English - New Flag Semi-Annual Report

Report and unaudited fi nancial statements for the fi nancial period ended 30 June 2016. An investment company with variable capital constituted as an umbrella fund under the laws of Ireland and authorised by the Central Bank of Ireland (“the Central Bank”) pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (as amended) (the “UCITS Regulations”), and authorised by the Central Bank (Supervision & Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations, 2015.

PutnamNew Flag EuroHigh Yield Fund plc

30 | 06 | 16Semi-annual report

2�Putnam New Flag Euro High Yield Fund plc

Table of contents Contents Page

Directors and Other Information 3

Report of the Directors 4

Investment Manager’s Report 6

Total Expense Ratio (TER) 7

Schedule of Investments 8

Statement of Financial Postion 10

Statement of Comprehensive Income 11

Statement of Changes in Net Assets 12

Notes to the Financial Statements 13

Schedule of Signifi cant Portfolio Movements 28

Important Information for German Investors 29

Directors and Other Information

Putnam New Flag Euro High Yield Fund plc 3

Board of Directors Investment Manager and Distributor David Dillon (Ireland) (Independent non-Executive Director) Putnam Investments Limited F. Peter Ferrelli (United States) Cassini House Susan G. Malloy (United States) 57-59 St James’s Street Stephen J. Tate (United States) London SW1A1LD Wyndham Williams (Ireland) (Independent non-Executive Director) United Kingdom Registered Office Sponsoring Irish Stock Exchange Broker Citibank Europe plc J&E Davy 1 North Wall Quay Davy House Dublin 1 49 Dawson Street Ireland Dublin 2 Ireland Legal Advisers as to Irish Law Dillon Eustace Solicitors Independent Auditors 33 Sir John Rogerson’s Quay PricewaterhouseCoopers Dublin 2 Chartered Accountants and Registered Auditors Ireland One Spencer Dock North Wall Quay Administrator and Company Secretary Dublin 1 State Street Fund Services (Ireland) Limited Ireland 78 Sir John Rogerson’s Quay Dublin 2 Transfer Agent Ireland Citibank Europe plc 1 North Wall Quay Custodian Dublin 1 State Street Custodial Services (Ireland) Limited Ireland 78 Sir John Rogerson’s Quay Dublin 2 Ireland

Report of the Directors

For the six months ended 30 June 2016

4 Putnam New Flag Euro High Yield Fund plc

The Directors of Putnam New Flag Euro High Yield Fund plc (the “Company”) present the unaudited Semi-Annual Report and financial statements for the financial period ended 30 June 2016.

Statement of Directors’ Responsibilities The Directors are responsible for preparing the Semi-Annual Report and the financial statements in accordance with Generally Accepted Accounting Practice in Ireland including the accounting standards issued by the Financial Reporting Council of the UK, including Financial Reporting Standard 104 and promulgated by the Institute of Chartered Accountants in Ireland. Company law requires the Directors to prepare financial statements for each financial period that give a true and fair view of the Company's assets, liabilities and financial position at the financial year end and of the profit or loss of the Company for that financial year. In preparing those financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgments and estimates that are reasonable and prudent;

• state whether the financial statements have been prepared in accordance with applicable accounting standards and identify the standards in question, subject to any material departures from those standards being disclosed and explained in the notes to the financial statements;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and

• be responsible for the maintenance and integrity of the corporate and financial information relating to the Company which may be included on the Company's website, www.putnam.com/ucits. Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors confirm that they have complied with the above requirements in preparing the financial statements. The Directors are responsible for the maintenance and integrity of the corporate and financial information relating to the Company which may be included on the Company’s website, www.putnam.com/ucits. Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The Directors are responsible for keeping adequate accounting records, which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements are prepared in accordance with accounting standards generally accepted in Ireland and comply with the Companies Act 2014 and the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011 (as amended) (the “UCITS Regulations”) and the Central Bank of Ireland (“the Central Bank”) (Supervision & Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations, 2015. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Directors’ Statement on Adequate Accounting Records The Directors believe that they have complied with the requirements of Companies Act 2014 with regard to adequate accounting records by employing personnel with appropriate expertise and by providing adequate resources to finance this function. The accounting records of the Company are maintained by State Street Fund Services (Ireland) Limited at 78 Sir John Rogerson’s Quay, Dublin 2, Ireland.

The Directors are responsible for the maintenance and integrity of the corporate and financial information in relation to the Company as included on the website. Legislation in Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Basis of Presentation The format and certain wording of the primary statements have been adapted from those contained in the Companies Act 2014, so that, in the opinion of the Directors, they more appropriately reflect the nature of the Company’s business as an investment fund.

Risk Management Objectives and Procedures The primary risks that the Directors assess as being relevant to the Portfolio are market risk, credit risk, interest rate risk, foreign currency risk and liquidity risk. A detailed assessment of the risk management objectives and policies that mitigate these risks is detailed in note 7.

Revenue The results of operations for the financial year are set out in the Statement of Comprehensive Income.

Distributions The Board of Directors of the Company declared a distribution during the financial year. (See note 13).

Transactions Involving Directors There were no contracts or agreements of any significance in relation to the business of the Company involving Directors of the Company. The Directors’ fees are disclosed in note 11.

Directors’ Interests None of the Directors or the Company Secretary had any interest in the share capital of the Company (other than certain Subscriber Shares as described in note 6) during the financial period.

Corporate Governance Statement Irish Funds, previously known as the Irish Funds Industry Association (“IFIA”), in association with the Central Bank has published a corporate governance code (the “Code”) to be adopted by Irish authorised collective investment schemes. The Board of Directors adopted the Code as the Company’s corporate governance code effective from 14 November 2012.

Report of the Directors cont. For the six months ended 30 June 2016


Connected party transactions Regulation 41 of the UCITS Regulations “Restrictions of transactions with connected persons” states that “A responsible person shall ensure that any transaction between a UCITS and a connected person is conducted a) at arm’s length; and b) in the best interest of the unit-holders of the UCITS”.

As required under UCITS Regulation 78.4, the Directors, as responsible persons are satisfied that there are in place arrangements, evidenced by written procedures, to ensure that the obligations that are prescribed by Regulation 41(1) are applied to all transactions with a connected party; and all transactions with connected parties that were entered into during the financial period to which the report relates complied with the obligations that are prescribed by Regulation 41(1).

Investment Manager’s Reports

For the six months ended 30 June 2016


Market Highlights and Performance For the six months ended 30 June 2016, the Portfolio’s Class E shares returned 0.82% on a net-of-fees basis, trailing the 3.26% gain of the BofA Merrill Lynch European Currency High Yield Constrained Index (100% hedged in euros).

Performance as of 30 June 2016 at NAV

Performance Results (%) YTD 3 Year

Class ESince

Inception

Putnam New Flag Euro High Yield Fund

Net of fees

Class E 0.82 4.07 6.17BofA Merrill Lynch European Currency High Yield Constrained Index (100% hedged in euro)* 3.26 5.99 6.26

Return periods greater than 1 year are annualised.

The European high-yield market European high-yield bonds generated solid performance for the six-month reporting period, as demand for risk assets improved and credit spreads tightened. Additional factors boosting the high-yield market included generally positive industry fundamentals — with financials and energy notable exceptions — along with substantial monetary support from the European Central Bank (ECB) and other major central banks.

With energy comprising a much smaller portion of the European high-yield market compared with the United States, high-yield bonds in Europe lagged their U.S. counterparts. Comparatively lower energy exposure largely insulated European high yield in 2015 when crude oil prices were falling. Through the first six months of 2016, however, the European market did not benefit as much as the U.S. market from the sharp rebound in oil prices.

Volatility in the financial sector resulting from the adoption of negative interest rates by major central banks in Europe and Japan also dampened the relative performance of European high-yield bonds. Central banks implemented negative policy rates in an effort to boost inflation and stimulate economic growth. However, negative rates placed additional downward pressure on bank profitability by hampering banks’ net-interest margins: the difference between what banks pay for funds and what they can charge to loan those funds. Consequently, negative rates weighed on the prices of bank stocks and bonds, suggesting that such unorthodox monetary policy could run counter to its intended goals.

June brought renewed volatility to the European high-yield market, as the surprise referendum vote by the United Kingdom to exit the European Union reverberated throughout global markets. High yield was one of several of the riskier bond categories to decline sharply on 24 and 27 June. As investors reassessed the Brexit outcome in the days immediately following the vote, U.S. high-yield bonds rebounded whereas European high yield remained under pressure.

From a supply-and-demand perspective, investor anticipation of the ECB’s plan to purchase investment-grade corporate bonds bolstered the high-yield market’s technical backdrop during the period’s second half. The ECB launched this purchase program in June.

Net inflows into European high-yield funds totalled €1.7 billion for the six-month period. In light of limited new-issue supply, positive fund flows provided a further boost to the market’s technical environment.

Portfolio positioning At the sector level, security selection and credit positioning in communication services and consumer cyclicals contributed the most versus the benchmark, followed by positioning in capital goods. On the downside, adverse positioning in the strong-performing energy and basic materials sectors, along with security selection in financials worked against the Portfolio's relative return.

At the issuer level, not holding lagging benchmark names such as Portugal Telecom and Areva aided relative performance. Overweight positions in Cirsa Business, Altice, and Iesy Repository also proved beneficial. Conversely, not owning several energy- or commodity-related index components proved to be the largest individual detractors. These included: Petrobras, Anglo American, ArcelorMittal and Gazprom. Outlook Overall, we currently remain constructive on the European high-yield market, as generally solid fundamentals and continued accommodative monetary policy by the ECB may support slow and steady growth in the region.

That said, political uncertainty following the Brexit vote is likely to weigh heavily on business sentiment in Europe, particularly in the U.K., given its reliance on Europe as an export market. In light of the U.K.’s large current-account deficit with continental Europe, we think the steep drop in the pound could also spur import-price inflation, creating a potentially “stagflationary” cyclical environment in the U.K.

Eurozone economic sentiment — both consumer and business — remained near post-recession highs prior to the Brexit vote. Notwithstanding the uncertainty caused by Brexit, we believe a relatively healthy household sector in Europe may support economic growth.

In terms of portfolio positioning, we currently plan to hold a slightly higher-than-normal cash allocation in the portfolio to provide a cushion against bouts of market volatility, as well as any disruptions in the market’s supply/demand environment. We continue to closely monitor the primary and secondary markets for relative value opportunities. As of period end, we remained focused on the financials and telecommunications sectors.

The views expressed herein are exclusively those of Putnam Investments Limited as of July 2016. They are not meant as investment advice and are subject to change.

Please note that the holdings discussed in this report may not have been held by the Portfolio for the entire period. Portfolio composition is subject to review in accordance with the Portfolio's investment strategy and may vary in the future. Current and future Portfolio holdings are subject to risk.

Putnam Investments Limited Date: July 2016

Total Expense Ratio (TER)* For the six months ended 30 June 2016


The Average Total Expense Ratio table shows the actual expenses incurred by each share class of the Portfolio during the financial period ended 30 June 2016, expressed as a percentage of the average NAV of each share class for the corresponding financial period.

Class Expense as a % of avg. NAV of Class

Class E 2.12% * The Total Expense Ratio (TER) is calculated as the total operating expenses for each Share Class of the Portfolio in the accounting currency of the Portfolio for the

financial period in question as a percentage of the average net assets of the Portfolio for the financial period. The TER has been annualised for 12 months.

Schedule of Investments As at 30 June 2016


EURO BONDS Fixed & Floating Interest Bonds

NominalHolding

CouponRate %

MaturityDate

FairValue

% ofNAV

Alliance Data Systems Corp 335,000 5.25 15/11/2023 € 329,891 2.34Altice Financing SA 100,000 6.50 15/01/2022 105,500 0.75Altice Luxembourg SA 180,000 7.25 15/05/2022 181,913 1.29Ardagh Packaging Finance PLC 100,000 6.75 15/05/2024 102,000 0.72Banco Bilbao Vizcaya Argentaria SA* (frn) 200,000 6.75 in perpetuity 172,000 1.22Banco Bilbao Vizcaya Argentaria SA* (frn) 200,000 8.88 in perpetuity 198,129 1.40Banco Santander SA* (frn) 100,000 6.25 in perpetuity 85,000 0.60Barclays PLC* (frn) 200,000 6.50 in perpetuity 178,000 1.26Belden Inc 110,000 5.50 15/04/2023 111,018 0.79Casino Guichard Perrachon SA 100,000 2.33 07/02/2025 99,233 0.70Casino Guichard Perrachon SA 100,000 2.80 05/08/2026 102,836 0.73Cemex SAB de CV 325,000 4.38 05/03/2023 317,103 2.25Cirsa Funding Luxembourg SA 260,000 5.88 15/05/2023 262,823 1.86Credit Agricole SA* (frn) 100,000 6.50 in perpetuity 94,438 0.67Douglas GmbH 115,000 6.25 15/07/2022 123,050 0.87Europcar Groupe SA 240,000 5.75 15/06/2022 249,660 1.77Faurecia 100,000 3.63 15/06/2023 101,535 0.72Fiat Chrysler Finance Europe 100,000 6.75 14/10/2019 112,581 0.80Fiat Chrysler Finance Europe 155,000 4.75 15/07/2022 166,510 1.18Fiat Chrysler Finance North America Inc 10,000 5.63 12/06/2017 10,387 0.07Findus PIK SCA 114,143 8.25 01/08/2019 113,289 0.80Gates Global LLC 200,000 5.75 15/07/2022 169,392 1.20Gestamp Funding Luxembourg SA 180,000 3.50 15/05/2023 184,109 1.30HomeVi SAS 135,000 6.88 15/08/2021 143,697 1.02Huntsman International LLC 100,000 5.13 15/04/2021 101,624 0.72Ineos Finance PLC 140,000 4.00 01/05/2023 134,684 0.95Infor US Inc 225,000 5.75 15/05/2022 191,318 1.36Koninklijke KPN NV* (frn) 405,000 6.13 in perpetuity 432,297 3.06LGE HoldCo VI BV 145,000 7.13 15/05/2024 160,588 1.14Matterhorn Telecom SA 100,000 3.88 01/05/2022 96,736 0.69Holding Medi-Partenaires SAS 100,000 7.00 15/05/2020 104,750 0.74Novafives SAS 100,000 4.50 30/06/2021 89,750 0.64Numericable-SFR SAS 300,000 5.63 15/05/2024 303,129 2.15OTE PLC 140,000 7.88 07/02/2018 150,255 1.06Picard Groupe SAS* (frn) 187,835 4.25 01/08/2019 188,539 1.34Play Finance 1 SA 100,000 6.50 01/08/2019 103,750 0.74Play Topco SA 205,000 7.75 28/02/2020 209,382 1.48Sealed Air Corp 100,000 4.50 15/09/2023 106,000 0.75Societe Generale SA* (frn) 155,000 6.75 in perpetuity 147,239 1.04Synlab Bondco PLC 100,000 6.25 01/07/2022 106,000 0.75Techem Energy Metering Service GmbH & Co KG 260,000 7.88 01/10/2020 274,300 1.94Telefonica Europe BV* (frn) 200,000 6.50 in perpetuity 210,150 1.49Telenet Finance V Luxembourg SCA 350,000 6.75 15/08/2024 385,875 2.73Thomas Cook Finance PLC 125,000 6.75 15/06/2021 116,250 0.82Trionista TopCo GmbH 265,000 6.875 30/04/2021 279,575 1.98Unitymedia KabelBW GmbH 435,000 3.75 15/01/2027 400,200 2.84Unitymedia Hessen GmbH & Co KG 100,000 6.25 15/01/2029 111,250 0.79UPC Holding BV 205,000 6.75 15/03/2023 220,503 1.56Valeant Pharmaceuticals International Inc 265,000 4.50 15/05/2023 201,739 1.43Virgin Media Finance PLC 200,000 4.50 15/01/2025 194,025 1.37Volkswagen International Finance NV* (frn) 75,000 2.50 in perpetuity 71,434 0.51WEPA Hygieneprodukte GmbH 100,000 3.75 15/05/2024 100,268 0.71Wind Acquisition Finance SA 410,000 7.00 23/04/2021 401,800 2.85ZF North America Capital Inc 500,000 2.75 27/04/2023 515,224 3.65Ziggo Bond Finance BV 290,000 4.63 15/01/2025 277,675 1.97Total Euro Fixed & Floating Interest Bonds € 10,100,403 71.56

Schedule of Investments cont. As at 30 June 2016


BRITISH POUND BONDS Fixed & Floating Interest Bonds

NominalHolding

CouponRate %

MaturityDate

FairValue

% ofNAV

Bakkavor Finance 2 PLC 110,000 8.75 15/06/2020 € 140,708 1.00Moy Park Bondco PLC 125,000 6.25 29/05/2021 151,164 1.07Phosphorus Holdco PLC† 225,000 10.00 01/04/2019 12,183 0.09Pizzaexpress Financing 2 PLC 100,000 6.63 01/08/2021 113,767 0.81Societe Generale SA* (frn) 295,000 8.88 in perpetuity 383,448 2.71Stonegate Pub Financing PLC 100,000 5.75 15/04/2019 120,269 0.85Virgin Media Secured Finance PLC 90,000 6.00 15/04/2021 111,952 0.79Total Euro Fixed & Floating Interest Bonds € 1,033,491 7.32 UNITED STATES DOLLAR BONDS Fixed & Floating Interest Bonds

NominalHolding

CouponRate %

MaturityDate

FairValue

% ofNAV

BNP Paribas SA* (frn) 200,000 7.63 in perpetuity € 180,476 1.28Commerzbank AG 215,000 8.13 19/09/2023 226,608 1.61Credit Suisse Group AG* (frn) 205,000 6.25 in perpetuity 174,477 1.24Dresdner Funding Trust I 410,000 8.15 30/06/2031 431,793 3.05ING Groep NV* (frn) 200,000 6.00 in perpetuity 169,675 1.20Inmarsat Finance PLC 100,000 4.88 15/05/2022 82,587 0.59Royal Bank of Scotland Group* (frn) 200,000 7.50 in perpetuity 165,174 1.17Standard Chartered PLC* (frn) 100,000 7.01 in perpetuity 91,363 0.65UBS Group AG* (frn) 200,000 6.88 in perpetuity 176,651 1.25Total United States Dollar Fixed & Floating Interest Bonds € 1,698,804 12.04 Total Value of Investments excluding Financial Derivative Instruments € 12,832,698 90.92 * For floating rate notes (frn) the effective yield is that of 30 June 2016. † Position in default since December 2014. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

Currency Sold

Amount Sold

Currency Bought

ForwardRate

MaturityDate Counterparty

UnrealisedAppreciation/

(Depreciation)% ofNAV

EUR 157,170 GBP 0.833 21/09/2016 Credit Suisse International € (10,696) (0.08)EUR 170,426 USD 1.114 21/09/2016 Westpac Banking Corp. 1,107 0.01GBP 114,000 EUR 0.833 21/09/2016 JPMorgan Chase Bank 9,960 0.07GBP 271,000 EUR 0.833 21/09/2016 Citibank N.A. 23,868 0.17GBP 298,000 EUR 0.833 21/09/2016 State Street Bank And Trust Co. 26,144 0.19GBP 54,900 EUR 0.833 21/09/2016 UBS AG 4,796 0.03GBP 100,000 EUR 0.833 21/09/2016 Bank of America, N.A. 8,718 0.06GBP 93,000 EUR 0.833 21/09/2016 Westpac Banking Corp. 8,151 0.06GBP 76,400 EUR 0.833 21/09/2016 HSBC Bank USA 6,682 0.05USD 5,600 EUR 1.114 21/09/2016 State Street Bank And Trust Co. (32) 0.00USD 62,400 EUR 1.114 21/09/2016 Barclays Bank PLC (369) 0.00USD 202,200 EUR 1.114 21/09/2016 Goldman Sachs International (1,158) (0.01)USD 200,000 EUR 1.114 21/09/2016 UBS AG (1,158) (0.01)USD 281,200 EUR 1.114 21/09/2016 Citibank N.A. (1,586) (0.01)USD 310,200 EUR 1.114 21/09/2016 Credit Suisse International (1,818) (0.01)USD 1,096,700 EUR 1.114 21/09/2016 JPMorgan Chase Bank (6,545) (0.05)USD 286,000 EUR 1.114 21/09/2016 HSBC Bank USA (1,590) (0.01)USD 500 EUR 1.114 21/09/2016 Royal Bank of Scotland Plc (3) 0.00Unrealised Appreciation on Forward Foreign Currency Exchange Contracts € 89,426 0.64Unrealised Depreciation on Forward Foreign Currency Exchange Contracts € (24,955) (0.18)Net Unrealised Appreciation on Forward Foreign Currency Exchange Contracts € 64,471 0.46Total Financial Assets at Fair Value through Profit or Loss € 12,922,124 91.56Total Financial Liabilities at Fair Value through Profit or Loss € (24,955) (0.18) Analysis of Total Assets

% ofTotal Assets

(a) Transferable securities admitted to an official stock exchange listing 82.51(b) Transferable securities dealt in another regulated market 7.27(c) OTC financial derivative instruments 0.64(d) Other assets 9.58Total Assets 100.00

Statement of Financial Position

The accompanying notes form an integral part of these financial statements.


Notes

As at30 June 2016

€

As at31 December 2015

€

Current Assets

Financial Assets at Fair Value through Profit or Loss 2 12,922,124 13,726,574

Interest Income Receivable 2 215,171 236,259

Cash 12 1,156,485 231,028

Total Assets 14,293,780 14,193,861

Creditors (amounts falling due within one financial year)

Financial Liabilities at Fair Value through Profit or Loss 2 24,955 20,451

Expenses Payable 11 155,664 173,860

Liabilities 180,619 194,311

Net Assets Attributable to Holders of Redeemable Participating Shares at last

traded market value 6 14,113,161 13,999,550 The Financial Statements were approved by the Board of Directors of Putnam New Flag Euro High Yield Fund plc on 22 August 2016.

Statement of Comprehensive Income



Notes

For the financial period ended30 June 2016

€


€

Operating Income

Interest Income 2 394,755 422,181

Deposit Interest 2 - 9,061

Miscellaneous Income - 2,700

Net Realised gains on Financial Assets and Liabilities at Fair Value through Profit

or Loss 2 655,693 44,189

Net Unrealised losses on Financial Assets and Liabilities at Fair Value through Profit

or Loss 2 (777,187) (11,528)

273,261 466,603

Operating Expenses

Investment Management Fees 11

- Class E 45,127 47,785

Other Expenses 11 107,697 111,386

152,824 159,171

Operating Profit 120,437 307,432

Finance Costs

Bank Interest Expense (5,930) -

Distributions to Holders of Redeemable Participating Shares 13 (273,931) (322,026)

Withholding tax (163) (223)

Decrease in Net Assets Attributable to Redeemable Participating Shareholders (159,587) (14,817) Gains and losses arose solely from continuing operations. There were no gains or losses other than those dealt with in the Statement of Comprehensive Income. The Financial Statements were approved by the Board of Directors of Putnam New Flag Euro High Yield Fund plc on 22 August 2016.

Statement of Changes in Net Assets




€


€

Net Assets Attributable to Holders of Redeemable Participating Shares at the beginning of financial period 13,999,550 14,536,935Decrease in Net Assets Attributable to Holders of Redeemable Participating Shares

from Profit and Loss Account (159,587) (14,817)

Proceeds from Redeemable Participating Shares issued and reinvested 273,198 303,070

Cost of Redeemable Participating Shares redeemed - (239,731)

Increase resulting from Capital share transactions 273,198 63,339

Total Increase in Net Assets Attributable to Holders of Redeemable

Participating Shares 113,611 48,522

Net Assets Attributable to Holders of Redeemable Participating Shares at the end of financial period 14,113,161 14,585,457

Notes to the Financial Statements As at 30 June 2016


1. General

Putnam New Flag Euro High Yield Fund plc (the “Company”) was incorporated in Ireland on 15 September 1999 and was established for the purpose of investing in transferable securities and/or other liquid financial assets in accordance with the UCITS Regulations. The primary investment objective and policies of each Portfolio will be adhered to, as specified in the relevant supplement. The Company currently has only one portfolio, the Putnam New Flag Euro High Yield Fund (the “Portfolio”).

The Portfolio currently offers three Classes of Shares in respect of the Portfolio, namely Class E Shares, Class M Shares and Class S Shares. Class E Shares and Class M Shares are denominated in Euro and Class S Shares are denominated in Sterling. Class E Shares is currently listed on the Irish Stock Exchange. Class M Shares and Class S Shares are not currently in issue.

The assets of each share class may be exposed to the liabilities of another within the Portfolio. At 30 June 2016, the Directors are not aware of such existing or contingent liability.

2. Summary of Significant Accounting Policies

Significant accounting policies adopted by the Company are as follows:

(a) Statement of Compliance These condensed Financial Statements have been prepared in accordance with the Financial Reporting Standard 104 ‘Interim Financial Reporting’ (“FRS 104”) and the UCITS Regulations.

The condensed unaudited Financial Statements should be read in conjunction with the Company’s annual audited Financial Statements for the financial year ended 31 December 2015, which were prepared in accordance with Irish statute comprising the Companies Act, 2014 and the applicable UCITS Regulations as issued by the Central Bank. Previous Irish GAAP for preparing the prior year end Financial Statements were those published by the Institute of Chartered Accountants in Ireland and issued by the Financial Reporting Council (“FRC”).

The Company has continued to avail of the exemption available to open-ended investment funds under FRS 104 and is not presenting a cash flow statement.

All references to net assets throughout the documents refers to net assets attributable to holders of Redeemable Participating Shares unless otherwise stated.

Fair Value Hierarchy The requirement for the Company, to measure financial instruments at fair value and estimation of the fair value have not changed with the adoption of the new accounting framework. In March 2016, the Financial Reporting Council issued Amendments to FRS 102—Fair value hierarchy disclosures. These amendments align the definition of levels A, B and C to IFRS 13 and rename the levels to the old convention 1, 2 and 3, effective for accounting periods beginning on or after 1 January 2017, with early application permitted. The Directors resolved to adopt and prepare disclosures in line with the issued amendments. The annual fair value hierarchy tables have been restated and presented under the new hierarchy definitions as set out under amendments to FRS 102.

Estimates and judgements The preparation of financial statements in conformity with FRS 104 requires the use of certain critical accounting estimates. It also requires the Board of Directors, based on the advice of the Investment Manager, to exercise its judgment in the process of applying the Company’s accounting policies. Management also makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed below. The registered office of the Company is 1 North Wall Quay, Dublin 1, Ireland.

Valuation of Investments (i) Securities which are quoted, listed or traded on a Recognised Market will be valued at the latest available dealing price or, if

unavailable or if bid and offer quotations are made, the latest available middle market quotation (i.e. the evaluated mean of the bid and offer price quoted) on the relevant Recognised Market at close of business on such Recognised Market as at each Valuation Point. Where a security is listed or dealt in on more than one Recognised Market the relevant exchange or market shall be the principal stock exchange or market on which the security is listed or dealt on or the exchange or market which the Directors determine provides the fairest criteria in determining a value for the relevant investment. Investments listed or traded on a Recognised Market, but acquired or traded at a premium or at a discount outside or off the relevant exchange or market may be valued taking into account the level of premium or discount at the Valuation Point provided that the Custodian shall be satisfied that the adoption of such a procedure is justifiable in the context of establishing the probable realisation value of the security.

Notes to the Financial Statements cont.

As at 30 June 2016


2. Summary of Significant Accounting Policies cont.

(a) Statement of Compliance cont.

Valuation of Investments cont. (ii) The value of any security which is not quoted, listed or traded on a Recognised Market or which is so quoted, listed or dealt but

for which no such quotation or value is available or the available quotation or value is not representative of the fair market value shall be the probable realisation value as estimated with care and good faith by (i) the Directors or (ii) a competent person, firm or corporation (including the Investment Manager) selected by the Directors and approved for the purpose by the Custodian or (iii) any other means provided that the value is approved by the Custodian. Where reliable market quotations are not available for fixed income securities the value of such securities may be determined using matrix methodology compiled by the Directors whereby such securities are valued by reference to the valuation of other securities which are comparable in rating, yield, due date and other characteristics.

(iii) Fair value of derivative financial instruments The Company may, from time to time, hold financial instruments that are not quoted in active markets, such as over-the-counter derivatives. Fair values of such instruments are determined using valuation techniques. Where valuation techniques (for example, models) are used to determine fair values, they are validated and periodically reviewed by experienced personnel at State Street Fund Services (Ireland) Limited, independent of the party that created them.

Models use observable data, to the extent practicable. However, areas such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates. Changes in assumptions about these factors could affect the reported fair value of financial instruments. The Company’s financial assets and financial liabilities are held for the purpose of being traded or are expected to be realised within one year.

(iv) Critical judgments

Functional currency The Board of Directors considers the Euro to be the currency that most faithfully represents the economic effect of the underlying transactions, events and conditions of the Company. The Euro is the currency in which the Company measures its performance and reports its results, as well as the currency in which it receives subscriptions from its investors. This determination also considers the competitive environment in which the Company is engaged compared to other European investment products.

(b) Financial Instruments (i) Classification

The Company classifies its investments in debt securities and related derivatives as financial assets or financial liabilities at fair value through profit or loss. These financial assets and liabilities are classified by the Investment Manager at fair value through profit or loss at inception. Financial assets and liabilities designated at fair value through profit or loss at inception are those that are managed and their performance evaluated on a fair value basis in accordance with the Company’s investment objective.

These instruments are acquired or incurred principally for the purpose of generating a profit from short-term fluctuation in price. Derivatives which consist of forward currency contracts and credit default swaps are categorised as held for trading.

(ii) Initial Recognition Purchases and sales of investments are accounted for on the trade date.

Financial instruments categorised at fair value through profit or loss are measured initially at fair value.

(iii) Subsequent Measurement After initial measurement, the Company measures instruments which are classified as at fair value through profit or loss, at their fair value. Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. The fair value of financial instruments is based on their quoted market prices on a recognised exchange or sourced from a reputable broker/counterparty in the case of non-exchange traded instruments, at the Statement of Financial Position date without any deduction for estimated future selling costs. Financial assets are priced at their last traded market prices.

If a quoted market price is not available on a recognised stock exchange or from a broker/dealer for non-exchange traded financial instruments, the fair value of the instrument is estimated using valuation techniques, including the use of recent arm’s length market transactions, reference to the current fair value of another instrument that is substantially the same, discounted cash flow techniques, option pricing models or any other valuation technique that provides a reliable estimate of prices obtained in actual market transactions. Subsequent changes in fair value of financial instruments at fair value through profit and loss are recognised in the Statement of Comprehensive Income.


As at 30 June 2016



(b) Financial Instruments cont. (iv) Derecognition

Investments are derecognised when the rights to receive cash flows from the investments have expired or the Company has transferred substantially all the risks and rewards of ownership. Realised gains and losses on investment disposals are calculated using the Average Cost basis.

(v) Net Gain/(Loss) on Investment Activities In respect of each instrument type classified as financial instruments at fair value through profit or loss, the movement in unrealised gains/(losses) since the prior financial period end and realised gains/(losses) are included in net gain/(loss) on investment activities in the Statement of Comprehensive Income.

Regular-way purchases and sales of investments are recognised on trade date. The trade date is the date on which the Company commits to purchase or sell the asset. Investments are initially recognised at fair value and transaction costs for all financial assets and financial liabilities carried at fair value through profit or loss are expensed as incurred.

Investments are recognised when the rights to receive cash flows from the investments are transferred to the Company or the Company has exposure to substantially all risks and rewards of ownership.

Realised gains and losses on investment transactions are calculated using the average cost method. Realised gains and losses on investment transactions in debt instruments are calculated as the difference between sales proceeds and the amortised cost of the instrument.

(c) Off-setting Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position where there is a legally enforceable right to set-off the recognised amounts and there is an intention to settle on a net basis, or realise the assets and settle the liability simultaneously.

(d) Redeemable Participating Shares Redeemable participating shares are redeemable at the shareholder’s option and are classified as financial liabilities. Distributions to redeemable participating shareholders are recognised in the Statement of Comprehensive Income. The participating share can be put back to the Company at any time for cash equal to a proportionate share of the Company’s net asset value. The participating share is carried at the redemption amount that is payable at the Statement of Financial Position date if the shareholder exercised his/her right to put the share back to the Company.

Redeemable participating shares are issued and redeemed at the shareholder’s option at prices based on the Company’s net asset value per share at the time of issue or redemption. The Company’s net asset value per share is calculated by dividing the net assets attributable to redeemable participating shareholders of each class of shares with the total number of outstanding shares for each respective class. In accordance with the provisions of the Company’s Prospectus, investment positions are valued based on the latest available dealing price (for fixed income securities) for the purpose of determining the net asset value per share for subscriptions and redemptions.

(e) Interest Income and Expense Interest income and expense are recognised in the Statement of Comprehensive Income for all debt instruments using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the relevant financial period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts throughout the expected life of the financial instrument, or a shorter financial period where appropriate, to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Company estimates cash flows considering all contractual terms of the financial instruments but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. There were no financial assets written down during the financial period.

Investment income is reported gross of non-reclaimable withholding tax which is separately recognised. Deposit interest is accounted for on an accrual basis.


As at 30 June 2016



(f) Forward Foreign Currency Contracts Forward Foreign Currency Contracts are valued based on the closing forward contract rates on the relevant foreign exchange market on a daily basis. The unrealised gain or loss on open forward foreign currency contracts is calculated by the difference between the contracted rate and the rate to close out the contract. Realised gains or losses include net gains or losses on closed forward currency contracts. Realised and unrealised gains and losses are reported in the Statement of Comprehensive Income. Changes in the value of forward foreign currency contracts are recognised as unrealised gains or losses on forward foreign currency contracts until the contracts are terminated, at which time realised gains and losses are recognised.

(g) Foreign Currencies Items included in the Company’s financial statements are measured in Euro, the currency of the primary economic environment in which it operates.

The functional currency of the Company is Euro, denoted by €, which represents the currency in which subscriptions are received and redemptions paid. Transactions which occurred during the financial period in foreign currencies are translated into Euros at the exchange rate prevailing on the transaction date. Assets and liabilities in foreign currencies are translated into Euros, being the presentation currency at exchange rates prevailing at the Statement of Financial Position date. Resulting gains or losses are reported in the Statement of Comprehensive Income.

The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities. Such fluctuations are included in the net realised and unrealised gains of financial assets and financial liabilities at fair value through profit or loss.

(h) Operating Expenses The Company is responsible for all normal operating expenses including auditors’ fees, stamp and other duties and charges incurred on the acquisition and realisation of investments. The costs and gains/losses of any hedging transactions will be attributable to the relevant Share Class. To the extent that expenses are attributable to a specific Share Class of the Company, that Share Class shall bear such expenses. All expenses are accrued on a daily basis.

(i) Distribution Policy Distributions to holders of redeemable participating shares are classified as finance costs in the Statement of Comprehensive Income and details of distributions declared and paid during the financial period are included in note 13. Distributions are recognised as at ex. date.

(j) Cash and Cash Equivalents Cash comprises current deposits with bank. For details of the cash deposits held by the Company at financial period end, refer to note 12. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

(k) Anti-Dilution Levy Redeemable participating shareholders may be required to pay an anti-dilution levy to be determined from time to time by the Company, on the market value of the relevant subscription and redemption amounts. The anti-dilution levy is paid to the Company and is used to defray the cost related to the associated purchase or sale of securities within the Company as a result of shareholder transactions. During the financial period ended 30 June 2016 €Nil was paid to the Company (June 2015: €Nil). Anti-dilution levies are disclosed in the Statement of Changes in Net Assets in the Proceeds from Redeemable Participating Shares issued and the Cost of Redeemable Participating Shares redeemed as relevant.

(l) Transaction Costs Transaction costs are defined as the incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial liability. An incremental cost is one that would not have been incurred if the entity had not acquired, issued or disposed of the financial instrument. When a financial asset or financial liability is recognised initially, an entity shall measure it at its fair value through profit or loss plus, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

Transaction costs on the purchase and sale of bonds and swaps, are included in the purchase and sale price of the investment. They cannot be practically or reliably gathered as they are embedded in the cost of the investment and cannot be separately verified or disclosed. Custody and Sub-Custodian transaction costs are included in the “Other Expenses” line in the Statement of Comprehensive Income. These costs are separately identifiable transaction costs and the total costs incurred by the Portfolio during the financial period are disclosed in note 10.


As at 30 June 2016


3. Efficient Portfolio Management

Typically, derivative contracts serve as components of the Company’s investment strategy and are utilised primarily to structure and economically hedge investments to enhance performance and reduce risk to the Company (the Company does not designate any derivatives as hedges for hedge accounting purposes as described under IAS 39). The derivative contracts that the Company holds or issues are forward foreign currency contracts and credit default swap contracts.

The Company records its derivative activities on a marked-to-market basis. Fair values are determined by using market prices obtained from counterparties and broker quotes where available. For Over-the-Counter (“OTC”) contracts, the Company enters into master netting agreements with its counterparties. Principal notional and unrealised amounts are disclosed in the Schedule of Investments.

Forward Foreign Currency Contracts The Company buys and sells forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used to hedge foreign exchange risk and to gain exposure on currency. Forward foreign currency contracts entered into by the Company represent a firm commitment to buy or sell an underlying asset or currency at a specified value and point in time based upon an agreed or contracted quantity. The realised/unrealised gain or loss is equal to the difference between the value of the contract at the onset and the value of the contract at settlement date/period and are included in the Statement of Comprehensive Income.

The Company did not use financial derivative instruments for efficient portfolio management purposes as outlined in the European Securities and Markets Authority (ESMA) guidelines that were effective 18 February 2013.

4. Taxation

Under current law and practice the Company qualifies as an investment undertaking as defined in Section 739B of the Taxes Consolidation Act 1997, as amended. On that basis, it is not chargeable to Irish tax on its income or gains. However, Irish tax may arise on the happening of a “chargeable event”. A chargeable event includes any distribution payments to shareholders or any encashment, redemption, cancellation or transfer of shares and the holding of shares at the end of each eight year period beginning with the acquisition of such shares.

No Irish tax will arise on the Company in respect of chargeable events in respect of:

(a) a shareholder who is neither Irish resident nor ordinarily resident in Ireland for tax purposes, at the time of the chargeable event, provided appropriate valid declarations in accordance with the provisions of the Taxes Consolidation Act, 1997, as amended, are held by the Company or the Company has been authorised by the Irish Revenue to make gross payments in the absence of appropriate declarations; and

(b) certain exempted Irish tax resident shareholders who have provided the Company with the necessary signed statutory declarations.

Dividends, interest and capital gains (if any) received on investments made by the Company may be subject to withholding taxes imposed by the country from which the investment income/gains are received and such taxes may not be recoverable by the Company or its shareholders.

The U.S. Foreign Account Tax Compliance Act (“FATCA”) provides that, as of 1 July 2014, a 30% withholding tax may be imposed on payments to the Portfolio of U.S. source income unless the Portfolio complies with the terms of the Ireland/U.S. Intergovernmental Agreement (“IGA”) (signed in December 2012) and supporting Irish legislation/regulations. Under the IGA, any Irish financial institutions as defined under the IGA will be required to report annually to Irish Revenue (commencing in 2015) details on its U.S. account holders including the name, address and taxpayer identification number (“TIN”) and certain other details. Such institutions will also be required to amend their account on-boarding procedures with effect from 1 July 2014 in order to easily identify U.S. new account holders and report this information to Irish Revenue. The Company, in conjunction with assistance from its service providers where necessary, will endeavour to ensure that it satisfies any obligations imposed on it under the IGA.

The Company's ability to satisfy its obligations under the IGA will depend on each shareholder in the Company providing the Company with any information, including information concerning the direct or indirect owners of such Company, that the Company determines is necessary to satisfy such obligations. Each shareholder will agree in its Application Form to provide such information upon request from the Company. If the Company fails to satisfy its obligations under the IGA, it may, in certain circumstances, be treated as a Non-participating Financial Institution by the U.S. tax authorities and, therefore, be subject to a 30% withholding on its U.S. source income and any proceeds from the sale of property that could give rise to U.S. source income. Shareholders are encouraged to consult with their own tax advisors regarding the possible implications of FATCA on their interest in the Company.


As at 30 June 2016


4. Taxation cont.

The Company expects to attempt to satisfy any obligations imposed on it to avoid the imposition of this withholding tax, which may entail documentation and other requirements on both new and existing shareholders. Failure to provide requested information may subject a shareholder to liability for any resulting U.S. withholding taxes, U.S. tax information reporting and/or mandatory redemption, transfer or other termination of the shareholder’s interest in its Shares. Detailed guidance as to the mechanics and scope of this new reporting and withholding regime is continuing to develop. There can be no assurance as to the timing or impact of any such guidance on future operations of the Company.

5. Related Party Disclosures

Transactions with entities who have significant influence The Company operates under an Investment Management Agreement with Putnam Investments Limited (the “Investment Manager”). All fees in relation to the Investment Manager are disclosed separately as Investment Management fees in the Statement of Comprehensive Income. During the financial period ended 30 June 2016 the Company incurred a management fee of €45,127 (30 June 2015: €47,785). As at 30 June 2016, €15,027 (31 December 2015: €7,372) was payable to the Investment Manager. Refer to note 11(a) for management fee reimbursals during the financial period.

Transactions with key management personnel Directors’ fees are disclosed as part of “Other Expenses” in the Statement of Comprehensive Income and also in note 11(i). None of the Directors or the Company Secretary had any interest in the share capital of Putnam New Flag Euro High Yield Fund plc during the financial year (except for certain Subscriber Shares described below). Directors’ fees are only paid to the two Non-Executive Directors.

During the financial period ended 30 June 2016 the Company incurred a fee of €8,239 (30 June 2015: €8,358) relating to legal services provided by Dillon Eustace. David Dillon as a Director of the Company had an interest in this fee in his capacity as partner/consultant of Dillon Eustace. The Company is not aware of any other transactions with connected persons during the financial period, other than those disclosed in these financial statements.

Significant Unitholders Under Section 33 of FRS 102 where a shareholder holds at least 20% of the total issued shares of an entity, the shareholder is considered to have a significant influence over that entity and is accordingly deemed a related party of that entity. The following table details the number of shareholders who hold at least 20% of the Company’s total Shares in issue as of 30 June 2016:

Number of Shareholders Value of Holding % of Company’s Net Assets

One €14,076,095 99.74% The following table details the number of shareholders who hold at least 20% of the Company’s total Shares in issue as of 31 December 2015:

Number of Shareholders Value of Holding % of Company’s Net Assets

One €13,960,484 99.72% 6. Share Capital and Redeemable Participating Shares

The authorised share capital of the Company is 500,000,040,000 shares of no par value divided into 40,000 Subscriber Shares with no par value and 500,000,000,000 shares of no par value. There are three Subscriber Shares in issue as at 30 June 2016 (31 December 2015: three). These Shares are held by parties connected to Putnam Investments Limited and its affiliates.

The Subscriber Shares entitle the holders to attend and vote at general meetings of the Company but do not entitle the holders to participate in the profits or assets of the Company except for a return of capital on a winding up. The shares entitle the holders to attend and vote at general meetings of the Company and to participate equally (subject to any differences between fees, charges and expenses applicable to different classes of shares) in the profits and assets of the Company.

The capital of the Company is equal to the Net Asset Value of the Company.


As at 30 June 2016


6. Share Capital and Redeemable Participating Shares cont.

In accordance with the provisions of the Company’s Prospectus, marketable investment securities are valued at last traded market price.

Net assets attributable to shareholders represent a liability in the Statement of Financial Position, carried at the redemption amount that would be payable at the Statement of Financial Position if the shareholders exercised the right to redeem the shares in the Company.

June 2016 December 2015 June 2015 Last Traded Price Last Traded Price Last Traded Price

Class E

Net Assets 14,113,161 13,999,550 14,585,457

Shares in Issue 14,096.378 13,819.565 14,105.426

Net Asset Value per Share € 1,001.19 €1,013.02 €1,034.03 Income equalisation arrangements are applied in the case of subscriptions to and redemptions from the Portfolio.

The table below summarises the Share dealing activity during the financial period ended 30 June 2016:

Share Transactions Class E

Balance at the beginning of financial period 13,819.565

Issued during financial period -

Reinvested during financial period 276.813

Redeemed during financial period -

Balance at end of financial period 14,096.378

The table below summarises the Share dealing activity during the financial year ended 31 December 2015:


Balance at the beginning of financial year 14,037.149

Issued during financial year -

Reinvested during financial year 571.692

Redeemed during financial year (789.276)

Balance at end of financial year 13,819.565

The table below summarises the Share dealing activity during the financial period ended 30 June 2015:


Balance at the beginning of financial period 14,037.149

Issued during financial period 298.277

Reinvested during financial period -

Redeemed during financial period (230.000)

Balance at end of financial period 14,105.426

7. Risks Associated with Financial Instruments

The adoption of FRS 102 has not resulted in any changes to the Company’s strategy on the management of investment risk. Therefore, the disclosures included in the prior year financial statements are still applicable to the FRS 102 financial statements. As detailed in the Fair valuation hierarchy section below, there is a change to the methodology applied in respect of the levelling of the financial instruments and the detail on this methodology is laid out in the relevant section on the Fair valuation hierarchy.

In accordance with paragraph 34.23 of FRS 102, this note details the way in which the Company manages risks associated with the use of financial instruments.

The main risks arising from the Portfolio’s financial instruments are market risk (which includes price risk, foreign currency risk, interest rate risk), credit or default risk and liquidity risks. The Investment Manager performs monthly reviews and agrees on policies for managing each of these risks and they are summarised below. The Board of Directors of the Company receives monthly reporting on risk matters and reviews the risk management process on an annual basis. These policies have remained substantially unchanged for the financial period to which these financial statements relate.


As at 30 June 2016


7. Risks Associated with Financial Instruments cont.

The Portfolio predominantly invests in non-investment grade debt obligations issued by European based companies or non-European based companies which have a substantial share of their revenues or income based in Europe and which are listed or traded on recognised markets.

The securities invested in will predominantly have a credit rating of Ba1 or below by Moody’s or BB+ or below by Standard & Poor’s or Fitch IBCA, which are credit rating agencies. However, the Portfolio may invest in transferable securities which, though unrated, are in the opinion of the Investment Manager of similar credit quality to rated securities.

The Company may also, as part of its investment policy, invest in financial derivative instruments subject to the conditions and limits as set out in the Prospectus.

(a) Market/price volatility risk Market risk arises mainly from uncertainty about future prices of financial instruments held. It represents the potential loss the Portfolio might suffer through holding market positions in the face of price movements caused by factors specific to the individual investment or factors affecting all instruments traded in the market. The Investment Manager considers the asset allocation of the Portfolio in order to minimise the risk associated with particular countries or industry sectors whilst continuing to follow the Company’s investment objective of the Portfolio.

The Investment Manager measures both the Portfolio’s total risk as well as its risk of underperformance versus its stated benchmark (also referred to as active risk or tracking error “TE”).

The market risk exposure for the Portfolio at 30 June 2016, is equivalent to the fair values of investments held, as reflected in the Schedule of Investments €12,922,124 (€13,726,574 for 31 December 2015). There were no credit default swap contracts held at 30 June 2016 and 31 December 2015.

Aggregate Value at Risk The Company uses relative Value at Risk (“VaR”) to its reference portfolio, the BofA Merrill Lynch European Currency High Yield Constrained Index (100% hedged in euro), as a risk measurement technique to measure, monitor and manage risks.

The Investment Manager considers the asset allocation of the Portfolio in order to minimise the risk associated with particular countries or industry sectors while continuing to follow the Company’s investment objective.

The Value at Risk risk measure estimates the potential loss in pre-taxation profit over a given holding period for a specified confidence level. The VaR methodology is a statistically defined, probability-based approach that takes into account market volatilities as well as risk diversification by recognising offsetting positions and correlations between products and markets. Risks can be measured consistently across all markets and products, and risk measures can be aggregated to arrive at a single risk number.

Given the interdependencies between market variables, the Company also estimates the Portfolio’s VaR, or the threshold loss that is not expected to exceed the 99th percentile confidence level over a 1-day horizon. Putnam Investments uses a proprietary multi-factor model to estimate the active risk (also referred to as tracking error) from which VaR estimates can be analytically derived. The VaR estimates presented below are point-in-time and vary over time as a function of market and portfolio composition changes.

Given its reliance on historical data, VaR is most effective in estimating risk exposures in markets in which there are no sudden fundamental changes or sudden shifts in market conditions. An inherent limitation of VaR is that the distribution of past changes in market risk factors may not produce accurate predictions of future risk. Different VaR methodologies and distributional assumptions could produce a materially different VaR. Moreover, VaR calculated for a one-day time horizon does not fully capture the market risk of positions that cannot be liquidated or offset with hedges within one day. Changes in VaR between reporting periods are generally due to changes in levels of exposure, volatilities and/or correlations among asset classes.

The models used by the Investment Manager to estimate risk on an ongoing basis are developed by analysing historical data and past market behaviour. All models that are based upon historical data have limitations should we experience abnormal market behaviour. In order to estimate risk in anomalous markets the Investment Manager performs stress tests on the Portfolio to see what returns could be in such markets. The risk models are evaluated for accuracy regularly by performing a Bias Stat test that indicates if the models are over or underestimating risk.

Volatility risk measures the sensitivity of bonds with embedded options should the implied volatility in the market change. This factor is most applicable to securities such as Mortgage-Backed Securities and Options. Specific risk is the estimate of price fluctuations that is associated with a bond specific to an individual name or market sector. This risk estimate is not correlated with the other factors and is hence not diversifiable.


As at 30 June 2016



(a) Market/price volatility risk cont.

Aggregate Value at Risk cont. The table below shows the VaR, stated in euro, of the Portfolio and benchmark, as well as the ratio between these two measures (also referred to as the relative VaR) for both start and end of the review period. Under normal market conditions the VaR number, in this case 0.92% as of 30 June 2016, indicates that we expect 99% of the daily returns of the Portfolio to be no worse than (0.92%).

Portfolio VaR 1-Day Min Average Max

30 June 2016 1.28% 0.90% 1.06% 1.35% 31 December 2015 1.03% 0.81% 0.96% 1.09% 30 June 2015 1.01% 0.80% 1.08% 1.52%

Benchmark VaR 1-Day Min Average MaxBofA Merrill Lynch European Currency High Yield Constrained Index (100% hedged in euro) 30 June 2016 0.97% 0.62% 0.84% 1.00%BofA Merrill Lynch European Currency High Yield Constrained Index (100% hedged in euro) 31 December 2015 0.79% 0.55% 0.69% 0.89%BofA Merrill Lynch European Currency High Yield Constrained Index (100% hedged in euro) 30 June 2015 0.66% 0.55% 0.68% 0.84%

VaR Ratio 1-Day

30 June 2016 1.32% 31 December 2015 1.30% 30 June 2015 1.53%

Leverage In accordance with ESMA Guidelines (CESR/10-788), the Company's leverage during the financial period is calculated as the gross sum of the notionals of all the derivative instruments used by the Company, with the sum expressed as a percentage of the Company's net assets. As a result of this calculation methodology, the Company's level of leverage as depicted by the figure below may be overstated and not representative of the actual exposure represented by the derivative positions in the Company. The leverage figure calculated takes the absolute sum of long and short derivative positions and sums them. There is no reduction for offsetting or partial offsetting positions or even exposures to positions that have been closed or partially closed. For example, if the Company opened a long Euro currency forward position against the British Pound for €1 million notional exposure (i.e., buying Euro, selling Pounds) and then later closed that position by executing the same trade in the offsetting direction (i.e., selling Euro, buying Pounds), these trades would count €2 million notional toward the sum despite that these positions have an economic exposure of €0.

Another example of how this figure may overstate leverage is in interest rate hedging. If the Company opens an interest rate swap position to pay on EUR rates fixed versus floating for €1 million notional and then re-hedges that interest rate position by receiving on EUR rates fixed versus floating for a €1 million notional, these trades would count €2 million notional toward the sum despite the fact that these positions have an economic exposure of €0.

AverageNew Flag Euro High Yield Fund plc 31.60%

Global Exposure Under the UCITS Regulations issued by the Central Bank, the Investment Manager is required to employ a risk management process which enables it to accurately monitor and manage the global exposure to the Fund from financial derivative instruments (“derivatives”). Derivative exposure including global exposure is controlled through the use of VaR methodology by the Investment Manager. The maximum VaR permitted for the Portfolio is that which equates to a portfolio relative VaR of twice that of an appropriate benchmark or reference portfolio that is representative of the investment objective of the Portfolio but which will not include derivatives. The Portfolio’s reference portfolio is the BofA Merrill Lynch European Currency High Yield Constrained Index (100% hedged in euro). The VaR will be calculated daily using a one-tailed 99% confidence interval, a holding period equivalent to one day and quarterly data set updates (or more frequent when market prices are subject to material changes), and the historical observation period will not be less than one year unless a shorter period is justified by a significant increase in price volatility.

(b) Foreign currency risk A portion of the Net Assets of the Portfolio are denominated in currencies other than euro (which is the Company’s functional currency), with the effect that the Statement of Financial Position and total return can be significantly affected favourably or unfavourably by currency movements. Therefore, the Company may be subject to foreign exchange risk.

The Company primarily utilises forward exchange contracts and purchased currency options with maturities of less than twelve months to hedge foreign-currency-denominated financial assets, liabilities, and firm commitments. Increases or decreases in the Company’s foreign-currency-denominated financial assets and liabilities are partially offset by gains and losses on the economic hedging instruments. Foreign currency risk is included in the calculation of VaR.


As at 30 June 2016



(c) Interest rate risk The Portfolio invests in the desired currencies at both fixed and floating rates of interest and may use interest rate swaps to generate the desired interest income profile and to manage the Portfolio’s exposure to interest rate fluctuations. The Portfolio is subject to interest risk estimation by Putnam’s factor risk modelling environment on a daily basis which is used to estimate the potential divergence in performance between the Portfolio and its benchmark. Interest rate risk is included in the calculation of VaR disclosed in note 7(a) above.

(d) Credit or default risk Credit risk is the risk that an issuer or counterparty will be unable to meet a commitment that it has entered into with the Company.

The Company’s maximum exposure to Credit Risk (not taking into account the value of any collateral or other security held) in the event that counterparties fail to perform their obligations as of 30 June 2016 in relation to each class of recognised financial assets, other than derivatives, is the carrying amount of those assets as indicated in the Statement of Financial Position. The Company may also enter into forward foreign exchange and credit default contracts. In addition to bearing the risk that the credit event will occur, the Company could be exposed to market risk due to unfavourable changes in interest and exchange rates or in the price of the underlying security or index, the possibility that the Company may be unable to close out its position at the same time or at the same price as if it had purchased comparable publicly traded securities or that the counterparty may default on its obligation to perform. Risks of loss may exceed amounts recognised on the Statement of Financial Position. The Company may enter into credit default swaps as either a buyer or seller of protection. The maximum potential amount of future payments the Company, as sellers of protection, may be required to make is equal to the notional amount of the relevant credit default swap contract at the Statement of Financial Position date of €Nil (31 December 2015: €Nil). As at 30 June 2016, there was no collateral or any other security held by the Company (31 December 2015: €Nil).

Concentrations of credit risk exist when changes in economic, industry or geographic factors affect counterparties or issuers whose aggregate credit exposure is significant in relation to the Company’s total credit exposure. The Company’s portfolio of financial instruments is broadly diversified along industry, product and geographic lines, and transactions are entered into with a range of counterparties, thereby seeking to mitigate any significant concentration of credit risk (though there can be no assurance in this respect).

Credit quality at 30 June 2016: Rating

% of Portfolio

Credit quality at 31 December 2015: Rating

% of Portfolio

Credit quality at 30 June 2015:Rating

% of Portfolio

AAA - AAA - AAA -

AA 2.27 AA 2.07 AA -

A - A - A -

BBB 8.30 BBB 5.14 Baa 1.11

BB 38.03 BB 44.72 Ba 35.74

B 38.69 B 40.67 B 50.10Caa - Caa - Caa 8.71Ca - Ca - Ca -CCC and below 2.25 CCC and below 4.96 CCC and below 0.05

Not rated 2.33 Not rated 2.44 Not rated 1.24

Cash and net other assets 8.13 Cash and net other assets - Cash and net other assets 3.05

Total 100.00 Total 100.00 Total 100.00

With respect to derivative financial instruments, credit risk arises from the potential failure of counterparties to meet their obligations under the contract or arrangement. Forward foreign currency contracts are used both in order to hedge unwanted currency risk as well as to achieve a specific currency exposure. They have the risk of currency exposure in the same way as a regular currency spot transaction. Forward foreign currency contracts are OTC traded and, therefore, have counterparty risk. Forward foreign currency contracts also carry roll risk, which is the risk that when a forward foreign currency contract expires, a new forward to replace the expired one cannot be put into place at the same cost or on the same hedge basis. This may occur due to changes in market liquidity or interest rates, resulting in a potential slippage or loss in the hedge position due to the contract expiration and roll.

Credit default swaps provide a measure of protection against defaults of debt issuers. The use of credit default swaps does not assure their use will be effective or will have the desired result. The Portfolio may either be the buyer or seller in a credit default swap transaction. The credit events are specified in the contract and are intended to identify the occurrence of a significant deterioration in the creditworthiness of the reference asset. On settlement, credit default products may be cash settled or involve the physical delivery of an obligation of the reference entity following a default. As a seller, the Portfolio will receive a fixed rate of income throughout the term of the contract, provided that there is no credit event. If a credit event occurs, the seller must pay the buyer the full notional value of the reference obligation.


As at 30 June 2016



(d) Credit or default risk cont. All brokerage transactions in listed securities are settled upon delivery to the Company’s Custodian. The risk of default is considered minimal, as delivery of securities sold is only made once the Company’s Custodian has received payment from the broker. Payment to a broker is made on a purchase once the securities have been received by the Company’s Custodian. The trade will fail if either party fails to meet its obligation. The Company is exposed to custody risk, which is the risk of loss of cash or securities held with the Custodian. In the event of the insolvency or bankruptcy of the Custodian, the Company will be treated as a general creditor of the Custodian in relation to cash holdings of the Company.

The clearing and depository operations for the Company’s security transactions are mainly concentrated with one custodian, namely State Street Custodial Services (Ireland) Limited. The long-term credit rating of the parent company of the Custodian, State Street Corporation is A1. At 30 June 2016, all cash and cash equivalents and investments are placed in custody with the Custodian. In addition, there are risks involved in dealing with custodians or brokers who settle trades with regard to the segregation of assets. It is expected that all securities and other assets deposited with custodians or brokers will be clearly identified as being assets of the Company; the Company should not, therefore, be exposed to a credit risk with respect to such parties. However, it may not always be possible to achieve this segregation, so the portfolio of the Company may experience increased exposure to credit risk associated with the applicable custodians or brokers. Bankruptcy or insolvency of the Custodian may cause the Company’s rights with respect to cash and securities held by State Street to be delayed or limited and the Company would be treated as a general creditor of that entity in respect of its cash balances.

(e) Liquidity risk The Company’s Prospectus provides for the daily creation and cancellation of shares and the Company is, therefore, exposed to the liquidity risk of meeting shareholder redemptions at any time. The Company has the ability to borrow in the short term to meet these obligations, although no such borrowings have arisen during the financial period.

The Company’s financial instruments include investments in OTC derivative contracts, which are not traded in an organised public market and which may be illiquid. As a result, the Company may not be able to promptly liquidate some of its investments in these instruments at an amount close to their fair value in order to meet its liquidity requirements or to respond to specific events such as deterioration in the credit worthiness of any particular issuer.

To minimise or mitigate the effect of liquidity risk where deemed necessary, the Investment Manager would either re-position the Portfolio or adjust the allocation to endeavour to obtain a higher concentration of more liquid and viable securities as detailed in the Company’s Prospectus.

Fair valuation hierarchy FRS 102 Section 11.27 on “Fair Value: Disclosure” requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. On 8 March 2016, the Financial Reporting Council issued Amendments to FRS 102 - Fair value hierarchy disclosures. The amendment is effective for accounting periods commencing 1 January 2017, however, the Board of Directors have agreed to early adopt this amendment in preparing these financial statements for the period ended 30 June 2016.

The fair value hierarchy of inputs is summarised in the three broad levels listed below.

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

• Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The level in the fair valuation hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.

The determination of what constitutes “observable” requires significant judgement by the Company. The Company considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

Investments, whose values are based on quoted market prices in active markets, and, therefore, classified within Level 1, include active listed equities, exchange traded derivatives, US government treasury bills and certain non-US sovereign obligations. The Company does not adjust the quoted price for these instruments.


As at 30 June 2016



Fair valuation hierarchy cont. Financial instruments that do not have quoted market prices or that trade in markets that are not considered to be active but are valued based on market information, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. These include investment-grade corporate bonds and certain non-US sovereign obligations, listed equities and over-the-counter derivatives. As Level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.

There were no Level 3 securities held during the financial period or financial year.

The following table analyses within the fair value hierarchy the Company’s financial assets and liabilities measured at fair value at 30 June 2016:

Fair Value € Level 1 Level 2 Level 3 TotalAssets

Investments in Securities

Corporate Bonds - 12,832,698 - 12,832,698

Total Investments in Securities - 12,832,698 - 12,832,698

Other Financial Instruments

Unrealised Appreciation on Forward Foreign Currency

Contracts - 89,426 - 89,426

Total Other Financial Instruments - 89,426 - 89,426

Liabilities Other Financial Instruments

Unrealised Depreciation on Forward Foreign Currency Contracts - (24,955) - (24,955)

Total Other Financial Instruments - (24,955) - (24,955)

The following table analyses within the fair value hierarchy the Company’s financial assets and liabilities measured at fair value at 31 December 2015:

Fair Value € Level 1 Level 2 Level 3 TotalAssets

Investments in Securities

Corporate Bonds - 13,531,078 - 13,531,078

Total Investments in Securities - 13,531,078 - 13,531,078

Other Financial Instruments

Unrealised Appreciation on Forward Foreign Currency

Contracts - 195,496 - 195,496

Total Other Financial Instruments - 195,496 - 195,496

Liabilities Other Financial Instruments

Unrealised Depreciation on Forward Foreign Currency Contracts - (20,451) - (20,451)

Total Other Financial Instruments - (20,451) - (20,451)

8. Comparative Statistics

30 June 2016 31 December 2015 30 June 2015

Total Net Asset Value at Last Traded Prices €14,113,161 €13,999,550 € 14,585,457

Class E Shares in Issue 14,096.378 13,819.565 14,105.426

Net Asset Value per Share €1,001.19 €1,013.02 €1,034.03

The value of shares may go down as well as up and is not guaranteed. Changes in rates of exchange may also cause the market value to fluctuate. Past performance is not necessarily an indication to future performance.


As at 30 June 2016


9. Exchange Rates

Vs. EUR Rate

30 June 2016Vs. EUR Rate

31 December 2015 Vs. EUR Rate30 June 2015

British Pound 0.8311 0.7370 0.7085

United States Dollar 1.1109 1.0863 1.1142

10. Soft Commissions and Transaction Costs

There were no soft commission transactions during the financial period ended 30 June 2016 (financial period ended 30 June 2015: €Nil).

11. Fees and Expenses

(a) Investment Manager Fees The Investment Manager is entitled to a fee of 0.65% per annum of the Net Asset Value of the Class E Shares and the Class S Shares, respectively and the Investment Manager is entitled to a fee of 1.35% per annum of the Net Asset Value attributable to Class M Shares. The investment management fees shall accrue daily and be payable monthly in arrears. The Investment Manager shall also be entitled to recover from the Company all out-of-pocket expenses suffered or incurred by the Investment Manager, which relate to the Company. For the financial period ended 30 June 2016 the Investment Manager earned €45,127 (financial period ended 30 June 2015: €47,785). As at 30 June 2016, €15,027 (31 December 2015: €7,372) was payable to the Investment Manager.

The Investment Manager may differentiate between shareholders of the Portfolio by waiving or reducing the management fee charged to certain shareholders. Any such waiver may be effected by way of a rebate to the relevant shareholder’s account. During the financial period ended 30 June 2016 the Investment Manager reimbursed €Nil (30 June 2015: €Nil).

(b) Custodian Fees The Company will pay the Custodian a fixed fee based on a transaction by transaction basis. Transaction fees billed and payable monthly also include the transaction fees charged by the sub custodians. They are based on the assumption that all transactions will be sent through a STP process. For the financial period ended 30 June 2016, State Street Custodial Services (Ireland) Limited earned €4,176 (financial period ended 30 June 2015: €4,031). As at 30 June 2016, €1,459 (31 December 2015: €1,102) was payable to the Custodian.

(c) Administration Fees The Company will pay the Administrator a fee of 8.0 basis points on the first US$1 billion of net assets, 7.0 basis points on the next US$500 million and 5.0 basis points on the balance over US$1.5 billion in net assets, subject to a per-annum minimum administration fee of $35,000. These fees are an annual charge, billed and payable monthly, based on daily net assets. For the financial period ended 30 June 2016, State Street Fund Services (Ireland) Limited earned €15,620 (30 June 2015: €15,557). As at 30 June 2016, €10,001 (31 December 2015: €7,850) was payable to the Administrator.

(d) Transfer Agency Fees The Administrator shall pay, out of its fees, the fees of the Transfer Agent. The Company shall pay out of its assets, the out-of-pocket expenses of the Transfer Agent.

(e) Distribution Fees The Distributor is entitled to be paid fees charged at normal commercial rates, together with any out-of-pocket expenses, out of the assets of the Portfolio. The Distributor may also be entitled to a sales charge in certain circumstances. Please see the Prospectus for the Company and the supplement for the Portfolio for details of the “Sales Charges”. There were no sales charges paid or accrued during the financial period. There were also no fees associated with the Distributor’s services paid during the financial period.

(f) Other Expenses In addition, the Portfolio pays certain other costs and expenses incurred in its operation, including, without limitation, taxes, expenses for legal, auditing, company secretarial and consulting services, promotional expenses, registration fees and fees and other expenses due to supervisory authorities in various jurisdictions, insurance, interest, brokerage costs and all professional fees and expenses incurred in connection therewith and the cost of the publication of the Net Asset Value per Share. The Portfolio also pays costs, charges and expenses (including the fees of the legal advisers) in relation to the preparation of the Prospectus and all other documents and matters relating to or concerning the offering and any other fees, charges and expenses on the creation and issue of the shares. The Portfolio also pays the costs of obtaining and maintaining a listing of the shares on any Recognised Exchange.


As at 30 June 2016


11. Fees and Expenses cont.

(g) Redemptions and Exchanges The Company may levy redemption charge of up to 0.50% of the Net Asset Value of the redemption proceeds of each class of shares where the aggregate redemption proceeds in relation to a redemption on a Dealing Day, net of all subscriptions on the relevant Dealing Day, exceeds 10% of the Net Asset Value of the Portfolio on that Dealing Day. This redemption charge will be paid into the assets of the Portfolio for the purpose of seeking to ensure that dealing costs are fairly apportioned between the shareholders in the Portfolio.

The Company may also levy a redemption charge of up to 1.00% of the Net Asset Value of the redemption proceeds of each Class of shares. This redemption charge will be paid to the distributors which may include Putnam Investments Limited, as Distributor.

A redemption charge was not applied for the financial period ended 30 June 2016 (30 June 2015: €Nil).

Anti-dilution levies as described in the Portfolio’s Prospectus may be applied.

(h) Sub-Investment Advisor The Investment Manager has entered into a sub-investment advisory agreement with The Putnam Advisory Company, LLC (“PAC”), an affiliate of Putnam Investments Limited. PAC has its principal office at One Post Office Square, Boston, Massachusetts 02109, and is a limited liability company organised under the laws of Delaware (the “Sub-Investment Advisor”).

The Sub-Investment Advisor is registered as an investment adviser under the United States Investment Advisers Act of 1940, as amended. The fees of the Sub-Investment Advisor, if any, are paid out of the fees of the Investment Manager.

(i) Director Fees The Director fees charged for the financial period ended 30 June 2016 were €10,000 (30 June 2015: €10,000).

12. Cash

Cash deposits of €1,156,485 (31 December 2015: €231,028) which represents 8.19% of Net Assets (31 December 2015: 1.65%) are held with State Street Custodial Services (Ireland) Limited. The Company does not have a bank overdraft facility.

13. Distributions

The following distributions were paid during the financial period ended 30 June 2016:

Declared 31 December 2015 Class Distribution per Unit Amount €

Class E 19.822 272,931

272,931

The following distributions were paid during the financial period ended 30 June 2015:

Declared 31 December 2014 Class Distribution per Unit Amount €

Class E 22.941 322,026

322,026

Up to 100% of the income of the Portfolio, after deduction of expenses, will be distributed to shareholders in accordance with their respective interests, subject to the approval of the Directors. Shareholders of a particular Class may elect to apply distributions to the purchase of additional shares of that Class as set out in the Application Form.

Distributions not applied to the purchase of further shares of the relevant Class will be paid by wire transfer to the account of the shareholder as disclosed in the Application Form or such other account as may be notified in writing to the Transfer Agent by the relevant shareholder. Distributions, if any, will be made semi-annually within four months of the end of the semi-annual and annual periods.

14. Significant Events during the financial Period

UCITS V is effective from 18 March 2016. The Company intends to amend its Prospectus later in the financial year to reflect this.


As at 30 June 2016


15. Subsequent Events

There have been no significant events to report since the period end.

16. Availability of Portfolio Information

Shareholders may obtain information about the Portfolio’s holdings from time to time by contacting the Investment Manager. Portfolio holdings information will only be provided for legitimate purposes as determined by the Investment Manager, and will be subject to a reasonable delay intended to protect the Portfolio. A Schedule of Significant Portfolio Movements is included in these financial statements. Shareholders may also request information about the Portfolio's management team and other relevant information relating to the Portfolio.

17. Approval of Financial Statements

The financial statements were approved by the Directors on 22 August 2016.

Schedule of Significant Portfolio Movements For the six months ended 30 June 2016


Largest cumulative purchases in excess of 1% of total purchases Cost € Largest cumulative sales in excess of 1% of total sales Proceeds €

ZF North America Capital Inc 2.75% 27/04/2023 406,875 Lloyds Bank PLC* (frn) 13.00% in perpetuity 492,618

Banco Bilbao Vizcaya Argentaria SA* (frn) 8.88% in perpetuity 200,000 Virgin Media Finance PLC 7.00% 15/04/2023 264,971

Virgin Media Finance PLC 4.50% 15/01/2025 182,550 Rexam PLC* (frn) 6.75% 29/06/2067 242,160

Banco Bilbao Vizcaya Argentaria SA* (frn) 6.75% in perpetuity 182,500 Enterprise Inns PLC 6.50% 06/12/2018 222,324

UBS Group AG* (frn) 6.88% in perpetuity 181,192 Altice Luxembourg SA 7.25% 15/05/2022 218,400

Gestamp Funding Luxembourg SA 3.50% 15/05/2023 180,000 Credit Agricole SA* (frn) 7.59% in perpetuity 148,429

Ziggo Bond Finance BV 4.63% 15/01/2025 179,550 Credit Agricole SA* (frn) 6.50% in perpetuity 143,745

BNP Paribas SA* (frn) 7.63% in perpetuity 178,971 Pizzaexpress Financing 1 PLC 8.63% 01/08/2022 135,855

Fiat Chrysler Finance Europe 4.75% 15/07/2022 161,394 Entertainment One Ltd 6.88% 15/12/2022 133,090

Dresdner Funding Trust I 8.15% 30/06/2031 145,747 Jaguar Land Rover Automotive PLC 5.00% 15/02/2022 128,239

Numericable-SFR SA 5.63% 15/05/2024 105,875 Areva SA 4.88% 23/09/2024 121,500

Play Topco SA 7.75% 28/02/2020 102,250 Auris Luxembourg II SA 8.00% 15/01/2023 110,000

WEPA Hygieneprodukte GmbH 3.75% 15/05/2024 100,000 Kloeckner Pentaplast of America Inc 7.13% 01/11/2020 106,000

Ardagh Packaging Finance PLC 6.75% 15/05/2024 100,000 Labeyrie Fine Foods SAS 5.63% 15/03/2021 101,125

Faurecia 3.63% 15/06/2023 100,000 Hanesbrands Finance Luxembourg SCA 3.50% 15/06/2024 101,000

Hanesbrands Finance Luxembourg SCA 3.50% 15/06/2024 100,000 3AB Optique Developpement SAS 5.63% 15/04/2019 91,000

Labeyrie Fine Foods SAS 5.63% 15/03/2021 99,750 KraussMaffei Group GmbH 8.75% 15/12/2020 85,440

Casino Guichard Perrachon SA 2.80% 05/08/2026 99,000 Royal Bank of Scotland Group* (frn) 7.64% in perpetuity 83,418

Europcar Groupe SA 5.75% 15/06/2022 96,750 Royal Bank of Scotland Group 5.50% in perpetuity 67,725

Casino Guichard Perrachon SA 2.33% 07/02/2025 96,500

Volkswagen International Finance NV* (frn) 2.50% in perpetuity 63,563

Rexam PLC* (frn) 6.75% 29/06/2067 55,124

* For floating rate notes (frn) the effective yield is that of 30 June 2016.

Important Information for the German Investors


1. J.P. Morgan AG, Taunus Turm, Taunustor 1, 60310, Frankfurt, Germany, has assumed the function of the Paying and Information Agent in the Federal Republic of Germany (the "Paying Agent") with respect to the Company.

2. Exchange and redemption requests for the Shares can be submitted to the Paying Agent. Upon request, the redemption proceeds,

distributions or other payments, if any, to the Shareholders are paid in Euro via the Paying Agent.

3. The following documents can be obtained free of charge, in electronic format and/or hard copy at the offices of the Paying Agent:

a) Prospectus;

b) Most recent Key Investor Information Documents;

c) Semi-Annual and Annual Reports;

d) Investment Management Agreement dated 30 September, 2002, as may be amended and restated from time to time, between the Company and the Investment Manager pursuant to which the Investment Manager was appointed to provide investment management and advisory services to the Company;

e) Amended and Restated Administration Agreement dated 3 February, 2015, as may be amended and restated from time to time, between the Company and the Administrator pursuant to which terms were updated from the original agreement dated 29 June, 2007 and effective 23:59 (Irish time) on 30 June 2007 between the Company and the Administrator pursuant to which the Administrator was appointed to provide administration and accounting services to the Company;

f) Amended and Restated Custodian Agreement dated 3 February, 2015, as may be amended and restated from time to time, between the Company and the Custodian pursuant to which terms were updated from the original agreement dated 29 June, 2007 and effective 23:59 (Irish time) on 30 June, 2007 between the Company and the Custodian pursuant to which the Custodian was appointed as custodian of the Company’s assets;

g) Amended and Novated Transfer Agency Agreement dated 29 June, 2007 and effective 23:59 (Irish time) on 30 June, 2007, as may be amended and restated from time to time, between the Company, Citi Fund Services (Ireland), Limited (and as transferred from Citi Fund Services (Ireland), Limited to Citibank Europe plc pursuant to a scheme of arrangement on 1 January 2012), J. P. Morgan Administration Services (Ireland) Limited and the Administrator amending and novating the transfer agency agreement dated 23 December, 2003 as amended by an amendment agreement dated 20 April, 2007 (the “Transfer Agency Agreement”) between the Company, Citi Fund Services (Ireland), Limited (and as transferred from Citi Fund Services (Ireland), Limited to Citibank Europe plc pursuant to a scheme of arrangement on 1 January 2012) and J. P. Morgan Administration Services (Ireland) Limited pursuant to which the Administrator was assigned the rights and obligations under the Transfer Agency Agreement; and

h) Distribution Agreement dated 21 November, 2006, as may be amended and restated from time to time, by and between the Company and the Distributor pursuant to which the Distributor has been appointed to act as Distributor to the Company.

Further shareholder information, if any, is available at the offices of the Paying Agent.

4. The Net Asset Value per Share, the purchase and redemption prices as well as the interim profit and the aggregate amount of income deemed to be received by the holder for the foreign investment units after 31 December 1993, or, the information required for taxation purposes for investors in the Federal Republic of Germany, respectively, are available on any Business Day at the offices of the Paying Agent.

5. The purchase and redemption prices and the interim profit of each Portfolio shall be published on www.putnam.com/ucits. Further information for investors, if any, shall be sent to shareholders by way of letters.

Putnam New Flag Euro High Yield Fund plc®

1 North Wall Quay

Dublin 1

Ireland

Tel: +353 (1)622-1837

Authorised and regulated

by the Central Bank of Ireland.

Putnam Investments Limited®

Cassini House

57-59 St. James’s Street

London SW1A1LD

United Kingdom

Tel: +44 (0)20-7907-8200

Authorised and regulated

by the Financial Conduct Authority.

302409 PNF03 8/16

www.putnam.com/ucits

This Web site is not intended for use by investors in certain jurisdictions. Please refer to the Prospectus.

Putnam Investments Limited®

Niederlassung Deutschland

Siemensstrasse 8

D-63263 Neu-lsenburg

Germany

Tel: +49 (0)6102 56059-0

For activities carried out in Germany,

the German branch of Putnam

Investments Limited is also subject to

limited regulatory supervision by the

German Federal Financial Supervisory

Authority (Bundesanstalt für

Finanzdienstleistungsaufsicht – BaFin).