putnam new flag euro high yield fund plc · 2016-04-26 · putnam new flag euro high yield fund plc...

Annual Report and Audited fi nancial statements for the fi nancial year ended 31 December 2015. 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

31 | 12 | 15Annual 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 7

Total Expense Ratio (TER) 8

Custodian’s Report 9

Independent Auditors’ Report 10

Schedule of Investments 12

Statement of Financial Postion 14

Statement of Comprehensive Income 15

Statement of Changes in Net Assets 16

Notes to the Financial Statements 17

Schedule of Signifi cant Portfolio Movements (Unaudited) 32

Important Information for German Investors (Unaudited) 33

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 Keith E. Thomas (United Kingdom) (resigned 30 June 2015) United Kingdom Wyndham Williams (Ireland) (Independent non-Executive Director) Sponsoring Irish Stock Exchange Broker Registered Office J&E Davy Citibank Europe plc Davy House 1 North Wall Quay 49 Dawson Street Dublin 1 Dublin 2 Ireland Ireland Legal Advisers as to Irish Law Independent Auditors Dillon Eustace Solicitors PricewaterhouseCoopers 33 Sir John Rogerson’s Quay Chartered Accountants and Registered Auditors Dublin 2 One Spencer Dock Ireland North Wall Quay Dublin 1 Administrator and Company Secretary Ireland State Street Fund Services (Ireland) Limited 78 Sir John Rogerson’s Quay Transfer Agent Dublin 2 Citibank Europe plc Ireland 1 North Wall Quay Dublin 1 Custodian Ireland State Street Custodial Services (Ireland) Limited 78 Sir John Rogerson’s Quay Dublin 2 Ireland

Report of the Directors

For the financial year ended 31 December 2015

4 Putnam New Flag Euro High Yield Fund plc

The Directors of Putnam New Flag Euro High Yield Fund plc (the “Company”) present the Annual Report and financial statements for the financial year ended 31 December 2015.

Statement of Directors’ Responsibilities The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable Irish Law and Generally Accepted Accounting Practice in Ireland including the accounting standards issued by the Financial Reporting Council of the UK, including Financial Reporting Standard 102 and promulgated by the Institute of Chartered Accountants in Ireland and Irish law. 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.

Review of Business and Future Development The Company was incorporated on 15 September 1999 and was authorised as an Undertaking for Collective Investment in Transferable Securities (“UCITS”) by the Central Bank.

The Company is an umbrella fund. As of the date of this report the Company has one Portfolio, Putnam New Flag Euro High Yield Fund, in respect of which three classes of shares are currently offered for investment, though not all classes are currently in issue. The Company’s principal activity is the collective investment in transferable securities of capital raised from the public.

The Directors have directed the Company's assets, liabilities and financial position at the financial year end so as to enable it to maintain its status as an investment company. A detailed review of the Company’s activities for the financial year ended 31 December 2015 is included in the Investment Manager’s Report.

A detailed comparative of NAV per share class is disclosed in note 6 to the financial statements. The Company will continue to pursue its investment objective as set out in the Prospectus. For information on future developments of the Company please refer to the Investment Manager’s Report.

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).

Directors Mr. Keith E. Thomas resigned from the Board of Directors on 30 June 2015.

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 year.

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.

Report of the Directors cont. For the financial year ended 31 December 2015


Corporate Governance Statement cont.

The Board of Directors adopted the Code as the Company’s corporate governance code effective from 14 November 2012. General Principles The Company is required to comply with the requirements of the Companies Act 2014 (the “Companies Act”), the UCITS Regulations, the Central Bank (Supervision & Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations, 2015, and the Central Bank UCITS notices and guidance notes, as applicable to the Company.

The European Communities (Directive 2006/46/EC) Regulations (S.I. 450 of 2009 and S.I. 83 of 2010) (the “Regulations”) requires the inclusion of a corporate governance statement in the annual report.

Although there is no specific statutory corporate governance code applicable to Irish collective investment schemes whose shares are admitted to trading on the Irish Stock Exchange, the Company is subject to corporate governance practices imposed by:

(i) The Companies Act 2014 which is available for inspection at the registered office of the Company; and may also be obtained at http://www.irishstatutebook.ie/home.html; (ii) The Articles of Association of the Company which are available for inspection at the registered office of the Company at 1 North Wall Quay, Dublin 1, Ireland and at the Companies Registration Office in Ireland;

(iii) The Central Bank in their UCITS Notices and Guidance Notes which can be obtained from the Central Bank’s website at: http://www.centralbank.ie/regulation/industry-sectors/funds/pages/default.aspx and are available for inspection at the registered office of the Company;

(iv) The Irish Stock Exchange (“ISE”) through the ISE Code of Listing Requirements and Procedures which can be obtained from the ISE’s website at: http://www.ise.ie/index.asp?loc ID=7&docID=-1; and

(v) The Business Plan for the Company and UCITS Notice 16 relating to code of conduct.

Internal Control and Risk Management Systems in Relation to Financial Reporting The Board is responsible for establishing and maintaining adequate internal control and risk management systems of the Company in relation to the financial reporting process. Such systems are designed to manage rather than eliminate the risk of error or fraud in achieving the Company’s financial reporting objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Board has procedures in place to ensure that all relevant accounting records are properly maintained and are readily available, including production of annual and half yearly financial statements. The Board has appointed the Administrator to maintain the accounting records of the Company. The Administrator is authorised and regulated by the Central Bank and must comply with the rules imposed by the Central Bank. The annual financial statements of the Company are produced by the Administrator and reviewed by the Investment Manager. They are required to be approved by the Board and the annual and half yearly financial statements of the Company are required to be filed with the Central Bank. The annual financial statements of the Company are required to be filed with the ISE.

During the period of these financial statements, the Board was responsible for the review and approval of the annual financial statements as set out in the Statement of Directors’ Responsibilities. The statutory financial statements are required to be audited by independent auditors who report annually to the Board on their findings. The Board monitors and evaluates the independent auditor’s performance, qualifications and independence. As part of its review procedures, the Board receives presentations from relevant parties including consideration of Irish accounting standards and their impact on the annual financial statements, and presentations and reports on the audit process. The Board evaluates and discusses significant accounting and reporting issues as the need arises.

Dealings with Shareholders The convening and conduct of shareholders’ meetings are governed by the Articles of Association of the Company and the Companies Act. Although the Directors may convene an extraordinary general meeting of the Company at any time, the Directors were required to convene the first annual general meeting of the Company within eighteen months of incorporation and fifteen months of the date of the previous annual general meeting thereafter, provided that an annual general meeting is held once in each financial year within nine months of the end of each accounting period of the Company.

At least twenty-one clear days’ notice of every annual general meeting and any meeting convened for the passing of a special resolution must be given to shareholders and fourteen clear days’ notice must be given in the case of any other general meeting, unless the auditors of the Company and all the shareholders of the Company entitled to attend and vote agree to shorter notice. Two shareholders present either in person or by proxy constitutes a quorum at a general meeting. The share capital of the Company is divided into different classes of shares and the Companies Act and the Articles of Association provide that the quorum for a general meeting convened to consider any alteration to the rights attached to any class of shares, is two or more shareholders present in person or by proxy, holding or representing by proxy at least one third of the issued shares of the relevant class.

Every holder of participating shares or subscriber shares present, in person or by proxy, who votes on a show of hands is entitled to one vote. On a poll, every holder of participating shares present, in person or by proxy, is entitled to one vote in respect of each share held by him, and every holder of subscriber shares is entitled to one vote in respect of all subscriber shares held by him. At any general meeting, a resolution put to the vote of the meeting is decided on a show of hands unless, before or upon the declaration of the result of the show of hands, a poll is demanded by the chairman of the general meeting, or by at least two members or shareholders present, in person or by proxy, having the right to vote at such meeting, or any holder or holders of participating shares present, in person or by proxy, representing at least one tenth of the shares in issue having the right to vote at such meeting.

Shareholders may resolve to sanction an ordinary resolution or special resolution at a shareholders’ meeting. Alternatively, a resolution in writing signed by all of the participating shareholders and holders of subscriber shares for the time being entitled to attend and vote on such resolution at a general meeting of the Company, will be valid and effective for all purposes as if the resolution had been passed at a general meeting of the Company duly convened and held.

Report of the Directors cont.



Corporate Governance Statement cont.

Dealings with Shareholders cont. An ordinary resolution of the Company (or of the shareholders of a particular fund or class of shares) requires a simple majority of the votes cast by the shareholders voting, in person or by proxy, at the meeting at which the resolution is proposed. A special resolution of the Company (or of the shareholders of a particular fund or class of shares) requires a majority of not less than 75% of shareholders present, in person or by proxy, and voting in general meeting in order to pass a special resolution including a resolution to amend the Articles of Association Board Composition and Activities In accordance with the Companies Act and the Articles of Association, unless otherwise determined by an ordinary resolution of the Company in general meeting, the number of Directors may not be less than two. Currently the Board is comprised of five Directors, two of whom are independent.

The business of the Company is managed by the Directors, who exercise all such powers of the Company as are not by the Companies Act or by the Articles of Association of the Company required to be exercised by the Company in general meeting.

The Board is responsible for the Company’s overall direction and strategy and to this end it reserves the decision making power on issues such as the determination of medium and long term goals, review of managerial performance, organisational structure and capital needs and commitments to achieve the Company’s strategic goals. To achieve these responsibilities, the Board meets on at least a quarterly basis to review the operations of the Company, address matters of strategic importance and to receive reports from the Administrator, Custodian and the Investment Manager. However, a Director may, and the Company Secretary on the requisition of a Director will, at any time summon a meeting of the Directors and ad hoc meetings in addition to the quarterly convened meetings as required.

Questions arising at any meeting of the Directors are determined by a majority of votes. In the case of an equality of votes, the Chairman of the meeting at which the show of hands takes place or at which the poll is demanded shall be entitled to a second or casting vote. The quorum necessary for the transaction of business at a meeting of the Directors is two. 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 period to which the report relates complied with the obligations that are prescribed by Regulation 41(1).

On behalf of the Board:

David Dillon (Director)

Wyndham Williams (Director)

Date: 14 April 2016

Investment Manager’s Reports For the financial year ended 31 December 2015


Market Highlights and Performance For the 12 months ended 31 December 2015, the Portfolio’s Class E shares returned 2.05% on a net-of-fees basis and outpaced the 1.49% gain of the BofA Merrill Lynch European Currency High Yield Constrained Index (hedged in euros).

Performance as of 31 December 2015 at Net Asset Value ("NAV")

Performance Results (%) YTD 3 Year

Class ESince

Inception

Putnam New Flag Euro High Yield Fund

Net of fees

Class E 2.05% 4.47% 6.31%BofA Merrill Lynch European Currency High Yield Constrained Index (100% hedged in euro)* 1.49% 5.61% 6.25%

Performance is the change in NAV per share and assumes reinvestment of all distributions, as outlined in Note 13, back into the Fund.

The macroeconomic backdrop Despite many crosswinds, the story in Europe continued to be one of slow and steady economic growth. There were many crosscurrents, and these often seemed to suggest a change of course, but then an offsetting development would occur. For example, weakness in China hampered export prospects, but domestic demand, especially in Germany, seemed to be picking up. The biggest surprise on the data front was the December inflation report, which was lower than expectations and generated renewed concern about deflationary risks in Europe. We think the surprise was more a reflection of unusually warm weather in December, which forced retailers into some unusual discounting, and we continue to believe that risks of outright deflation in Europe appear low.

The European high-yield market The financial year was dominated by declining commodity prices, concerns about slowing growth in China and other emerging markets, and monetary policy changes. Company-specific developments at Valeant Pharmaceuticals, Sprint, Volkswagen, Abengoa and Banco Novo pressured the market. As the financial year came to a close, the liquidity premium associated with the asset class increased significantly. The European high-yield market outperformed its counterpart in the United States due to less exposure to energy and commodities, along with accommodative monetary policy from the European Central Bank (the “ECB”). In addition, the supply-and-demand backdrop was generally supportive, as new issuance for the financial year was limited to €75 billion.

Portfolio positioning At the sector/industry level, security selection in financials, overall positioning in communication services, an overweight in consumer staples, and avoiding the energy sector, contributed the most versus the benchmark. On the downside, selections in consumer cyclicals, technology and basic materials, as well as not owning any utilities, worked against the Portfolio's relative return.

* The BofA Merrill Lynch European Currency High Yield Constrained Index, 100% hedged in euro (“HPCO”), is an unmanaged list of lower-rated, higher-yielding European corporate bonds with all currency exposure hedged back into euro. It is not possible to invest directly in an index.

At the issuer level, not holding benchmark names such as Portugal Telecom, Petroleo Brasileiro and Novo Banco, aided relative performance. Overweight positions in Lloyds TSB Group and Royal Bank of Scotland also proved beneficial. Conversely, the largest individual detractors included stakes in Valeant Pharmaceuticals and Gates Global, as well as not owning Gazprom.

Outlook

We remain constructive on the European high-yield market, as solid fundamentals and continued accommodative monetary policy by the ECB may support slow and steady growth in the region. Banks and other financial services providers appear to be improving while the weak euro has helped manufacturing. Commodity-related credits still present concern because the outlook for oil prices remained unclear as of financial year end.

In light of increased market volatility, as well as reduced new issuance, we plan to maintain a slightly higher-than-normal cash allocation to act as a buffer against illiquidity or detrimental price action. We continue to closely monitor the primary and secondary markets for relative value opportunities. As of financial year end, we remained focused on the financials and telecommunications sectors.

Putnam Investments Limited Date: February 2016

Total Expense Ratio (TER)*



The Average Total Expense Ratio table shows the actual expenses incurred by each share class of the Portfolio during the financial year ended 31 December 2015, expressed as a percentage of the average NAV of each share class for the corresponding financial year.

Class Expense as a % of avg. NAV of Class

Class E 2.14% * 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

period in question as a percentage of the average net assets of the Portfolio for the financial year.

Custodian’s Report



Report of the Custodian to the Shareholders

We have enquired into the conduct of Putnam New Flag Euro High Yield Fund plc (the “Company”) for the financial year ended 31 December 2015, in our capacity as Custodian to the Company.

This report including the opinion has been prepared for and solely for the shareholders in the Company as a body, in accordance with the Central Bank’s UCITS Notice 4, and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown.

Responsibilities of the Custodian

Our duties and responsibilities are outlined in the Central Bank’s UCITS Notice 4. One of those duties is to enquire into the conduct of the Company in each annual accounting period and report thereon to the shareholders.

Our report shall state whether, in our opinion, the Company has been managed in that period in accordance with the provisions of the Company’s Memorandum and Articles of Association and the UCITS Regulations. It is the overall responsibility of the Company to comply with these provisions. If the Company has not so complied, we as Custodian must state why this is the case and outline the steps which we have taken to rectify the situation.

Basis of Custodian Opinion

The Custodian conducts such reviews as it, in its reasonable opinion, considers necessary in order to comply with its duties as outlined in UCITS Notice 4 and to ensure that, in all material respects, the Company has been managed (i) in accordance with the limitations imposed on its investment and borrowing powers by the provisions of its constitutional documentation and the appropriate regulations and (ii) otherwise in accordance with the Company’s constitutional documentation and the appropriate regulations.

Opinion

In our opinion, the Company has been managed during the financial year, in all material respects:

(i) in accordance with the limitations imposed on the investment and borrowing powers of the Company by the Memorandum and Articles of Association and by 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.

(ii) otherwise in accordance with the provisions of the Memorandum and Articles of Association and the Regulations.

State Street Custodial Services (Ireland) Limited 78 Sir John Rogerson’s Quay Dublin 2 Ireland Date: 14 April 2016

Independent Auditors’ Report



Independent auditors’ report to the members of Putnam New Flag Euro High Yield Fund plc

Report on the financial statements

Our opinion

In our opinion, Putnam New Flag Euro High Yield Fund plc financial statements (the “financial statements”):

give a true and fair view of the company’s assets, liabilities and financial position as at 31 December 2015 and of its results for the financial year then ended;

have been properly prepared in accordance with Generally Accepted Accounting Practice in Ireland; and

have been properly prepared in accordance with the requirements of the Companies Act 2014 and the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (as amended).

What we have audited

The financial statements comprise:

the statement of financial position as at 31 December 2015;

the statement of comprehensive income for the financial year then ended;

the statement of changes in net assets for the financial year then ended;

the portfolio of investments for the company as at 31 December 2015; and

the notes to the financial statements for the company which include a summary of significant accounting policies and other explanatory information.

The financial reporting framework that has been applied in the preparation of the financial statements is Irish law and accounting standards issued by the Financial Reporting Council and promulgated by the Institute of Chartered Accountants in Ireland (Generally Accepted Accounting Practice in Ireland).

In applying the financial reporting framework, the directors have made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events.

Matters on which we are required to report by the Companies Act 2014

We have obtained all the information and explanations which we consider necessary for the purposes of our audit.

In our opinion the accounting records of the company were sufficient to permit the financial statements to be readily and properly audited.

The financial statements are in agreement with the accounting records.

In our opinion the information given in the Directors' Report is consistent with the financial statements.

In our opinion, based on the work undertaken in the course of our audit of the financial statements, the description of the main features of the internal control and risk management systems in relation to the financial reporting process included in the Corporate Governance Statement, is consistent with the financial statements and has been prepared in

accordance with section 1373(2)(c) of the Companies Act 2014.

Based on our knowledge and understanding of the company and its environment, obtained in the course of our audit of the financial statements, we have not identified material misstatements in the description of the main features of the internal control and risk management systems in relation to the financial reporting process included in the Corporate Governance Statement.

In our opinion, based on the work undertaken during the course of our audit of the financial statements, the information required by section 1373 (2)(a),(b),(e) and (f) is contained in the Corporate Governance Statement.

Matter on which we are required to report by exception

Directors’ remuneration and transactions

Under the Companies Act 2014 we are required to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions specified by sections 305 to 312 of that Act have not been made. We have no exceptions to report arising from this responsibility.

Responsibilities for the financial statements and the audit

Our responsibilities and those of the directors

As explained more fully in the Statement of Directors’ Responsibilities set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with Irish law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with section 391 of the Companies Act 2014 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What an audit of financial statements involves

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:

whether the accounting policies are appropriate to the company’s circumstances and have been consistently applied and adequately disclosed;

the reasonableness of significant accounting estimates made by the directors; and

the overall presentation of the financial statements.

We primarily focus our work in these areas by assessing the directors’ judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements.

Independent Auditors’ Report cont.



What an audit of financial statements involves cont.

We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.

In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Siobhàn Collier for and on behalf of PricewaterhouseCoopers Chartered Accountants and Statutory Audit Firm Dublin Date: 14 April 2016

Schedule of Investments As at 31 December 2015

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


EURO BONDS (31 December 2014: 60.43%) Fixed & Floating Interest Bonds

NominalHolding

CouponRate %

MaturityDate

FairValue

% ofNAV

3AB Optique Developpement SAS 100,000 5.63 15/04/2019 € 90,500 0.65Alliance Data Systems Corp 335,000 5.25 15/11/2023 333,479 2.38Altice Financing SA 100,000 6.50 15/01/2022 105,015 0.75Altice Luxembourg SA 400,000 7.25 15/05/2022 375,660 2.67Areva SA 150,000 4.88 23/09/2024 151,425 1.08Auris Luxembourg II SA 100,000 8.00 15/01/2023 109,374 0.78Banco Santander SA* (frn) 100,000 6.25 in perpetuity 94,800 0.68Barclays PLC* (frn) 200,000 6.50 in perpetuity 203,075 1.45Belden Inc 110,000 5.50 15/04/2023 111,650 0.80Cemex SAB de CV 325,000 4.38 05/03/2023 295,831 2.11Cirsa Funding Luxembourg SA 260,000 5.88 15/05/2023 247,650 1.77Credit Agricole SA* (frn) 240,000 6.50 in perpetuity 247,200 1.77Douglas GmbH 115,000 6.25 15/07/2022 121,124 0.87Europcar Groupe SA 140,000 5.75 15/06/2022 145,915 1.04Fiat Chrysler Finance Europe 100,000 6.75 14/10/2019 113,077 0.81Fiat Chrysler Finance North America Inc 10,000 5.63 12/06/2017 10,511 0.08Findus PIK SCA 109,228 8.25 01/08/2019 108,818 0.78Gates Global LLC 200,000 5.75 15/07/2022 144,394 1.03Holding Medi-Partenaires SAS 100,000 7.00 15/05/2020 106,611 0.76HomeVi SAS 135,000 6.88 15/08/2021 142,903 1.02Huntsman International LLC 100,000 5.13 15/04/2021 93,347 0.67Ineos Finance PLC 140,000 4.00 01/05/2023 134,218 0.96Infor US Inc 225,000 5.75 15/05/2022 202,388 1.45Kloeckner Pentaplast of America Inc 100,000 7.13 01/11/2020 102,545 0.73Koninklijke KPN NV* (frn) 405,000 6.13 in perpetuity 431,173 3.08KraussMaffei Group GmbH 80,000 8.75 15/12/2020 86,200 0.62LGE HoldCo VI BV 145,000 7.13 15/05/2024 157,325 1.12Matterhorn Telecom SA 100,000 3.88 01/05/2022 91,370 0.65Novafives SAS 100,000 4.50 30/06/2021 85,022 0.61Numericable-SFR SAS 200,000 5.63 15/05/2024 203,250 1.45OTE PLC 140,000 7.88 07/02/2018 150,045 1.07Picard Groupe SAS* (frn) 200,000 4.25 01/08/2019 200,744 1.43Play Finance 1 SA 100,000 6.50 01/08/2019 104,500 0.75Play Topco SA 105,000 7.75 28/02/2020 107,625 0.77Rexam PLC* (frn) 185,000 6.75 29/06/2067 186,604 1.33Royal Bank of Scotland Group 70,000 5.50 in perpetuity 69,956 0.50Sealed Air Corp 100,000 4.50 15/09/2023 103,753 0.74Societe Generale SA* (frn) 155,000 6.75 in perpetuity 158,781 1.13Synlab Bondco PLC 100,000 6.25 01/07/2022 104,230 0.74Techem Energy Metering Service GmbH & Co KG 260,000 7.88 01/10/2020 279,669 2.00Telefonica Europe BV* (frn) 200,000 6.50 in perpetuity 210,812 1.51Telenet Finance V Luxembourg SCA 350,000 6.75 15/08/2024 383,906 2.73Thomas Cook Finance PLC 125,000 6.75 15/06/2021 130,938 0.94Trionista TopCo GmbH 265,000 6.88 30/04/2021 280,563 2.00Unitymedia GmbH 435,000 3.75 15/01/2027 375,568 2.68Unitymedia Hessen GmbH & Co KG 100,000 6.25 15/01/2029 109,925 0.79UPC Holding BV 205,000 6.75 15/03/2023 221,656 1.58Valeant Pharmaceuticals International Inc 265,000 4.50 15/05/2023 231,319 1.65Wind Acquisition Finance SA 410,000 7.00 23/04/2021 406,925 2.91ZF North America Capital Inc 100,000 2.75 27/04/2023 95,930 0.69Ziggo Bond Finance BV 100,000 4.63 15/01/2025 93,125 0.67Total Euro Fixed & Floating Interest Bonds € 8,852,424 63.23 BRITISH POUND BONDS (31 December 2014: 27.62%) Fixed & Floating Interest Bonds

NominalHolding

CouponRate %

MaturityDate

FairValue

% ofNAV

Bakkavor Finance 2 PLC 110,000 8.75 15/06/2020 € 162,383 1.16Credit Agricole SA* (frn) 100,000 7.59 in perpetuity 147,723 1.06Enterprise Inns PLC 165,000 6.50 06/12/2018 239,824 1.71Entertainment One Ltd 100,000 6.88 15/12/2022 135,681 0.97Jaguar Land Rover Automotive PLC 100,000 5.00 15/02/2022 140,430 1.00Lloyds Bank PLC* (frn) 235,000 13.00 in perpetuity 553,225 3.95

Schedule of Investments cont. As at 31 December 2015



BRITISH POUND BONDS (31 December 2014: 27.62%) cont. Fixed & Floating Interest Bonds

NominalHolding

CouponRate %

MaturityDate

FairValue

% ofNAV

Moy Park BondCo PLC 125,000 6.25 29/05/2021 € 173,580 1.24Phosphorus Holdco PLC† 225,000 10.00 01/04/2019 12,211 0.09Pizzaexpress Financing 1 PLC 100,000 8.63 01/08/2022 142,320 1.02Pizzaexpress Financing 2 PLC 100,000 6.63 01/08/2021 139,499 1.00Priory Group No 3 PLC 186,722 7.00 15/02/2018 259,679 1.85Societe Generale SA* (frn) 295,000 8.88 in perpetuity 442,285 3.15Stonegate Pub Co Financing PLC 100,000 5.75 15/04/2019 138,394 0.99Virgin Media Finance PLC 200,000 7.00 15/04/2023 286,558 2.05Virgin Media Secured Finance PLC 90,000 6.00 15/04/2021 126,704 0.91Total British Pound Fixed & Floating Interest Bonds € 3,100,496 22.15 UNITED STATES DOLLAR BONDS Fixed & Floating Interest Bonds

NominalHolding

CouponRate %

MaturityDate

FairValue

% ofNAV

Altice Financing SA 200,000 7.88 15/12/2019 € 191,936 1.37Commerzbank AG 215,000 8.13 19/09/2023 227,897 1.63Credit Suisse Group AG* (frn) 205,000 6.25 in perpetuity 189,121 1.35Dresdner Funding Trust I 270,000 8.15 30/06/2031 306,059 2.19ING Groep NV* (frn) 200,000 6.00 in perpetuity 185,032 1.32Inmarsat Finance PLC 100,000 4.88 15/05/2022 89,984 0.64Standard Chartered PLC* (frn) 100,000 7.01 in perpetuity 99,305 0.71Royal Bank of Scotland Group* (frn) 200,000 7.50 in perpetuity 192,166 1.37Royal Bank of Scotland Group* (frn) 100,000 7.64 in perpetuity 96,658 0.69Total United States Dollar Fixed & Floating Interest Bonds € 1,578,158 11.27 Total Value of Investments excluding Financial Derivative Instruments € 13,531,078 96.65 * For floating rate notes (frn) the effective yield is that of 31 December 2015. † Position in default since December 2014. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

Currency Sold

Amount Sold

Currency Bought

ForwardRate

MaturityDate Counterparty

UnrealisedAppreciation/

(Depreciation)% ofNAV

EUR 172,707 GBP 0.738 16/03/2016 Credit Suisse International € (7,453) (0.05)EUR 368,437 USD 1.088 16/03/2016 Westpac Banking Corporation (7,858) (0.06)EUR 246,260 USD 1.088 16/03/2016 State Street Bank & Trust Company (5,138) (0.04)GBP 100,000 EUR 0.738 16/03/2016 Bank of America, N.A. 3,090 0.02GBP 158,200 EUR 0.738 16/03/2016 UBS AG 9,617 0.07GBP 275,200 EUR 0.738 16/03/2016 Deutsche Bank AG 16,706 0.12GBP 276,200 EUR 0.738 16/03/2016 Westpac Banking Corporation 16,895 0.12GBP 375,500 EUR 0.738 16/03/2016 Citibank N.A. 22,884 0.16GBP 373,600 EUR 0.738 16/03/2016 JPMorgan Chase Bank 22,904 0.16GBP 439,900 EUR 0.738 16/03/2016 State Street Bank & Trust Company 26,693 0.20GBP 441,600 EUR 0.738 16/03/2016 HSBC Bank USA 26,906 0.19USD 500 EUR 1.088 16/03/2016 Royal Bank of Scotland Plc (2) (0.00)USD 62,400 EUR 1.088 16/03/2016 Barclays Bank Plc Wholesale 1,217 0.01USD 310,200 EUR 1.088 16/03/2016 Credit Suisse International 6,040 0.05USD 200,000 EUR 1.088 16/03/2016 UBS AG 3,964 0.03USD 216,100 EUR 1.088 16/03/2016 HSBC Bank USA 4,245 0.03USD 281,200 EUR 1.088 16/03/2016 Citibank N.A. 5,555 0.04USD 362,600 EUR 1.088 16/03/2016 Deutsche Bank AG 7,205 0.05USD 1,086,000 EUR 1.088 16/03/2016 JPMorgan Chase Bank 21,575 0.15Unrealised Appreciation on Forward Foreign Currency Exchange Contracts € 195,496 1.40Unrealised Depreciation on Forward Foreign Currency Exchange Contracts € (20,451) (0.15)Net Unrealised Appreciation on Forward Foreign Currency Exchange Contracts € 175,045 1.25Total Financial Assets at Fair Value through Profit or Loss € 13,726,574 98.05Total Financial Liabilities at Fair Value through Profit or Loss € (20,451) (0.15) Analysis of Total Assets

% ofTotal Assets

(a) Transferable securities admitted to an official stock exchange listing 89.99(b) Transferable securities dealt in another regulated market 5.34(c) OTC financial derivative instruments 1.38(d) Other assets 3.29Total Assets 100.00

Statement of Financial Position



Notes

As at31 December 2015

€

As at31 December 2014

€

Current Assets

Financial Assets at Fair Value through Profit or Loss 2 13,726,574 14,174,311

Interest Income Receivable 2 236,259 319,809

Cash 12 231,028 331,404

Total Assets 14,193,861 14,825,524

Creditors (amounts falling due within one financial year)

Financial Liabilities at Fair Value through Profit or Loss 2 20,451 151,139

Expenses Payable 11 173,860 137,450

Liabilities 194,311 288,589

Net Assets Attributable to Holders of Redeemable Participating Shares at last

traded market value 6 13,999,550 14,536,935 The Financial Statements were approved by the Board of Directors of Putnam New Flag Euro High Yield Fund plc and signed on their behalf by:

David Dillon (Director):

Wyndham Williams (Director):

Date: 14 April 2016

Statement of Comprehensive Income



Notes

For the financial year ended

31 December 2015€


31 December 2014€

Operating Income

Interest Income 2 846,732 928,149

Deposit Interest 2 9,950 8,154

Miscellaneous Income 4,065 18,943

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

or Loss 2 (22,314) (185,178)

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

or Loss 2 (218,904) (246,784)

619,529 523,284

Operating Expenses

Investment Management Fees 11

- Class E 94,605 97,240

Other Expenses 11 224,728 224,387

319,333 321,627

Operating Profit 300,196 201,657

Finance Costs

Bank Interest Expense (966) -

Distributions to Holders of Redeemable Participating Shares 13 (613,359) (745,598)

Withholding tax (1,415) (2,312)

Loss for the Financial Year (315,544) (546,253)

Decrease in Net Assets Attributable to Redeemable Participating Shareholders (315,544) (546,253) 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.

Statement of Changes in Net Assets




31 December 2015€


31 December 2014€

Net Assets Attributable to Holders of Redeemable Participating Shares at the beginning of financial year 14,536,935 14,692,654Decrease in Net Assets Attributable to Holders of Redeemable Participating Shares

from Profit and Loss Account (315,544) (546,253)

Proceeds from Redeemable Participating Shares issued - -

Cost of Redeemable Participating Shares redeemed (803,929) (295,132)

Dividends reinvested 582,088 685,666

(Decrease) /increase resulting from Capital share transactions (221,841) 390,534

Total Decrease in Net Assets Attributable to Holders of Redeemable

Participating Shares (537,385) (155,719)

Net Assets Attributable to Holders of Redeemable Participating Shares at the end of financial year 13,999,550 14,536,935

Notes to the Financial Statements As at 31 December 2015


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 and Class M Shares are 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 31 December 2015, 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 financial statements have been prepared on a going concern basis and in accordance with FRS 102; the Financial Reporting Standard applicable in the UK and Republic of Ireland (“FRS 102”), the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011, as amended (the “UCITS Regulations”), and Irish Statute comprising the Companies Act 2014. Accounting standards generally accepted in Ireland in preparing financial statements giving a true and fair view are those promulgated by the Institute of Chartered Accountants in Ireland and issued by the Financial Reporting Council (“FRC”). Prior to 1 January 2015 the financial statements were prepared in accordance with previous Irish GAAP. In preparing the financial statements for the financial year ended 31 December 2015, the Directors have applied FRS 102 for the first time and these financial statements comply with that standard.

The Company has continued to avail of the exemption available to open-ended investment funds under FRS 102 and is not presenting a cash flow statement. The format and wording of certain line items on the primary statements contains departures from the Guidelines under Schedule 2, Part 1 of the Companies Act 2014 to reflect this Company’s structure as an Investment Fund. All references to net assets throughout the documents refers to net assets attributable to holders of Redeemable Participating Shares unless otherwise stated.

Transition to the new accounting framework During the financial year, the Directors resolved to adopt and prepare the financial statements in accordance with Financial Reporting Standard ("FRS") 102; the Financial Reporting Standard applicable in the UK and Republic of Ireland ("FRS 102").

The date of transition to the new accounting framework is 1 January 2014 (i.e. the earliest period for which the Company presents full comparative information) and accordingly the comparative amounts presented for the financial year ended 31 December 2014 is based on the Company’s financial statements for that year after adjustment for the transition to FRS 102.

As part of the transition to FRS 102 the Profit and Loss and Balance Sheet have been renamed to Statement of Comprehensive Income and Statement of Financial Position, respectively.

Changes to the Company’s accounting policies have been made as required, in accordance with the transitional provisions in the respective FRS. In effect, the accounting policies applied in preparing these financials under FRS 102 are consistent with the accounting policies applied in preparing the prior year financial statements under the previous accounting framework.

On initial application of FRS 102 in accounting for its financial instruments a reporting entity is required to apply either a) the full requirements of FRS 102 relating to Basic Financial Instruments and Other Financial Instruments Issues, b) the recognition and measurement provisions of the International Financial Reporting Standard (“IFRS”), IAS 39 Financial Instruments: Recognition and Measurement (“IAS 39”) and only the disclosure requirements of FRS 102 relating to Basic Financial Instruments and Other Financial Instruments. The Company has chosen to implement the recognition and measurement provisions of IAS 39 and only the disclosure requirements of FRS 102 relating to Basic Financial Instruments and Other Financial Instruments.

Estimates and judgements The preparation of financial statements in conformity with FRS 102 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.

Notes to the Financial Statements cont.

As at 31 December 2015


2. Summary of Significant Accounting Policies cont.

(a) Statement of Compliance cont.

Valuation of Investments 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.

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.

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.

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.





(b) Financial Instruments cont.

(iii) Subsequent Measurement cont. 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.

(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 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 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 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.





(e) Interest Income and Expense cont. 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 year.

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

(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 year 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 year 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 year 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 year ended 31 December 2015 €Nil was paid to the Company (December 2014: €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 year are disclosed in note 10.




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 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 US 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 US 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 US tax authorities and therefore be subject to a 30% withholding on its US source income and any proceeds from the sale of property that could give rise to US source income. Shareholders are encouraged to consult with their own tax advisors regarding the possible implications of FATCA on their interest in the Company.

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 “Management Fees” in the Statement of Comprehensive Income. During the financial year ended 31 December 2015 the Company incurred a management fee of €94,605 (31 December 2014: €97,240). As at 31 December 2015, €7,372 (31 December 2014: €7,653) was payable to the Investment Manager. Refer to note 11(a) for management fee reimbursals during the financial year.

Transactions with key management personnel Directors’ fees are disclosed 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 year ended 31 December 2015 the Company incurred a fee of €11,359 (31 December 2014: €9,525) 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 year, 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 31 December 2015:

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

One €13,960,484 99.72% 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 2014:

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

One €13,681,166 94.11% 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 31 December 2015 (31 December 2014: 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.

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.

December 2015 December 2014 Last Traded Price Last Traded Price

Class E

Net Assets 13,999,550 14,536,935

Shares in Issue 13,819.565 14,037.149

Net Asset Value per Share €1,013.02 €1,035.60

As a result of the differing fee structure for each class of shares as outlined in note 11, the Net Asset Value for each class will differ. Income equalisation arrangements are applied in the case of subscriptions to and redemptions from the Portfolio.




6. Share Capital and Redeemable Participating Shares cont.

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

Share Transactions Class E

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 year ended 31 December 2014:

Share Transactions Class E

Balance at the beginning of financial year 13,676.996

Issued during financial year 646.153

Reinvested during financial year -

Redeemed during financial year (286.000)

Balance at end of financial year 14,037.149

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 period to which these financial statements relate.

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 31 December 2015, is equivalent to the fair values of investments held, as reflected in the Schedule of Investments €13,726,574 (€14,174,311 for 31 December 2014). There were no credit default swap contracts held at 31 December 2015 and 31 December 2014.




7. Risks Associated with Financial Instruments cont.

(a) Market/price volatility risk cont.

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.

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 31 December 2015, 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

2015 1.03% 0.81% 0.96% 1.09% 2014 0.92% 0.80% 1.12% 1.52%

Benchmark VaR 1-Day Min Average Max

BofA Merrill Lynch European Currency High Yield Constrained Index (100% hedged in euro) 2015 0.79% 0.55% 0.69% 0.89%

BofA Merrill Lynch European Currency High Yield Constrained Index (100% hedged in euro) 2014 0.64% 0.58% 0.72% 0.84%

VaR Ratio 1-Day

2015 1.30% 2014 1.44%

Leverage In accordance with ESMA Guidelines (CESR/10-788), the Company's leverage during the financial year 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.





(a) Market/price volatility risk cont.

Leverage cont. 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 44%

Global Exposure Under the UCITS Notices 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.

The following sets out the total exposure to foreign currency risk of the Portfolio as at 31 December 2015 and 31 December 2014:

Monetary Assets/(Liabilities)

31 December 2015Non-Monetary

Assets/(Liabilities) Monetary Assets/(Liabilities)

31 December 2014Non-Monetary

Assets/(Liabilities)British Pound 35,556 - 25,949 -

United States Dollar (17,161) - 6,794 -Total 18,395 - 32,743 -

(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 modeling 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 31 December 2015 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 2014: €Nil). As at 31 December 2015, there was no collateral or any other security held by the Company (31 December 2014: €Nil).





(d) Credit or default risk cont. 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 31 December 2015: Rating % of Portfolio

Credit quality at 31 December 2014: Rating % of Portfolio

AAA - AAA -

AA 2.07 AA -

A - A -

BBB 5.14 BBB 1.59

BB 44.72 BB 42.82

B 40.67 B 42.41

CCC and below 4.96 CCC and below 10.01

Not rated 2.44 Not rated 3.17

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.

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 31 December 2015, 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 year.

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.





(e) Liquidity risk cont. 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.

The table below analyses the Company’s financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining year at the Balance Sheet date to the contractual maturity date. Balances due within 12 months equal their carrying balances, as the impact of discounting is not significant.

Liabilities as at 31 December 2015 On Demand Less than 3 months 3 to 12 months TotalFinancial Liabilities at Fair Value through Profit or Loss - 20,451 - 20,451Expenses Payable - 173,860 - 173,860Amounts due to Redeemable Participating Shareholders 13,999,550 - - 13,999,550Total 13,999,550 194,311 - 14,193,861

Liabilities as at 31 December 2014 On Demand Less than 3 months 3 to 12 months TotalFinancial Liabilities at Fair Value through Profit or Loss - 151,139 - 151,139Expenses Payable - 137,450 - 137,450Amounts due to Redeemable Participating Shareholders 14,536,935 - - 14,536,935Total 14,536,935 288,589 - 14,825,524 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.

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.

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 year.





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)

Fair valuation hierarchy The following table analyses within the fair value hierarchy the Company’s financial assets and liabilities measured at fair value at 31 December 2014:

Fair Value € Level 1 Level 2 Level 3 TotalAssets

Investments in Securities

Corporate Bonds - 14,146,874 - 14,146,874

Total Investments in Securities - 14,146,874 - 14,146,874


Unrealised Appreciation on Forward Foreign Currency Contracts - 27,437 - 27,437

Total Other Financial Instruments - 27,437 - 27,437

Liabilities


Unrealised Depreciation on Forward Foreign Currency Contracts - (151,139) - (151,139)

Total Other Financial Instruments - (151,139) - (151,139)

8. Comparative Statistics

31 December 2015 31 December 2014 31 December 2013

Total Net Asset Value at Last Traded Prices €13,999,550 €14,536,935 €14,692,654

Class E Shares in Issue 13,819.565 14,037.149 13,676.996

Net Asset Value per Share €1,013.02 €1,035.60 €1,074.26

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.

9. Exchange Rates

Currency Vs. EUR Rate

31 December 2015Vs. EUR Rate

31 December 2014

British Pound 0.7370 0.7760

United States Dollar 1.0863 1.2101




10. Soft Commissions and Transaction Costs

There were no soft commission transactions during the financial year ended 31 December 2015 (financial year ended 31 December 2014:€Nil). For the financial year ended 31 December 2015, the Company incurred transaction costs, as detailed in note 2(l), of €1,183 (31 December 2014: €1,185).

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 year ended 31 December 2015 the Investment Manager earned €94,605 (31 December 2014: €97,240). As at 31 December 2015, €7,372 (31 December 2014: €7,653) 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 year ended 31 December 2015 the Investment Manager reimbursed €Nil (31 December 2014: €297).

(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 year ended 31 December 2015, State Street Custodial Services (Ireland) Limited earned €8,059 (31 December 2014: €6,986). As at 31 December 2015, €1,102 (31 December 2014: €3,207) 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 year ended 31 December 2015, State Street Fund Services (Ireland) Limited earned €31,553 (31 December 2014: €26,428). As at 31 December 2015, €7,850 (31 December 2014: €7,013) 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 year. There were also no fees associated with the Distributor’s services paid during the financial year.

(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.

(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 year ended 31 December 2015 (31 December 2014: €Nil).

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




11. Fees and Expenses cont.

(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 year ended 31 December 2015 were €20,000 (31 December 2014 €20,000).

(j) Auditors' Remuneration For the financial year ended 31 December 2015, the remuneration excluding VAT for all work carried out for the Company by the statutory auditor or the statutory audit firm in the audit of the financial statements is as follows:

Auditors Remuneration 31 December 2015

€ 31 December 2014

€

Statutory Audit 30,000 28,900

Other Assurance Services 6,000 16,350

12. Cash

Cash deposits of €231,028 (31 December 2014: €331,404) which represents 1.65% of Net Assets (31 December 2014: 2.28%) 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 year ended 31 December 2015:

Declared 30 June 2015 Class Distribution per Unit Amount €

Declared 31 December 2014Class Distribution per Unit Amount €

Class E 20.654 291,333 Class E 22.941 322,026

291,333 322,026

Declared 30 June 2014 Class Distribution per Unit Amount €

Declared 31 December 2013 Class Distribution per Unit Amount €

Class E 26.514 371,286 Class E 27.368 374,312

371,286 374,312

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 Year

A fifth addendum to the Prospectus was issued on 3 February 2015.

Mr. Keith E. Thomas resigned from the Board of Directors on 30 June 2015.

15. Subsequent Events

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




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 14 April 2016.

Schedule of Significant Portfolio Movements (unaudited) For the financial year ended 31 December 2015


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Valeant Pharmaceuticals International Inc 4.50% 15/05/2023 365,000 Barclays PLC*(frn) 7.00% in perpetuity 366,611

Cirsa Funding Luxembourg SA 5.88% 15/05/2023 357,160 Thomas Cook Finance PLC 7.75% 15/06/2020 366,425

Alliance Data Systems Corp 5.25% 15/11/2023 335,000 AA Bond Co Ltd 9.50% 31/07/2019 345,672

Cemex SAB de CV 4.38% 05/03/2023 325,000 BBVA International Preferred SAU*(frn) 5.92% in perpetuity 339,751

ZF North America Capital Inc 2.75% 27/04/2023 297,354 Unitymedia GmbH 9.50% 15/03/2021 329,368

Europcar Groupe SA 5.75% 15/06/2022 247,339 BPCE SA*(frn) 4.75% in perpetuity 251,563

Douglas GmbH 6.25% 15/07/2022 235,894 Wind Acquisition Finance SA (Germany listing) 4.00%

15/07/2020 247,063

Infor US Inc 5.75% 15/05/2022 225,000 Natixis SA*(frn) 6.31% in perpetuity 218,750

Thomas Cook Finance PLC 6.75% 15/06/2021 225,000 Cerved Group SpA 8.00% 15/01/2021 216,000

Altice Financing SA 7.88% 15/12/2019 201,492 Wind Acquisition Finance SA 7.00% 23/04/2021 213,500

Campofrio Food Group SA 3.38% 15/03/2022 200,000 Royal Bank of Scotland Group*(frn) 7.64% in perpetuity 203,344

ING Groep NV*(frn) 6.00% in perpetuity 187,301 Campofrio Food Group SA 3.38% 15/03/2022 201,400

Royal Bank of Scotland Group*(frn) 7.50% in perpetuity 184,052 ZF North America Capital Inc 2.75% 27/04/2023 191,875

Altice Luxembourg SA 6.25% 15/02/2025 180,000 Altice Luxembourg SA 7.25% 15/05/2022 184,306

Altice Luxembourg SA 7.25% 15/05/2022 175,750 Altice Luxembourg SA 6.25% 15/02/2025 182,250

Areva SA 4.88% 23/09/2024 168,000 Baggot Securities Ltd 10.24% in perpetuity 170,935

LGE HoldCo VI BV 7.13% 15/05/2024 163,669 Enterprise Inns PLC 6.50% 06/12/2018 157,617

HomeVi SAS 6.88% 15/08/2021 142,088 Moto Finance PLC 6.38% 01/09/2020 142,399

Moto Finance PLC 6.38% 01/09/2020 141,327 Volkswagen International Finance NV*(frn) 3.75% in perpetuity 140,182

Ineos Finance PLC 4.00% 01/05/2023 140,000 Chemours Co 6.13% 15/05/2023 132,113

Entertainment One Ltd 6.88% 15/12/2022 138,865 Douglas GmbH 6.25% 15/07/2022 120,031

Pizzaexpress Financing 1 PLC 8.63% 01/08/2022 138,419 Kirk Beauty One GmbH 8.75% 15/07/2023 118,163

PSPC Escrow Corp 6.00% 01/02/2023 135,000 PSPC Escrow Corp 6.00% 01/02/2023 114,750

Chemours Co 6.13% 15/05/2023 130,000 TVN Finance Corp III AB 7.38% 15/12/2020 109,500

UPC Holding BV 6.75% 15/03/2023 117,075 Auris Luxembourg II SA 8.00% 15/01/2023 109,000

Kirk Beauty One GmbH 8.75% 15/07/2023 115,144 KION Finance SA 6.75% 15/02/2020 108,375

Telenet Finance V Luxembourg SCA 6.75% 15/08/2024 113,000 Trionista TopCo GmbH 6.88% 30/04/2021 108,000

Schaeffler Finance BV 7.75% 15/02/2017 112,375 Cerba European Lab SAS 7.00% 01/02/2020 106,750

Auris Luxembourg II SA 8.00% 15/01/2023 108,750 Telenet Finance Luxembourg SCA 6.38% 15/11/2020 105,875

Cerba European Lab SAS 7.00% 01/02/2020 104,750 Altice Financing SA 5.25% 15/02/2023 105,500

TNI Luxco 1 SA 7.00% 01/02/2020 104,750 TNI Luxco 1 SA 7.00% 01/02/2020 104,750

Labco SA 8.50% 15/01/2018 103,750 Unitymedia Hessen GmbH & Co KG 4.00% 15/01/2025 103,500

Altice Financing SA 6.50% 15/01/2022 103,000 Merlin Entertainments PLC 2.75% 15/03/2022 102,250

Standard Chartered PLC*(frn) 7.01% 29/07/2049 101,579 Sappi Papier Holding GmbH 3.38% 01/04/2022 101,150

United States of America Treasury Bills 0.00% 14/05/2015 101,419 Europcar Groupe SA 5.75% 15/06/2022 101,000

Kloeckner Pentaplast of America Inc 7.13% 01/11/2020 100,000 Thomas Cook Finance PLC 6.75% 15/06/2021 100,750

Sappi Papier Holding GmbH 3.38% 01/04/2022 100,000 Snai SpA 7.63% 15/06/2018 100,500

Matterhorn Telecom SA 3.88% 01/05/2022 100,000 ZF North America Capital Inc 2.25% 26/04/2019 99,600

Ziggo Bond Finance BV 4.63% 15/01/2025 100,000 Cirsa Funding Luxembourg SA 5.88% 15/05/2023 99,250

Altice Financing SA 5.25% 15/02/2023 100,000 Novafives SAS 4.50% 30/06/2021 98,000

Merlin Entertainments PLC 2.75% 15/03/2022 100,000 Unitymedia Hessen GmbH & Co KG 5.50% 15/09/2022 94,500

Sealed Air Corp 4.50% 15/09/2023 100,000 Valeant Pharmaceuticals International Inc 4.50% 15/05/2023 91,125

Picard Groupe SAS*(frn) 4.25% 01/08/2019 99,625 Boparan Finance PLC 4.38% 15/07/2021 91,000

ZF North America Capital Inc 2.25% 26/04/2019 99,529 Intralot Capital Luxembourg SA 6.00% 15/05/2021 89,250

Picard Groupe SAS*(frn) 4.25% 01/08/2019 99,500

KraussMaffei Group GmbH 8.75% 15/12/2020 99,450

Synlab Bondco PLC 6.25% 01/07/2022 99,000

Novafives SAS 4.50% 30/06/2021 87,000

* For floating rate notes (frn) the effective yield is that of 31 December 2015.

Important Information for the German Investors (Unaudited)


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.

299466 PNF04 4/2016

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).