Board of First Trust Dynamic Europe Equity Income Fund Approves Conversion into an ETF

Rhea-AI Summary

First Trust Advisors L.P. announced plans to reorganize the First Trust Dynamic Europe Equity Income Fund (NYSE: FDEU) into an actively managed exchange-traded fund (ETF). This reorganization aims for a tax-free transfer of assets to the new ETF, with shareholders receiving ETF shares equal to their current net asset value in FDEU. The transaction requires shareholder approval and regulatory compliance, expected to complete in 2023. FDEU, focusing on high current income and capital appreciation through European equity investments, will modify its investment objectives post-reorganization. The final registration statement and proxy materials will be filed with the SEC soon.

Positive

• Transitioning FDEU to a new actively managed ETF could enhance liquidity and appeal for investors.
• The restructuring is expected to be tax-free, benefiting shareholders financially.

Negative

• Shareholder approval is required, introducing uncertainty about the successful completion of the transaction.
• Potential delays in obtaining necessary regulatory approvals may impact the timeline for the reorganization.

WHEATON, Ill.--(BUSINESS WIRE)-- First Trust Advisors L.P. (“FTA”) announced today that the Board of Trustees of First Trust Dynamic Europe Equity Income Fund (NYSE: FDEU), a closed-end fund managed by FTA, approved the reorganization of FDEU into a to be-created exchange-traded fund (“ETF”), that will be traded on the NYSE Arca and will be an actively managed ETF managed by FTA and sub-advised by Janus Henderson Investors, FDEU’s current sub-advisor.

Under the terms of the proposed transaction, which is expected to be tax‑free, the assets of FDEU would be transferred to, and the liabilities of FDEU would be assumed by, the new ETF, and shareholders of FDEU would receive shares of the new ETF with a value equal to the aggregate net asset value of the FDEU shares held by them. It is currently expected that the transaction will be consummated during 2023, subject to requisite shareholder approval of FDEU and satisfaction of applicable regulatory requirements and approvals and customary closing conditions. There is no assurance when or whether such approvals, or any other approvals required for the transaction, will be obtained. More information on the proposed transaction will be contained in registration statement/proxy materials that will be filed with the SEC in the coming weeks. Upon completion of the proposed transaction, the investment objectives and strategies of FDEU will be modified to reflect the change to an ETF.

FDEU is a diversified, closed‑end management investment company that seeks to provide a high level of current income with a secondary focus on capital appreciation. Under normal market conditions, FDEU pursues its investment objectives by investing at least 80% of its Managed Assets in a portfolio of equity securities of European companies of any market capitalization, including, but not limited to, common and preferred stocks that pay dividends, depositary receipts, and real estate investment trusts. “Managed Assets” means the total asset value of FDEU minus the sum of FDEU’s liabilities other than the principal amount of borrowings, if any.

FTA is a federally registered investment advisor and serves as the investment advisor of FDEU. FTA and its affiliate First Trust Portfolios L.P. (“FTP”), a FINRA registered broker-dealer, are privately-held companies that provide a variety of investment services. FTA has collective assets under management or supervision of approximately $196 billion as of February 28, 2023 through unit investment trusts, exchange-traded funds, closed-end funds, mutual funds and separate managed accounts. FTA is the supervisor of the First Trust unit investment trusts, while FTP is the sponsor. FTP is also a distributor of mutual fund shares and exchange-traded fund creation units. FTA and FTP are based in Wheaton, Illinois.

Janus Henderson Investors US LLC, formerly Janus Capital Management LLC (“Janus Henderson” or the “Sub-Advisor”), a legal entity of Janus Henderson Investors, serves as FDEU’s investment sub-advisor and will serve as the new ETF’s investment sub-advisor. Janus Henderson Investors is headquartered in London and is a global investment management firm that provides a full spectrum of investment products and services to clients around the world. With offices in 23 cities with more than 2,200 employees, Janus Henderson Investors managed approximately $287.3 billion in assets as of December 31, 2022.

Additional Information about the Proposed Reorganization and Where to Find It

This press release is not intended to, and shall not, constitute an offer to purchase or sell shares of FDEU or the to be formed ETF; nor is this press release intended to solicit a proxy from any shareholder of FDEU. The solicitation of the purchase or sale of securities or of proxies to effect the transaction may only be made by a final, effective Registration Statement, which includes a definitive Proxy Statement/Prospectus, after the Registration Statement is declared effective by the SEC.

This press release references a Registration Statement, which includes a Proxy Statement/Prospectus, to be filed by FDEU and the new ETF. This Registration Statement has yet to be filed with the SEC. After the Registration Statement is filed with the SEC, it may be amended or withdrawn and the Proxy Statement/Prospectus will not be distributed to shareholders of FDEU unless and until the Registration Statement is declared effective by the SEC.

FDEU, the new ETF, FTA, FTP and their respective trustees, officers and employees, and other persons may be deemed to be participants in the solicitation of proxies with respect to the proposed reorganization. Investors and shareholders may obtain more detailed information regarding the direct and indirect interests of FDEU’s, the new ETF’s, FTA’s and FTP’s respective directors, trustees, officers and employees by reading the Proxy Statement/Prospectus regarding the proposed reorganization when it is filed with the SEC.

Investors and security holders of FDEU are urged to read the Proxy Statement/Prospectus and other documents filed with the SEC carefully in their entirety when they become available because they will contain important information about the proposed reorganization. Investors should consider the investment objectives, risks, charges and expenses of FDEU and the new ETF carefully. The Proxy Statement/Prospectus will contain information with respect to the investment objectives, risks, charges and expenses of the funds and other important information about FDEU and the new ETF. The Proxy Statement/Prospectus will constitute neither an offer to sell securities, nor will it constitute a solicitation of an offer to buy securities, in any state where such offer or sale is not permitted.

Investors may obtain free copies of the Registration Statement and Proxy Statement/Prospectus and other documents (when they become available) filed with the SEC at the SEC’s web site at www.sec.gov. In addition, free copies of the Proxy Statement/Prospectus and other documents filed with the SEC may also be obtained after the Registration Statement becomes effective by calling FTA toll-free at (800) 621-1675.

The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA and the Internal Revenue Code. First Trust has no knowledge of and has not been provided any information regarding any investor. Financial advisors must determine whether particular investments are appropriate for their clients. First Trust believes the financial advisor is a fiduciary, is capable of evaluating investment risks independently and is responsible for exercising independent judgment with respect to its retirement plan clients.

Forward Looking Statements

Certain statements made in this press release that are not historical facts are referred to as “forward‑looking statements” under the U.S. federal securities laws. Actual future results or occurrences may differ significantly from those anticipated in any forward‑looking statements due to numerous factors. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward‑looking statements, which generally are not historical in nature. Forward‑looking statements are subject to certain risks and uncertainties that could cause actual results to differ from those anticipated in any forward-looking statements. You should not place undue reliance on forward‑looking statements, which speak only as of the date they are made. FTA, FDEU and the new ETF undertake no responsibility to update publicly or revise any forward‑looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230322005502/en/

Jeff Margolin – (630) 517-7643

Jim Dykas – (630) 517-7665

Source: First Trust Advisors L.P.

FAQ

What is the planned reorganization of FDEU?

FDEU will be reorganized into a new actively managed ETF, subject to shareholder approval.

When is the reorganization of FDEU expected to occur?

The reorganization is anticipated to be completed during 2023.

Will the reorganization of FDEU be tax-free?

Yes, the proposed transaction is expected to be tax-free for shareholders.

What will happen to FDEU shareholders after the reorganization?

Shareholders will receive shares of the new ETF with a value equal to their current FDEU shares.

Who will manage the new ETF after the reorganization of FDEU?

The new ETF will be managed by First Trust Advisors and sub-advised by Janus Henderson Investors.