UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR/A
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-23072
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First Trust Dynamic Europe Equity Income Fund
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(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Name and address of agent for service)
Registrant's telephone number, including area code: (630) 765-8000
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2015
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
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EXPLANATORY NOTE
The Registrant is filing this amendment to its Form N-CSR for the period ended
December 31, 2015, originally filed with the Securities and Exchange Commission
on March 7, 2016 (Accession Number 0001445546-16-007324) to correct
typographical errors in Item 4 and relating to the dates on the signature page.
Item 1 to this Form N-CSR is incorporated by reference to the Form N-CSR filed
on EDGAR on March 7, 2016 (Accession Number 0001445546-16-007324). This
amendment shall not supersede the Registrant's Form N-CSR for the period ended
December 31, 2016, filed with the Securities and Exchange Commission on March 7,
2017 (Accession Number 0001445546-17-001269).
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ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless
of whether these individuals are employed by the registrant or a third
party.
(c) There have been no amendments, during the period covered by this report,
to a provision of the code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant or
a third party, and that relates to any element of the code of ethics
description.
(d) The registrant has not granted any waivers, including an implicit waiver,
from a provision of the code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant or
a third party, that relates to one or more of the items set forth in
paragraph (b) of this item's instructions.
(e) Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's board of
trustees has determined that Thomas R. Kadlec and Robert F. Keith are qualified
to serve as audit committee financial experts serving on its audit committee and
that each of them is "independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees (Registrant) -- The aggregate fees billed for each of the
last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements were $53,000 for 2014 and
$62,500 for 2015.
(b) Audit-Related Fees (Registrant) -- The aggregate fees billed in each
of the last two fiscal years, for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under paragraph
(a) of this Item were $0 for 2014 and $0 for 2015.
Audit-Related Fees (Investment Adviser) -- The aggregate fees billed in
each of the last two fiscal years of the registrant for assurance and related
services by the principal accountant that are reasonably related to the
performance of the audit of the registrant's financial statements and are not
reported under paragraph (a) of this Item were $0 for 2014 and $0 for 2015.
(c) Tax Fees (Registrant) -- The aggregate fees billed in each of the last
two fiscal years for professional services rendered by the principal accountant
for tax compliance, tax advice, and tax planning to the registrant were $5,200
for 2014 and $0 for 2015.
Tax Fees (Investment Adviser) -- The aggregate fees billed in each of the
last two fiscal years of the registrant for professional services rendered by
the principal accountant for tax compliance, tax advice, and tax planning to the
registrant's adviser were $0 for 2014 and $0 for 2015.
(d) All Other Fees (Registrant) -- The aggregate fees billed in each of
the last two fiscal years for products and services provided by the principal
accountant to the registrant, other than the services reported in paragraphs (a)
through (c) of this Item were $0 for 2014 and $0 for 2015.
All Other Fees (Investment Adviser) -- The aggregate fees billed in each
of the last two fiscal years for products and services provided by the principal
accountant to the registrant's investment adviser, other than services reported
in paragraphs (a) through (c) of this Item were $0 for 2014 and $0 for 2015.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter and its Audit and Non-Audit Services Pre-Approval
Policy, the Audit Committee (the "Committee") is responsible for the
pre-approval of all audit services and permitted non-audit services (including
the fees and terms thereof) to be performed for the registrant by its
independent auditors. The Chairman of the Committee is authorized to give such
pre-approvals on behalf of the Committee up to $25,000 and report any such
pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the independent
auditor's engagements for non-audit services with the registrant's adviser (not
including a sub-adviser whose role is primarily portfolio management and is
sub-contracted or overseen by another investment adviser) and any entity
controlling, controlled by or under common control with the investment adviser
that provides ongoing services to the registrant, if the engagement relates
directly to the operations and financial reporting of the registrant, subject to
the de minimis exceptions for non-audit services described in Rule 2-01 of
Regulation S-X. If the independent auditor has provided non-audit services to
the registrant's adviser (other than any sub-adviser whose role is primarily
portfolio management and is sub-contracted with or overseen by another
investment adviser) and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to its policies, the Committee
will consider whether the provision of such non-audit services is compatible
with the auditor's independence.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) for the registrant and the registrant's investment adviser of this
Item that were approved by the audit committee pursuant to the pre-approval
exceptions included in paragraph (c)(7)(i)(c) or paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X are as follows:
(b) 0%
(c) 0%
(d) 0%
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most recent
fiscal year that were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees was less than fifty
percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's investment
adviser (not including any sub-adviser whose role is primarily portfolio
management and is subcontracted with or overseen by another investment adviser),
and any entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the Registrant for 2014 were $5,200
and $8,500 for the Registrant and the Registrant's investment adviser,
respectively and for 2015 were $0 and $0 for the Registrant and the Registrant's
investment adviser, respectively.
(h) The Registrant's audit committee of its Board of Trustees determined
that the provision of non-audit services that were rendered to the Registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the Registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) The registrant has a separately designated audit committee consisting of
all the independent trustees of the Registrant. The members of the audit
committee are: Thomas R. Kadlec, Niel B. Nielson, Richard E. Erickson and
Robert F. Keith.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are attached herewith.
HENDERSON INVESTMENT MANAGEMENT LIMITED
PROXY POLICIES AND PROCEDURES
AS OF JUNE 14, 2012
It is the intent of Henderson Investment Management Limited ("HIML") to vote
proxies in the best interests of the firm's clients. HIML believes that in order
to achieve long-term success, companies need not only to conceive and execute
appropriate business strategies, but also to maintain high standards of
corporate governance and corporate responsibility. We therefore expect companies
to operate according to recognised national and international standards in these
areas.
This policy sets out HIML's approach to corporate governance, corporate
responsibility and proxy voting.
1. Responsibilities
The Corporate Governance Manager at Henderson Global Investors, acting on
behalf of HIML, is responsible for the implementation of the Proxy Voting
Policies.
2. Service Providers
HIML has contracted ISS Europe Ltd. to provide policy development,
research, advisory and voting disclosure services.
Proxy voting services are provided by BNP Paribas Securities Services plc,
which provides a range of administrative services to Henderson. BNP
Paribas Securities Services plc is provided with voting services by ISS.
3. Voting Guidelines
HIML has adopted the Henderson Global Investors Responsible Investment
policy. This policy sets out Henderson's approach to monitoring and taking
action on financial performance, corporate governance and corporate
responsibility. The International Corporate Governance Policy is detailed
below.
3.1. International Corporate Governance Policy
International corporate governance systems vary a great deal according to
factors such as the legal system, the extent of shareholder rights and the
level of dispersed ownership. In formulating our approach to corporate
governance we are conscious that a 'one size fits all' policy is not
appropriate. We therefore seek to vary our voting and engagement
activities according to the market, and pay close attention to local
market codes of best practice.
Notwithstanding these differences, we consider that certain core
principles of corporate governance apply across all markets, and we seek
to apply these in our voting policy. The paragraphs below elaborate on
these core principles.
3.2. Corporate Objective
The overriding objective of the company should be to optimize over time
the returns to its shareholders. Where other considerations affect this
objective, they should be clearly stated and disclosed. To achieve this
objective, the company should endeavour to ensure the long-term viability
of its business, and to manage effectively its relationships with
stakeholders.
3.3. Disclosure and Transparency
Companies should disclose accurate, adequate and timely information, in
particular meeting market guidelines where they exist, so as to allow
investors to make informed decisions about the acquisition, ownership
obligations and rights, and sale of shares. Clear and comprehensive
information on directors, corporate governance arrangements and the
company's management of corporate responsibility issues should be
provided.
Shareholders should be given sufficient and timely information about all
proposals to allow them to make an informed judgment and exercise their
voting rights. Each proposal should be presented separately to
shareholders - multiple proposals should not be combined in the same
resolution. In the absence of sufficient information provided by a company
on a proposed resolution we will vote against.
3.4. Boards of Directors
Henderson recognises the plurality of corporate governance models across
different markets and does not advocate any one form of board structure.
However, for any corporate board there are certain key functions which
apply.
o Reviewing and guiding corporate strategy, major plans of action,
risk policy, annual budgets and business plans; setting performance
objectives; monitoring implementation and corporate performance; and
overseeing major capital expenditures, acquisitions and
divestitures.
o Monitoring the effectiveness of the company's governance practices
and making changes as needed.
o Selecting, compensating, monitoring and, where necessary, replacing
key executives and overseeing succession planning.
o Aligning key executive and board remuneration with the longer term
interests of the company and its shareholders.
o Ensuring a formal and transparent board nomination and election
process.
o Monitoring and managing potential conflicts of interest of
management, board members and shareholders, including misuse of
corporate assets and abuse in related party transactions.
o Ensuring the integrity of the corporation's accounting and financial
reporting systems, including the independent audit, and that
appropriate systems of control are in place, in particular, systems
for risk management, financial and operational control, and
compliance with the law and relevant standards.
o Overseeing the process of disclosure and communications.
The board of directors, or supervisory board, as an entity, and each of
its members, as an individual, is a fiduciary for all shareholders, and
should be accountable to the shareholder body as a whole. Each member
should stand for election on a regular basis.
Boards should include a sufficient number of independent non-executive
members with appropriate skills, experience and knowledge.
Responsibilities should include monitoring and contributing effectively to
the strategy and performance of management, staffing key committees of the
board, and influencing the conduct of the board as a whole.
Audit, remuneration and nomination/succession committees should be
established. These should be composed wholly or predominantly of
independent non-executives. Companies should disclose the terms of
reference of these committees and give an account to shareholders in the
annual report of how their responsibilities have been discharged. The
chairmen and members of these committees should be appointed by the board
as a whole according to a transparent procedure. When determining how to
vote on the election of a non-executive director, we will give close
consideration to their independence and to the proportion of independent
directors on the Board as a whole.
3.5. Shareholder Rights
All shareholders should be treated equitably. Companies' ordinary shares
should provide one vote for each share, and companies should act to ensure
the owners' rights to vote.
Major strategic modifications to the core business(es) of a company should
not be made without prior shareholder approval. Equally, major corporate
changes which in substance or effect materially dilute the equity or erode
the economic interests or share ownership rights of existing shareholders
should not be made without prior shareholder approval of the proposed
change. Such changes include modifications to articles or bylaws, the
implementation of shareholder rights plans or so called "poison pills",
and the equity component of compensation schemes.
We will not support proposals that have the potential to reduce
shareholder rights such as significant open-ended authorities to issue
shares without pre-emption rights or anti-takeover proposals unless
companies provide a compelling rationale for why they are in shareholder
interests.
3.6. Audit and Internal Control
Company boards should maintain robust structures and processes to ensure
sound internal controls and to oversee all aspects of relationships with
external auditors. The Audit Committee should ensure that the company
gives a balanced and clear presentation of its financial position and
prospects, and clearly explains its accounting principles and policies.
Audit Committee members should have appropriate levels of financial
expertise, in accordance with prevailing legislation or best practice. The
Audit Committee should ensure that the independence of the external
auditors is not compromised by conflicts of interest (arising, for
example, from the award of non-audit consultancy assignments).
Where we have serious concerns over auditor independence we will vote
against the re-election of the auditor.
3.7. Remuneration
Remuneration of executive directors and key executives should be aligned
with the interests of shareholders. Performance criteria attached to
share-based remuneration should be demanding and should not reward
performance that is not clearly superior to that of a group of comparable
companies that is appropriately selected in sector, geographical and index
terms. Requirements on directors and senior executives to acquire and
retain shareholdings in the company that are meaningful in the context of
their cash remuneration are also appropriate.
The design of senior executives' contracts should not commit companies to
'payment for failure'. Boards should pay attention to minimising this risk
when drawing up contracts and to resist pressure to concede excessively
generous severance conditions.
Companies should disclose in each annual report or proxy statement the
board's policies on remuneration - and, preferably, the remuneration of
individual board members and top executives, as well as the composition of
that remuneration - so that investors can judge whether corporate pay
policies and practices are appropriately designed.
Broad-based employee share ownership plans or other profit-sharing
programmes are effective market mechanisms that promote employee
participation.
When reviewing whether to support proposed new share schemes we place
particular importance on the following factors:
o the overall potential cost of the scheme, including the level
of dilution the issue price of share options relative to the
market price
o the use of performance conditions aligning the interests of
participants with shareholders the holding period i.e., the
length of time from the award date to the earliest date of
exercise the level of disclosure.
4. Voting Procedures
The procedure for casting proxy votes is as follows:
1. Custodians notify ISS of forthcoming company meetings and send proxy
materials.
2. ISS notifies Henderson of meetings via its ProxyExchange website.
3. ISS provides voting recommendations based on HIML's Proxy Voting
Policies.
4. The Corporate Governance Manager (or his designee) consults with
fund managers and analysts as appropriate.
5. The Corporate Governance Manager (or his designee) decides in
conjunction with the relevant fund managers and analysts whether to
accept or override the voting recommendations provided by ISS.
6. Voting instructions are sent to custodians via the ProxyExchange
website and executed by the custodians.
7. If at any time during implementation of the above procedures a
conflict of interest is identified the matter will be referred to
the HIML Proxy Committee via the Head of Compliance. In such
circumstances the Proxy Committee reviews the issue and directs ISS
how to vote the proxies through the ProxyExchange website and voting
instructions are executed by the custodians.
5. Share Blocking
In a number of markets in which the funds invest, shares must be suspended
from trading ('blocked') for a specified period before the Annual General
Meeting if voting rights are to be exercised. Such restrictions may place
constraints on portfolio managers that mean exercising proxy votes is not
in clients' interest. In other markets casting proxy votes may involve
costs that are disproportionate to any benefit gained. In markets where
share blocking applies or additional costs are incurred that outweigh the
potential benefits of voting, HIML will vote only in exceptional
circumstances.
6. Conflicts of Interest
For each director, officer and employee of HIML ("HIML person"), the
interests of HIML's clients must come first, ahead of the interest of HIML
and any person within the HIML organization, which includes HIML's
affiliates.
Accordingly, each HIML person must not put "personal benefit", whether
tangible or intangible, before the interests of clients of HIML or
otherwise take advantage of the relationship to HIML's clients. "Personal
benefit" includes any intended benefit for oneself or any other
individual, company, group or organization of any kind whatsoever except a
benefit for a client of HIML, as appropriate. It is imperative that each
of HIML's directors, officers and employees avoid any situation that might
compromise, or call into question, the exercise of fully independent
judgment in the interests of HIML's clients.
Occasions may arise where a person or organization involved in the proxy
voting process may have a conflict of interest. A conflict of interest may
exist if HIML has a business relationship with (or is actively soliciting
business from) either the company soliciting the proxy or a third party
that has a material interest in the outcome of a proxy vote or that is
actively lobbying for a particular outcome of a proxy vote. Any individual
with knowledge of an actual or potential conflict of interest relating to
a particular referral item shall disclose that conflict to the Head of
Compliance.
The following are examples of situations where a conflict may exist:
o Business Relationships - where HIML manages money for a company or
an employee group, manages pension assets or is actively soliciting
any such business, or leases office space from a company;
o Personal Relationships - where a HIML person has a personal
relationship with other proponents of proxy proposals, participants
in proxy contests, corporate directors, or candidates for
directorships;
o Familial Relationships - where a HIML person has a known familial
relationship relating to a company (e.g. a spouse or other relative
who serves as a director of a public company or is employed by the
company); and
o Fund Relationships - HIML may have a conflict because of a
relationship to fund shares held in client accounts (e.g., an entity
who receives fees from a fund is solicited by the fund to increase
those fees).
o Fund of Fund's Relationship - HIML may have a conflict where it
manages a fund of funds that invests in other affiliated Henderson
funds, and the underlying affiliated fund is soliciting votes for a
proxy.
It is the responsibility of each director, officer and employee of HIML to
report any real or potential conflict of interest to the Head of
Compliance who shall present any such information to the Proxy Committee.
However, once a particular conflict has been reported to the Head of
Compliance, this requirement shall be deemed satisfied with respect to all
individuals with knowledge of such conflict. In addition, all HIML persons
shall certify annually as to their compliance with this policy.
7. Proxy Committee
The Proxy Committee shall have three members, the Head of Equities, the
Corporate Governance Manager and the Head of Compliance (or their
respective designees). Proxy Committee meetings may be called by any
member of the Proxy Committee and shall be called whenever an actual or
potential conflict of interest is identified.
Two members of the Proxy Committee shall constitute a quorum and the Proxy
Committee shall act by a majority vote. The Proxy Committee shall keep
minutes of its meetings that shall be kept with the other corporate
records of HIML.
The Proxy Committee will review each item referred to it to determine if
an actual or potential conflict of interest indeed exists. If the Proxy
Committee determines that no actual or potential conflict exists, then the
proxy will be voted as it otherwise would have been under these
procedures. If the Proxy Committee determines that an actual or potential
conflict exists, then it will review the issue and instruct ISS to: (1)
vote based on ISS' recommendation, (2) vote in the same proportion as the
other shareholders, (3) abstain from voting entirely, (4) vote in
accordance with the recommendation of the investment professional
responsible for the account, or (5) vote in another manner as the Proxy
Committee deems fit. With respect to a conflict that arises due to (a) a
business transaction involving Henderson Group PLC and the company
soliciting the proxy, or (b) a Fund of funds relationship described above
only options (1)-(3) above shall be available.
For each matter where the Proxy Committee determines an actual or
potential conflict exists, the Proxy Committee will produce a Conflicts
Report that (1) describes the conflict of interest; (2) discusses the
procedures used to address such conflict of interest; and (3) discloses
any contacts from parties outside HIML (other than routine communications
from proxy solicitors) with respect to the referral item not otherwise
reported in a portfolio manager's recommendation. To the extent the Proxy
Committee instructs ISS to vote in accordance with the recommendation of
the investment professional responsible for the account, the Conflicts
Report will also include written confirmation that any recommendation from
an investment professional provided under circumstances where a conflict
of interest exists was made solely on the investment merits and without
regard to any other consideration.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS.
Information provided as of December 31, 2015
Henderson Global Investors (North America) Inc., a registered investment adviser
("HGINA" or the "Sub-Advisor"), is the Fund's sub-adviser and provides U.S.
regulatory and compliance oversight to the Fund and HIML (as defined below).
HGINA is a Delaware corporation and provides investment management services to
SEC-registered mutual funds, other pooled investment vehicles and institutional
accounts. The principal offices of HGINA are located at 737 North Michigan
Avenue, Suite 1700, Chicago, Illinois.
HGINA is an indirect, wholly-owned subsidiary of Henderson Group plc ("Henderson
Group"), which is the parent company of an asset management group. Henderson
Group, founded in 1934, is a global asset management firm providing a full
spectrum of investment products and services to institutions and individuals
around the world. The Advisor, the Sub-Advisor and the Fund have engaged
Henderson Investment Management Limited ("HIML" or the "Sub-Sub-Advisor"), a
registered investment adviser and an indirect, wholly-owned subsidiary of
Henderson Group, pursuant to an investment sub-advisory agreement among the
Fund, the Advisor, HGINA and HIML. Investment professionals of HIML render
portfolio management, research or trading services to certain clients of HGINA,
including the Fund. HIML will be responsible for the day-to-day investment
decisions of the Fund other than the Option Overlay Strategy.
The members of the portfolio management team responsible for the day-to-day
management of the Fund's investment portfolio other than the Option Overlay
Strategy are Alex Crooke and Ben Lofthouse. The members of the portfolio
management team responsible for implementing the Option Overlay Strategy are
John Gambla and Rob A. Guttschow.
1. ALEX CROOKE
HEAD OF GLOBAL EQUITY INCOME AT HENDERSON INVESTMENT MANAGEMENT
LIMITED ("HENDERSON")
Alex Crooke is a portfolio manager with more than 25 years of investment
management experience. Mr. Crooke is currently head of the Henderson Global
Equity Income team, which encompasses the firm's key equity income products.
Prior to joining Henderson, Alex was an Investment Analyst at Equitable Life
Assurance Society responsible for US Equity Research. In 1994, Mr. Crooke joined
Henderson as a Fund Manager and was responsible for UK and European Investments.
He was named Director of UK Investment Trusts in 2001. Mr. Crooke has managed
several funds during his 20 plus years at Henderson Global Investors, including
currently managing the Henderson Global Equity Income Fund, the Henderson
Dividend & Income Builder Fund, Henderson High Income Investment Trust and the
Bankers Investment Trust.
2. BEN LOFTHOUSE, CFA
PORTFOLIO MANAGER FOR THE GLOBAL EQUITY INCOME TEAM AT HENDERSON
Ben Lofthouse, CFA, is the portfolio manager of the Henderson Global Equity
Income Fund and the Henderson Dividend & Income Builder Fund, and has been a
member of the Henderson Global Equity Income team since 2004. In addition, Mr.
Lofthouse has co-managed the Global Equity Income OEIC since May 2012, and has
managed the Henderson International Income Trust plc since its launch in April
2011. Mr. Lofthouse joined Henderson in 2004 as an Investment Analyst and
Assistant Fund Manager having previously trained as a Chartered Accountant with
PricewaterhouseCoopers in its Banking and Capital Markets division. Mr. Crooke
also worked in the PricewaterhouseCoopers Business Recovery Services team.
3. JOHN GAMBLA, CFA
SENIOR PORTFOLIO MANAGER FOR THE ALTERNATIVES AND ACTIVE EQUITY INVESTMENT TEAM
AT FIRST TRUST ADVISORS L.P. ("FIRST TRUST")
Mr. Gambla has 20 years of investment experience, most recently as co-Chief
Investment Officer at the Nuveen HydePark Group LLC, a wholly-owned subsidiary
of Nuveen Investments. He graduated Phi Beta Kappa with a Bachelor of Science in
genetics and developmental biology (Cum Laude) and a Bachelor of Arts in finance
(departmental distinction) from the University of Illinois at Urbana/Champaign,
and earned an MBA from the University of Chicago's Graduate School of Business.
He is a CFA Charter holder and holds FRM and PRM designations.
4. ROB A. GUTTSCHOW, CFA
SENIOR PORTFOLIO MANAGER FOR THE ALTERNATIVES AND ACTIVE EQUITY INVESTMENT TEAM
AT FIRST TRUST
Mr. Guttschow has nearly 20 years of investment experience, most recently as
co-Chief Investment Officer at the Nuveen HydePark Group LLC, a wholly-owned
subsidiary of Nuveen Investments. Mr. Guttschow earned a Bachelor of Science
degree in engineering and an MBA from the University of Illinois at
Urbana/Champaign. He is a CFA Charter holder and a member of the CFA Society of
Chicago.
(a)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
AND POTENTIAL CONFLICTS OF INTEREST
Information provided as of December 31, 2015
# OF ACCOUNTS TOTAL ASSETS
MANAGED FOR WHICH FOR WHICH
TOTAL ADVISORY FEE IS ADVISORY FEE
NAME OF PORTFOLIO # OF ACCOUNTS TOTAL BASED ON IS BASED ON
MANAGER OR TEAM MEMBER TYPE OF ACCOUNTS MANAGED ASSETS PERFORMANCE PERFORMANCE
----------------
1. Alex Crooke Registered Investment 3 $3,997,765,345
Companies:
Other Pooled 3 $1,473,134,466 1 $289,862,116
Investment Vehicles:
Other Accounts:
2. Ben Lofthouse Registered Investment 3 $3,997,765,345
Companies:
Other Pooled 4 $ 995,381,605 1 $ 1,728,002
Investment Vehicles:
Other Accounts:
3. John Gambla Registered Investment 6 $ 294.2mm 0 0
Companies:
Other Pooled
Investment Vehicles:
Other Accounts: $ 0.6mm 0 0
4. Rob Guttschow Registered Investment 6 $ 294.2mm 0 0
Companies:
Other Pooled
Investment Vehicles:
Other Accounts: $ 0.6mm 0 0
POTENTIAL CONFLICTS OF INTERESTS
HENDERSON, POTENTIAL CONFLICTS OF INTERESTS
PORTFOLIO MANAGEMENT CONFLICTS OF INTEREST. Henderson has adopted a Code
of Ethics to ensure that those who have knowledge of portfolio transactions or
other confidential client information will not be able to act thereon to the
disadvantage of Henderson's clients. The Code of Ethics does not purport to
comprehensively cover all types of conduct or transactions which may be
prohibited or regulated by the laws and regulations applicable.
The portfolio managers responsible for managing the Funds may currently or
in the future also manage one or more other accounts. Other than potential
conflicts between investment strategies, the side-by-side management of a Fund
and other accounts may raise potential conflicts of interest due to certain
trading practices used by the portfolio manager (e.g., allocation of aggregated
trades). Henderson has policies and procedures reasonably designed to mitigate
these conflicts. The portfolio managers may advise certain accounts under a
performance fee arrangement. A performance fee arrangement may create an
incentive for a portfolio manager to make investments that are riskier or more
speculative than would be the case in the absence of performance fees.
PORTFOLIO MANAGEMENT COMPENSATION. The following is a summary of the
compensation received by Henderson's investment professionals for all accounts
managed and not just for the Fund. Henderson's investment professionals have
significant short and long-term financial incentives. In general, the
compensation plan is based on:
o Pre-defined, objective, measurable investment performance
o Performance goals that are ambitious, but attainable
o The plan provides an incentive for appropriately aggressive
portfolio management to achieve maximum feasible results within the
portfolio's risk return parameters.
The compensation structure consists of four primary elements. There is a
competitive base salary together with a short-term incentive bonus plan. In
addition, there are two further incentive-based packages for senior
international investment professionals that reward staff on both individual and
team performance, reflecting profitable asset growth. "Profitable asset growth"
refers to the increase in adviser revenues generated less the increase in costs.
It is typically calculated per adviser team on a calendar year basis. Members of
the relevant team receive a share of this growth, which is typically paid over a
three year period.
Some managers are granted an award in a long-term incentive program that
is based on several factors, including the profitability of Henderson Global
Investors. Additionally, some managers participate in the distribution of
performance-related fees if such funds are structured accordingly. Currently,
none of the Funds charge performance-related fees.
A summary of the compensation package is as follows:
o Basic Salaries: in line with or better than the industry average
o Short Term Incentive Bonus: the STI bonus is usually the majority of
the variable component, based largely on investment performance; for
a typical fund manager, it can vary between 50 percent and 150
percent of the salary
o Growth Equity Bonus Plan: the GEB is based on a team's contribution
to a rise in profits, it is designed to reward profitable asset
growth
o Long Term Incentive Plan: as described above
o Employee Share Plans: from year to year, managers may be able to
invest part of their remuneration in various share schemes which are
then partially matched by Henderson
o Performance-related fees: for some funds, any performance-related
fee earned by the firm is shared with individuals generating that
performance. If a performance-related fee applies, compensation is
based solely on performance and its terms are made public in the
fund's relevant disclosure document (i.e., prospectus or offering
memorandum). Performance-related fees may vary from fund to fund but
are typically measured over a one year period and compare the fund's
returns to either (i) a peer group, (ii) an index or (iii) an
absolute return.
FIRST TRUST, POTENTIAL CONFLICTS OF INTERESTS
First Trust and its affiliate, First Trust Portfolios L.P. ("FTP"), have in
place a joint Code of Ethics and Insider Trading Policies and Procedures that
are designed to (a) prevent First Trust personnel from trading securities based
upon material inside information in the possession of such personnel and (b)
ensure that First Trust personnel avoid actual or potential conflicts of
interest or abuse of their positions of trust and responsibility that could
occur through such activities as front running securities trades for the
Registrant. Personnel are required to have duplicate confirmations and account
statements delivered to First Trust and FTP compliance personnel who then
compare such trades to trading activity to detect any potential conflict
situations.
(a)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
Information provided as of December 31, 2015
ALEX CROOKE AND BEN LOFTHOUSE, HENDERSON
SALARY AND BENEFITS
Base salaries are set to be competitive with the market, and are set typically
within a band of +/- 5% of market median for the individual's role and
responsibilities, although salary levels at or around market upper quartile may
be awarded for key individuals with specialist skills, market knowledge and/or
who perform critical roles, to ensure that their fixed remuneration remains
market leading. Salary levels may be lower than market median for individuals
who are inexperienced or new to their role, but will be moved rapidly towards to
median and beyond where this is merited by individual performance. Base salaries
are set to be competitive with the market, and are periodically reviewed for
market competitiveness.
A range of benefits are provided to employees (including private medical
insurance, disability insurance and life insurance) with a view to offering an
overall remuneration package that is competitive to each local market in which
Henderson operates. Fringe benefits account for a small percentage of total
remuneration. Henderson also operates non-contributory pension schemes for
employees. With the exception of a small number of individuals who participate
in closed legacy defined benefits schemes, pension arrangements are all funded
on a defined contribution basis, with contribution levels being benchmarked to
the local market.
INCENTIVE ARRANGEMENTS FOR INVESTMENT PROFESSIONALS
Investment Management Incentive Plan (IMIP) IMIP is a short term incentive
variable pay (bonus) framework, which is designed to reward the contribution of
portfolio managers to increased profitability and quality asset growth. The
total incentive pool is based on a variable share of net management fees, taking
into account:
o A 'base' element - formed of a set percentage of management fees,
after deduction of direct salary and associated costs
o A 'performance' element (which can be positive or negative) -
determined as a variable share of management fees, depending on the
1 and 3 year track record of underlying funds
o A 'growth' element - determined as a set percentage of management
fees in the first 12 months from net inflows, offset by rebates and
commissions and subject to a clawback for net outflows
o A 'corporate' - determined as a variable share of management fees,
after deduction of direct salary and associated costs, with the
share dependent on the Group (STI) Balanced Scorecard outcome (see
below)
Performance fees
For some funds, performance-related fees earned by the firm are shared with the
individuals generating that performance in a transparent and agreed way.
Individual performance fee allocations are also subject to mandatory deferral
mechanisms and, in some cases, individuals are obliged to defer a proportion of
their performance fee incentives into their own funds.
Alternative Investment Management Fund Directive (AIFMD)
Henderson complies with AIFMD, which has impacted variable pay earned by
Henderson fund managers since January 1, 2015. The key implications are that, in
relation to variable remuneration earned in respect of AIFMD activities:
o The percentage of variable remuneration that must be deferred is
likely to increase (up to 60% of total variable pay for the highest
paid code employees).
o It will become mandatory for at least 50% of both deferred and
non-deferred variable remuneration to be delivered in
units/interests of the relevant funds.
In addition, within the Global Equities team the investment managers are
rewarded by their contribution to our clients' performance. A significant
portion of the end of year bonus pool is distributed to the investment managers
based on the performance attribution over a 1 and 3 year basis. This more
closely aligns the investment managers with the performance the team has
delivered to clients and rewards them for the return of the stocks they put in
the portfolio.
JOHN GAMBLA AND ROB GUTTSCHOW, FIRST TRUST
The compensation structure for John Gambla and Rob Guttschow is based upon a
fixed salary as well as a discretionary bonus determined by the management of
the Advisor. Salaries are determined by management and are based upon an
individual's position and overall value to the firm. Bonuses are also determined
by management and are generally based on a variety of factors, including, but
not limited to, an individual's overall contribution to the success of the firm
and the profitability of the firm.
(a)(4) DISCLOSURE OF SECURITIES OWNERSHIP
Information provided as of December 31, 2015
Name of Portfolio Dollar ($) Range of
------------------ --------------------
Manager or Fund Shares
----------- ------------
Team Member Beneficially Owned
----------- --------------------
Alex Crooke $0
Ben Lofthouse $0
John Gambla $0
Rob A. Guttschow $0
(b) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
None.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial
officers, or persons performing similar functions, have concluded
that the registrant's disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act of 1940, as
amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of
a date within 90 days of the filing date of the report that includes
the disclosure required by this paragraph, based on their evaluation
of these controls and procedures required by Rule 30a-3(b) under the
1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b)
under the Securities Exchange Act of 1934, as amended (17 CFR
240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Incorporated by reference to the Form N-CSR filed on EDGAR on
March 7, 2016 (Accession Number 0001445546-16-007324).
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) First Trust Dynamic Europe Equity Income Fund
--------------------------------------------------------
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, President and
Chief Executive Officer
(principal executive officer)
Date: March 10, 2017
-------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, President and
Chief Executive Officer
(principal executive officer)
Date: March 10, 2017
-------------------
By (Signature and Title)* /s/ Donald P. Swade
----------------------------------------
Donald P. Swade, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: March 10, 2017
-------------------
* Print the name and title of each signing officer under his or her signature.