I have the same issue.
But for me Copy Mesh to Static Mesh still has the same issue…
Is that a bug or they changed something?
Here’s some screenshots…
In 5.3 (dynamic mesh is on the right):
In 5.4(dynamic mesh is on the right):
As you can see in 5.4 material slot 0 is just not used (since it suggesting me to delete material).
Dont tell me we need to wait another year (untill 5.5 will be released) in order to get this fixed 