Company: RFMZ
Filing Date: 2025-09-05
Form Type: N-CSR
Source: 0001398344-25-017693
Chunk: 51

Company: RiverNorth Flexible Municipal Income Fund II, Inc.
Filing Date: 2025-09-05
Form: N-CSR
Chunk 51
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 participations generally provide the Fund with the right to demand payment,
on not more than seven days’ notice, of all or any part of the Fund’s participation interest in the underlying leases, plus
accrued interest.

Tobacco Settlement Bonds. Included in the
general category of Municipal Bonds in which the Fund may invest are “tobacco settlement bonds.” The Fund may invest in tobacco
settlement bonds, which are municipal securities that are backed solely by expected revenues to be derived from lawsuits involving tobacco
related deaths and illnesses which were settled between certain states and American tobacco companies. Tobacco settlement bonds are secured
by an issuing state’s proportionate share in the Master Settlement Agreement (“MSA”). The MSA is an agreement, reached
out of court in November 1998 between 46 states and nearly all of the U.S. tobacco manufacturers. The MSA provides for annual payments
in perpetuity by the manufacturers to the states in exchange for releasing all claims against the manufacturers and a pledge of no further
litigation. Tobacco manufacturers pay into a master escrow trust based on their market share, and each state receives a fixed percentage
of the payment as set forth in the MSA. A number of states have securitized the future flow of those payments by selling bonds pursuant
to indentures or through distinct governmental entities created for such purpose. The principal and interest payments on the bonds are
backed by the future revenue flow related to the MSA. Annual payments on the bonds, and thus risk to the Fund, are highly dependent on
the receipt of future settlement payments to the state or its governmental entity.

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RiverNorth Flexible Municipal Income Fund II, Inc.

Zero Coupon Bonds. The Fund may invest
in zero-coupon bonds. A zero coupon bond is a bond that does not pay interest either for the entire life of the obligation or for an initial
period after the issuance of the obligation. When held to its maturity, its return comes from the difference between the purchase price
and its maturity value. A zero coupon bond is normally issued and traded at a deep discount from face value. Zero coupon bonds allow an
issuer to avoid or delay the need to generate cash to meet current interest payments and, as a result, may involve greater credit risk
than bonds that pay interest currently or in cash. The market prices of zero coupon bonds are affected to a greater extent by changes
in prevailing levels of interest