Company: RFMZ
Filing Date: 2025-09-05
Form Type: N-CSR
Source: 0001398344-25-017693
Chunk: 46

Company: RiverNorth Flexible Municipal Income Fund II, Inc.
Filing Date: 2025-09-05
Form: N-CSR
Chunk 46
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other than debt representing leverage and any preferred stock
that may be outstanding). Such assets attributable to leverage include the portion of assets in tender option bond trusts of which the
Fund owns TOB Residuals (as defined below) that has been effectively financed by the trust’s issuance of TOB Floaters (as defined
below).

Other Investments. The Fund may invest,
directly or indirectly, up to 20% of its Managed Assets in taxable municipal securities. Any portion of the Fund’s assets invested
in taxable municipal securities does not count toward the 35%-75% of the Fund’s assets allocated to Municipal Bonds.

The Fund may at times establish hedging positions,
which may include short sales and derivatives, such as options, futures and swaps (“Hedging Positions”). Such Hedging Positions
may be used to attempt to protect against possible changes in the value of securities held in or to be purchased for the Fund’s
portfolio and to manage the effective maturity or duration of the Fund’s portfolio. The Fund’s Hedging Positions may, however,
result in income or gain to the Fund that is not exempt from regular U.S. federal income taxes.

A short sale is a transaction in which the Fund
sells a security that it does not own in anticipation of a decline in the market price of the security. The Fund may benefit from a short
position when the shorted security decreases in value by more than the cost of the transaction but will suffer a loss on a short sale
if the security’s value does not decline or increase. The Fund will not engage in any short sales of securities issued by CEFs.

The Fund also may attempt to enhance the return
on the cash portion of its portfolio by investing in total return swap agreements. A total return swap agreement provides the Fund with
a return based on the performance of an underlying asset, in exchange for fee payments to a counterparty based on a specific rate. The
difference in the value of these income streams is recorded daily by the Fund, and is typically settled in cash at least monthly. If the
underlying asset declines in value over the term of the swap, the Fund would be required to pay the dollar value of that decline plus
any applicable fees to the counterparty. The Fund may use its own NAV or any other reference asset that the Adviser or Subadviser chooses
as the underlying asset in a total return swap. The Fund limits the notional amount of all total return swaps in the aggregate to 15%
of the