Company: RFMZ
Filing Date: 2025-09-05
Form Type: N-CSR
Source: 0001398344-25-017693
Chunk: 17

Company: RiverNorth Flexible Municipal Income Fund II, Inc.
Filing Date: 2025-09-05
Form: N-CSR
Chunk 17
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 voting rights and decisions to be made with respect to any other rights relating to the Underlying Securities deposited
in the TOB Issuer are passed through to the Fund, as the holder of TOB Residuals. Such a transaction, in effect, creates exposure for
the Fund to the entire return of the Underlying Securities deposited in the TOB Issuer, with a net cash investment by the Fund that is
less than the value of the Underlying Securities deposited in the TOB Issuer. This multiplies the positive or negative impact of the Underlying
Securities’ return within the Fund (thereby creating leverage). Income received from TOB Residuals will vary inversely with the
short term rate paid to holders of TOB Floaters and in most circumstances, TOB Residuals represent substantially all of the Underlying
Securities’ downside investment risk and also benefits disproportionately from any potential appreciation of the Underlying Securities’
value. The amount of such increase or decrease is a function, in part, of the amount of TOB Floaters sold by the TOB Issuer of these securities
relative to the amount of TOB Residuals that it sells. The greater the amount of TOB Floaters sold relative to TOB Residuals, the more
volatile the income paid on TOB Residuals will be. The price of TOB Residuals will be more volatile than that of the Underlying Securities
because the interest rate is dependent on not only the fixed coupon rate of the Underlying Securities, but also on the short-term interest
rate paid on TOB Floaters.

For TOB Floaters, generally, the interest rate
earned will be based upon the market rates for municipal securities with maturities or remarketing provisions that are comparable in duration
to the periodic interval of the tender option, which may vary from weekly, to monthly, to extended periods of one year or multiple years.
Since the option feature has a shorter term than the final maturity or first call date of the Underlying Securities deposited in the TOB
Issuer, the Fund, if it is the holder of the TOB Floaters, relies upon the terms of the agreement with the financial institution furnishing
the option as well as the credit strength of that institution. As further assurance of liquidity, the terms of the TOB Issuer provide
for a liquidation of the Underlying Security deposited in the TOB Issuer and the application of the proceeds to pay off the TOB Floaters