Company: RFMZ
Filing Date: 2025-09-05
Form Type: N-CSR
Source: 0001398344-25-017693
Chunk: 24

Company: RiverNorth Flexible Municipal Income Fund II, Inc.
Filing Date: 2025-09-05
Form: N-CSR
Chunk 24
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 more quickly and
efficiently than if it were to make direct purchases or sales of securities capable of affecting a similar response to market factors.

Rule 18f-4 under the 1940 Act provides for the
regulation of the use of derivatives and certain related instruments by registered investment companies. Rule 18f-4 prescribes specific
value-at-risk leverage limits for certain derivatives users. In addition, Rule 18f-4 requires certain derivatives users to adopt and implement
a derivatives risk management program (including the appointment of a derivatives risk manager and the implementation of certain testing
requirements) and prescribes reporting requirements in respect of derivatives. Subject to certain conditions, if a fund qualifies as a
“limited derivatives user,” as defined in Rule 18f-4, it is not subject to the full requirements of Rule 18f-4. With respect
to reverse repurchase agreements, tender option bonds or other similar financing transactions in particular, Rule 18f-4 permits a fund
to enter into such transactions if the fund either (i) complies with the asset coverage requirements of Section 18 of the 1940 Act, and
combines the aggregate amount of indebtedness associated with all tender option bonds or similar financing with the aggregate amount of
any other senior securities representing indebtedness when calculating the relevant asset coverage ratio, or (ii) treats all tender option
bonds or similar financing transactions as derivatives transactions for all purposes under Rule 18f-4. The Fund is required to comply
with Rule 18f-4 and has adopted procedures for investing in derivatives and other transactions in compliance with Rule 18f-4.

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RiverNorth Flexible Municipal Income Fund II, Inc.

Market Risk Factors: In pursuit of its
investment objectives, the Fund may seek to use derivatives to increase or decrease its exposure to the following market risk factors:

Equity Risk: Equity risk relates to the change in
value of equity securities as they relate to increases or decreases in the general market.

Interest Rate Risk: Interest rate risk relates to
the risk that the municipal securities in the Fund’s portfolio will decline in value because of increases in market interest rates.

Risk of Investing in Derivatives

The Fund’s use of derivatives can result
in losses due to unanticipated changes in the market risk factors and the overall market. Derivatives may have little or no initial cash
investment relative to their market value