Company: RFMZ
Filing Date: 2025-09-05
Form Type: N-CSR
Source: 0001398344-25-017693
Chunk: 26

Company: RiverNorth Flexible Municipal Income Fund II, Inc.
Filing Date: 2025-09-05
Form: N-CSR
Chunk 26
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 of the contract and the price at which the index contract was originally
written. Futures transactions may result in losses in excess of the amount invested in the futures contract. There can be no guarantee
that there will be a correlation between price movements in the hedging vehicle and in the portfolio securities being hedged. An incorrect
correlation could result in a loss on both the hedged securities in a fund and the hedging vehicle so that the portfolio return might
have been greater had hedging not been attempted. There can be no assurance that a liquid market will exist at a time when a fund seeks
to close out a futures contract or a futures option position. Lack of a liquid market for any reason may prevent a fund from liquidating
an unfavorable position, and the fund would remain obligated to meet margin requirements until the position is closed. In addition, a
fund could be exposed to risk if the counterparties to the contracts are unable to meet the terms of their contracts. With exchange-traded
futures, there is minimal counterparty credit risk to the Fund since futures are exchange-traded and the exchange’s clearinghouse,
as counterparty to all exchange-traded futures, guarantees the futures against default. The Fund is party to certain enforceable master
netting arrangements, which provide for the right of offset under certain circumstances, such as the event of default.

When a purchase or sale of a futures contract
is made by a fund, the fund is required to deposit with its custodian (or broker, if legally permitted) a specified amount of liquid assets
(“initial margin”). The margin required for a futures contract is set by the exchange on which the contract is traded and
may be modified during the term of the contract. The initial margin is in the nature of a performance bond or good faith deposit on the
futures contract that is returned to the Fund upon termination of the contract, assuming all contractual obligations have been satisfied.
These amounts are included in Deposit with broker for futures contracts on the Statement of Assets and Liabilities. Each day the Fund
may pay or receive cash, called “variation margin,” equal to the daily change in value of the futures contract. Such payments
or receipts are recorded for financial statement purposes as unrealized gains or losses by the Fund. Variation margin does not represent
a borrowing or loan by the Fund but instead is a settlement between the Fund and the broker of the amount one would owe the other if the
futures contract expired. When the contract is closed, the Fund records