Document

This Code of Ethics (the “Code”) has been adopted by each of Prospect Enhanced Yield Fund and its consolidated subsidiaries (“PENF” or the “Trust”), and Prospect Enhanced Yield Management, LLC, the investment adviser (the “Adviser” or “PENFM”) of the Trust (together “Priority”), in compliance with Rule 17j-1 under the Investment Company Act of 1940 (the “1940 Act”) and Rule 204A-1 under the Investment Advisers Act of 1940 (the “Advisers Act”). The purpose of the Code is to establish standards and procedures for the detection and prevention of activities by which persons having knowledge of the investments, investment intentions and other non-public information of the Trust may abuse their fiduciary duty to the Trust, and otherwise to deal with the types of conflict of interest situations to which Rule 17j-1 and Rule 204A-1 are addressed.

The Code is based on the principle that the trustees and officers of the Trust, and the managers, partners, officers, personnel, and employees of the Adviser, who provide services to the Trust, (i) owe a fiduciary duty to the Trust to conduct their personal securities transactions in a manner that does not interfere with the Trust’s transactions or otherwise take unfair advantage of their relationship with the Trust, and (ii) owe a fiduciary duty of care, loyalty, honesty and good faith to act in the best interests of the Trust and its stockholders. All Access Persons (as defined below) are expected to adhere to this general principle as well as to comply with all of the specific provisions of this Code that are applicable to them. Any Access Person who is affiliated with another entity that is a registered investment adviser is, in addition, expected to comply with the provisions of the code of ethics that has been adopted by such other investment adviser.

Technical compliance with the Code will not automatically insulate any Access Person from scrutiny of transactions that show a pattern of compromise or abuse of the individual’s fiduciary duty to the Trust. Accordingly, all Access Persons must seek to avoid any actual or potential conflicts between their personal interests and the interests of the Trust and its stockholders. In sum, all Access Persons shall place the interests of the Trust before their own personal interests.

(A) “Access Person” means any Supervised Person (as defined below) of the Adviser who has access to non-public information regarding the Trust or any other clients’ purchase or sale of securities, or non-public information regarding the portfolio holdings of the Trust or any other clients for which the Adviser serves as investment adviser, or whose investment adviser or principal underwriter controls (as defined below) the Adviser, is controlled by the Adviser, or is under common control with the Adviser, or Advisory Person (as defined below) of the Trust or the Adviser.

(B) An “Advisory Person” of the Trust or the Adviser means: (i) any trustee, officer, general partner, or employee of the Trust or the Adviser, or any company in a control relationship to the Trust or the Adviser, who in connection with his or her regular functions or duties makes, participates in, or obtains information regarding the purchase or sale of any Covered Security (as defined below) by the Trust, or whose functions relate to the making of any recommendation with respect to such purchases or sales; and (ii) any natural person in a control relationship to the Trust or the Adviser,

(C) “Beneficial Ownership” is interpreted in the same manner as it would be under Rule 16a-1(a)(2) under the Securities Exchange Act of 1934, as amended (the “1934 Act”). Under this Rule, a person is deemed to have beneficial ownership of a security if the person, directly or indirectly, through contract, arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest in such security. A “pecuniary interest” in a security means the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the security. A person is presumed to have an “indirect pecuniary interest” in securities held by a member of his or her “Immediate Family” (although this presumption may be rebutted). For purposes of the Rule, “Immediate Family” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships. An indirect pecuniary interest also includes, among other things:

• subject to certain exceptions specified in the Rule, a performance-related fee, other than an asset-based fee, received by any broker, dealer, bank, insurance company, investment company, investment adviser, investment manager, trustee or person or entity performing a similar function;

• a person’s right to acquire equity securities through the exercise or conversion of any derivative security, whether or not presently exercisable. The term “derivative security” means any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege at a price related to an equity security, or similar securities with a value derived from the value of an equity security.

A person who is a stockholder of a corporation or similar entity is not deemed to have a pecuniary interest in portfolio securities held by the corporation or the entity if the stockholder is not a controlling stockholder of the corporation or the entity and does not have or share investment control over the corporation’s or the entity’s portfolio.

(E) “ComplySci” means the ComplySci Platform by Compliance Science, Inc., which Prospect employs for all compliance monitoring of Access Persons, including trade monitoring, certifications and attestations, and reporting of personal trading accounts and activities, gifts and entertainment and outside business affiliations.

(F) “Control” shall have the same meaning as that set forth in Section 2(a)(9) of the 1940 Act. Under the 1940 Act, “control” means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with the company. A person is presumed to control a company if he or she owns beneficially, either directly or through one or more controlled companies, more than 25% of the voting securities of that company.

(H) “Covered Security” means a security as defined in Section 2(a)(36) of the 1940 Act and Section 202(a)(18) of the Advisers Act, which includes: any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, pre-organization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. Covered Security also means any exchange traded fund.

“Covered Security” does not include: (i) direct obligations of the Government of the United States; (ii) bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements; (iii) shares issued by money market funds; (iv) shares issued by open-end investment companies registered under the 1940 Act that are not Reportable Funds (as defined below); and (v) shares issued by unit investment trusts that are invested exclusively in one or more open-end investment companies registered under the 1940 Act, none of which are Reportable Funds.

References to a Covered Security in this Code (e.g., a prohibition or requirement applicable to the purchase or sale of a Covered Security) shall be deemed to refer to and to include any warrant for, option in, or security immediately convertible into that Covered Security, and shall also include any instrument that has an investment return or value that is based, in whole or in part, on that Covered Security (collectively, “Derivatives”). Therefore, except as otherwise specifically provided by this Code: (i) any prohibition or requirement of this Code applicable to the purchase or sale of a Covered Security shall also be applicable to the purchase or sale of a Derivative relating to that Covered Security; and (ii) any prohibition or requirement of this Code applicable to the purchase or sale of a Derivative shall also be applicable to the purchase or sale of a Covered Security relating to that Derivative.

(J) “Initial Public Offering” means an offering of securities registered under the Securities Act of 1933, as amended (the “1933 Act”), the issuer of which, immediately before the registration, was not subject to the reporting requirements of Sections 13 or 15(d) of the 1934 Act.

(L) “Reportable Fund” means any investment company registered under the 1940 Act: (i) for which the Adviser serves as an investment adviser; or (ii) whose investment adviser or principal underwriter controls the Adviser, is controlled by the Adviser or is under common control with the Adviser.

(M) “Security Held or to be Acquired” by the Trust means: (i) any Covered Security which, within the most recent 15 days: (A) is or has been held by the Trust; or (B) is being or has been considered by the Trust or the Adviser for purchase by the Trust; and (ii) any option to purchase or sell, and any security convertible into or exchangeable for, a Covered Security described in Section II (F).

(N) “Supervised Person” means any partner, officer, trustee (or other person occupying a similar status or performing similar functions) or employee of the Adviser or other person who provides investment advice on behalf of the Adviser and is subject to the supervision and control of the Adviser, any other person designated as such by the Adviser’s Chief Compliance Officer.

A.As set forth in this Code, all Supervised Persons must comply with applicable federal securities laws and regulations. Access Persons may not engage in any investment transaction under circumstances in which he or she benefits from or interferes with the purchase or sale of investments by the Trust (or the Adviser on behalf of the Trust). In addition, Access Persons may not use information concerning the investments or investment intentions of the Trust, or such person’s ability to improperly influence such investment intentions, for personal gain or in a manner detrimental to the interests of the Trust.

Access Persons may not engage in conduct that is deceitful, fraudulent or manipulative, or that involves false or misleading statements, in connection with the purchase or sale of investments by the Trust. In this regard, Access Persons should recognize that Rule 17j-1 of the 1940 Act makes it unlawful for any affiliated person of the Trust, or any affiliated person of an investment adviser for the Trust, in connection with the purchase or sale, directly or indirectly, by the person of a Security Held or to be Acquired by the Trust to:

Access Persons should also recognize that a violation of this Code, Rule 17j-1 of the 1940 Act or Rule 204A-1 of the Advisers Act may result in the imposition of: (1) sanctions as provided by Section VIII below; or (2) administrative, civil and, in certain cases, criminal fines, sanctions or penalties. No Access Person may trade any security without advance approval from an Approving Officer.

Annex A and Section 9.3.2 of the Adviser’s Compliance Manual are each incorporated hereby, and to be regarded integral parts of this Section III.B as fully as if set forth herein in their entireties in haec verba. Any agreement or commitment of the Company, Adviser, Prospect Capital Management, L.P., Prospect Administration, LLC, or any affiliate or portfolio company of any of the foregoing (together, “Prospect”) to anyone must be pursuant to a formal written instrument signed by John Francis Barry III specifying the change from the prior state of affairs and the reasons why Prospect is agreeing to such change (including but not limited to any offer of employment, partnership, or joint venture, and any commitment, agreement, amendment, waiver, consent, change in ownership, interest rate or other term). This Section III.B and Annex A of the Adviser’s Compliance Manual expressly modify the Offer Letter between you and Prospect which you received at the commencement of your employment by Prospect.

Access Persons may not purchase or sell any individual publicly traded security, nor participate in any initial public offering or limited offering (as each term is defined in Rule 204A-1 of the Advisers Act) (such, together with individually traded public securities, “Covered Securities”)without advance approval from the Deputy CCO, or his or her designee, as requested and granted via ComplySci. The PCM CCO and PCM’s Head of Administration (currently Daria Becker) have access to view, and the Deputy CCO, or his or her designee, monitors, employee investment transactions through ComplySci. Notwithstanding, Access Persons do not need to seek advance approval for trades in Covered Securities conducted through any non-discretionary account over which the Access Person has no direct or indirect influence or control, as further discussed in Section V(D). Mutual Funds are exempt from categorization as Covered Securities. Additionally, Access Persons must comply with Section 9.4.2 of the Adviser’s Compliance Manual, which is excerpted below.

9.4.2 Restricted Lists. Upon notice from a supervised person that PENFM is in possession of MNPI regarding an issuer or otherwise at his or her discretion, the Deputy CCO, or his or her designee, will place the issuer on a “Restricted List” and circulate the updated list of all restricted securities to supervised persons. PENFM supervised persons and their immediate family members are prohibited from personally, or on behalf of an advisory account, purchasing or selling securities of an issuer during any period the issuer is listed on the Restricted List. Issuers of which PENFM Supervised Persons are expected to have MNPI on a regular basis should generally be placed on the Restricted List. The CCO, or his or her designee, shall inform all supervised persons when an issuer is removed from the Restricted List. An issuer should only be removed from the Restricted List after such time as the PENFM supervised person responsible for monitoring a given issuer or investment can confidently attest that PENFM is no longer in possession of MNPI regarding such issuer.

Currently, shares of the Trust (“PENF Shares”) are not listed on an exchange. Access Persons must seek pre-approval from the Adviser’s CCO, or his or her designee, prior to subscribing for PENF shares , purchasing PENF shares in a secondary market transaction or submitting PENF shares for repurchase (each of these transaction are referred to hereinafter as a “Trade”). Access Persons must comply with the policy governing trading in PENF Shares discussed below.

No affiliate, trustee, member, officer or employee of PENF or PENFM, or any other person who has access to non-public information pertaining to the operations, assets, investment activities or other material matters concerning the Trust ("Access Persons") and their immediate family members may Trade in PENF Shares:

(iv)other than during the period beginning on the business day immediately following the publication of any semi-annual, annual or other interim financial report that includes PENF’s net asset value (“NAV”) as of such reporting period and ending on the later of (x) the four week anniversary of such date, or (y) one week before the end of the next fiscal quarter; provided, that such “trading window” shall be closed (a) for the period beginning one week before the publication of PENF’s NAV in connection with a quarterly repurchase offer and ending on the business day following the publication of such NAV, and (b) at any time any Approving Officer comes into possession of

Additionally, Access Persons may make transactions in PENF Shares outside the trading window if they are made pursuant to a predetermined, non-discretionary trading plan (“automatic investment plan”), provided that such plan has been reviewed and approved by the PCM Head of Administration, or his or her designee. The PCM Head of Administration, Deputy CCO, or his or her respective designee, shall collect evidence of the non-discretionary nature of the automatic investment plan, such as a letter from the responsible investment adviser, prior to granting approval.. In addition, the Adviser may grant stock or other forms of equity of the Trust to an Access Person outside the trading window if it is made pursuant to a predetermined employee stock plan or vesting schedule, provided such grant has been reviewed and approved by the PCM Head of Administration, or his or her designee.

(A) No Access Person shall recommend any transaction in any Covered Securities by the Trust without having disclosed to each of the Adviser and the Trust, his or her interest, if any, in such Covered Security or the issuer thereof, including: the Access Person’s Beneficial Ownership of any Covered Securities of such issuer; any contemplated transaction by the Access Person in such Covered Securities; any position or other economic interest that the Access Person has with such issuer; and any present or proposed business relationship between such issuer and the Access Person (or a party in which the Access Person has a significant interest).

(B) An Access Person must comply with the Adviser’s insider trading policies and procedures with respect to material non-public information. Please refer to the section entitled “Insider Trading Procedures” in the Adviser’s Compliance Manual.

No later than 10 days after a person becomes an Access Person, such person must file with the Chief Compliance Officer or Deputy CCO, or his or her designee, via ComplySci a Holdings Report. The report requires the Access Person to list all Covered Securities in which the Access Person has Beneficial Ownership. It also requires the Access Person to list all brokers, dealers, and banks where the Access Person maintained an account in which any securities (not just Covered Securities) were held for the direct or indirect benefit of the Access Person on the date such person became an Access Person. The report must be current as of a date no more than 45 days prior to the date the person became an Access Person. For purposes of this section, the term “Access Person” shall also include such person’s Immediate Family sharing the same household.

No later than 30 days after the end of March, June, September, and December each year, each Access Person must file with the Chief Compliance Officer, or Deputy CCO, or his or her designee, via ComplySci a Quarterly Transactions Reporting Form acknowledging receipt of, and agreeing to comply with, this Code. This report requires each Access Person to list all transactions (other than transactions effected pursuant to an automatic investment plan) during the most recent calendar quarter in Covered Securities, in which transactions such Access Person had Beneficial Ownership. The report also requires each Access Person to list all brokers, dealers, and banks where such Access Person established an account in which any securities (not just Covered Securities) were held during the quarter for the direct or indirect benefit of the Access Person. For purposes of this section, the term “Access Person” shall also include such person’s Immediate Family sharing the same household. Copies of statements or confirmations containing the information specified in the report may be submitted in lieu of listing the transactions.

Access Persons submitting statements (or causing statements to be submitted, including as by enabling a broker feed from his or her accounts to ComplySci) will be deemed to have satisfied this reporting requirement, and need only sign off quarterly on having complied. For periods in which no reportable transactions were effected, the Quarterly Transactions Reporting Form shall contain a representation that no transactions subject to the reporting requirements were effected during the relevant time period.

Each Access Person must file with the Chief Compliance Officer or Deputy CCO, or his or her designee, via ComplySci an Annual Holdings Reporting Form. The report requires the Access Person to list all Covered Securities in which the Access Person has Beneficial Ownership as of December 31 of the prior year. It also requires the Access Person to list all brokers, dealers, and banks where the Access Person maintained an account in which any securities (not just Covered Securities) were held for the direct or indirect benefit of the Access Person as of December 31 of the prior year. The obligations of this Annual Holdings Reporting Form may be satisfied for all holdings in accounts linked via broker feed to ComplySci, and Access Persons will be accordingly deemed to have satisfied this reporting requirement upon pertinent certification. For purposes of this section, the term “Access Person” shall also include such person’s Immediate Family sharing the same household.

Notwithstanding the reporting requirements set forth in this Section V, an Independent Trustee who would be required to make a report under this Section V solely by reason of being a trustee of the Trust is not required to file a Quarterly Transactions or Annual Holdings Form upon becoming a trustee of the Trust. Such an Independent Trustee remains exempt from filing such Quarterly Transactions and Annual Holdings Forms unless such trustee knew or, in the ordinary course of fulfilling his or her official duties as a trustee of the Trust, should have known that during the 15-day period immediately preceding or after the date of the transaction in a Covered Security by the trustee, such Covered Security is or was purchased or sold by the Trust, or the Trust or the Adviser considered purchasing or selling such Covered Security.

An Access Person need not make any report under Section V with respect to transactions effected for, and Covered Securities held in, any account over which the Access Person has no direct or indirect influence or control (“non-discretionary account”), provided that the Access Person has provided adequate evidence that he or she has ceded all influence or control over such account.

An Access Person of the Adviser need not submit a Quarterly Transactions Form if all of the information in the report would duplicate information held by the Adviser in its records that are required to be recorded pursuant to Rule 204-2(a)(13) under the Advisers Act, as amended, so long as the Adviser receives such information no later than 15 days after the end of the applicable calendar quarter.

1.Promptly after account opening, but in no event later than 15 days after the end of each calendar quarter, add to ComplySci any account in which any securities are held for the direct or indirect benefit of the Access Person, and in doing so (a) identify the name of the broker, dealer or bank

2.Permit the linking of such newly established account via broker feed to ComplySci for the monitoring of all holdings and transactions. If a feed is unable to be established, instruct the brokers, dealers or banks with whom they maintain such an account to provide, or otherwise themselves provide, duplicate account statements to the Chief Compliance Officer of the Adviser or the Deputy CCO via ComplySci within two (2) weeks of the end of a typical statement period for the given account.

It is the responsibility of each Access Person to take the initiative to comply with the requirements of this Section V. Any effort by the Trust, or by the Adviser and its affiliates, to facilitate the reporting process does not change or alter that responsibility.

Any report required by this Section V must contain a statement that the report will not be construed as an admission that the person making the report has any direct or indirect Beneficial Ownership in the Covered Security to which the report relates.

Until disclosed in a public report to stockholders or to the Securities and Exchange Commission in the normal course, it is the Adviser’s fiduciary duty to keep all information concerning the identity of security holdings and financial circumstances of the Trust confidential. In addition, all information concerning the securities “being considered for purchase or sale” by the Trust shall be kept confidential by all Access Persons and disclosed by them to other Access Persons only on a “need to know” basis or as otherwise permitted by law. It shall be the responsibility of the Chief Compliance Officer of the Adviser and the Trust to report any inadequacy found in this regard to the trustees of the Trust.

Access Persons may not engage in any outside business activities that may give rise to actual, or the appearance of, conflicts of interest, interfere with the duties to the Trust or the Adviser, or otherwise jeopardize the integrity or reputation of the Trust or the Adviser. Similarly, no such outside business activities may be inconsistent with the interests of the Trust or the Adviser. Access Persons may not use the Trust’s or Adviser’s name or related trademarks for personal benefit (or for the benefit of a third party). All outside business activities, including directorships of public or private companies, held by Access Persons shall be reported to the Chief Compliance Officer or the Deputy CCO, or his or her designee, upon hire and prior to engagement in any such role.

It is the duty of each Access Person to read and understand the Code of Ethics and consult with the Chief Compliance Officer of the Adviser, or his or her designee, with respect to any portion of the Code that is not clearly understood. Access Persons who are trustees, managers, officers or employees of the Trust or the Adviser shall be required to certify initially, quarterly and annually that they have read this Code and that they understand it and recognize that they are subject to it and agree to comply with its terms.

No less frequently than annually, the Chief Compliance Officer of the Trust and the Adviser must furnish to the Trust’s board of trustees, and the board of trustees must consider, a written report that: (A) describes any issues arising under this Code of Ethics or procedures since the last report to the board of trustees, including, but not limited to, information about material violations of the Code or procedures and sanctions imposed in response to material violations; and (B) certifies that the Trust or the Adviser, as applicable, has adopted procedures reasonably necessary to prevent Access Persons from violating the Code.

Any violation of this Code shall be subject to the imposition of such sanctions by the Trust or the Adviser as may be deemed appropriate under the circumstances to achieve the purposes of Rule 17j-1 of the 1940 Act, Rule 204A-1 of the Advisers Act and this Code. The sanctions to be imposed shall be determined by the board of trustees, including a majority of the Independent Trustees, provided, however, that with respect to violations by persons who are trustees, managers, officers or employees of the Adviser (or of a company that controls the Adviser), the sanctions to be imposed shall be determined by the Adviser (or the controlling person thereof). Sanctions may include, but are not limited to, suspension or termination of employment, a letter of censure and/or restitution of an amount equal to the difference between the price paid or received by the Trust and the more advantageous price paid or received by the offending person with respect to any security transaction.

(1)Maintaining a current list of the names of all Access Persons with an appropriate description of their title or employment, including a notation of any directorships held by Access Persons who are officers or employees of the Adviser or of any company that controls the Adviser, and informing all Access Persons of their reporting obligations hereunder;

(4)Using ComplySci to maintain listings of all transactions effected by Access Persons who are subject to the requirement to file Quarterly Transactions, Annual Holdings, and Quarterly Acknowledgement Forms and reviewing such transactions against a listing of all restricted securities;

(5)Issuing either personally or with the assistance of counsel as may be appropriate, of any interpretation of this Code that may appear inconsistent with the objectives of Rule 17j-1 of the 1940 Act, Rule 204A-1 of the Advisers Act and this Code;

(7)Submitting a written report to the board of trustees of the Trust, no less frequently than annually, that describes any issues arising under the Code since the last such report, including but not limited to the information described in Section VII (B).

1.A copy of all codes of ethics adopted by the Trust or the Adviser and its affiliates, as the case may be, pursuant to Rule 17j-1 of the 1940 Act and/or Rule 204A-1 of the Advisers Act that have been in effect at any time during the past five (5) years;

4.A copy of each report made by the Chief Compliance Officer of the Adviser and/or the Trust to the board of trustees of the Trust for two (2) years from the end of the fiscal year of the Trust in which such report is made or issued and for an additional three (3) years in a place that need not be easily accessible;

5.A list of all persons who are, or within the past five (5) years have been, required to make reports pursuant to Rule 17j-1 of the 1940 Act, Rule 204A-1 of the Advisers Act and this Code of Ethics, or who are or were responsible for reviewing such reports;

7.A record of any decision, and the reasons supporting the decision, to approve the acquisition by Advisory Persons of securities in an Initial Public Offering or Limited Offering for at least five (5) years after the end of the fiscal year in which the approval is granted.

Prospect Access Persons are required to consider the impact of any actual or apparent conflicts of interest in their business dealings. Entertainment and gift-giving is a business setting is permissible only as intends to foster working relationships, and may in no way be employed to generate an unfair advantage. Access Persons are expected to adhere to the following guidelines.

•An Access Person must obtain prior permission from his or her supervisor to provide a gift, such as includes any item(s), or the entertainment event(s) of a given day, that exceeds $150 in total value (inclusive of any tax or tip) per person or per gift, whichever hits $150 first;

•If an Access Person forgets or neglects to preclear, please submit the preclearance form after the fact (understanding that this in effect transforms preclearance into post-clearance, but better than no record whatsoever in ComplySci). Please further understand that the actual amount spent should not exceed the pre-approved and pre-cleared amount absent extraordinary circumstances. In the event such real-time adjustments must be made, please make every effort to obtain on-the-spot approval, followed by notification to Deputy CCO, or his or her designee, of the actual amount spent. Deputy CCO, or his or her designee, will edit the original Gift & Entertainment Preclearance Request on ComplySci to note the discrepancy between the pre-cleared amount and the actual amount spent;