Prospect Street(R) Income Shares Inc. Announces Redemption of Auction Rate Cumulative Preferred Shares

  
    
  
  
    
      Prospect Street Income Shares Inc. (the “Fund”) 
      (NYSE:CNN) announced today that its Board of Directors approved the full 
      redemption of the Fund’s outstanding Series T 
      Auction Rate Cumulative Preferred Shares pursuant to their terms. The 
      redemption date will be July 16, 2008 and the redemption price will be 
      $25,000 per share, which is equal to the liquidation preference per 
      share.
    
    
      Highland Capital Management, L.P. (“Highland”), 
      the Fund’s investment adviser, is a leading 
      alternative investment management firm specializing in credit and 
      structured products, with approximately $37.3 billion in assets under 
      management as of April 30, 2008. Headquartered in Dallas, Texas, 
      Highland manages assets on behalf of investors around the world with 
      offices in New York and London.
    
    
      About Prospect Street® Income Shares Inc.
    
    
      Prospect Street® Income Shares Inc. is a 
      diversified, closed-end management investment company. The Fund’s 
      investment objective is to provide high current income, with capital 
      appreciation as a secondary objective. The Fund seeks to primarily 
      invest in debt securities rated in the four highest categories (Baa/BBB 
      or higher) by an established rating agency or nonrated debt securities 
      deemed by the Fund’s investment adviser to be 
      of comparable quality. Highland Capital Management, L.P. (“Highland”) 
      has served as Fund’s investment adviser since 
      2001. Fund’s shares are listed on the NYSE 
      under the symbol “CNN”. 
      An investment in the Fund is not appropriate for all investors. No 
      assurance can be given that the Fund will achieve its investment 
      objectives.
    
    
      Shares of closed-end investment companies frequently trade at a discount 
      to net asset value. The price of the Fund’s 
      shares is determined by a number of factors, several of which are beyond 
      the control of the Fund. Therefore, the Fund cannot predict whether its 
      shares will trade at, below or above net asset value.
    
    
      Statements made in this release that look forward in time involve risks 
      and uncertainties and are forward-looking statements within the meaning 
      of the Private Securities Litigation Reform Act of 1995. Such risks and 
      uncertainties include, without limitation, the adverse effect from a 
      decline in the securities markets or a decline in the Fund’s 
      performance, a general downturn in the economy, competition from other 
      closed-end investment companies, changes in government policy or 
      regulation, inability of the Fund’s 
      investment adviser to attract or retain key employees, inability of the 
      Fund to implement its investment strategy, inability of the Fund to 
      manage rapid expansion and unforeseen costs and other effects related to 
      legal proceedings or investigations of governmental and self-regulatory 
      organizations.
    
    
      Past performance does not guarantee future results.