PHY Prospect ST HI New

Prospect Street� High Income Portfolio Inc. (the �Fund�) (NYSE: PHY), a diversified, closed-end management investment company, today announced that its Board of Directors has declared a regular distribution on its common stock, for the month of June 2008, of $0.0235 per share, payable on last business day of the month to holders of record at the close of business ten calendar days prior to such date. The following are annualized historical distribution rate calculations based on the total declared distribution for the month, the Fund�s net asset value (�NAV�) at month-end and the Fund�s month-end closing price (�Market Price�). Annualized Period-End Distribution Rates � Amount � NAV � Market Price � May 30, 2008 $ 0.0235 9.49 % 10.76 % April 30, 2008 $ 0.0235 9.72 % 10.72 % March 31, 2008 $ 0.0235 10.11 % 11.51 % February 29, 2008 $ 0.0235 10.04 % 11.06 % January 31, 2008 $ 0.0235 9.69 % 10.76 % December 31, 2007 $ 0.0235 9.01 % 10.37 % November 30, 2007 $ 0.0235 8.70 % 9.89 % October 31, 2007 $ 0.0235 8.25 % 9.37 % September 28, 2007 $ 0.0235 8.32 % 9.28 % August 31, 2007 $ 0.0235 8.52 % 9.37 % July 31, 2007 $ 0.0235 8.55 % 9.13 % June 29, 2007 $ 0.0235 7.99 % 8.62 % Distribution rates are calculated by annualizing the distribution declared during the period and then dividing the resulting annualized distribution by the month-end NAV (in the case of NAV) or the month-end closing price (in the case of Market Price). The distribution rate is based on an estimation of investment income and may or may not include a return of capital. The distribution rate is based solely on actual distributions, which are made at the discretion of the Board of Directors. This press release is not for tax reporting purposes but is being provided to announce the amount of the Fund�s distributions that have been declared by the Board of Directors. In early 2009, after definitive information is available, the Fund will send stockholders a Form 1099-DIV specifying how the distributions paid by the Fund during the calendar year should be characterized for purposes of reporting the distributions on a stockholder�s tax return (e.g., ordinary income, short-term capital gain, long-term capital gain or return of capital). About Prospect Street� High Income Portfolio Inc. Prospect Street� High Income Portfolio Inc. is a diversified, closed-end management investment company. The Fund�s investment objective is to provide high current income, while seeking to preserve stockholders� capital. The Fund seeks to primarily invest in fixed-income securities rated in the lower categories by established rating agencies (rated �BB� or lower by S&P and �Ba� or lower by Moody�s) or nonrated fixed-income securities deemed by the Fund�s investment adviser to be of comparable quality. Highland Capital Management, L.P. (�Highland�) has served as the Fund�s investment adviser since 2000. The Fund�s shares are listed on the NYSE under the symbol �PHY�. 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. Highland Capital Management, L.P., the Fund�s investment adviser, is a leading alternative investment management firm specializing in credit and structured products. Headquartered in Dallas, Texas, Highland manages assets on behalf of investors around the world with offices in New York and London. Past performance does not guarantee future results.