FOR IMMEDIATE RELEASE

Contact:          Karen J. Thelen
                  Prospect Street High Income Portfolio Inc.
                  (617) 742-3800


                   PROSPECT STREET HIGH INCOME PORTFOLIO INC.
              ANNOUNCES STOCKHOLDER APPROVAL OF ADVISORY AGREEMENT
                     WITH HIGHLAND CAPITAL MANAGEMENT, L.P.
                        AND ELECTION OF SIX NEW DIRECTORS


BOSTON,  MA, December 17, 1999 - Prospect Street High Income Portfolio Inc. (the
"Fund")  (NYSE:PHY)  announced  today  that  its  stockholders  approved  a  new
investment  advisory agreement between the Fund and Highland Capital Management,
L.P.  of Dallas,  Texas  ("Highland")  to take  effect  upon the  closing of the
acquisition of certain assets of Prospect Street Investment Management Co., Inc.
("PSIM")  by Highland  (the  "Transaction").  The new  advisory  agreement  will
provide for Highland to render its investment  advisory  services to the Fund in
accordance  with the same  advisory fee  schedule  currently in effect under its
advisory  agreement with PSIM.  The closing of the  Transaction is scheduled for
January 21,  2000.  The closing of the  transaction  is also  subject to certain
other  conditions,  including  refinancing  by the  fund of it  outstanding  $50
million senior loan facility.
         The stockholders  also elected James Dondero,  Mark Okada, John William
Honis,  Timothy K. Hui,  Scott F.  Kavanaugh  and James F. Leary to the Board of
Directors to serve  commencing upon the closing of the Transaction and until the
next annual meeting of the Fund's  stockholders.  John S.  Albanese,  C. William
Carey,  Harlan D. Platt and  Christopher  E. Roshier  will  continue to serve as
Directors. Upon the closing of the Transaction,  Richard E. Omohundro, Jr., John
A. Frabotta, and Joseph G. Cote will resign from the Board.
         Highland is an investment manager for a number of structured investment
vehicles and separate accounts whose portfolios  include senior debt instruments
and high-yield  securities of high-yield issuers.  Highland has advised the Fund
that  it  manages   approximately   $5.5   billion   in   below-investment-grade
("high-yield") fixed income portfolios for institutional investors.



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