SEC Form 4

FORM 4		UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934 or Section 30(h) of the Investment Company Act of 1940	OMB APPROVAL OMB Number: 3235-0287 Estimated average burden hours per response: 0.5
	Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

1. Name and Address of Reporting Person* DONDERO JAMES D (Last) (First) (Middle) 13455 NOEL ROAD, STE 800 (Street) DALLAS TX 75240 (City) (State) (Zip)	2. Issuer Name and Ticker or Trading Symbol PROSPECT STREET INCOME SHARES INC [ CNN ]	5. Relationship of Reporting Person(s) to Issuer (Check all applicable) Director 10% Owner Officer (give title below) X Other (specify below) Affiliate - Investment Advisor
	3. Date of Earliest Transaction (Month/Day/Year) 04/16/2007
	4. If Amendment, Date of Original Filed (Month/Day/Year)	6. Individual or Joint/Group Filing (Check Applicable Line) X Form filed by One Reporting Person Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	3. Transaction Code (Instr. 8)		4. Securities Acquired (A) or Disposed Of (D) (Instr. 3, 4 and 5)			5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4)	6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
			Code	V	Amount	(A) or (D)	Price
Common Stock	04/16/2007		P(1)		5,682	A	$6.32	981,746.02	I	See footnote(2)(3)

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	4. Transaction Code (Instr. 8)		5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5)		6. Date Exercisable and Expiration Date (Month/Day/Year)		7. Title and Amount of Securities Underlying Derivative Security (Instr. 3 and 4)		8. Price of Derivative Security (Instr. 5)	9. Number of derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)	10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
				Code	V	(A)	(D)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares

Explanation of Responses:

1. Shares purchased by the Highland Capital Management LP Retirement Plan and Trust (the "Retirement Plan and Trust").

2. Includes (i) 291,400 shares held by the Highland CDO Opportunity Fund, Ltd. ("CDO"), (ii) 200,816 shares held by The Canis Major Trust ("Canis Major"), (iii) 108,799.020 shares held by the HCM Services Option Plan (the "Option Plan"),(iv) 330,251 shares held by the Highland 401(k) Plan (the "401(k) Plan") and (v) 50,500 shares held by the Retirement Plan and Trust.

3. Highland Capital Management, LP ("HCMLP") is the investment advisor for Prospect Street Income Shares, Inc. HCMLP maintains the 401(k) Plan, Retirement Plan and Trust and Option Plan for the benefit of its employees. Mr. Dondero is the President of HCMLP and the trustee of Canis Major, 401(k) Plan and Retirement Plan and Trust as well as a participant in the 401(k) Plan and Retirement Plan and Trust. CDO is controlled by HCMLP. The 401(k) Plan and Retirement Plan and Trust expressly disclaims beneficial ownership of the securities reported herein. Each of the CDO, Canis Major, HCMLP, the Option Plan and Mr. Dondero expressly disclaims beneficial ownership of the securities reported herein, except to the extent of their pecuniary interest therein.

Remarks:

	/s/ James Dondero	04/20/2007
	** Signature of Reporting Person	Date
Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
* If the form is filed by more than one reporting person, see Instruction 4 (b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
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