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NexPoint Credit Strategies Fund Announces The Regular Monthly Dividend

NexPoint Credit Strategies Fund (NYSE: NHF) (“NHF” or the “Fund”) today announced its regular monthly dividend on its common stock. A dividend of $.050 per share will be payable on the last business day of October to shareholders of record at the close of business October 24, 2013. As of September 30, 2013, the Trust had estimated undistributed net investment income of approximately $8.1 million (unaudited).

The Fund is a closed-end fund managed by NexPoint Advisors, L.P. (the “Manager”), an affiliated adviser of Highland Capital Management, L.P. The Fund invests primarily in below investment grade debt and equity and has the ability to hedge risk. The Manager attempts to deliver consistent returns in excess of the Credit Suisse Hedge Fund and the HFRX Global Hedge Fund indices in a transparent, registered fund format with consistent monthly dividends.

Fund Earnings

In 2013, the Manager has recommended, and the board has approved, three dividend increases totaling 43%. The increases have been driven by increased earnings on portfolio positions and lower costs, particularly a decrease in the cost of its leverage facility. Prior to recommending increases in the dividend to the board, the Manager carefully analyzed each position in the Fund and its long-term earning potential as well as the Fund’s expense run rate. We feel confident the Fund can earn an amount that will sustain the current distribution rate. Below is a pro-forma calculation of the Fund’s anticipated earnings over the next twelve months based on the earnings as of September 30, 2013, and removing any one-time income and expense items:

Income/Expense Item
    Amount ($m)
Estimated Interest Income (including discount amortization) $ 50.0
Estimated Dividend Income   3.5  
Total Income 53.5
Expense Projection   (14.2 )
Net Income Available to Common Shareholders 39.3
Per Share Net Income $ .051
Current Per Share Dividend $ .050
 

Additionally, the Fund had an estimated undistributed net income (“UNI”) balance as of September 30, 2013 of $8.1 million (unaudited). This means the Fund has an accumulated excess of income earned historically versus dividends paid that it can utilize to maintain a steady $.05 per share monthly dividend in the event net income is lower than expected. It is anticipated dividends in the near-term will be covered by the net investment income earned by the Fund, meaning these dividends will not represent a return of capital.

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