SecProbe.io

Mail Stop 0505             April 21, 2006

Philip Harris, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York  10036

Re: Highland Credit Strategies Fund (the “Trust”)
 Registration Statement on Form N-2
 File Numbers 333-132436; 811-21869

Dear Mr. Harris:

We have reviewed the registration statemen t referenced above and have the following
comments.

Registration Statement Cover Page

Provide a footnote to clarify th at the amount of shares bei ng registered includes shares
that could be issued pursuant to the underwriters’ over-allotment option.

Prospectus
Outside Front Cover Page
Expand the description of the Tr ust’s primary investment objectiv e to clarify the type of
returns its seeks to deliver to its investors;  for example, income or total return.  If the
Trust intends to deliver total return, then briefly explain how  it intends to realize capital
appreciation from its proposed investments.

Clarify to what “credit makets” the second sentence is referring; for example, debt
markets.

Philip Harris, Esq.
Page  2

Clarify whether the Trust’s primary and othe r investment objectives are fundamental or
whether they can be changed without shareholder approval.

Delineate the Trust’s secondary or other investment objectives.

Revise to provide a plain English version of th e phrase “directional, relative value, capital
structure arbitrage and event dr iven investment strategies.”

No Prior History

Present in a prominent fashion th e lack of a history of public trading in the Trust’s shares.
See Item 1.1.i. of Form N-2.

Expand the paragraph to disclose  specifically the risk of loss that trading at a discount
from net asset value creates for investors purchas ing shares in the initi al public offering.
See Item 1.1.i. of Form N-2.

Present the risk factor cross -references in bold face type.  See Item 1.1i.of Form N-2.

Pricing Table

In your response letter, confirm to the staff that the pricing table and f ootnotes thereto
will appear on the outside front cover page of the prospectus.

The amounts included under th e “Estimated Offering Expenses” column should also
include the estimated offering expenses of the Preferred Share offering that is expected to
occur soon after the completion of this o ffering, since that Preferred Share offering
expenses will be borne by the holders of the Trust’s Common Shares.

Expand footnote (2) to specify the amount that Highland, the Trust’s investment
manager, may pay certain underwriters as a sa les incentive fee, structuring fee and as
additional compensation in connection with th e offering, provided that certain specified
sales targets are met.

Refer to the second sentence of footnote (2).  Advise us in your letter whether all persons
receiving commissions will be registered broker/dealers.

Footnote (3) indicates that th e Trust may reimburse Highland for expenses incurred in
connection with this offering.  The pricing table should include as a sales load any
amounts borrowed to pay offering costs that are re quired to be paid in less than one year.
See Instruction 3 to Item 1.g. of Form N-2

Philip Harris, Esq.
Page  3
Investment Policies and Strategies

In the penultimate sentence of the first paragraph, specify the type of low correlation that
the Investment Manager will attempt to maintain on behalf of the Trust.

Specify the “other alternative investment st rategies” mentioned in the first paragraph on
page ii.

The disclosure indicates that an objective of the Trust is to provid e “high risk-adjusted
returns on capital.”   Explain what this means in the context of the hi gh risk nature of the
Trust’s proposed investments.   Will retu rns be lower when the Trust attempts to
minimize the risk of its portfolio  or are the returns expected to  be higher in relative to its
portfolio’s level of risk?

Since the Trust is a non-diversified invest ment company, the reference in the second
paragraph to “diversification”  is inappropriate.   Please make conforming deletions as
appropriate.

The SAI states that as a fundamental policy th e Trust will not concentrate its investments
in any single industry.  Accordingly, delete  the reference in th e second paragraph, and
elsewhere as applicable, to the possibility  of concentrating th e Trust’s portfolio by
industry.

Expand the last sentence of the third paragr aph to specify the maximum amount of Trust
assets that may devoted to opportunities in the non-U.S. credit markets.

Table of Contents

Delete the last sentence of the paragraph appearing imme diately after the table of
contents because it is incons istent with your obligation to deliver a current prospectus.
As an alternative, disclose that the Trust will amend the prospectus to disclose any
material changes.

Prospectus Summary

Investment Objectives

Revise the first three sentences to provide a plain English version of  the disclosure.  In
this regard, clarify whether the first part of the third sentence  refers to a market neutral
investment strategy.

Investment Policies and Strategy

Explain what is meant by the phrase “the In vestment Manager looks to leverage its
investment platform of approximately sixt y (60) credit invest ment professionals.”

Philip Harris, Esq.
Page  4
Briefly define the word “credits.”

Clarify whether the Investment  Manager believes that the credit investing it will provide
on behalf of the Trust is the type described in last sentence of the second paragraph.

Disclose in the last paragraph whether the In vestment Manager anticipates that the Trust
will experience a high portfolio turnover.

Investment Strategy

Specify the number of years that the Investment Manage r has primarily engaged in
“leveraged loan, high yield, structured pr oducts, and distressed markets” investing.

Indicate whether the Investment Manager will  use quantitative analysis when determining
which investments to purchase a nd sell on behalf of the Trust.

Specify the maximum percentage amount of the Trust’s assets that can be invested “in securities traded in foreign countries a nd denominated in foreign currencies.”  If
appropriate, add risk factor disclosure.

Briefly highlight whether the Trust could be deemed to be a statutory underwriter when
reselling any securities that it receives in connection with any of the transaction described
in the fourth paragraph.  If it could, then also highlight any as sociated risks, as applicable.

State the maximum amount of the Trust’s a ssets that may be invested in illiquid
securities.

In the last sentence of the last paragraph, clarify whet her the Investment Manager will
also pursue a defensive position during peri ods of uncertain economic or business
conditions.

Investment Manager

Provide a precise definition of “leverage” that will be used in the context of determining
the “total assets” that are subj ect to the Management Fee.  Th is should also be made clear
in the advisory contract between th e Trust and the Investment Manager.

In your response letter, describe what the Board of Trus tees considered when approving
administrative services compensation based on tota l assets, rather than net assets, for  the
administrative services that Highl and provides to the Trust.

Borrowings and Preferred Shares

Disclose the expected amount of the reduction in net asset value per common share that
will result from the anticipated offering of Preferred Shares.

Philip Harris, Esq.
Page  5
Distributions

Indicate whether distributions co uld also be made in the form of a return of shareholders’
capital.  Also confirm to the staff in your  letter that the Trust’s distribution policy
complies with the requirements of secti on 19 of the Investment Company Act.

It appears that the Trust’s di stribution policy contemplates the distribution of long-term
capital gains more frequently than what is permitted by section 19(b) of the Investment Company Act.  Please revise or advise th e staff in your response letter why you believe
that the Trust’s distribution policy comp lies with the statutory requirements.

Clarify that distributions made in additiona l shares of common stock of the Trust are
taxable to the shareholder recipient.  Also  note that the shareholder recipient will be
required to pay income taxes on the distri bution without a corres ponding receipt of cash
with which to pay such taxes.

State that each participant in the dividend rein vestment plan will pay a pro rata share of
brokerage commissions incurred in connec tion with open-market purchases, and that
participants requesting a sale of shares through the Plan Agen t are subject to a sales fee
and a brokerage commission.

Market Price of Shares

Reconcile the statement “investment companies like the Trust that invest primarily in
equity securities” with the Tr ust’s stated principal invest ment objective a nd strategies.

Principal Risks of the Trust

Concentration of the Trust’s Portfolio

Refrain form using the word “concentration” to describe the Trust’s portfolio since the
Trust has a fundamental policy no t to concentrate by industry.

Illiquidity of Investment

Disclose the maximum percentage of the Trust’ s portfolio that can be invested in illiquid
securities.  If there is none, so state.  If a ppropriate, also disclose the risks of investing
substantial amounts of the Trust’s portfolio in illiquid securities.

Bank Loans

Revise this and other risk f actor captions to convey and encap sulate the risk described in
the respective narrative risk factor disclosure.

Philip Harris, Esq.
Page  6
Distressed Debt

Specify the maximum amount of Trust assets th at can be invested in  the securities and
other obligations of distressed and bankrupt is suers.   If there is no maximum amount, so
state.

Indicate whether the Trust will ever invest for purposes of control.

High-Yield Securities

Clarify that “high-yield s ecurities” are commonly referred to as “junk securities.”

Leverage

Expand the disclosure to provide  a plain English discussion of leverage; for example, that
the Trust will borrow money to buy more investments; that with the us e of leverage there
is the risk that the interest rates paid by the Trust on the amount that it borrows will be
higher than the return on the Trust’s investments; etc.

Clarify that the fees and expens es attributed to leverage wi ll be dispropor tionately borne
by holders of the Trust’s common shares, a nd that the holders of the Trust’s common
shares will bear all offering expenses pertaining to leverage including, among other things, higher effective advisory fees.

Provide a separate summary risk factor high lighting the potentially differing interests of
holders of preferred shares versus holder s of common shares a nd the disproportionate
influence over the Trust’s affairs that could be accorded holders of preferred shares; for
example, whether holders of preferred shares could vote as a separate class and therefore
block proposals passed by the holders of co mmon shares, including a proposal to convert
the Trust to an open-end mutual fund.

If the Trust anticipates  issuing preferred securities with a minimum credit rating, disclose
the various restrictions that a credit rati ng agency may impose on the Trust’s portfolio
characteristics (such as liquidity, credit quality, etc.)

Small and Mid-Cap Stock Risk

If investing in companies with small or medium capitalizations is a principal investment strategy of the Trust, it shoul d be added to the Investme nt Strategy section of the
Prospectus Summary.

Emerging Markets Risk

If investing in securities of  the issuers based in underdeveloped emerging markets is a
principal investment strategy of the Trust, it should be added to the Investment Strategy
section of the Prospectus Summary.

Philip Harris, Esq.
Page  7

Securities Lending Risk

State that the Trust may lend its portfolio securi ties to a maximum of one-third of its total
assets.

Interest Rate Risk

Indicate whether the Trust may invest in invers e floaters and, if so, highlight the risk of
such an investment.

Prepayment Risk

If investing in mortgage-backed securities is a principal investment strategy of the Trust,
it should be added to the I nvestment Strategy section of the Prospectus Summary.

Strategic Transactions Risk

Change the heading of this se ction to “Derivatives Risk.”

Clarify that the Trust may invest in derivatives for speculative purposes.

Synthetic Securities

Disclose any maximum amount of F und assets that may be invested  in derivatives.  In the
alternative, disclose that there is no such  maximum and add heightened risk factor
disclosure, as appropriate.

Short Sales

If short selling is a principal investment strategy of the Trust,  then it should be added to
the Investment Strategy secti on of the Prospectus Summary.

Confirm to the staff in your letter that all cost s of short selling are included in the “Other
Expenses” line item of the fee table.

Summary of Trust Expenses

In the introductory paragraph a nd in the fee table, delete th e respective references to “or
employed some other from of leverage” and “or other leverage is used.”  Make a
conforming deletion to footnote (5).

Add a “Total annual expenses pl us cost of servicing Prefer red Shares” line item after the
“Total annual expenses” line item in the fee table presentation.  Th e cost of servicing
Preferred Shares component should include all of the costs of servicing and issuing

Philip Harris, Esq.
Page  8
Preferred Shares as a percentage of net assets  attributable to Comm on Shares.  Revise the
disclosure contained in f ootnote (4) as appropriate.

Expand footnote (2) to indicate that each participant will also pay a pro rata share of
brokerage commissions incurred in open-market purchases when the dividend reinvestment occurs at a time that the net asset value per common sh are is greater than
the market value per common share.

Delete footnote (3) and instead include as  part of the “Management fee” the amount
payable to Highland for the provision of administrative services to the Trust.

In your response letter, describe the “non-advisory servi ces provided to the Trust by the
employees of Highland” that is referred to in footnote (4).

Clarify in footnote (4) whethe r the Trust currently anticipat es incurring any indebtedness
or paying any interest during the next twelve months.

Reduce the size of the table presented in footnot e (5) so that it is given less prominence
than the primary fee table presentation.  Als o, change the parenthetical in the column
heading to “(assumes Preferred Shares are no t issued or no other leverage is used).”

The Example should immediately follow the f ee table presentation and not be preceded
by any footnotes.  Please revise  the presentation accordingly.

Confirm to the staff in your response letter that the lead-in para graph of the Example
includes all items called for by General Instructio n 10.c. to Item 3.1 of Form N-2.   In this
regard, change “(1) total net a nnual expenses of      % of  net assets attributable to
common shares” to “(1) total annual expenses  plus cost of servicing Preferred Shares
of     % of net assets attributable to common shares.”

Revise to present in a prominent fashion the in formation contained in the first sentence of
footnote (1) to the Example.  See  Instruction 10.d. to Item 3.1.of Form N-2.

Use of Proceeds

Specify the amount of proceeds that will be used to reimburse th e underwriters and any
affiliates of the Trust.

Portfolio Composition

The information contained in the first two se ntences of the second paragraph should also
be included on the cover page of the prospectus.  In this regard, expand the first sentence
of the second paragraph to identify the Trus t’s “principal investment categories.” Also
change the word “Fund’s” to "Trust’s.”

Philip Harris, Esq.
Page  9

Senior Loans

Briefly highlight the consequen ces and risks of structural su bordination in the conte