SecProbe.io

May  4, 2011

Laurie A. Churchill , Esq.
Ropes & Gray LLP
Prudential Tower
800 Boylston Street
Boston, MA  02199- 3600

Re: Highland Credit Strategies Fund (the “Trust”)
 Registration Statement on Form N -2
 File Numbers 333 -173004; 811- 21869

Dear M s. Churchill :

We have reviewed the registration statement referenced above and have the following comments.
Prospectus
 Outside Front Cover Page
Clarify how investing in equities is consistent with a credit strategy.
 Provide a plain English version of the phrase “capital structure arbitrage, pair trades and shorting.”
 Clarify that, as of February 28, 2011, approximately 78% of the Trust’s investment portfolio consisted of “junk” securities.
 If possible, disclose the per share net a sset value of the Trust’s common shares as of a
date more current than March 21, 2011.
 File forms of each “related prospectus supplement ” that the Trust intends to deliver with
“this  prospectus .”  In this regard, expand the disclosure to make clear that the “related
prospectus supplement” and “this prospectus” will together constitute the prospectus for an offering of the Trust’s securities.

Laurie A. Churchill, Esq.
Page  2
 The fifth paragraph states that the Trust may offer its  common shares directly to one or
more purchasers.  In your response letter, describe the Trust’s plans to engage in self -
underwritten offerings or at -the-market offerings.
 In your response letter, confirm that the information contained in the seventh and eighth paragraphs will appear on the outside front cover page of the prospectus .

Table of Contents
Delete the last sentence of the paragraph appearing immediately after the table of
contents because it is inconsistent with an  obligation to deliver a cur rent prospectus  in
connection with sales of securities being registered by the Trust .  As an alternative,
disclose that the Trust will amend the prospectus t o disclose any material changes.

About This Prospectus
Clarify that all of the material terms of “any exhibits and the additional information
described under the heading…’Where You Can Find Additional Information’ ” will
nonetheless be summarized in the prospectus or applicable prospectus supplement .

 Prospectus Summary
 Offerings
Clarify that any offering of securities by a closed -end investment company that requires
shareholder approval must occur, if at all, within one year after receiving such
shareholder approval.
 Princip al Risks of the Trust
It appears that risk disclo sure should be added to highlight the matters discussed on pages
78 &  79 under the heading “Certain Legal Proceeding s.”  Also, in your response letter,
please inform us how the Trust satisfied the filing requirements of section 33 of the
Investment Company Act of 1940.
 Risks of Investing in High- Yield Securities
Add the phrase “also known as junk securities” at the end of the risk factor caption.

 Risks of Investing in Structured Finance Securities
Highlight the categories of receivables and other financial assets that will back the
structured finance securities in which the Trust may invest.

Laurie A. Churchill, Esq.
Page  3

 Risks of Non- Diversification and Other Focused Strategies
We note from the penultimate sentence that the “focus of the portfolio in any one
industry or group of industries would subj ect the Trust to a greater degree of risk with
respect to economic downturns relating to such industry or industries.”  It appears from
the Trust’s annual report for the period ended December 31, 2010, that approximately 24.8% of its portfolio is invested in the securities of issuers that are part of the healthcare industry.  Expand the disclos ure to highlight the material risks of such an investment
“focus.”  In this regard, discuss in your response letter how the Board of Trustees will monitor to ensure t hat the Trust does not violate its fundamental policy not to invest 25%
or more of the value of its total assets in any single industry or group of industries.

Offerings
The information appearing on pages 35 & 36, unde r the “Offerings” caption , should
instead be integrated with the information included in the “Prospectus Summary”
beginning on page 7.

Summary of Trust Fees and Expenses
Please note that any prospectus supplement used with any offering from this shelf
registration statement should include a fee table and example that is updated with the most current information known to the Trust.    Delete the first paragraph and instead provide only the information, and in the location, prescribed by General Instruction 1 of Item 3 to Form N -2.
 Delete the “Percentage of Subscription Price” column heading from the “Shareholder Transaction Expenses” section of the fee table.
 Delete the p hrase “by the Trust/” from the second line item appearing under the
“Shareholder Transaction Expenses” section of the fee table.
 We note the absence of the Acquired Fund Fees & Expenses line item from the Trust’s fee table.  Please explain in your respons e letter the reason for its absence.
 The footnotes should be presented in non- italic regular type.
 Expand footnote (5) to disclose that, because the base management fee is based on the  Trust’s gross assets, when the Trust uses leverage, the base manage ment fee as a
percentage of net assets attributable to common stock will increase
 The interest, dividends and other costs of short selling should be presented as a separ ate
line item in the “Annual Expenses” section of the fee table whenever  such costs ar e
expected to exceed five basis points.

Laurie A. Churchill, Esq.
Page  4

 Financial Highlights
In the second sentence, replace the phrase “is derived from the Trust’s financial
statements that were” with the phrase “in the table was.”  See  General Instruction 8. to
Item 4.1 of Form N -2.
 Disclose that the Trust’s performance has been enhanced by the existence of the voluntary waiver of fees and expenses which may not continue into the future.

Plan of Distribution
Expand the disclosure to indicate the extent to which the Trust’s common shareholders
will indirectly bear all of the various expenses incurred in connection with all of the
distribution activities described therein.

Please confirm to the staff in your response letter that the Trust will submit any
underwritten offering to the NASD for its prior approval of the underwriting terms .

 Credit Default Swaps
Expand the disc ussion to highlight the risks of selling credit default swaps.  Disclose
whether the Trust will establish a segregated account to cove r each credit default swap
and whether the Trust ’s credit default swap activities could expose  it to potentially
unlimited losses. Identify the maximum percentage of Fund assets that may be allocated
to credit default swaps and all other derivatives and in dicate whether the Fund may use
derivatives for speculative purposes.  See generally Letter from Barry D. Miller,
Associate Director, Division of Investment Management, SEC to Karrie McMillan,
General Counsel, ICI (July 30, 2010).

 Other Investment Companies
Clarify whether investing in other investment companies, including ETFs, is a principal
investment strategy of the Trust.    Clarify that, for purposes of satisfying the Trust’s 80% asset test, each investment company in which the Trust invests will h ave a policy to invest at least 80% of its assets
in credit obligations.

Valuations
Specify in which bullet valuation category swaps and other derivatives fall.

Laurie A. Churchill, Esq.
Page  5
 Description of Capital Structure
Clarify whether units, as well as their constituent securities, and preferred shares will be publicly offered by the Trust.  If they will be publicly offered by the Trust, also disclose when they will be registered under the Securities Act of 1933.

Subsc ription Rights
In your response letter, confirm that each subscription rights offering will satisfy the
requirements of section 23(b) of the Investment Company Act of 1940.
 Include risk disclos ure about the potential negative consequences of the possibility  of
multiple rights offerings  including, among other things, the dilutive impact to NAV and
voting  and the potential impact of market overhang on the price of the Trust’s common
stock  See generally Investment Company Act Release No. 9932 (Sept. 15, 1977) .
 In your response letter, confirm that the subscription rights offerings will entitle the Trust’s record date shareholders at the time of any transferable subscription rights
offering to purchase one new share for every three rights held.

Disclose, if true,  that the Trust’s common shareholders will indirectly bear all of the
expenses of the subscription rights offer ings, regardless of whether the Trust’s common
stockholders exercise any subscription rights .

Statement of Additional Information
 Anti-Takeover Provisions in the Agreement and Declaration of Trust
In the last sentence of the last paragraph clarify that the material provisions of the Trust’s
Agreement and Declaration of Trust are nonetheless summarized in the Statement of Additi onal Information.  If necessary, expand the disclosure to ensure that all material
provisions are, in fact, summarized therein.

Financial Statements
Our accounting staff will contact you directly and provide you with their financial
statement and other accounting -related comments.
 In your response letter, discuss the Trust’s plans to update the  financial statements
incorporated by reference into the SAI during the shelf registration o ffering period.

 Exhibits
Please file as an exhibit the legality of shares opinion, and related consent of counsel,
with your next pre -effective amendment.   In this regard, it appears that it may be
necessary for the Trust to undertake to file an unqualified legality of shares opinion, and

Laurie A. Churchill, Esq.
Page  6
related consent of counsel, in a post -effective amendment with each takedown from this
shelf registration statement.

 Closing
We note that portions of the filing are incomplete.  We may have additional comments on
such portions when you complete them in a pre -effective amen dment, on disclosures
made in response to this letter, on information supplied supplementally, or on exhibits added in any pre -effective amendments.
 Whenever a comment is made in one location, it is considered applicable to all similar disclosure appearing elsewhere in the registration statement.
 Response to this letter should be in the form of a pre -effective amendment filed pursuant
to Rule 472 under the Securities Act.  The pre- effective amendment filing should be
accompanied by a supplemental letter that includes your responses to each of these comments.  Where no change will be made in the filing in response to a comment, please
indicate this fact in a supplemental letter and briefly state the basis for your position.
 Please advise us if you  have submitted or expect to submit an exemptive application or
no-action request in connection with your registration statement.
 You should review and comply with all applicable requirements of the federal securities laws in connection with the preparati on and distribution of a preliminary prospectus.
 We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filings reviewed by the staff to be certain that they have provided all information investors require for an informed decision.  Since the Trust and its management are in possession of all facts relating to the Trust’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.
 In the event the Trust requests acceleration of t he effective date of the pending
registration statement, it should furnish a letter, at the time of such request, acknowledging that

• the Trust is responsible for the adequacy and accuracy of the disclosure in
the filing;
• should the Commission or the sta ff, acting pursuant to delegated authority,
declare the filing effective, it does not foreclose the Commission from
taking any action with respect to the filing;
• the action of the Commission or the staff, acting pursuant to delegated
authority, in declarin g the filing effective, does not relieve the Trust from
its full responsibility for the adequacy and accuracy of the disclosure in
the filing; and

Laurie A. Churchill, Esq.
Page  7
• the Trust may not assert this action as a defense in any proceeding
initiated by the Commission or any person  under the federal securities
laws of the United States.

In addition, please be advised that the Division of Enforcement has access to all information you provide to the staff of the Division of Investment Management in connection with our review of your filing or in response to our comments on your filing.
 We will consider a written request for acceleration of the effective date of the registration statement as confirmation of the fact that those requesting acceleration are aware of their respective resp onsibilities.
 Should you have any questions regarding this letter, please contact me at (202) 551- 6964.
       Sincerely,
        Dominic Minore
      Senior Counsel