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corresp

June 10, 2011

VIA EDGAR AND FACSIMILE

Securities and Exchange Commission

Division of Investment Management

100 F Street, NE

Washington, DC 20549

Attention:Domenic Minore, Esq.

    Re:

    Comment Letter Dated May 4, 2011

Highland Credit Strategies Fund

Registration Statement on Form N-2

File Nos. 333-173004 and 811-21869

Dear Mr. Minore:

On behalf of Highland Credit Strategies Fund (the “Trust”), a Delaware statutory trust,
please find below the Trust’s responses to the comments provided in your letter dated May 4, 2011
(the “Comment Letter”) relating to the Trust’s Registration Statement on Form N-2 filed
with the Securities and Exchange Commission (the “Commission”) on March 23, 2011 (File Nos.
333-173004 and 811-21869) (the “Registration Statement”).

For your convenience and in order to expedite the staff’s review of the Trust’s responses to the
Comment Letter, the Trust is supplementally providing to the staff a copy of relevant portions of
the Registration Statement, which have been marked to indicate the changes from the Registration
Statement as originally filed on March 23, 2011. We have set forth our responses below, and are
filing Pre-Effective Amendment No. 1 to the Registration Statement (“Amendment No. 1”),
which reflects these comments (as applicable), simultaneously with this letter.

For reference purposes, the comments set out in the Comment Letter are reproduced in bold in
numerical sequence in this letter, and the corresponding responses of the Trust are shown below
such comments. References to page numbers are to the page numbers of Amendment No. 1.

Prospectus

    1.

    Outside Front Cover Page — Clarify how investing in equities is consistent
with a credit strategy.

    RESPONSE TO COMMENT 1

    The Trust supplementally advises the staff that, although its primary investment
strategy involves investments in debt securities, the Trust may also take equity
positions in situations where opportunities may develop. The Registration Statement
makes this strategy clear in the Prospectus Summary under “Investment Strategies”
and in the “Investment Strategies” section of the prospectus beginning on page 41.
In addition, the Trust discloses the relevant risks related to investments in equity
securities in the “Principal Risks of the Trust” section of the prospectus beginning
on page 58.

    2.

    Outside Front Cover Page — Provide a plain English version of the phrase
“capital structure arbitrage, pair trades and shorting.”

    RESPONSE TO COMMENT 2

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 2.

    3.

    Outside Front Cover Page — Clarify that, as of February 28, 2011,
approximately 78% of the Trust’s investment portfolio consisted of “junk” securities.

    RESPONSE TO COMMENT 3

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 2.

    4.

    Outside Front Cover Page — If possible, disclose the per share net asset value
of the Trust’s common shares as of a date more current than March 21, 2011.

    RESPONSE TO COMMENT 4

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 2.

    5.

    Outside Front Cover Page — 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.

    RESPONSE TO COMMENT 5

    The Trust advises the staff that no offering is presently contemplated, and
therefore no form of prospectus supplement has been prepared at this time. The

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    Registration Statement has been revised to make clear that the “related prospectus
supplement” and “this prospectus” will together constitute the prospectus for an
offering of the Trust’s securities, as shown in Annex A. See page 3.

    6.

    Outside Front Cover Page — 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.

    RESPONSE TO COMMENT 6

    The Trust supplementally advises the staff that it currently does not have any plans
to engage in self-underwritten offerings or at-the-market offerings.

    7.

    Outside Front Cover Page — 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.

    RESPONSE TO COMMENT 7

    The Trust supplementally confirms to the staff that the information contained in the
seventh and eighth paragraphs will appear on the outside front cover page of the
prospectus.

    8.

    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 current prospectus in connection with sales of securities being registered
by the Trust. As an alternative, disclose that the Trust will amend the prospectus to
disclose any material changes.

    RESPONSE TO COMMENT 8

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 4.

    9.

    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.

    RESPONSE TO COMMENT 9

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 6.

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    10.

    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.

    RESPONSE TO COMMENT 10

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 7.

    11.

    Prospectus Summary — Principal Risks of the Trust — It appears that risk
disclosure should be added to highlight the matters discussed on pages 78 & 79 under
the heading “Certain Legal Proceedings.” 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.

    RESPONSE TO COMMENT 11

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 18.

    The Trust supplementally advises the staff that the matters described on pages 78
and 79 under the heading “Certain Legal Proceedings” do not fall within the
categories of civil actions requiring filings under Section 33 of the Investment
Company Act of 1940 because neither matter is a civil action brought by a registered
investment company or shareholder thereof, and respectfully directs the staff to SEC
No-Action Letter to Investment Company Institute, released on September 11, 1985.

    12.

    Prospectus Summary — Risks of Investing in High-Yield Securities — Add the
phrase “also known as junk securities” at the end of the risk factor caption.

    RESPONSE TO COMMENT 12

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 12.

    13.

    Prospectus Summary — 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.

    RESPONSE TO COMMENT 13

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 31.

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    14.

    Prospectus Summary — 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 subject 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 disclosure 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 that 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.

    RESPONSE TO COMMENT 14

    The Trust supplementally advises that staff that, as disclosed on page 5 of the
Trust’s Annual Report to Shareholders for the period ended December 31, 2010, as of
December 31, 2010, approximately 20.4% of the Trust’s portfolio was invested in
securities issued by companies in healthcare industry. In response to this comment,
we have added disclosure to the “Risks of Non-Diversification and Other Focused
Strategies” heading in the “Principal Risks of the Trust” section of the
Registration Statement, as shown in Annex A. See page 33.

    15.

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

    RESPONSE TO COMMENT 15

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See pages 7 and 35.

    16.

    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.

    RESPONSE TO COMMENT 16

    The Trust acknowledges this comment and confirms that it will comply with this
requirement in any prospectus supplement.

    17.

    Summary of Trust Fees and Expenses — 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.

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    RESPONSE TO COMMENT 17

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 37.

    18.

    Summary of Trust Fees and Expenses — Delete the “Percentage of Subscription
Price” column heading from the “Shareholder Transaction Expenses” section of the fee
table.

    RESPONSE TO COMMENT 18

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 37.

    19.

    Summary of Trust Fees and Expenses — Delete the phrase “by the Trust/” from the
second line item appearing under the “Shareholder Transaction Expenses” section of the
fee table.

    RESPONSE TO COMMENT 19

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 37.

    20.

    Summary of Trust Fees and Expenses — We note the absence of the Acquired Fund
Fees & Expenses line item from the Trust’s fee table. Please explain in your response
letter the reason for its absence.

    RESPONSE TO COMMENT 20

    The Trust supplementally notes that “Acquired Fund Fees & Expenses” accounts for
less than 0.01% of average net assets. Accordingly, it has added a footnote to
“Other Expenses” disclosing this information, as shown in Annex A. See page
37.

    21.

    Summary of Trust Fees and Expenses — The footnotes should be presented in
non-italic regular type.

    RESPONSE TO COMMENT 21

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See pages 37 and 38.

    22.

    Summary of Trust Fees and Expenses — 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 management fee as a percentage of net assets attributable to
common stock will increase.

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    RESPONSE TO COMMENT 22

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 37.

    23.

    Summary of Trust Fees and Expenses — The interest, dividends and other costs of
short selling should be presented as a separate line item in the “Annual Expenses”
section of the fee table whenever such costs are expected to exceed five basis points.

    RESPONSE TO COMMENT 23

    The Trust supplementally notes that the interest, dividends and other costs of short
selling account for less than 0.05% of average net assets.

    24.

    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.

    RESPONSE TO COMMENT 24

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 38.

    25.

    Financial Highlights — 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.

    RESPONSE TO COMMENT 25

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 38.

    26.

    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.

    RESPONSE TO COMMENT 26

    The Registration Statement has been revised in response to this comment, as shown in
Annex A. See page 40.

    27.

    Plan of Distribution — 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.

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    RESPONSE TO COMMENT 27

    The Trust supplementally confirms that it or a principal underwriter will submit any
underwritten offering to FINRA for its prior approval of the underwriting terms.

    28.

    Credit Default Swaps — Expand the discussion to highlight the risks of selling
credit default swaps. Disclose whether the Trust will establish a segregated account to
cover 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
indicate 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).

    RESPONSE TO COMMENT 28

    The Registration Statement has been revised
in response to this comment, as shown in Annex A. See page 49.

    29.

    Other Investment Companies — Clarify whether investing in other investment
companies, including ETFs, is a principal investment strategy of the Trust.

    RESPONSE TO COMMENT 29

    The Registration Statement has been revised
in response to this comment, as shown in Annex A. See page 51.

    30.

    Other Investment Companies — Clarify that, for purposes of satisfying the
Trust’s 80% asset test, each investment company in which the Trust invests will have a
policy to invest at least 80% of its assets in credit obligations.

    RESPONSE TO COMMENT 30

    The Trust respectfully advises the staff that the Trust’s 80% test does not require
that each investment company in which the Trust invests will have a policy to invest
at least 80% of its assets in credit obligations, and accordingly, the proposed
disclosure would not be accurate as it pertains to the Tr