Nicholas High Income Fund, Inc.

Nicholas Company, Inc. executed a

1:5 Reverse Stock Split

of the Nicholas High Income Fund, Inc.

Class I (NCINX) and Class N (NNHIX).

The effective date of the reverse share split was Monday, January 29, 2007. Class N shares.  The action of the reverse-split by itself did not change the market value of the shareholders investment.  Please note that this was a non-taxable event. 

Nicholas High Income Fund Shareholders,

On January 29, 2007 , Nicholas High Income Fund (the "Fund") executed a reverse stock split for shareholders of record.  Each five (5) shares of the Class that you owned were converted to one (1) share of that Class.  Though this did not effect the total market value of your holdings in Nicholas High Income Fund, it does equate to a fewer number of shares owned at a higher net asset value ("NAV"). 

As an example:

The purpose for the reverse split is to provide share pricing that is more reflective of the price movements in the values of the underlying holdings in the Fund.  Since fund prices are publicly reported to only two decimal places, the current share structure requires a greater move in the cumulative value of the Fund's holdings to incrementally change each Class’ quoted share price, the NAV. 

We apologize for any confusion this may cause you, but we believe this an appropriate action to offer a better investment vehicle for our shareholders.  Importantly, the market value of your current position in Nicholas High Income Fund will not change as a result of the reverse split.

If you have any questions regarding this issue you can call us at (800) 544-6547, or
(414) 276-0535. 

Regards,

Nicholas Company, Inc.

Adviser to the Nicholas Funds