H&Q Healthcare Investors Declares Stock Distribution.

BOSTON -- On August 28, 2006, H&Q Healthcare Investors declared a stock distribution of $0.34 per share. The record date for the stock distribution is September 8, 2006 and the payable date is September 29, 2006. The Fund will trade ex-distribution on September 6, 2006.

This stock distribution will automatically be paid in newly issued shares of the Fund unless otherwise instructed by the shareholder. The shares will be valued at the lower of the net asset value or market price on the pricing date, September 22, 2006. Fractional shares will generally be settled in cash, except for registered shareholders with book entry accounts at the transfer agent who will have whole and fractional shares added to their account.

Shareholders may request to be paid in cash instead of shares by responding to the bank, brokerage or nominee who holds the shares if the shares are in "street name" or by filling out an election card received from Computershare Investor Services shortly after the record date if the shares are in registered form. The bank, brokerage or nominee who holds the shares must advise the Depository Trust Company ("DTC") as to their full and fractional share requirements by September 21, 2006. Written notification for the election of cash instead of stock by registered shareholders must be received by Computershare Investor Services prior to September 21, 2006.

Since the Fund's inception on May 1, 1987, the Fund's net asset value per share has ranged from a high of $53.69 to a low of $6.16 (unadjusted for capital gains of $33.34). The market price per share has ranged from a high of $40.00 to a low of $4.37. The stock price to net asset value premium has been as high as 21.5% and the discount as wide as 30.9%. On August 25, 2006, the closing stock price was $17.08 and the net asset value per share was $17.21 representing a discount of 0.76%

H&Q Healthcare Investors (NYSE: HQH) is a closed-end fund that invests in public and private companies in the healthcare industries. Hambrecht & Quist Capital Management, LLC, based in Boston, serves as Investment Adviser to the Fund. Shares of the Fund can be purchased on the New York Stock Exchange through any securities broker.

For additional information, please consult www.hqcm.com or call [phone].