H&Q Healthcare Investors Pays Stock Distribution.

BOSTON -- On December 29, 2006, H&Q Healthcare Investors paid a stock distribution of $0.36 per share. Of the eligible shares, over 50% opted to receive stock. The new shares were issued at a share price of $16.34 and 22,503,608 shares are now outstanding.

This payment of $0.36 per share in capital gains represents a quarterly distribution to shareholders of 2% of net asset value per share at quarter-end in accordance with the Fund's previously announced fixed distribution policy. It is the intention of the Fund to use net realized capital gains when making quarterly distributions, however this distribution policy would result in a return of capital to shareholders if the amount of the distribution exceeds the Fund's net investment income and realized capital gains.

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 $34.04). 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%. At the close of the NYSE on December 29, 2006, the Fund's net asset value was $17.49 per share and its share price was $16.47 representing a 5.83% discount to net asset value.

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 visit www.hqcm.com or call [phone].