<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR/A
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4889
H&Q Life Sciences Investors
(Exact name of registrant as specified in charter)
30 Rowes Wharf, Fourth Floor, Boston, MA 02110-3328
(Address of principal executive offices)
30 Rowes Wharf, Fourth Floor, Boston, MA 02110-3328
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-772-8500
Date of fiscal year end: September 30
Date of reporting period: October 1, 2004 to March 31, 2005
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Section 3507.
<Page>
ITEM 1. REPORTS TO STOCKHOLDERS.
<Page>
H&Q LIFE SCIENCES INVESTORS
[GRAPHIC]
SEMIANNUAL REPORT
March 31, 2005
<Page>
To our Shareholders:
On March 31, 2005, the net asset value per share of your Fund was $15.41. During
the six month period ending March 31, 2005, total return at net asset value of
your Fund was 1.10%. During the most recent quarter ending March 31, 2005, the
total return at net asset value of your Fund was -4.50%. The total investment
return at market was -7.41% during the six month period ended March 31, 2005 and
was -7.23% during the quarter ended March 31, 2005. Comparisons to relevant
indices are listed below:
<Table>
<Caption>
QUARTER SIX MONTHS
ENDED ENDED
TOTAL RETURNS 3/31/05 3/31/05
- ------------------------------------------------------------------------
Investment Return at Market -7.23% -7.41%
Investment Return at Net Asset Value -4.50% +1.10%
NASDAQ Biotech Index (NBI) -15.35% -8.96%
S&P 500 Index -2.15% +6.88%
</Table>
The Fund's Market Return exceeded the NBI during both the most recent quarter
and the six month period ended March 31, 2005. In addition, the NAV return
significantly exceeded that of the index during each of these periods.
The last six months has been quite volatile for the NBI. It advanced notably (up
7.6%) during the fourth calendar quarter of 2004 before declining even more
prominently (down 15.35%) during the first calendar quarter of 2005. While the
Fund's NAV and Market Price out-performed this index during the full six-month
period, both the Fund's NAV and market price trailed the index during the first
three months before out-pacing the Index during the second three-month period.
The Fund's underperformance during the first three months was in part due to
underweighting Amgen in the portfolio. Amgen's stock performed well and consists
of approximately 16% of the NBI. Out-performance during the second three months
was due in part to the fact that the Fund did not own Biogen Idec, the NBI's
greatest declining stock during the period. Separate from assessing our
performance relative to the NBI, we also note that both the NBI and the Fund's
NAV and Market Price trailed the broad S&P 500 Index.
During the six-month period ended March 31, 2005, the Fund established positions
in Abgenix, Connetics Corporation, Cytokinetics, DOV Pharmaceutical, Emageon,
Epix Pharmaceuticals, Lexicon Genetics, Momenta Pharmaceuticals, Neurogen
Corporation, NPS Pharmaceuticals, Nuvelo, Penwest Pharmaceuticals, Protein
Design Labs, Renovis,
1
<Page>
Rigel Pharmaceuticals, and Tercica. The Fund exited its positions in Amgen, Barr
Laboratories, Biofield, Celgene, Charles River Laboratories, Corixa, CTI
Molecular, CV Therapeutics, Enzon Pharmaceuticals, Guilford Pharmaceuticals,
Lexicon Genetics, Neurocrine Biosciences, Pharmacyclics, Pozen, Rigel
Pharmaceuticals, Vicuron Pharmaceuticals, and WebMD. During the quarter, the
Fund made no new investments in its venture portfolio.
In evaluating the Fund's portfolio, we are in aggregate pleased with the
individual company components. The Fund invests in a significant number of
small, emerging healthcare companies. The stock prices of such companies can be
volatile. It is not uncommon for the stock of a given company to be among the
Fund's best performers at one point and then be a trailing performer (or visa
versa) within a relatively short period of time. We attempt to mitigate the
effect of such volatility by appropriate buying and selling, but in general we
seek to invest a significant percentage of the Fund's assets in small/mid size
companies with excellent growth potential. This is probably most evident in the
Fund's venture portfolio. Over the last several years, the healthcare venture
market, including many of our venture investments, has not performed well.
However, we are seeing much improved performance in the venture portfolio of
late. In fact, during the six-month period described in this report, three
companies, Idun Pharmaceuticals, Theravance and Conor were the best performing
assets in the portfolio. Each of these companies were until recently in our
restricted stock portfolio. Idun was acquired by Pfizer very recently.
Theravance and Conor completed successful initial public offerings (IPO's) in
the fall of 2004. In fact since the early part of 2004, there have been seven
exits from the venture portfolio. In addition to those already mentioned,
Novacept was acquired and Senomyx, VNUS Medical and Acadia all completed IPOs.
Overall we think these companies have significant growth potential.
Beyond our portfolio, the past six months have been notable for the
biotechnology sector in particular and for the healthcare sector in general. In
the biotechnology sector, events surrounding Genentech, Biogen Idec and Elan
have been notable.
Genentech was one of the earliest biotechnology companies. It has produced a
number of impressive products through it lifetime. In 2004, its Avastin product
was approved to treat colorectal cancer after having demonstrated (unexpectedly
to some) to have impressive effects on this very difficult-to-treat disease.
Broad use of Avastin in this indication in colorectal cancer is now widely
anticipated; the drug is generally thought of as having blockbuster potential.
Most recently (in May of 2005), Genentech demonstrated that Avastin may well
also be useful to treat both non-small cell lung cancer as well as breast
cancer. We feel that the utility
2
<Page>
of such a drug in three such common and insidious forms of cancer may turn out
to have been a catalyst for the sector.
Conversely, the travails of Tysabri, a drug that has been marketed by Biogen
Idec and Elan to treat multiple sclerosis, may turn out to be a memorable
disappointment for the biotechnology sector. Tysabri was approved in 2004 after
demonstrating very impressive efficacy data in treating multiple sclerosis.
Initial launch of the drug was impressive to us, both in terms of reported sales
and in market share attained. Tysabri was expected to be a multi-billion dollar
product in a relatively short time. And while it was apparent that Tysabri was
an efficacious drug, during the first quarter of 2005, Elan and Biogen Idec
announced that two patients on Tysabri had developed a rare and often fatal
condition. This development lead to the removal of Tysabri from the marketplace
pending additional study. We think it will be difficult for this once heralded
drug to re-enter the market with anything like the previously anticipated sales
expectations. We feel that recent events surrounding Tysabri have had a sobering
effect on the biotech sector. And while the Fund has not had a recent position
in Biogen Idec, it did have a position in Elan from which it profitably exited
in 2004.
In general the biotech sector has been volatile in recent months with no clear
long-term upward or downward trend. We think that this uncertainty in direction
has been a response to a combination of both encouraging and discouraging
factors such as the events surrounding Avastin and Tysabri. We feel that in the
long run the positives will outweigh the negatives, but in the near future we
see a bit more uncertainty in the biotechnology sector.
There have also been events in the pharmaceutical sector that may have broad
impact on healthcare and potentially on the biotechnology sector. Events
surrounding a group of drugs in the so called COX-2 drugs in particular bear
note. Several large pharmaceutical companies including Merck and Pfizer have
marketed drugs in this class primarily to treat pain in arthritis patients.
These drugs had been thought to have gastrointestinal side effect advantages
over previously available drugs. Over the last few years, the COX-2 drugs have
exhibited excellent sales growth. Unfortunately, in the fall of 2004, Merck
elected to withdraw its COX-2 product from the market after it determined that
the drug might have unwanted cardiovascular side effects. This lead to a more
generalized evaluation of other drugs in the class. Ultimately, two other COX-2
drugs were either removed from the market or exhibited substantially reduced
use.
3
<Page>
Certainly, events surrounding the COX-2 drugs have had negative effects on the
companies that marketed them. However, there may also be a broader impact. We
have some concern that the combined effects of the safety issues surrounding
Tysabri and the COX-2 drugs may produce, at least in the short term, a more
cautious approach by the FDA in reviewing new product applications. It is too
early to know for sure but we will continue to look for telltale signs.
As always, if you have any questions please call us at 617-772 8500. Thank you.
/s/ Daniel R. Omstead
Daniel R. Omstead
President
4
<Page>
PRIVACY NOTICE
If you are a registered shareholder of the Fund, the Fund and Hambrecht & Quist
Capital Management LLC, the Fund's investment adviser, may receive nonpublic
personal information about you from the information collected by the transfer
agent from your transactions in Fund shares. Any nonpublic personal information
is not disclosed to third parties, except as permitted or required by law. In
connection with servicing your account and effecting transactions, the
information received may be shared with the investment adviser and
non-affiliates, including transfer agents, custodians, or other service
companies. Access to your nonpublic personal information is restricted to
employees who need to know that information to provide products or services to
you. To maintain the security of your nonpublic personal information, physical,
electronic, and procedural safeguards are in place that complies with federal
standards. The policies and practices described above apply to both current and
former shareholders.
If your Fund shares are held in "street name" at a bank or brokerage, we do not
have access to your personal information and you should refer to your bank's or
broker's privacy policies for a statement of the treatment of your personal
information
FOR MORE INFORMATION
A description of the Fund's proxy voting policies and procedures and information
regarding how the Fund voted proxies relating to portfolio securities during the
most recent 12-month period ended June 30, is available (i) without charge, upon
request by calling 1-800-451-2597; (ii) by writing to Hambrecht & Quist Capital
Management LLC at 30 Rowes Wharf, Boston, MA 02110-3328; (iii) on the Fund's
website at www.hqcm.com; and (iv) on the Securities Exchange Commission's
website at www.sec.gov.
The Fund's complete Schedule of Investments for the first and third quarters of
its fiscal year will be filed quarterly with the Securities and Exchange
Commission ("SEC") on Form N-Q. This Schedule of Investments will also be
available on the Fund's website at www.hqcm.com, or the SEC's website at
www.sec.gov. The Fund's Form N-Q may be reviewed and copied at the SEC's Public
Reference Room in Washington, DC or by calling 1-800-SEC-0330.
5
<Page>
H&Q LIFE SCIENCES INVESTORS
LARGEST HOLDINGS
AS OF MARCH 31, 2005
<Table>
<Caption>
% OF NET ASSETS
---------------
Conor Medsystems, Inc. (Restricted) 4.51%
Gilead Sciences, Inc. 3.38%
Cubist Pharmaceuticals, Inc. 3.28%
Idun Pharmaceuticals, Inc. (Restricted) 3.26%
IDEXX Laboratories, Inc. 2.73%
Genzyme Corporation 2.54%
MedImmune, Inc. 2.47%
Theravance, Inc. (Restricted and unrestricted) 2.40%
Connetics Corporation 2.23%
Exelixis, Inc. 2.23%
</Table>
H&Q LIFE SCIENCES INVESTORS
[CHART]
PORTFOLIO
AS OF MARCH 31, 2005
<Table>
<Caption>
RESTRICTED
BIOPHARMACEUTICALS 0.00% 16.23%
DRUG DELIVERY 0.00% 4.36%
DRUG DISCOVERY TECHNOLOGIES 5.47% 2.92%
EMERGING BIOPHARMACEUTICALS 6.11% 23.01%
GENERIC PHARMACEUTICALS 0.00% 5.72%
HEALTHCARE SERVICES 5.20% 0.59%
MEDICAL DEVICES AND DIAGNOSTICS 8.84% 6.10%
SHORT-TERM INVESTMENTS 0.00% 14.76%
</Table>
6
<Page>
H&Q LIFE SCIENCES INVESTORS
SCHEDULE OF INVESTMENTS
MARCH 31, 2005
(UNAUDITED)
<Table>
<Caption>
SHARES VALUE
- --------------- ----------------
CONVERTIBLE SECURITIES - 18.3% OF NET ASSETS
CONVERTIBLE PREFERRED (RESTRICTED) - 18.1%
DRUG DISCOVERY TECHNOLOGIES - 5.4%
1,587,302 Agilix Corporation Series B*^ $ 380,952
566,958 Avalon Pharmaceuticals Series B* 680,350
250,000 Ceres, Inc. Series C* 1,500,000
18,296 Ceres, Inc. Series C-1*# 109,776
174,200 Ceres, Inc. Series D*# 1,045,200
932,488 Galileo Pharmaceuticals, Inc. Series F-1* 326,371
808,473 Idun Pharmaceuticals, Inc. Series A-1* 4,769,992
308,642 Idun Pharmaceuticals, Inc. Series B-1* 1,425,926
1,150,000 Triad Therapeutics, Inc. Series A* 1,150
350,000 Triad Therapeutics, Inc. Series B* 350
800,000 Triad Therapeutics, Inc. Series C* 16,000
200,000 Zyomyx, Inc. Series A New* 20,000
200 Zyomyx, Inc. Series B New* 20
EMERGING BIOPHARMACEUTICALS - 4.5%
634,921 Agensys, Inc. Series C* 2,000,001
1,724,138 Corus Pharma, Inc. Series C* 2,000,000
1,212,121 Raven biotechnologies, Inc. Series B* 1,006,060
1,872,772 Raven biotechnologies, Inc. Series C* 1,554,401
30,920 Therion Biologics Corporation Series A* 37,722
160,000 Therion Biologics Corporation Series B*# 195,200
271,808 Therion Biologics Corporation Series C* 331,606
22,224 Therion Biologics Corporation Series C-2 Units*# 27,113
28,991 Therion Biologics Corporation Sinking Fund* 290
1,400,000 Xanthus Life Sciences, Inc. Series B* 1,400,000
HEALTHCARE SERVICES - 4.0%
1,051,429 CardioNet, Inc. Series C* 3,680,002
322,168 CytoLogix Corporation Series A*^ 265,789
151,420 CytoLogix Corporation Series B*#^ 124,922
3,589,744 PHT Corporation Series D*^ 2,800,000
802,996 PHT Corporation Series E*^ 626,337
MEDICAL DEVICES AND DIAGNOSTICS - 4.2%
3,235,293 Concentric Medical, Inc. Series B*^ 2,782,352
1,162,790 Concentric Medical, Inc. Series C*^ 999,999
177,778 EPR, Inc. Series A* 1,778
130,000 Masimo Corporation Series D* 1,430,000
1,088,436 OmniSonics Medical Technologies, Inc. Series B* 1,454,150
1,031,992 OmniSonics Medical Technologies, Inc. Series C* 1,200,000
434,782 TherOx, Inc. Series H* 165,217
----------------
$ 34,359,026
----------------
</Table>
The accompanying notes are an integral part of these financial statements.
7
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- --------------- ----------------
CONVERTIBLE SECURITIES - CONTINUED
CONVERTIBLE NOTES (RESTRICTED) - 0.2%
DRUG DISCOVERY TECHNOLOGIES - 0.07%
$ 132,340 Avalon, variable ranging from
15.0% to 8.0% Cvt. Note, due 2006 $ 132,340
HEALTHCARE SERVICES - 0.06%
112,224 CytoLogix Corporation 6.75% Cvt. Note+^ 112,224
MEDICAL DEVICES AND DIAGNOSTICS - 0.11%
202,724 TherOx, Inc. 6.0% Cvt. Bridge Note, due 2006# 202,724
----------------
447,288
----------------
TOTAL CONVERTIBLE SECURITIES AND NOTES
(Cost $43,697,623) $ 34,806,314
----------------
<Caption>
SHARES
- ---------------
COMMON STOCKS - 66.2%
BIOPHARMACEUTICALS - 16.2%
588,182 Cubist Pharmaceuticals, Inc.* $ 6,246,494
84,500 Genzyme Corporation* 4,836,780
179,410 Gilead Sciences, Inc.* 6,422,878
59,000 Imclone Systems, Inc.* 2,035,500
197,000 MedImmune, Inc.* 4,690,570
60,000 Millennium Pharmaceuticals, Inc.* 505,200
171,700 NPS Pharmaceuticals, Inc.* 2,166,854
115,600 Pfizer, Inc. 3,036,812
312,200 Vivus, Inc.* 933,478
----------------
30,874,566
----------------
DRUG DELIVERY - 4.4%
167,960 Connetics Corporation* 4,247,708
499,955 DepoMed, Inc.* 1,969,823
168,180 Penwest Pharmaceuticals Co.* 2,078,705
----------------
8,296,236
----------------
DRUG DISCOVERY TECHNOLOGIES - 2.9%
594,840 deCODE Genetics, Inc.* 3,390,588
182,028 Senomyx, Inc.* 2,167,953
200,000 Zyomyx, Inc. (Restricted)* 2,000
----------------
5,560,541
----------------
EMERGING BIOPHARMACEUTICALS - 24.6%
204,000 Abgenix, Inc.* 1,428,000
283,868 ACADIA Pharmaceuticals, Inc.* 1,958,689
236,000 Adolor Corporation* 2,345,840
323,959 Ariad Pharmaceuticals, Inc.* 1,814,170
225,311 Cytokinetics, Inc.* 1,478,040
136,000 DOV Pharmaceutical, Inc.* 1,860,480
357,163 Dyax Corporation* 1,150,065
</Table>
The accompanying notes are an integral part of these financial statements.
8
<Page>
<Table>
<Caption>
SHARES VALUE
- --------------- ----------------
EMERGING BIOPHARMACEUTICALS - CONTINUED
270,900 Epix Pharmaceuticals, Inc.* $ 1,896,300
624,400 Exelixis, Inc.* 4,233,432
380,700 Kosan Biosciences, Inc.* 1,560,870
393,300 Lexicon Genetics, Inc.* 2,009,763
282,240 Momenta Pharmaceuticals, Inc.* 2,390,573
255,400 Myogen, Inc.* 2,015,106
51,080 Myogen, Inc., Warrants* 4,597
106,990 Neurogen Corporation* 757,489
254,344 Nuvelo, Inc.* 1,653,236
103,000 Protein Design Labs, Inc.* 1,646,970
243,800 Renovis, Inc.* 1,967,466
106,500 Rigel Pharmaceuticals, Inc.* 1,708,260
232,600 Sangamo BioSciences, Inc.* 930,400
379,520 Seattle Genetics, Inc.* 1,950,733
676,924 Sirna Therapeutics, Inc.* 1,976,618
138,214 Telik, Inc.* 2,084,267
189,854 Tercica, Inc.* 1,448,586
82,113 Theravance, Inc.* 1,498,562
177,103 Theravance, Inc. (Restricted)* 3,070,523
146,982 Therion Biologics Corporation (Restricted)* 1,470
----------------
46,840,505
----------------
GENERIC PHARMACEUTICALS - 5.7%
217,152 Impax Laboratories, Inc.*## 3,474,432
172,250 IVAX Corporation* 3,405,383
56,500 Par Pharmaceutical Companies, Inc.* 1,889,360
67,800 Teva Pharmaceutical Industries, Ltd. ADR 2,101,800
----------------
10,870,975
----------------
HEALTHCARE SERVICES - 1.8%
17,416 DakoCytomation, Inc. (Restricted)@ 181,301
62,730 Emageon, Inc.* 1,126,631
140,000 Provident Senior Living Trust (Restricted)**### 2,100,000
204,139 Syntiro Healthcare Services (Restricted)*# 2,041
----------------
3,409,973
----------------
MEDICAL DEVICES AND DIAGNOSTICS - 10.6%
618,799 Conor Medsystems, Inc. (Restricted)* 8,568,200
95,980 IDEXX Laboratories, Inc.* 5,198,277
130,000 Masimo Corporation (Restricted)* 1,300
706,350 Orthovita, Inc.* 2,401,590
139,019 Songbird Hearing, Inc. (Restricted)* 1,390
364,583 VNUS Medical Technologies, Inc. (Restricted)* 4,010,778
----------------
20,181,535
----------------
TOTAL COMMON STOCKS
(Cost $106,684,005) $ 126,034,331
----------------
</Table>
The accompanying notes are an integral part of these financial statements.
9
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- --------------- ----------------
SHORT-TERM INVESTMENTS - 14.8%
$ 5,900,000 American Express Credit Corp.; 2.67%,
due 4/1/05 $ 5,900,000
800,000 American Express Credit Corp.; 2.69%,
due 4/1/05 800,000
6,100,000 American Express Credit Corp.; 2.73%,
due 4/8/05 6,096,762
2,500,000 American Express Credit Corp.; 2.75%,
due 4/11/05 2,498,090
7,500,000 American Express Credit Corp.; 2.73%,
due 4/13/05 7,493,175
400,000 American Express Credit Corp.; 2.68%,
due 4/15/05 399,583
4,400,000 General Electric Capital Corp.; 2.74%,
due 4/4/05 4,398,995
480,000 General Electric Capital Corp.; 2.76%,
due 4/6/05 479,816
----------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $28,066,421) $ 28,066,421
----------------
TOTAL INVESTMENTS - 99.3%
(Cost $178,448,049) $ 188,907,066
----------------
OTHER ASSETS IN EXCESS
OF LIABILITIES - 0.7% 1,281,640
----------------
NET ASSETS - 100% $ 190,188,706
================
</Table>
- ----------
* Non income-producing security.
# Including associated warrants.
@ Foreign security.
+ Variable maturity.
### Exchange traded security fair valued by the Valuation Committee of the Board
of Trustees.
^ Affiliated issuers in which the Fund holds 5% or more of the voting
securities (Total Market Value of $8,092,575).
** Real Estate Investment Trust.
## Includes 11,535 restricted shares.
ADR American Depository Receipt.
The accompanying notes are an integral part of these financial statements.
10
<Page>
H&Q LIFE SCIENCES INVESTORS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2005
(UNAUDITED)
<Table>
ASSETS:
Investments in non affiliated issuers, at value (identified cost $168,090,998;
see Schedule of Investments) $ 180,814,491
Investments in affiliated issuers, at value (identified cost $10,357,051; see
Schedule of Investments) 8,092,575
Cash 39,086
Interest receivable 33,449
Receivable for investments sold 2,230,415
Prepaid expenses 40,286
-----------------
Total assets $ 191,250,302
-----------------
LIABILITIES:
Payable for investments purchased $ 644,517
Accrued advisory fee 223,710
Accrued audit fee 36,707
Accrued legal fees 45,048
Accrued shareholder reporting fees 49,864
Accrued other 61,750
-----------------
Total liabilities $ 1,061,596
-----------------
NET ASSETS $ 190,188,706
=================
SOURCES OF NET ASSETS:
Shares of beneficial interest, par value $.01 per share, unlimited number of
shares authorized, amount paid in on 12,343,273 shares issued and
outstanding $ 173,227,916
Accumulated net investment loss (1,395,630)
Accumulated net realized gain on investments 7,897,403
Net unrealized gain on investments 10,459,017
-----------------
Total net assets (equivalent to $15.41 per share based on 12,343,273
shares outstanding) $ 190,188,706
=================
</Table>
The accompanying notes are an integral part of these financial statements.
11
<Page>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2005
(UNAUDITED)
<Table>
INVESTMENT INCOME:
Dividend income (net of foreign tax of $1,639) $ 94,182
Interest income from non affiliated issuers 217,093
Interest income from affiliated issuers 3,809
-----------------
Total investment income $ 315,084
EXPENSES:
Advisory fees $ 1,303,042
Trustees' fees and expenses 76,677
Legal fees 79,342
Custodian fees 39,813
Shareholder reporting 49,956
Accounting and auditing fees 36,707
Transfer agent fees 25,784
Stock exchange listing fee 13,862
Other (see note (3)) 85,531
-----------------
Total expenses 1,710,714
-----------------
Net investment loss $ (1,395,630)
-----------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investments from non affiliated issuers $ 9,867,861
Decrease in net unrealized gain on investments (6,453,181)
-----------------
Net realized and unrealized gain on investments $ 3,414,680
-----------------
Net increase in net assets resulting from operations $ 2,019,050
=================
</Table>
The accompanying notes are an integral part of these financial statements.
12
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
MARCH 31, 2005 SEPTEMBER 30,
(UNAUDITED) 2004
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment loss $ (1,395,630) $ (3,070,147)
Net realized gain on investments 9,867,861 22,434,597
Decrease in net unrealized gain on investments (6,453,181) (12,204,850)
--------------- ---------------
Net increase in net assets resulting from operations $ 2,019,050 $ 7,159,600
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized capial gains $ (7,886,233) $ (16,063,421)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Value of shares issued in reinvestment of distributions (276,866
and 653,934 shares, respectively) $ 4,217,905 $ 10,389,334
--------------- ---------------
Net decrease (increase) in net assets $ (1,649,278) $ 1,485,513
NET ASSETS:
Beginning of period 191,837,984 190,352,471
--------------- ---------------
End of period $ 190,188,706 $ 191,837,984
=============== ===============
Accumulated net investment loss included in net assets at end of the
period $ (1,395,630) --
=============== ===============
</Table>
The accompanying notes are an integral part of these financial statements.
13
<Page>
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 2004
(UNAUDITED)
<Table>
CASH FLOWS USED IN OPERATING ACTIVITIES:
Interest income received $ 10,577
Dividends received 94,182
Operating expenses paid (1,652,969)
-----------------
Net cash used in operating activities $ (1,548,210)
-----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of portfolio securities $ (48,277,894)
Net purchases of temporary cash investments (14,570,457)
Sales and maturities of portfolio securities 67,372,804
-----------------
Net cash provided from investing activities $ 4,524,453
-----------------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Cash distributions paid, net $ (3,668,328)
-----------------
Net cash used in financing activities $ (3,668,328)
-----------------
NET DECREASE IN CASH $ (692,085)
CASH AT BEGINNING OF PERIOD 731,171
-----------------
CASH AT END OF PERIOD $ 39,086
=================
RECONCILIATION OF NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS TO NET
CASH USED FOR OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $ 2,019,050
Accretion of discount (199,958)
Net realized gain on investments (9,867,861)
Decrease in net unrealized gain on investments 6,453,181
Decrease in dividends and interest receivable (10,367)
Increase in accrued expenses 48,552
Increase in prepaid expenses 9,193
-----------------
Net cash used in operating activities $ (1,548,210)
=================
</Table>
Noncash financing activities not included herein consist of reinvested
distributions of $4,217,905.
Noncash investing activities not included herein consist of three conversions of
restricted preferred stock with a cost of $7,254,579 to restricted common stock
each of the same issuer.
The accompanying notes are an integral part of these financial statements.
14
<Page>
H&Q LIFE SCIENCES INVESTORS
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR EACH SHARE OF BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT THE PERIOD INDICATED)
<Table>
<Caption>
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED SEPTEMBER 30,
MARCH 31, 2005 -----------------------------------
(UNAUDITED) 2004 2003
--------------- -------------- --------------
Net asset value per share:
Beginning of period $ 15.90 $ 16.68 $ 15.14
--------------- -------------- --------------
Net investment loss $ (0.12)(2) $ (0.26)(2) $ (0.21)(2)
Net realized and unrealized gain
(loss) on investments 0.28 0.86 3.55
--------------- -------------- --------------
Total increase (decrease) from
investment operations $ 0.16 $ 0.60 $ 3.34
--------------- -------------- --------------
Capital gains distributions
to shareholders $ (0.65) $ (1.38) $ (1.80)
--------------- -------------- --------------
Net asset value per share:
End of period $ 15.41 $ 15.90 $ 16.68
=============== ============== ==============
Per share market value:
End of period $ 14.38 $ 16.20 $ 15.28
Total investment return at market value (7.41%) 15.52% 47.65%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period $ 190,188,706 $ 191,837,984 $ 190,352,471
Ratio of operating expenses to average
net assets 1.78%* 1.73% 1.74%
Ratio of net investment loss to average
net assets (1.45%)* (1.56%) (1.38%)
Portfolio turnover rate 27.46% 34.93% 32.36%
Number of shares outstanding at end of
period 12,343,273 12,066,409 11,412,475
<Caption>
FOR THE YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------
2002 (1) 2001 2000
-------------- -------------- --------------
Net asset value per share:
Beginning of period $ 23.09 $ 39.37 $ 17.80
-------------- -------------- --------------
Net investment loss $ (0.26)(2) $ (0.22)(2) $ (0.30)
Net realized and unrealized gain
(loss) on investments (4.84) (12.13) 24.76
-------------- -------------- --------------
Total increase (decrease) from
investment operations $ (5.09) $ (12.36) $ 24.46
-------------- -------------- --------------
Capital gains distributions
to shareholders $ (2.86) $ (3.92) $ (2.90)
-------------- -------------- --------------
Net asset value per share:
End of period $ 15.14 $ 23.09 $ 39.37
============== ============== ==============
Per share market value:
End of period $ 11.79 $ 18.45 $ 31.31
Total investment return at market value (25.82%) (29.07%) 155.36%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period $ 157,585,450 $ 215,162,600 $ 318,271,356
Ratio of operating expenses to average
net assets 1.71% 1.58% 1.51%
Ratio of net investment loss to average
net assets (1.25%) (0.83%) (1.06%)
Portfolio turnover rate 17.36% 16.49% 12.70%
Number of shares outstanding at end of
period 10,409,622 9,318,998 8,085,152
</Table>
(1) In 2002, the Fund adopted the provisions of the AICPA Audit and Accounting
Guide for Investment Companies and began accreting discounts and amortizing
premiums on all debt securities. The effect of this change for the year
ended September 30, 2002 was a decrease in net investment loss per share of
$.006, an increase in net realized and unrealized loss on investments per
share of $.006, and a decrease in the ratio of net investment loss to
average net assets from (1.28%) to (1.25%). Per share data and ratios for
the periods prior to October 1, 2001 have not been restated to reflect this
change in presentation.
(2) Net investment loss per share has been computed using average shares
outstanding.
* Annualized.
The accompanying notes are an integral part of these financial statements.
15
<Page>
H&Q LIFE SCIENCES INVESTORS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)
(1) ORGANIZATION
H&Q Life Sciences Investors (the Fund) is a Massachusetts business
trust registered under the Investment Company Act of 1940 as a diversified
closed-end management investment company. The Fund's investment objective
is long-term capital appreciation through investment in securities of
companies in the healthcare industries. The Fund invests primarily in
securities of public and private companies that are believed to have
significant potential for above-average growth. The Fund was organized on
February 20, 1992 and commenced operations on May 8, 1992.
The Fund has adopted investment policies (non-fundamental investment
policies) which may be changed by action of the Board of Trustees without
shareholder approval. In June 2004, the Board of Trustees took action to
make the following change (as indicated by the strikethrough) to one of the
Fund's non fundamental investment policies: "Investments will not be made
in any company with the objective of exercising control over that company's
management, [BEGINSTRIKETHROUGH]and the Fund generally will not provide
managerial assistance to any such company as is normally the case with
venture capital funds.[ENDSTRIKETHROUGH] The Fund, however, may make
investments as a co-investor with other venture capital groups that may
provide issuers with significant managerial assistance."
In June and September, 2004, the Board of Trustees amended the Fund's
by-laws to provide for the office of Chief Compliance Officer and to
require that all matters put to a vote of shareholders shall be decided by
a vote of the majority of all votes validly cast at a meeting at which a
quorum is present, unless otherwise specifically required by the Fund's
Declaration of Trust or By-Laws.
The preparation of these financial statements requires the use of
certain estimates by management in determining the Fund's assets,
liabilities, revenues and expenses. Actual results could differ from these
estimates. The following is a summary of significant accounting policies
consistently followed by the Fund, which are in conformity with accounting
principals generally accepted in the United States of America.
INVESTMENT SECURITIES
Investments traded on national securities exchanges or in the
over-the-counter market that are National Market System securities are
valued at the last sale price or, lacking any sales, at the mean between
the last bid and asked prices. Other over-the-counter securities are valued
at the most recent bid prices as obtained from one or more dealers that
make markets in the securities. Exchange traded investments for which
market quotations are not readily available are valued at fair value as
determined in good faith by the Trustees of the Fund. The value of venture
capital and other restricted securities is determined in good faith by the
Trustees. However, because of the uncertainty of venture capital and other
restricted security valuations, these estimated values may differ
significantly from the values that would have been used had a ready market
for these securities existed, and the differences could be material. See
note 4 below. Temporary investments with maturity of 60 days or less are
valued at amortized cost.
Investment transactions are recorded on a trade date basis. Gains and
losses from sales of investments are recorded using the "identified cost"
method. Interest income is recorded on the accrual basis, adjusted for
amortization of premiums and accretion of discounts. Dividend income is
recorded on the ex-dividend date. Income and realized gains or losses on
investments from affiliated issuers are identified in the Statement of
Operations. Affiliated issuers are issuers in which the Fund holds 5% or
more of the voting securities and are separately identified in the Schedule
of Investments.
16
<Page>
REPURCHASE AGREEMENTS
From time to time, in connection with managing cash and short-term
investments the Fund may enter into transactions in repurchase agreements.
When such transactions are entered into the Fund's custodian takes
possession of the underlying collateral securities, the market value of
which is at least equal to the principal, including accrued interest, of
the repurchase transaction at all times. In the event of default or
bankruptcy by the other party to the agreement, realization and/or
retention of the collateral by the Fund may be delayed or limited.
FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to its shareholders substantially all of its taxable income and
its net realized capital gains, if any. Therefore, no Federal income or
excise tax provision is required.
DISTRIBUTIONS
The Fund records all distributions to shareholders from net investment
income, if any, and realized gains on the ex-dividend date. Such
distributions are determined in conformity with income tax regulations. Due
to permanent book/tax differences in accounting for certain transactions,
certain distributions may be treated as distributions from capital as
opposed to distributions of net investment income or realized capital
gains.
DISTRIBUTION POLICY
Distributions will automatically be paid in newly issued shares of the
Fund unless otherwise instructed by the shareholder. Pursuant to an SEC
exemptive order, the Fund has implemented a fixed distribution policy that
permits the Fund to make quarterly distributions at a rate of 2% of the
Fund's net assets to shareholders of record. The Fund intends to use net
realized capital gains when making quarterly distributions. This could
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. It is anticipated that net realized capital gains in excess of the
total distributed under this policy would be included in the December
distribution.
STATEMENT OF CASH FLOWS
The cash amount shown in the Statement of Cash Flows is the amount
included in the Fund's Statement of Assets and Liabilities and represents
cash on hand at its custodian and does not include temporary cash
investments at March 31, 2005.
INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and Trustees
may be indemnified against certain liabilities and expenses arising out of
the performance of their duties to the Fund. Additionally, in the normal
course of business, the Fund enters into agreements with service providers
that may contain indemnification clauses. The Fund's maximum exposure under
these agreements is unknown as this would involve future claims that may be
made against the fund that have not yet occurred. However, based on
experience, the Fund expects the risk of loss to be remote.
(2) SECURITIES TRANSACTIONS
The aggregate cost of purchases and proceeds from sales of investment
securities (other than temporary cash investments) for the six months ended
March 31, 2005 totaled $48,033,476 and $69,032,497 respectively.
17
<Page>
At March 31, 2005, the total cost of securities for Federal income tax
purposes was $178,448,049. The net unrealized gain on securities held by
the Fund was $10,459,017, including gross unrealized gain of $42,876,216
and gross unrealized loss of $32,417,199.
(3) INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into an Investment Advisory Agreement (the
"Advisory Agreement") with Hambrecht & Quist Capital Management LLC (the
Adviser). Pursuant to the terms of the Advisory Agreement, the Fund pays
the Adviser a monthly fee at the rate when annualized of (i) 2.5% of the
average net assets for the month of its venture capital and other
restricted securities up to 25% of net assets and (ii) for the month, for
all other assets, 1.0% of the average net assets up to $250 million, 0.9%
of the average net assets for the next $250 million, 0.8% of the average
net assets for the next $500 million and 0.7% of the average net assets
thereafter. The aggregate fee may not exceed a rate when annualized of
1.375%.
The Fund has entered into a Services Agreement (the "Agreement") with
the Adviser. Pursuant to the terms of the Agreement, the Fund reimburses
the Adviser for certain services related to a portion of the payment of
salary and provision of benefits to the Fund's Chief Compliance Officer.
During the six months ended March 31, 2005 these payments amounted to
$37,370 and are included in "Other" under the heading "EXPENSES" in the
Statement of Operations. These expenses along with insurance expenses of
$28,230 incurred to unaffiliated entities are the major components of
"Other" under the heading "EXPENSES" in the Statement of Operations.
Expenses incurred pursuant to the Agreement as well as certain expenses
paid for by the Adviser are allocated in an equitable fashion to the Fund.
Certain officers and Trustees of the Fund are also officers of the
Adviser. Trustees who are not affiliates of the Adviser receive an annual
fee of $20,000 plus $500 for each Committee on which they serve and $1,000
for each meeting attended.
(4) VENTURE CAPITAL AND OTHER RESTRICTED SECURITIES
The Fund may invest in venture capital and other restricted securities
if these securities would currently comprise 40% or less of net assets. The
value of these securities represents 27.73% of the Fund's net assets at
March 31, 2005.
The Fund maintains an investment restriction that prohibits the Fund
from purchasing more than 10% of the outstanding voting securities of any
issuer. In order to clarify that restriction, the Board of Trustees
(effective September 30, 2004), has determined that for purposes of that
restriction, the Fund will consider outstanding voting securities of an
issuer to include any security of the issuer that entitles the owner or
holder to vote for the election of directors of the issuer (a "voting
security") and any other outstanding security of the issuer that is
exercisable for or convertible into a voting security within 60 days from
the date of calculation.
During the year ended September 30, 2004, a restricted security was
exchanged for cash in connection with a corporate action, a portion of
which has been retained by the issuer in an escrow account pending
resolution of certain contingencies and whose estimated value of $247,144
at March 31, 2005 has been determined by the Trustees. The value of the
escrow account is included in the Receivable for Investments Sold in the
Statement of Assets and Liabilities.
18
<Page>
The following table details the acquisition date, cost, carrying value
per unit, and value of the Fund's venture capital and other restricted
securities at March 31, 2005, as determined by the Trustees of the Fund.
<Table>
<Caption>
ACQUISITION CARRYING VALUE
SECURITY DATE COST PER UNIT VALUE
- ---------------------------------------------------------------------------------------------------------------------------
Agensys, Inc.
Series C Cvt. Pfd. 2/14/02 $ 2,003,383 $ 3.15 $ 2,000,001
Agilix Corporation^
Series B Cvt. Pfd. 11/8/01 2,009,507 0.24 380,952
Avalon Pharmaceuticals
Series B Cvt. Pfd. 10/22/01 2,005,767 1.20 680,350
Bridge Loan 2/11/05 132,340 1.00 132,340
CardioNet, Inc.
Series C Cvt. Pfd. 5/3/01 - 3/25/03 3,699,455 3.50 3,680,002
Ceres, Inc.
Series C Cvt. Pfd. 12/23/98 1,000,875 6.00 1,500,000
Series C-1 Cvt. Pfd.# 3/31/01 74,325 6.00 109,776
Series D Cvt. Pfd.# 3/14/01 1,046,778 6.00 1,045,200
Concentric Medical, Inc.^
Series B Cvt. Pfd. 5/7/02 - 1/24/03 2,219,473 0.86 2,782,352
Series C Cvt. Pfd. 12/19/03 999,999 0.86 999,999
Conor MedSystems, Inc.
Restricted Common 10/23/03 - 8/6/04 1,954,131 13.85 8,568,200
Corus Pharma, Inc.
Series C Cvt. Pfd. 4/8/04 2,001,540 1.16 2,000,000
CytoLogix Corporation^
Series A Cvt. Pfd. 1/13/98 - 7/21/99 1,077,912 0.83 265,789
Series B Cvt. Pfd.# 1/11/01 506,622 0.83 124,922
Cvt. Note# 5/29/02 112,224 1.00 112,224
DakoCytomation, Inc.
Restricted Common 6/14/04 734,913 10.41 181,301
EPR, Inc.
Series A Cvt. Pfd. 3/9/94 800,331 0.01 1,778
Galileo Pharmaceuticals, Inc.
Series F-1 Cvt. Pfd. 8/18/00 2,001,929 0.35 326,371
Idun Pharmaceuticals, Inc.
Series A-1 Cvt. Pfd. 11/26/02 2,001,312 5.90 4,769,991
Series B-1 Cvt. Pfd. 5/24/04 494,479 4.62 1,425,926
Masimo Corporation
Series D Cvt. Pfd. 8/14/96 910,027 11.00 1,430,000
Restricted Common 3/31/98 0 0.01 1,300
Omnisonics Medical Technologies, Inc.
Series B Cvt. Pfd. 5/24/01 1,606,312 1.34 1,454,150
Series C Cvt. Pfd. 10/1/03 1,200,224 1.16 1,200,000
PHT Corporation^
Series D Cvt. Pfd. 7/23/01 2,803,841 0.78 2,800,000
Series E Cvt. Pfd. 9/12/03 - 12/17/03 627,472 0.78 626,337
Provident Senior Living Trust
Restricted Common 7/26/04 2,100,469 15.00 2,100,000
Raven biotechnologies, Inc.
Series B Cvt. Pfd. 12/12/00 2,001,150 0.83 1,006,060
Series C Cvt. Pfd. 11/26/02 1,554,400 0.83 1,554,401
Songbird Hearing, Inc.
Restricted Common 12/14/00 2,003,239 0.01 1,390
Syntiro Heathcare Services
Restricted Common# 2/5/97 800,325 0.01 2,041
</Table>
19
<Page>
<Table>
<Caption>
ACQUISITION CARRYING VALUE
SECURITY DATE COST PER UNIT VALUE
- ---------------------------------------------------------------------------------------------------------------------------
Theravance, Inc.
Restricted Common 10/4/04 $ 2,402,276 $ 17.34 $ 3,070,523
Therion Biologics Corporation
Series A Cvt. Pfd. 8/20/96 - 10/16/96 289,847 1.22 37,722
Series B Cvt. Pfd.# 6/22/99 600,609 1.22 195,200
Series C Cvt. Pfd. 9/26/01 - 10/15/01 1,019,568 1.22 331,606
Sinking Fund Cvt. Pfd. 10/18/94 - 4/3/96 582,505 0.01 290
Series C-2 Cvt. Pfd.# 8/13/03 40,003 1.22 27,113
Restricted Common 6/30/93 251,642 0.01 1,470
TherOx, Inc.
Series H Cvt. Pfd. 9/11/00 2,001,626 0.38 165,217
Bridge Note# 1/28/04 202,724 1.00 202,724
Triad Therapeutics, Inc.
Series A Cvt. Pfd. 6/8/99 1,151,679 0.00 1,150
Series B Cvt. Pfd. 1/10/03 702,090 0.00 350
Series C Cvt. Pfd. 12/20/00 - 11/25/02 613,894 0.02 16,000
VNUS Medical Technologies, Inc.
Restricted Common 8/20/01 2,800,000 11.00 4,010,778
Xanthus Life Sciences, Inc.
Series B Cvt. Pfd. 12/5/03 1,400,880 1.00 1,400,000
Zyomyx, Inc.
New Restricted Common 2/19/99 - 7/22/02 2,401,101 0.01 2,000
Series A New Cvt. Pfd. 2/19/99 - 1/12/04 199,800 0.10 20,000
Series B New Cvt. Pfd. 3/31/04 112 0.10 20
------------ ------------
$ 59,145,110 $ 52,745,316
============ ============
</Table>
# With warrants attached.
^ Affiliated issuers im which the Fund holds 5% or more of the voting
securities.
(5) SOURCES OF NET ASSETS
The changes in the sources of net assets for the period from October
1, 2004 through March 31, 2005 are as follows:
<Table>
<Caption>
CAPITAL PAID ACCUMULATED ACCUMULATED NET
IN ON SHARES NET NET REALIZED UNREALIZED
OF BENEFICIAL INVESTMENT GAIN ON GAIN ON TOTAL NET
INTEREST LOSS INVESTMENTS INVESTMENTS ASSETS
-----------------------------------------------------------------------------------------
As of October 1, 2004 $ 169,010,011 $ -- $ 5,915,775 $ 16,912,198 $ 191,837,984
Net investment loss
for the period from
October 1, 2004 through
March 31, 2005 (1,395,630) (1,395,630)
Net realized gains
for the period from
October 1, 2004 through
March 31, 2005 9,867,861 9,867,861
Distributions, net of
reinvestments paid
during the period from
October 1, 2004 through
March 31, 2005 (7,886,233) (7,886,233)
Value of shares issued
in reinvestment of
distributions 4,217,905 4,217,905
Decrease in net
unrealized gain on
investments (6,453,181) (6,453,181)
--------------- --------------- --------------- --------------- ---------------
As of March 31, 2005 $ 173,227,916 $ (1,395,630) $ 7,897,403 $ 10,459,017 $ 190,188,706
=============== =============== =============== =============== ===============
</Table>
20
<Page>
New York Stock Exchange Symbol: HQL
30 Rowes Wharf, 4th Floor
Boston, Massachusetts 02110-3328
(617) 772-8500
www.hqcm.com
OFFICERS
Daniel R. Omstead, Ph.D., President
Kathleen Eckert, Secretary, Treasurer and
Chief Compliance Officer
TRUSTEES
Lawrence S. Lewin
Robert P. Mack, M.D.
Eric Oddleifson
Daniel R. Omstead, Ph.D.
Oleg M. Pohotsky
Uwe E. Reinhardt, Ph.D.
Henri A. Termeer
INVESTMENT ADVISER
Hambrecht & Quist Capital Management LLC
CUSTODIAN
State Street Bank and Trust Company
TRANSFER AGENT
EquiServe Trust Company, N.A.
LEGAL COUNSEL
Dechert LLP
Shareholders with questions regarding share transfers may call
1-800-426-5523
Interim daily net asset value may be obtained from
our website (www.hqcm.com) or by calling
1-800-451-2597
For copies of the Fund's
DIVIDEND REINVESTMENT PLAN,
please contact the Plan Agent, EquiServe Trust Company, N.A.
P.O. Box 43010, Providence, RI 02940-3010
Telephone: 1-800-426-5523
<Page>
HAMBRECHT & QUIST CAPITAL MANAGEMENT LLC
30 Rowes Wharf
Boston, MA 02110-3328
HQHLS-SAR-05
<Page>
ITEM 2. CODE OF ETHICS.
Not applicable to this semi-annual filing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to this semi-annual filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to this semi-annual filing.
<Page>
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
No applicable to this semi-annual filing.
ITEM 6. SCHEDULE OF INVESTMENTS.
The Registrant's Schedule of Investments is included as part of the Report
to Shareholders filed under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to this semi-annual filing.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable to this semi-annual filing.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
None.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrant's Board of Trustees,
where those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of
Schedule 14A, or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) In the opinion of the principal executive officer and principal
financial officer, based on their evaluation which took place within
90 days of this filing, the Registrant's disclosure controls and
procedures are adequately designed and are operating effectively to
ensure (i) that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to them by
others within those entities, particularly during the period in which
this report is being prepared; and (ii) that information required to
be disclosed by the registrant on Form N-CSR is recorded, processed,
summarized and reported within the time period specified in the
Securities and Exchange Commission's rules and forms.
(b) There were no changes in the Registrant's internal control over
financial reporting that occurred during the Registrant's most recent
fiscal half-year that may have materially affected or are reasonably
likely to materially affect, the Registrant's internal control.
ITEM 12. EXHIBITS
(a)(1) CODE OF ETHICS: NOT APPLICABLE TO THIS SEMI-ANNUAL FILING.
(a)(2) CERTIFICATION: FILED AS AN ATTACHMENT TO THIS FILING.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) H&Q LIFE SCIENCES INVESTORS
--------------------------------------------------------------------
By (Signature and Title)* /s/ Daniel R. Omstead
-------------------------------------------------------
Daniel R. Omstead, President
Date: 6/14/05
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Kathleen Eckert
-------------------------------------------------------
Kathleen Eckert, Treasurer
Date: 6/14/05
By (Signature and Title)*
-------------------------------------------------------
Date:
* Print the name and title of each signing officer under his or her signature.