<PAGE> PAGE 1
000 B000000 09/30/98
000 C000000 0000884121
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0
000 J000000 A
001 A000000 H & Q LIFE SCIENCES INVESTORS
001 B000000 811-6565
001 C000000 6173100567
002 A000000 50 RONES WHARF
002 B000000 BOSTON
002 C000000 MA
002 D010000 02110
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
007 B000000 0
007 C010100 1
007 C010200 2
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
020 A000001 COVEN
020 C000001 1
020 A000002 BT ALEX BROWN
020 C000002 3
020 A000003 VECTOR SECURITIES
020 C000003 2
020 C000004 0
020 C000005 0
020 C000006 0
020 C000007 0
020 C000008 0
020 C000009 0
020 C000010 0
021 000000 6
022 A000001 FORD MOTOR CP
022 C000001 49486
022 D000001 0
022 A000002 GMAC CP
022 C000002 32170
<PAGE> PAGE 2
022 D000002 0
022 A000003 GE CREDIT CP
022 C000003 13200
022 D000003 0
022 A000004 VECTOR SECURITIES
022 C000004 0
022 D000004 4888
022 A000005 BT ALEX BROWN
022 C000005 2593
022 D000005 1602
022 A000006 ROBERTSON STEVENS
022 C000006 1626
022 D000006 1970
022 A000007 NATIONS BANK MONTGOMERY
022 C000007 842
022 D000007 2087
022 A000008 WARBERG
022 C000008 929
022 D000008 1428
022 A000009 HERZOG
022 C000009 0
022 D000009 2115
022 A000010 PIPER JAFFREY
022 C000010 895
022 D000010 860
023 C000000 104957
023 D000000 21931
062 A000000 N
062 B000000 0.0
062 C000000 0.0
062 D000000 0.0
062 E000000 0.0
062 F000000 0.0
062 G000000 0.0
062 H000000 0.0
062 I000000 0.0
062 J000000 0.0
062 K000000 0.0
062 L000000 0.0
062 M000000 0.0
062 N000000 0.0
062 O000000 0.0
062 P000000 0.0
062 Q000000 0.0
062 R000000 0.0
066 A000000 Y
066 B000000 N
066 C000000 Y
066 D000000 N
066 E000000 N
066 F000000 N
<PAGE> PAGE 3
066 G000000 N
067 000000 N
068 A000000 N
068 B000000 N
069 000000 N
070 A010000 Y
070 A020000 N
070 B010000 Y
070 B020000 N
070 C010000 Y
070 C020000 N
070 D010000 Y
070 D020000 N
070 E010000 Y
070 E020000 N
070 F010000 Y
070 F020000 N
070 G010000 Y
070 G020000 N
070 H010000 Y
070 H020000 N
070 I010000 N
070 I020000 N
070 J010000 Y
070 J020000 Y
070 K010000 Y
070 K020000 N
070 L010000 Y
070 L020000 N
070 M010000 Y
070 M020000 N
070 N010000 Y
070 N020000 N
070 O010000 Y
070 O020000 N
070 P010000 Y
070 P020000 N
070 Q010000 Y
070 Q020000 N
070 R010000 Y
070 R020000 N
071 A000000 20691
071 B000000 27440
071 C000000 113624
071 D000000 18
072 A000000 12
072 B000000 132
072 C000000 5
072 D000000 0
072 E000000 0
072 F000000 1554
<PAGE> PAGE 4
072 G000000 0
072 H000000 0
072 I000000 18
072 J000000 64
072 K000000 0
072 L000000 71
072 M000000 45
072 N000000 20
072 O000000 0
072 P000000 0
072 Q000000 0
072 R000000 48
072 S000000 25
072 T000000 0
072 U000000 0
072 V000000 0
072 W000000 38
072 X000000 1883
072 Y000000 0
072 Z000000 -1746
072AA000000 11685
072BB000000 8674
072CC010000 12327
072CC020000 0
072DD010000 0
072DD020000 0
072EE000000 5189
073 A010000 0.0000
073 A020000 0.0000
073 B000000 0.7400
073 C000000 0.0000
074 A000000 0
074 B000000 0
074 C000000 7679
074 D000000 0
074 E000000 17478
074 F000000 76116
074 G000000 0
074 H000000 0
074 I000000 0
074 J000000 120
074 K000000 0
074 L000000 11
074 M000000 9
074 N000000 101413
074 O000000 0
074 P000000 0
074 Q000000 0
074 R010000 0
074 R020000 0
074 R030000 0
<PAGE> PAGE 5
074 R040000 1383
074 S000000 0
074 T000000 100030
074 U010000 7294
074 U020000 0
074 V010000 1371.00
074 V020000 0.00
074 W000000 0.0000
074 X000000 0
074 Y000000 0
075 A000000 0
075 B000000 116130
076 000000 10875.00
077 A000000 Y
077 B000000 Y
077 C000000 N
077 D000000 N
077 E000000 N
077 F000000 N
077 G000000 N
077 H000000 N
077 I000000 N
077 J000000 N
077 K000000 N
077 L000000 N
077 M000000 N
077 N000000 N
077 O000000 N
077 P000000 N
077 Q010000 N
077 Q020000 N
077 Q030000 N
078 000000 N
080 A000000 FIDELITY & DEPOSIT COMPANY OF MARYLAND
080 B000000 0
080 C000000 1000
081 A000000 Y
081 B000000 1
082 A000000 Y
082 B000000 25
083 A000000 N
083 B000000 0
084 A000000 N
084 B000000 0
085 A000000 Y
085 B000000 N
SIGNATURE KIM CARROLL
TITLE TREASURER
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
H&Q Life Sciences Investors
In planning and performing our audit of the financial statements of H&Q
Life Sciences Investors for the year ended September 30, 1998, we considered its
internal control structure, including procedures for safeguarding securities, in
order to determine our auditing procedures for the purpose of expressing our
opinion on the financial statements and to comply with the requirements of Form
N-SAR, not to provide assurance on the internal control structure.
The management of H&Q Life Sciences Investors is responsible for establishing
and maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of internal control structure policies and
procedures. Two of the objectives of an internal control structure are to
provide management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and transactions
are executed in accordance with management's authorization and recorded properly
to permit preparation of financial statements in conformity with generally
accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and may not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
September 30, 1998.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
/s/ Arthur Andersen LLP
Boston, Massachusetts
November 9, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 81,267,095
<INVESTMENTS-AT-VALUE> 101,273,415
<RECEIVABLES> 131,311
<ASSETS-OTHER> 8,533
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 101,413,259
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,195,298
<TOTAL-LIABILITIES> 1,382,938
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 85,715,744
<SHARES-COMMON-STOCK> 7,294,722
<SHARES-COMMON-PRIOR> 7,011,362
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,987,306
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,327,271
<NET-ASSETS> 100,030,321
<DIVIDEND-INCOME> 4,764
<INTEREST-INCOME> 131,694
<OTHER-INCOME> 0
<EXPENSES-NET> 1,883,382
<NET-INVESTMENT-INCOME> (1,746,924)
<REALIZED-GAINS-CURRENT> 3,011,272
<APPREC-INCREASE-CURRENT> (31,646,651)
<NET-CHANGE-FROM-OPS> (30,382,303)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 5,188,917
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 3,613,808
<NET-CHANGE-IN-ASSETS> (31,957,412)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,553,695
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,883,382
<AVERAGE-NET-ASSETS> 116,130,000
<PER-SHARE-NAV-BEGIN> 18.825
<PER-SHARE-NII> (0.239)
<PER-SHARE-GAIN-APPREC> (4.133)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.74
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.713
<EXPENSE-RATIO> 1.62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>