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years and open to boys under the age of sixteen years, previously maintained. No change was made as to the junior foundation scholarships or the grant-of free education to both foundation and district scholars, and to six or any less number of the winners of certificates in each year. Last term forty-one boys, or 20 per cent, of the total number on the roll, were thus exempt from fees, as were also four sons of officials. The Board notes with pleasure the prominence in the honour lists of the names of district scholars since the tenure of scholarships has been extended from two to three years, and looks for still better results from the new regulations of the Board of Education, which came into force this year, under which district scholars enter the school at an earlier age and will be able to compote for further scholarships. It is believed that under this system the school will, for many of these boys, be a link between primary and University education. Examinations, ate. —The school having undergone a special examination last year, it was not felt necessary to incur the expense of calling in examiners from outside this year. Examinations were held, in each term by the staff. In external competitions many successes have been won ; in the senior Civil Service examination, in particular, several high places were obtained. The Board would regret any alteration of the regulations as to this examination which would deprive the boys of this school of the opportunity of competing. Drawing, Workshop, dc. —Great attention has been paid, as heretofore, to freehand, geometrical, and, especially, mechanical drawing. Good results have been obtained in the workshop. At the close of the year the offer of prizes for the best models elicited several excellent specimens of workmanship. Many of these were made from working drawings copied by the competitors from those actually used in the construction of public works. Evening Classes. —These have been duly advertised, but in no case has the minimum number of candidates prescribed, namely eight, been reached. In fact only two applications were received during the year, each for only one of the five classes (chemistry, drawing, English, French, Latin) offered. Finances.— The Board has still to report straitened finances. In consequence of this, reductions of the staff more than proportional to the diminution in numbers have been made ; nor have any increases of salary been given to deserving masters. The Board also regrets to have to report that the audit at the close of the year brought to light irregularities on the part of the late Secretary, Mr. G. von der Ileyde. The deficiency first discovered was made good; but, after Mr. von der Heyde had been removed from his office and had left the colony, further investigation by the Provincial Auditor revealed others (vide returns). It was resolved that in future the Secretary should furnish security for £200. Secretary. —The Eev. E. Kidd, L.L.D., has been appointed Secretary. Beturns, &c. —The usual returns and copies of the school list, the Headmaster's report, a statement of the assets and liabilities, and the audited statement of the receipts and expenditure, are forwarded herewith. Ist March, 1887. Eobert Kidd, Secretary.

2. Statement of Eeceipts and Expenditure for the Year ending 31st December, 1886. Receipts. £ s. d. Expenditure. £ s. d. To Balance at beginning of year .. .. 13 19 1 By Overdraft at beginning of year .. 1,776 8 3 Current income from reserves .. 3,183 12 6 Office salary and commission.. .. 226 18 8 School fees.. .. .. .. 1,612 18 6 Other office expenses .. .. 60 14 2 Loan on second mortgage .. .. 2,000 0 0 Teachers'salaries and allowances .. 3,236 6 0 Pee for a lease in hand .. .. 3 0 0 Examiners'fees * .. .. .. 286 14 0 Proceeds of old houses sold for removal 29 0 0 Other expenses f .. .. .. 41 5 3 Overdraft, end of year, Bank New Zealand 132 14 0 Scholarships .. .. .. 86 13 4 Prizes .. .. .. .. 65 11 2 Printing .. .. .. .. 11 3 6 Advertising .. .. .. .. 29 5 3 Cleaning, fuel, light, &a. .. .. 53 15 6 Book and stationery account, and other temporary advances— School stationery, per Governor's order t .. .. .. 35 16 0 School stationery and books for sale per J. Anderson, late assis-tant-master, net} .. .. 119 5 3 Advance account, W. Tibbs, for school stationery § .. .. 43 4 0 Site and buildings— Balance to complete expenditure on Grammar School .. .. G2 10 0 Repairs to school-building .. .. 40 16 8 Repairs to houses on endowments .. 27 13 4 Insurance and rates (including waterrates) on, and for use of, school .. 38 9 4 Ditto for houses on endowments .. 131 12 4 Interest on current account .. .. 116 9 2 Expenses of leases by auction, and sale of old houses .. .. .. 49 12 0 Interest on loans .. .. .. 197 10 0 Cleaning, and closets—school .. 25 19 9 Cleaning, and closets—property .. 19 2 0 General law expenses .. .. 14 8 4 School furniture and requisites .. 37 6 9 School sports and cricket-ground .. 17 10 0 Election expenses .. • ■ .. 12 13 0 Travelling expenses .. .. .. 18 5 0 Deficiency account late Secretary .. 89 6 3 £6,975 4 1 £6,975 4 1 * Ordinary, £5 ; special, j£2Bl lis, t Ordinary, £0 17s. Cd.; special, £31 It. 9d. I Old accounts. § New account. G. Maurice O'Borke, Chairman,