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carried on in separate buildings, which cannot be accomplished until there are sufficient funds to erect a boys' school. The average attendance for the year has been forty-five boys and twentyfour girls. The number on the roll at the end of the year was fifty-seven boys and twenty-five girls. In order to induce parents more extensively to avail themselves of the privileges of secondary education, the Board has reduced the fees to one-half the usual charge in cases where boys have competed for a scholarship and have gained 60 per cent, of the possible number of marks, but who have failed to obtain the scholarship. A preparatory class has been formed, but it has not met with the support the Board anticipated. The matter of annual examinations of the schools by outside examiners has occupied attention; but no satisfactory system within the means of the Board lias been devised. The importance of such examinations is much felt; but it is not within the power of the Board to make satisfactory arrangements. The endowments dealt with during the year have been Section 10, Block LIX., and Section 6, Block LXVIII., Town of Invercargill. The leases of these reserves expired, and the properties were again leased to the previous lessees for seven years at the upset annual rent in each case. Owing to the inferior quality of the largest of the Board's endowments, Eun 214, Eyre District, it was found desirable in the interests of the Board, and with the advice of its solicitor, to reduce the rent from £260 to £175 per annum, the lease being cancelled, and the tenancy being from year to year. The annual statement of receipts and disbursements is enclosed herewith, also other documents required for the compilation of statistics and for the preparing of annual returns. I have, &c, The Hon. the Minister of Education, Wellington. Geo. Lumsden, Chairman.

2. Statement of Eeceipts and Expenditure for the Tear ending 31st December, 1886. Receipts. £ s. d. Expenditure. £ s. d. To Balance, at beginning of year .. .. 320 19 1 By Salary .. .. .. .. 75 0 0 Grant from vote of the General Assembly 250 0 0 Teachers' salaries and allowances, inBeserves sold.. .. .. .. 307 19 0 eluding fees to visiting teachers .. 1,320 8 0 Bank of New Zealand, fixed deposit from Prizes .. .. .. .. 17 11 2 last year .. .. .. 600 0 0 Printing, stationery, and advertising .. 49 17 8 Current income from reserves .. .. 510 1 0 Cleaning, fuel, light, &o. .. .. 70 18 8 Interest on moneys invested and on un- Fencing, repairs, &c. .. .. 32 8 6 paid purchase-money .. .. 30 0 0 Bents, insurance, and taxes .. .. 315 0 Paid by School Commissioners .. 141 18 2 Endowments, sales account— School fees, boys' school .. .. 396 611 Proceeds invested, fixed deposit, Bank Books, &c, sold, and other refunds, boys' of New Zealand .. .. 1,050 0 0 school, including fees received for Expenses of survey, sales, manageextra subjects .. .. .. 46 17 6 ment, &c. .'. .. .. 31 19 4 School fees, girls' school .. .. 215 2 6 Deserves —Rates, expenses of leasing, &c. 22 8 5 Books, &c, sold, and other refunds, girls' Furniture and fittings .. .. 8 9 11 school, including fees received for Sundries —Stamps, telegrams, chequeextra subjects .. .. .. 23 12 4 book, &c. .. .. .. 10 1 0 Balance at end of year .. .. 155 18 10 £2,848 16 6 £2,848 16 6 Geobg-e Lumsden, Chairman. Chables Eout, Treasurer. Correct by Treasurer's books and vouchers and bank passbook. —H. Livingston, Auditor. Amounts due to the Board on account of Preserves and unpaid, 31st December, 1886. Bents.— .... Total, £207 os. 2d. Deferred-payment Instalments. — .... Total, £86 ss. Accompanied by statements—(l) school fees in arrear, (2) rents in arrear, (3) deferred-payment instalments in arrear. —H.L.

3. WORK OF THE HIGHEST AND LOWEST FOBMS. Boys' School. Highest Form. —Latin: Horace, Odes, Book I.; Cicero, Pro Milone ; Arnold's Latin Prose Composition (Bradley). French: Moliere's L'Avare, Brachet's French Grammar. History: Henry VIII. to Victoria (Edith Thompson, with notes from Green). English : Historical English Grammar (Morris); Julius Caesar and Merchant of Venice. Mathematics : Arithmetic ; Euclid, Books I. to IV.; algebra to end of quadratic equations. Chemistry : The non-metallic elements (Eoscoe's Elementary Lessons in Chemistry). Lowest Form. —Latin : Smith's Principia, Part I. English : Morris's English Grammar Primer, English Eeaders. History: Curnow's Smaller History. Geography: Petrie's. Arithmetic: To end of weights and measures. Girls' School. Highest Form. —Latin: Caesar, Book I.; Principia Latina, Part IV. French : La Picciola, Brachet's French Grammar. English : Smith's English Grammar, Macmillan's English Literature. History : Collins's. Geography : Mackay's. Lowest Form. —French : Bue's to end of verbs. English : Morris's English Grammar Primer, Globe Eeaders, Lady of the Lake. Geography: Petrie's. History : Curnow's Smaller History. Arithmetic : Hamblin Smith's to end of weights and measures.