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In April, 1902, the Eoyal New Zealand Artillery was forty under establishment, and was recruited up to strength between April and August. During the year the strength has been maintained. While recruits were being trained the out-stations were necessarily much below strength, but during the latter part of the year this has been remedied. There is no difficulty in obtaining recruits, and there are always numerous applicants awaiting vacancies. At the commencement of the past year the Eoyal New Zealand Engineers were considerably over strength, and consequently only two men have been enlisted. The company is now down to its normal strength. There is a very long list of applicants for vacancies. As reported last year, the strength of these branches of the Defence Forces is the minimum under which the various duties required of them can be performed. It would be all too small for war conditions. The following changes have taken place during the past year: The command of the Permanent Force has been taken over by Major St. L. M. Moore, Artillery staff officer, from the Ist February, 1903. Captain W. Coyle has been promoted to the rank of Major, and appointed Inspector Submarine Mining for the whole colony. Captain J. E. Hume returned from England, and. took over the command of the Lyttelton detachment. Lieutenant M. M. Gardiner returned from England on the sth May, 1902, and was posted to the Dunedin detachment. Lieutenant F. Symon is still in England under instruction, and will leave for New Zealand early in August on completion of his course. Lieutenants E. B. Mickle, E. O. Chesney, and G. S. Sandle, E.N.Z.A., and Lieutenant E. B. Smythe, E.N.Z.E., proceeded to South Africa with the Ninth Contingent, and returned to New Zealand on the 14th August, 1902. Lieutenants E. Fraser and E. H, Moorhouse, E.N.E., were appointed to the command of the submarine-mining vessels " Janie Seddon " and " Lady Eoberts" respectively, with the honorary rank of captain; Messrs. J. McPherson and W. G. Nelson were appointed Chief Engineers in charge of engines of submarine-mining vessels and establishments, with the honorary rank of lieutenant: the value of the vessels demanded these appointments. Besides the ordinary artillery duties, certain guns have been transferred and remounted in the various stations. At Wellington, Auckland, Lyttelton. and Dunedin non-commissioned officers have been employed as instructors to garrison and field artillery Volunteers, and to Maxim-gun detachments of battalions of infantry Volunteers. These duties have absorbed a considerable number of men, and the work is by no means light. Contingents leaving and returning to New Zealand have caused extra work for the Permanent Force. When the Eighth, Ninth, and Tenth New Zealand Contingents returned with sickness on board, the Permanent Force furnished squads of men for fumigating and destroying blankets, &c, and for care of sick and convalescents. These duties were very satisfactorily performed. Men have been employed to a considerable extent at each station assisting the Public Works Department. Sentries are employed over prisoners when the latter are working for the Public Works Department. A squad of ten men was employed for three months clearing gorse on Government property at Trentham ; this work is paid" for. At Wellington a new underground test and observing station has been completed at Fort Ballance. Besides the ordinary submarine-mining duties and upkeep of station, the non-commissioned officers have acted as instructors to Volunteer submarine miners and engineers two or three nights per week, and during the annual camps of training. The training, efficiency, and conduct of the Permanent Force for the past year have been up to the high standard of former years. The designation " Permanent Force " was substituted for " Permanent Militia," and " Nos. 1 and 2 Service Companies" were styled "Nos. 1 and 2 Companies." Later, the names "Eoyal New Zealand Artillery " and " Eoyal New Zealand Engineers " were adopted in place of " Nos. 1 and 2 Companies " on receipt of sanction from England. The barrack accommodation at Fort Ballance, Shelly Bay, and Lyttelton is somewhat limited. The present system by which the Permanent Force has to find sentries over prisoners, orderlies, &c, is, with the small numbers of men available, unsatisfactory. Where clerical duties have to be performed it would be better to have a clerical staff available. Men performing the " other duties " referred to should be supernumerary to the establishment. Workshops, where the artificers could turn out the work they are capable of, are still urgently required. Sanction has been given for the erection of these at Wellington, but, although this was received over six months ago, no further steps have apparently been taken. The loss to the colony in this respect, referred to in my annual report of 1902, still continues. Volunteers. The strength of the Volunteer Force (exclusive of Cadets) on the Ist August was distributed as follows : — Auckland (Officers and Men). 1 battery of field artillery ... ... ... ... ... 77 3 companies garrison artillery ... ... ... ... ... 279 2 companies engineers ... ... ... ... ... ... 183 4 battalions mounted rifles (in all, 19 companies) ... ... ... 1,253 2 battalions infantry (in all, 20 companies) ... ... ... 1,080 1 bearer corps ... ... ... ... ... ... 34 1 garrison band ... ... ... ... ... ... 25