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3. The recent Christmas examinations of the pupils gave most satisfactory proof of the efficiency of the present tutorial staff. His Honour Mr. Justice Richmond, after a somewhat prolonged examination, pronounced the " teaching thoroughly sound and effective," and reports of an equally gratifying character have been presented to the Governors by the other examiners on that occasion —the Eev. Samuel Poole and the Eev. C. O. Mules. 4. His Excellency the Governor of New Zealand, about the middle of the past year, visited and inspected the College, and expressed himself pleased with its general efficiency. 5. At the suggestion of the headmaster some changes have been made in the distribution of the fund allotted to Foundation Scholarships. The subjoined table (which includes the alterations referred to) gives a complete list of the scholarships in connection with the Nelson and Marlborough College, and the names of the present holders: —

In the recent examination for the Stafford Scholarship, the Governors have again availed themstelves of the friendly services of the Bishop of Nelson. 6. In their Eeport of 1868, the Governors assert the " desirability of connecting the Provincial system of education with that of the College, by giving peculiar facilities for the admission into the College of the best trained and most advanced among the scholars of the Provincial schools." A recent addition to the funds of the College (which is further referred to below) will soon afford the desired opportunity. Already two exhibitions, affording free admission into the College to boys bond fide educated at such schools, have been created by the Governors, and, after due public advertisement, have been eagerly competed for. This system has received the warmest approbation of the College Masters (who to assist the views of the Governors have generously foregone their fees), and, when experience shall have declared in its favour, will be extended from time to time aa means permit. 7. While seeking to promote the admirable existing system of public education in this Province, the Governors have not been entirely forgetful of one who, prior to the establishment of that system, devoted himself to the cause of education here ; and at a recent meeting they resolved to recognise the early services of Mr. Campbell, by giving to his son (for some years a pupil of the College) a free education for the space of two years. 8. The Trustees of the Nelson Trust Funds, in the exercise of powers vested in them by " The Nelson Trust Funds Act, 1854," have lately handed over the remainder of those funds to the Governors of the Nelson College. Although making no material difference in the present means of the Governors, this liberal and judicious step will eventually add considerably to the College endowment. By the terms of the gift the Governors are debarred from. expending the moneys thus accruing in building, but they are bound to allow them to remain intact for investment. From this source also the Governors hope to realise their wishes with regard to the gratuitous and assisted admission to the Nelson College of boys of the Provincial schools, whether as day scholars or as> boarders, and also to effect a reduction in both respects in the charges to the pupils generally. 9. One result of the complete disposal of the trust funds is the abolition by the Electoral Eoll under the Trust Funds Act; which roll is also that of the electors under "The Nelson College Incorporation Act, 1858." In this event the last-named Act provides that vacancies among the body of Governors " shall be filled up by a majority of votes of their own body." The Governors, however, are of opinion that the mode thus prescribed by law for the filling-up of vacancies is open to great objections, and they have placed on record their desire that such alteration should be made n the law as would still secure to the people of this Province, and that of Marlborough, either directly or indirectly, the choice of the College Governors. As three of the existing body of Governors will retire in November of this year, it will be desirable that action be taken in this direction in the coming session of the Parliament of New Zealand. 10. The Governors have had under their consideration the propriety of removing the difference at present existing between the terms of admission for boys at Nelson and Marlborough, and for boys who reside outside those Provinces. Looking, however,, at the origin of the funds intrusted to them (funds arising exclusively from the sale of lands in tfiose two Provinces), as well as to the terms of the deed of foundation, the Governors do not think it consistent with their duties to admit non-contributors to the College Endowment to an equal participation in the benefits of their largely-endowed institution with those by whose contributions the College was founded, and is in a great measure upheld. The Nelson College is still open, however, to the boys of other Provinces on terms at least as liberal and attractive as those on which similar advantages can elsewhere be enjoyed. E. Pollock, Secretary. February 10, 1870.

Scholarships. Time for which held. Annual Value. When obtained. By whom. End of Term. Neweome ... Eichmond ... Stafford ... Fell § fist Classical I 12nd do. g 11st Mathematical... £ (2nd do. Three years Three years Three years Two years One year One year One year One year £30 £30 £20 £20 £20 £10 £20 £10 January, 1869 June, 1867 June, 1869 June, 1869 Christmas, 1869 do. do. do. J. Burnett F. Wither Barnicoat (1) Blackett (2) Blaekett (1) Barnicoat (2) T. Campbell (1) Wastney (1) January, 1872 June, 1870 June, 1872 June, 1871 Christmas, 1870 do. do. do.