The Conference of the Parties (COP), by its decision 12/CP.2, adopted and thereby brought into force a Memorandum of Understanding (MOU) between the COP and the Council of the Global Environment Facility (GEF) (FCCC/CP/1996/15/Add.1). The MOU provides, inter alia, that annual reports of the GEF be made available to the COP through the secretariat. In response to that provision, the GEF secretariat has submitted a report dated 4 October 2005, contained in this document; it is reproduced here as submitted, without formal editing, and with the original pagination. The MOU also provides that the COP shall, pursuant to Article 11, paragraph 1, of the Convention, decide on policies, programme priorities and eligibility criteria relating to the Convention for the financial mechanism which shall function under the guidance of and be accountable to the COP. The MOU further stipulates that the COP will, after each of its sessions, communicate to the Council of the GEF any policy guidance approved by the COP concerning the financial mechanism.