This annual report of the Executive Board of the clean development mechanism (CDM) to the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (COP/MOP) covers activities from the end of November 2004 to the end of September 2005. In the wake of the entry into force of the Kyoto Protocol, the implementation of the CDM made notable progress. There are now 25 registered CDM project activities, 11 operational entities performing validation of projects and two such entities undertaking verification and requesting issuance of certified emission reductions (CERs). Among the 46 approved methodologies for baselines and monitoring, there are six consolidated ones, up from two less than a year ago. Simplified methodologies for small-scale projects, including afforestation and reforestation, were further developed. The CDM registry is ready to receive CERs. Access to information through the UNFCCC CDM web site, including for 4,500 subscribers to the CDM News facility, has been further improved. The report also highlights the areas of governance, management and resources which are critical to ensuring the efficient, cost-effective and transparent functioning of the CDM. The Board has adopted a CDM management plan until the end of 2006 and reiterates the urgent need for adequate and predictable resources to implement its activities. The report recommends decisions to be taken at COP/MOP 1, including on the designation of operational entities and on the share of proceeds to cover administrative expenses of the CDM. It also refers to CDM-related issues under items 3 and 12 (c) of the provisional agenda. The work of the Board from the beginning of October until late November 2005 will be covered in an addendum to this report. Ms. Sushma Gera, Chair of the Board, will highlight achievements and future challenges of the CDM in her presentation to the session