This annual report of the Executive Board of the clean development mechanism (CDM) to the Conference of the Parties (COP), for consideration at its tenth session, covers activities undertaken from the end of November 2003 until early September 2004. The report provides information on progress made towards the implementation of the CDM arising from action taken by the Board during its third year of operation. Such progress relates to advancements in the process leading to the registration of CDM project activities, notably regarding the accreditation and provisional designation of operational entities, the approval of new methodologies for baselines and monitoring, and the consolidation of such methodologies. The development of the CDM registry, required for the issuance of certified emission reductions (CERs), is another important topic covered in this report. The report also addresses governance issues and measures taken to ensure the efficient, cost-effective and transparent functioning of the CDM, including steps taken to improve access to information on the CDM and its governance processes through the UNFCCC CDM web site. Information is also provided on resource requirements for administering the CDM. Apart from giving an account of substantive and governance matters agreed by the Board, the report contains recommendations for decisions to be taken by the COP at its tenth session. The work of the CDM Executive Board from September to December 2004 will be covered in addenda to this document, as necessary. In addition, the Chair of the Board, Mr. John S. Kilani, will give an oral report to the COP at its tenth session, highlighting challenges and achievements during the third year of CDM operations