This annual report of the Joint Implementation Supervisory Committee (JISC) to the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (COP/MOP) covers activities from 7 December 2005 to 31 July 2006. The report recommends decisions to be taken by the COP/MOP, at its second session, on the rules of procedure for the JISC and a joint implementation project design document. It also refers to work undertaken by the JISC during this reporting period, including on operationalization of the verification procedure, guidance on criteria for baseline setting and monitoring, and establishment of a Joint Implementation Accreditation Panel. Based on this information, the COP/MOP may wish to provide further guidance relating to JI, notably to the JISC. 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 JISC. The JISC reiterates the urgent need for adequate and predictable resources to implement its activities. The work of the JISC from the beginning of August until the beginning of November 2006 will be covered in an addendum to this report. Ms. Daniela Stoycheva, Chair of the JISC, will highlight achievements and future challenges of the JISC in her presentation to the session.