This document is the annual report prepared by the Interagency Working Group on Information Technology Research and Development of the National Science and Technology Council. This report is a Supplement to the President's fiscal year (FY) 2002 Budget that describes the Federal Networking and Information Technology Research and Development (NITRD) activities. As required under the High-Performance Computing Act of 1991, the Supplement covers current work and planned directions for FY 2002. FY 2001 budget estimates and FY 2002 requests for the multi-agency program, by Program Component Area (PCA) and by agency, are shown. This year's Supplement is organized around the following key research challenges that must be overcome to ensure continuing U.S. leadership in advanced computing and networking and in all the defense and non-defense sectors that increasingly rely on these capabilities: (1) next-generation computing and data storage technologies; (2) surmounting the silicon complementary metal oxide semiconductor (CMOS) barrier; (3) versatile, secure, scalable networks for the 21st century; (4) advanced IT to sustain U.S. strength in science and engineering; (5) ensuring reliable, secure operation of critical systems; (6) making software for the real world; (7) supporting human capabilities and university human development; (8) managing and enabling worlds of knowledge; (9) supporting education and development of a world-class IT workforce; and (10) understanding the effects of IT to maximize the benefits. The Supplement also describes some of the significant national applications of information technology that can have a transforming impact on critical infrastructures nationwide, to the benefit of all citizens. The Nation's ability to deploy these powerful emerging applications will depend on many successful results of the fundamental research in component technologies outlined in this report. (AEF)