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). 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 the attached report dated 23 August 2002; it is reproduced here without formal editing.The MOU further provides that, in accordance with Article 11, paragraph 1, of the Convention, the COP will, after each of its sessions, communicate to the GEF any policy guidance approved concerning the financial mechanism