The first section of this report provides an update on the Afghanistan Reconstruction Trust Funds (ARTF's) financial activities during the first quarter of SY1391 (March 20 to June 20, 2012). This section also includes an update on new approvals, the Incentive Program and the ARTF external review. As per the financing strategy for SY1391-1393, the ceiling for recurrent cost financing in SY1391 was set at US$225 million, including US$175 million in recurrent cost base financing and US$50 million for the Incentive Program (IP). Based on a request from the Ministry of Finance the full baseline financing of US$175 million was transferred already in the first quarter of SY1391. These funds are yet to be disbursed. The IP funds will be released when benchmarks agreed under the new IP have been met.