The Foundation Phase is a Welsh Government flagship policy of early years education (for 3 to 7-year old children) in Wales. Marking a radical departure from the more formal, competency-based approach associated with the previous Key Stage 1 National Curriculum, it advocates a developmental, experiential, play-based approach to teaching and learning. The policy has been progressively 'rolled out' over the last seven years so that by 2011/12 it included all 3 to 7-year-olds in Wales. In April 2011 the Welsh Government, on behalf of Welsh Ministers, invited tenders for a three-year independent evaluation of the Foundation Phase. Following a competitive tender process, a multi-disciplinary team of researchers, led by Professor Chris Taylor from Cardiff University and the Wales Institute of Social & Economic Research, Data & Methods (WISERD), were appointed to undertake the evaluation in July 2011. The three year evaluation (2011-2014) has four main aims, as outlined by the Welsh Government in its original research tender specification: to evaluate how well the Foundation Phase is being implemented and highlight ways in which improvement can be made (the process evaluation); to evaluate what impact the Foundation Phase has had to date (the outcome evaluation); to assess the value for money of the Foundation Phase (the economic evaluation); to put in place an evaluation framework for the future tracking of outputs and outcomes of the Foundation Phase (the evaluation framework). This annual report sets out the work of the evaluation during its first year and provides a summary of the research and findings from Stage I of the evaluation design. It also outlines the approach and methodology of the evaluation. (author abstract)