Australia's oldest listed investment company has recorded a 10.4 per cent rise in full-year profit, and an increase in dividends for the first time in years.
The Australian Foundation Investment Company also announced the retirement of two of its longest-serving board members, former BHP Billiton chairman Don Argus, and its chairman, Bruce Teele, who joined the board in 1966.
AFIC is the country's biggest listed investment group, with $5.7 billion under management.
It made a net profit in the year to June 30 of $242.7 million, compared with $219.9 million in the previous corresponding period.
Ross Barker, AFIC's managing director, said falling local interest rates and an improving US equity market boosted the fund this year, and he was happy with the 1¢ increase in the company's dividend (to 14¢ fully franked), which came after years of no dividend increases.
However, he warned that business and consumer confidence had become subdued in recent months, with the outlook for corporate profitability and the looming federal election weighing on investor sentiment.
He also warned of potential "headwinds" hitting global markets in the medium term.
"One of the biggest things we're thinking about is how the US and Europe deal with their huge government debt situations," Mr Barker told BusinessDay.
"You can't have continuing record-low interest rates for ever. That'll change at some point and how that unravels is going to be a very important thing for global markets."
AFIC's portfolio return for the year was 24.4 per cent, compared with the S&P ASX 200 Index of 22.8 per cent. The fund's net operating result, which measures underlying income from its portfolio, was $234.3 million, up 14.4 per cent from the previous year's $204.8 million.
The portfolio performance was largely helped by its big bank holdings, and other high-yielding stocks such as Wesfarmers and Telstra.
Some of the fund's big transactions of the past year included QBE Insurance, Suncorp, Coca-Cola Amatil, CSL and Sonic Healthcare.
"Healthcare's been a theme that we've wanted to increase in our portfolio over recent years, but it's always been fairly expensive," Mr Barker said. "And we've been following QBE for quite a while, and we think there's some positives there for the company in the medium to long term."
AFIC's Australian Infrastructure Fund was sold as a result of its assets being acquired by the Future Fund. Other sales included holdings in Metcash and CFS Retail Property.
After denying rumours in recent weeks, Don Argus and Bruce Teele have told AFIC's board they plan to retire at the fund's annual meeting on October 9.
Mr Argus retired as chairman of Brambles in 2008, and as BHP Billiton chairman in 2010.