About the Company

Australian Foundation Investment Company (AFIC) is Australia’s largest listed investment company specialising in investing in Australian equities. It has a market capitalisation of $5.1 billion (at 30 June 2008) and a history which now extends to 80 years.

Investment Aims

We aim to provide shareholders with attractive investment returns through access to a steady stream of fully franked dividends and enhancement of capital invested.

In this regard our primary goals are:
	to pay dividends which, over time, grow faster than the rate of inflation; and
	to provide attractive total returns over the medium to long term.

Approach to Investing

The investment philosophy is built on taking a medium to longer term view of value, which means we aim to buy and hold individual stocks over the long term based on selection criteria which, in summary, include:
	formulation and execution of business strategy of the company and its underlying business value;
	key financial indicators, including prospective price earnings relative to projected growth, sustainability of earnings and dividend yield (including franking) and balance sheet position including gearing, interest cover and cash flow; and
	corporate governance practices, including sound and well constructed boards.

AFIC also has access to lines of credit, which allows the Company on a limited basis to gear its balance sheet when appropriate investment returns are available to enhance shareholder returns. In addition, the Company also uses options written against its trading portfolio to generate additional income. However, for risk management purposes at any one time the trading portfolio does not comprise more than 10 per cent of the total investment portfolio.