Investment firm Australian Foundation Investment Company Ltd (AFIC) (ASX: AFI) said on Monday that following this year's dipping profit results, the company is adopting a careful approach on investment decisions that it would make in 2010/11.

AFIC said that it "will be taking a patient approach as our expectations are that the market is likely to trade broadly in a range around current levels for a period of time with higher volatility in the short to medium term."

The company registered an after-tax profit of $183.75 in the June quarter, sliding by 11.9 percent from the $208.4 million it netted last year, as it added that its 2008/09 net profit was re-stated from $103.5 million after AFIC decided to use new accounting standards which revised the company's regards on unrealised gains and losses on investments.

AFIC said that it is set to pay shareholders a final dividend of 13 cents per share, fully franked and leading to total dividends of 21 cents for 2009/10 fully franked and unchanged on the prior year's total dividends.

The company said that the market's future gains would hinge on projections of solid growth coming from China as it noted that political uncertainty and additional considerations pointed to indications that the market would be trading in carefully determined range.

AFIC said that the market is generally sifting for positive evidence as Australian companies are set to release encouraging earnings projections in August though it noted that the country's economy is indeed healthy due to its robust fiscal position, sound employment levels and expectations for capital expenditures that are underway.

The company said that its net operating profit slid by 10.1 percent to $179.5 million when its revenue plunged by 15.5 percent to $194.9 million for the year to June 30 this year as dividends of companies where AFIC placed its investments were considerably slashed.

AFIC said that its investment portfolio in 2009/10 brought a total return of 15.6 percent after management fees and tax but this was crimped as the market retreated in the last half of the same fiscal year over the growing concerns on Europe's sovereign debt.

Around that time, the company said that it opted to acquire shares in companies with promises of long-term returns such as Australian Infrastructure Fund, Amcor and ANZ Banking Group while it divested some of its stakes in Nufarm and bought back its securities in Santos Fuels.

AFIC revealed that its major investments are currently placed in BHP Billiton, $537.5 million; Commonwealth Bank of Australia, $412.1 million and Westpac Banking Corporation, $387.2 million.

As of 1053 AEST on Monday, AFIC shares were trading at $4.81, gaining by three cents from previous trading day.