The Future Fund grew by 1.1 per cent in the September quarter to $163 billion as the global economy showed signs of recovering from the coronavirus pandemic.
However, the fund - set up in May 2006 to cover future superannuation liabilities of public servants - delivered a return of minus 1.8 per cent for the year.
"In an exceptionally challenging environment brought on by the COVID pandemic the Future Fund has performed strongly," chair and former federal treasurer Peter Costello said in a statement on Wednesday.
"In the March quarter, global stock markets fell dramatically and the Australian equities index dropped over one third."
While there has been a recovery, the local market still remains significantly below levels of 12 months ago against the backdrop of the recession in Australia.
Mr Costello said while the global economy had begun to rebound, the fund remained cautious about the long-term investment outlook, given the extent of the economic dislocation globally.
'The board of guardians (of the fund) remains highly disciplined in balancing its risk and return objectives as it invests on behalf of future generations of Australians," said Mr Costello, who was the architect of the fund.
"This prudent approach has delivered strong long-term returns and remains the cornerstone of all investment decisions the board makes.'
Since its inception, the fund has grown by $102 billion.
Over the past 10 years, the fund has made a return of 8.9 per cent on its investments compared to a target return of 6.2 per cent.
Australian Associated Press