Bill Miller - Value Trust Methodology

Value Trust has surpassed the S&P 500 by an average of 3.67% for the previous fifteen years. Value Trust also maintained Morningstar's five star rating. Mutual fund investment performance can be measured by finding out its net asset value and Annual Total Return. Net Asset Value can be computed as the fund's total assets minus the liabilities divided by funds shares outstanding. Annual total return can be measured by the increase or the decrease in net asset value plus the fund's income distribution. These are used to find the measure of the percentage of annual growth rate of net asset value assuming that reinvestment, and the absolute dollar value today of an investment made at some point in the past. Good performance would require the investment to provide a measurable reward-to-volatility trade-off and to consistently outperform the major markets such as the S&P 500 and Russell.

Miller's methodology includes buying low-price, high intrinsic-value stocks, researching areas of the market that look least promising, the lowest average cost wins, high price stocks can still be good (Wal-Mart and Microsoft), think long-term and anticipate rather than reacting, mixture of cyclically underpriced stock and secularly underpriced stock, be aggressive when stocks are low and less when stocks are high, and finally they must be able to take risk for huge gains. His methodology takes into account behavioral finance. He looks forward to the market's overreaction to news and adjusts his investments accordingly. He also looks for distrust in the market. Small differences in choosing a benchmark against which to compare returns can cumulate to large apparent abnormalities in long-term returns. It will be extremely more difficult to continue this record as more money is invested into this fund because the few companies that compose funds only have so much available stock. Value Trust may eventually have to increase its number of stocks to