Mutual Funds, Bill Miller and Value TrustValue Trust, an $11.2 billion mutual fund managed by Bill Miller III and one of a family of funds managed by Legg Mason., a leading global asset management firm based in Baltimore, Maryland has achieved extraordinary success. The Fund invests primarily in large-cap stocks, is benchmarked against the S&P 500, and has outperformed its benchmark for a record 14 consecutive years since 2005. This extraordinary run of success has drawn a lot of attention to this highly rated fund and what exactly lies behind its excellent success and management. Below is an example of performance for the period 2001-2004: TOTAL ANNUAL RETURN (%) HISTORY Year Value Trust S&P 500 Differential 2001 -9.29 -11.89 2.62002 -18.92 -22.10 3.182003 43, 53 28.68 14.852004 11.96 10.88 1. 08A mutual fund is a professionally managed collective investment fund that collects the money of many investors and places it in various securities such as stocks, bonds and money markets. The mutual fund will have a fund manager, who regularly trades the collected money and after realizing capital gains or losses, it will be distributed in the form of dividends to individual investors. These funds offer key advantages for investors over individual stocks: automatic diversification, professional management and convenience, while maintaining liquidity. Mutual fund managers generally rely on some variation of the two classic schools of stock analysis: fundamental and technical. Fundamental analysis is based on information such as economic supply and demand and the financial health of the company. These investors use information such as annual growth rate, earnings records and key ratios to make decisions and focus on consistent and steady growth. Alternatively, technical analysis focuses more on the study of timing, price fluctuation and investor sentiment. A common method of technical analysis is to use a stock price history chart to predict market sentiment and stock price action. Despite the popularity of the two schools of stock analysis, there is no guarantee that either will pay off consistently. A sentiment shared by many professionals states that all the information available to investors will already be integrated into the stock price. This notion is known as the efficient market hypothesis (EMH) and is widely accepted by financial economists. If EMH were right that all current prices reflect all available information, it would be impossible to beat the market by relying on superior knowledge and skill, meaning that most success would be due to luck. Bill Miller's success in consistently beating what is believed to be an efficient market is unusual, and many have wondered what might explain Miller's performance.