Bill Miller

Introduction:

William H. Miller III (Bill) started investing when he was 9 years old. He bought his first stock at the age of 16 in RCA. After serving in the military intelligence he earned a doctorate in philosophy from Johns Hopkins University. Miller is now the manager of an 11.2 billion dollar mutual fund, Value Trust which has outperformed its benchmark index and S&P 500 for 14 years in a row. This record marked the longest streak of success for any manager in the mutual fund industry. In 1981 Miller joined Legg Mason, Inc. and served as Chief executive officer of Legg Mason Capital Management which had about 40 billion in assets under his management.

1) How well has Value Trust performed in recent years? In making that assessment, what benchmark(s) are you using? How do you measure investment performance? What does good performance mean to you?

Value Trust has surpassed the S&P 500 by an average of 3.67% (total return) for the previous fifteen years. Value Trust’s beta according to the Morningstar Report against the S&P 500 is 1.31 . It has also attained Morningstar’s five star rating.

Mutual fund investment performance can be measured by computing its net asset value (NAV) and Annual Total Return . NAV can be computed as the fund’s total assets less liabilities, divided by the number of mutual-fund shares outstanding or market value of fund assets-liabilities/fund shares outstanding. Annual total return can be measured by increase or decrease in net asset value plus the fund’s income distributions (i.e., dividends and capital gains), expressed as a percentage of the fund’s NAV at the beginning of the investment period or change in net asset value + dividends + capital-gain distributions/ NAV (at the beginning of the year) . These are used to find the measure of (1) the percentage of annual growth rate of NAV assuming reinvestment (the total return on investment), and (2) the absolute dollar value today of an investment made at some point in the...