The fund returned 11.96 percent for the year, while the index rose 10.88 percent, Legg Mason said, citing data from Lipper Inc., a unit of Reuters Group Plc.
Propelled by gains in some of its biggest holdings, Value Trust had been the best-performing fund in the large-cap core category over the one- and four-week periods ending Thursday, Lipper data show.
A report on Monday by Internet retailer Amazon.com Inc. that it had logged its busiest holiday shopping season in its 10-year history helped push Value Trust over the S&P for the first time in almost a year.
Though Amazon, one of the fund's largest holdings, fell 16 percent in 2004, it recovered late in the year, after having been down as much as 37 percent in October.
Similarly, IAC/Interactive Corp, was off nearly 19 percent for the year, but up from a 43 percent decline in October.
Also helping performance has been Nextel Communications Inc., the fund's largest holding as of September 30. Nextel rose 7 percent for the year, a far cry from its nearly 25 percent decline in August.
Beating the S&P 500, a broad market gauge made up of mostly large capitalisation stocks, is not easy. No other actively managed fund has come close to Miller, with the next-longest streak dating to 1997, according to Morningstar Inc.
Miller's forte is sticking by his stock picks. He makes big bets, typically holding a mere 35 stocks. He trades as few as one or two stocks in a year, and will hold onto a stock even after the share price has more than doubled.
"What I admire about (Miller) is there are too many portfolio managers who are chasing near-term performance, and they're not successful," said Tom Brown, a hedge fund manager at Second Curve Capital who has known Miller since the 1980s.
"He has had the courage of his convictions to stay with a company when the majority of investors are saying that you are wrong," he said. "In the short-run you suffer pain, but in the long run if you're right, you will make more money."
Of course, beating the S&P every calendar year doesn't mean a fund manager is winning all the time. There have been 30 12-month rolling periods during Miller's streak when Value Trust lagged the S&P 500, Morningstar Inc. has said.
Many investors say the S&P is a yardstick that academics have foisted on the industry.
Marty Whitman, a renowned investor at Third Avenue Funds, said using the index to judge a fund manager's performance was a "bad objective" and a "phony standard."
Whitman said he thinks highly of Miller, but he said performance should be judged by long-term average return. Just beating the index is "probably not a good acid test," he said.
For the last 10 years, Value Trust returned an annualised 18.58 percent, while the S&P returned an annualised 12.07 percent, Legg Mason said, citing Lipper. A $10,000 investment a decade ago in the fund would be worth $51,832 as of September 30, according to Lipper.