A Prudent Approach to Wealth Accumulation in the Stock Market

What significant factor determines whether a company's share price will rise or fall? In our opinion, growth of earnings over time.

It is our belief that a company's stock price will eventually follow its growth in earnings (profitability). If a company enjoys consistent growth in earnings, its stocks should eventually tend to rise. If a company displays a history of negative earnings, its stock should eventually tend to fall. If a company is losing money but has only the prospect of substantial earnings, we believe it's too speculative and the risk of owning stock in such a company is too great. We prefer to concentrate on a company's growth in earnings and closely monitor its P/E ratio. The collapse of many young technology or Internet stocks during the fourth quarter of 2000 and the first quarter of 2001-firms that possessed a potential for substantial earnings but operated at a loss-supports our contention. Investing in high-flying tech stocks with little or no earnings proved quite popular in recent years but, as investor discovered, losses mounted up quickly.

It's our view that a sensible, less stressful, prudent approach for wealth accumulation in the stock market must focus on opportune investing in well-established, large cap, bellwether stocks derived from opportune sectors in the market.* In addition to possessing strong growth characteristics these stocks should display superior management, realistic P/E ratios. Historically, demonstrated over time consistent growth in earnings and the prospect for sustainable growth into the future.

The E-Portfolio

Our research screens many stocks and identifies large-cap companies that meet our requirements of sustainable revenues and earnings growth as well as competitive advantage and returns on equity. Our Equity Portfolio consists of 25 to 50 select companies which stand out in their respective industries and have demonstrated an ability to build capital appreciation for shareholders over time.

General Characteristics of Stocks in the E-Portfolio

• Classified as upper tier, "large cap"
• Ability to produce growth and earnings in a variety of economic environments
• Typically, less sensitive to short-term economic trends than cyclical, low-quality companies
• Highly liquid
• Seasoned management
• Typically, leaders in market capitalization in their respective fields
• Strong return on equity

Possessing strong fundamentals, we believe our E-Portfolio stocks offer investors the opportunity for stability and price appreciation over the long term. Our disciplined investment approach encourages investors to have confidence in the E-Portfolio stocks. In fact, Value Line Publication ranks only 24 companies currently with the highest financial strength rating (A++). Companies included in our E-Portfolio which enjoy this ranking are General Electric, Johnson & Johnson, Abbot Labs, and Anheuser-Busch.

Adding Income With a Measure of Downside Protection

We believe a sound and prudent way to add income with a measure of downside protection in our E-Portfolio is to strategically write covered call options. Unlike writing naked calls, where risk can be unlimited, writing covered calls limits one's risk by the virtue of owning the underlying stock itself. In writing covered calls, the options writer receives cash (premium) for selling the call but, in exchange for the premium, the writer forfeits any increase in the stock above the option's strike price.

Certain market conditions are conducive to covered call strategies. For example, in a consolidating, mildly bullish, or even in a slightly receding market environment, the option premium can typically provide additional returns to investors, without the stock being "called away." The major negative factor in writing covered calls occurs if a stock rallies above the strike price; while keeping the premium, investors then sacrifice additional gains on the stock above the strike price. One should also be aware that this strategy, although providing additional income, still leaves the underlying stock position at the risk of the market.**

Our "Prescription" for Wealth Accumulation

Many investors, until recently, believed that earning 30% to 50% a year in the stock market was realistic. Gains of that magnitude simply cannot be achieved without significant risk. Certainly, the negative performance of the Nasdaq 100 for the 12 months ending March 31, 2001, highlights the risk in popular of developmental high-tech companies. Unfortunately, many investors suffered painful losses during that difficult market period.

Our prescription for wealth accumulation is simple and straightforward:

• We believe that stock prices eventually follow revenue and earnings growth, so we place strong emphasis on select, large-cap stocks where price movement is driven principally by revenue and earnings.
• Additionally, by strategically writing covered call options against the stocks in our portfolios, we seek an optimum combination of measured downside protection with additional income opportunities.

Who Are We?

Vision Investment Advisors, LLC, is a money management and advisory firm, headquartered in the Wall Street financial district and registered with the SEC as an investment advisor. Capital appreciation and risk management are our foremost concerns since our focus lies in helping investors build wealth through the construction of balanced, growth-oriented equity portfolios, based on each investor's individual needs and requirements.

*Risk Factors and Risk Discussion:

1. Past performance is no guarantee of future results.
2. Investors with short-term investment horizons can experience depreciation in financially sound, established companies. Recovery from cycles of market depreciation vary and may last for substantial periods.
3. complete discussion of risk factors and fees and charges are included in Vision Advisors' Form ADV, Part II.

** Depending on market conditions, covered call strategies may be used to a greater extent than in the past.