Creating a Master VM that can be cloned later

I'm testing out Parallels 5, and I would like to know if it is possible (and how) to create a new VM, install Windows XP and all updates, along with some other basic software ... and then create an image of the VM that can be used for future VMs.

I want to avoid having to reinstall the OS and other software every time I want to create a new VM.

Is this possible? If so, how?

I tried doing this in Parallels 4, but never figured it out. I thought I would simply be able to create the initial VM, and then shutdown Parallels, copy the VM file to a new filename (e.g., "WinXP-Master"). Later to create another VM, I could just duplicate the "WinXP-Master" VM and then launch that as a new VM.

Does that work? I'm pretty sure I tried this in Parallels 4, but couldn't get it to work.