AIM V.I. Small Cap Equity Fund

Transcription

1 AIM V.I. Sall Cap Equity Fund PROSPECTUS May 1, 2009 Series I shares Shares of the fund are currently offered only to insurance copany separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. Sall Cap Equity Fund s investent objective is long-ter growth of capital. This prospectus contains iportant inforation about the Series I class shares (Series I shares) of the fund. Please read it before investing and keep it for future reference. As with all other utual fund securities, the Securities and Exchange Coission has not approved or disapproved these securities or deterined whether the inforation in this prospectus is adequate or accurate. Anyone who tells you otherwise is coitting a crie. An investent in the fund: is not FDIC insured; ay lose value; and is not guaranteed by a bank.

2 Table of Contents Investent Objective and Strategies 1 Principal Risks of Investing in the Fund 1 Perforance Inforation 2 Annual Total Returns 2 Perforance Table 2 Fee Table and Expense Exaple 3 Fees and Expenses of the Fund 3 Expense Exaple 3 Hypothetical Investent and Expense Inforation 4 Disclosure of Portfolio Holdings 4 Fund Manageent 4 The Advisors 4 Advisor Copensation 5 Portfolio Managers 5 Other Inforation 6 Purchase and Redeption of Shares 6 Excessive Short-Ter Trading Activity Disclosures 6 Trade Activity Monitoring 6 Fair Value Pricing 7 Risks 7 Pricing of Shares 7 Taxes 8 Dividends and Distributions 8 Share Classes 9 Payents to Insurance Copanies 9 Financial Highlights 10 Obtaining Additional Inforation Back Cover The AIM Faily of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investents, AIM Investor, AIM Lifetie Aerica, AIM LINK, AIM Institutional Funds, aifunds.co, La Failia AIM de Fondos, La Failia AIM de Fondos and Design, Invierta con DISCIPLINA, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investents and Design and Your goals. Our solutions. are registered service arks and AIM Bank Connection, AIM Internet Connect, AIM Private Asset Manageent, AIM Private Asset Manageent and Design, AIM Stylized and/or Design, AIM Alternative Assets and Design and yai.co are service arks of Invesco Ai Manageent Group, Inc. AIM Triark is a registered service ark of Invesco Ai Manageent Group, Inc. and Invesco Triark Ltd. No dealer, salesperson or any other person has been authorized to give any inforation or to ake any representations other than those contained in this prospectus, and you should not rely on such other inforation or representations. Shares of the fund are used as investent vehicles for variable annuity contracts and variable life insurance policies (variable products) issued by certain insurance copanies. You cannot purchase shares of the fund directly. As an owner of a variable product (variable product owner) that offers the fund as an investent option, however, you ay allocate your variable product values to a separate account of the insurance copany that invests in shares of the fund. Your variable product is offered through its own prospectus, which contains inforation about your variable product, including how to purchase the variable product and how to allocate variable product values to the fund.

3 Investent Objective and Strategies The fund s investent objective is long-ter growth of capital. The investent objective of the fund ay be changed by the Board of Trustees (the Board) without shareholder approval. The fund seeks to eet its objective by investing, norally, at least 80% of its assets in equity securities, including convertible securities, of sall-capitalization copanies. In coplying with this 80% investent requireent, the fund s investents ay include synthetic instruents. Synthetic instruents are investents that have econoic characteristics siilar to the fund s direct investents, and ay include warrants, futures, options, exchange-traded funds and Aerican Depositary Receipts. The fund considers a copany to be a sall-capitalization copany if it has a arket capitalization, at the tie of purchase, no larger than the largest capitalized copany included in the Russell 2000 Index during the ost recent 11-onth period (based on onth-end data) plus the ost recent data during the current onth. The Russell 2000 Index easures the perforance of the 2,000 sallest copanies in the Russell 3000 Index, which easures the perforance of the 3,000 largest U.S. copanies. The Russell 2000 Index is widely regarded as representative of sall-cap stocks. The fund ay also invest up to 25% of its total assets in foreign securities. In selecting investents, the portfolio anagers utilize a disciplined portfolio construction process that aligns the fund with the S&P Sall Cap 600 Index which the portfolio anagers believe represents the sall cap core asset class. The security selection process is based on a three-step process that includes fundaental, valuation and tieliness analysis. Fundaental analysis involves building a series of financial odels, as well as conducting in-depth interviews with copany anageent. The goal is to find high quality, fundaentally sound copanies operating in an attractive industry. Valuation analysis focuses on identifying attractively valued securities given their growth potential over a one- to two-year horizon. Tieliness analysis is used to help identify the tieliness of a purchase. In this step, relative price strength, trading volue characteristics, and trend analysis are reviewed for signs of deterioration. If a stock shows signs of deterioration, it will not be considered as a candidate for the portfolio. The portfolio anagers consider selling a security if a change in industry or copany fundaentals indicates a proble, the price target set at purchase is exceeded or a change in technical outlook indicates poor relative strength. The fund s investents in the types of securities described in this prospectus vary fro tie to tie, and at any tie, the fund ay not be invested in all types of securities described in this prospectus. Any percentage liitations with respect to assets of the fund are applied at the tie of purchase. The fund typically aintains a portion of its assets in cash, which is generally invested in oney arket funds advised by the fund s advisor. The fund holds cash to handle its daily cash needs, which include payent of fund expenses, redeption requests and securities transactions. The aount of cash held by the fund ay increase if the fund takes a teporary defensive position. The fund ay take a teporary defensive position when it receives unusually large redeption requests, or if there are inadequate investent opportunities due to adverse arket, econoic, political or other conditions. A larger aount of cash could negatively affect the fund s investent results in a period of rising arket prices; conversely it could reduce the agnitude of a fund s loss in the event of falling arket prices and provide liquidity to ake additional investents or to eet redeptions. As a result, the fund ay not achieve its investent objective. Principal Risks of Investing in the Fund There is a risk that you could lose all or a portion of your investent in the fund. The value of your investent in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to any factors, including the historical and prospective earnings of the issuer, the value of its assets, general econoic conditions, interest rates, investor perceptions, and arket liquidity. This is especially true with respect to equity securities of sall-cap copanies, whose prices ay go up and down ore than equity securities of larger, ore-established copanies. Also, since equity securities of sall-cap copanies ay not be traded as often as equity securities of larger, ore-established copanies, it ay be difficult or ipossible for the fund to sell securities at a desirable price. The dollar value of the fund s foreign investents will be affected by changes in the exchange rates between the dollar and the currencies in which those investents are traded. The value of the fund s foreign investents ay be adversely affected by political and social instability in their hoe countries, by changes in econoic or taxation policies in those countries, or by the difficulty in enforcing obligations in those countries. Foreign copanies generally ay be subject to less stringent regulations than U.S. copanies, including financial reporting requireents and auditing and accounting controls. As a result, there generally is less publicly available inforation about foreign copanies than about U.S. copanies. Trading in any foreign securities ay be less liquid and ore volatile than U.S. securities due to the size of the arket or other factors. The values of the convertible securities in which the fund ay invest also will be affected by arket interest rates, the risk that the issuer ay default on interest or principal payents and the value of the underlying coon stock into which these securities ay be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values ay fall if arket interest rates rise and rise if arket interest rates fall. Additionally, an issuer ay have the right to buy back certain of the convertible securities at a tie and at a price that is unfavorable to the fund. 1

4 Principal Risks of Investing in the Fund (continued) There is no guarantee that the investent techniques and risk analyses used by the fund s portfolio anagers will produce the desired results. An investent in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governent agency. Perforance Inforation The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund s past perforance is not necessarily an indication of its future perforance. All perforance shown assues the reinvestent of dividends and capital gains. The bar chart shown does not reflect charges assessed in connection with your variable product; if it did, the perforance shown would be lower. ANNUAL TOTAL RETURNS 1 The following bar chart shows changes in the perforance of the fund s Series I shares fro year to year. 40% % 8.11% 17.44% 5.19% % /31/04 12/31/05 12/31/06 12/31/07 12/31/08 1 The fund s return during certain periods was positively ipacted by its investents in IPOs. There can be no assurance that the fund will have favorable IPO investent opportunities in the future. For additional inforation regarding the fund s perforance, please see the Financial Highlights section of this prospectus. During the periods shown in the bar chart, the highest quarterly return was 11.66% (quarter ended Deceber 31, 2004) and the lowest quarterly return was 23.80% (quarter ended Deceber 31, 2008). PERFORMANCE TABLE The following perforance table copares the fund s perforance to those of an unanaged broad-based securities arket benchark, style specific benchark and peer group benchark. The fund is not anaged to track the perforance of any particular benchark, including the bencharks shown below, and consequently, the perforance of the fund ay deviate significantly fro the perforance of the bencharks shown below. A fund s past perforance is not necessarily an indication of its future perforance. The perforance table shown below does not reflect charges assessed in connection with your variable product; if it did, the perforance shown would be lower. Average Annual Total Returns* (for the periods ended Deceber 31, 2008) 1 Year 5 Year Since Inception Inception Date AIM V.I. Sall Cap Equity Fund (31.31)% 0.07% 2.53% 08/29/03 S&P 500 Index 1,2 (36.99) (2.19) (0.12) 3 08/31/03 3 Russell 2000 Index 1,2,4 (33.79) (0.93) /31/03 3 Lipper VUF Sall-Cap Core Funds Index 1,2,5 (34.62) (2.14) /31/03 3 * The fund s return during certain periods was positively ipacted by its investents in IPOs. There can be no assurance that the fund will have favorable IPO investent opportunities in the future. For additional inforation regarding the fund s perforance, please see the Financial Highlights section of this prospectus. 1 The Standard & Poor s 500 Index is a arket capitalization-weighted index covering all ajor areas of the U.S. econoy. It is not the 500 largest copanies, but rather the ost widely held 500 copanies chosen with respect to arket size, liquidity, and their industry. The fund has also included the Russell 2000 Index, which the fund believes ore closely reflects the perforance of the securities in which the fund invests. In addition, the Lipper Variable Underlying Funds Sall-Cap Core Funds Index (which ay or ay not include the fund) is included for coparison to a peer group. 2

5 Perforance Inforation (continued) 2 The bencharks ay not reflect payent of fees, expenses or taxes. 3 The average annual total return given is since the onth-end closest to the inception date of the fund s Series I shares. 4 The Russell 2000 Index easures the perforance of the 2,000 sallest copanies in the Russell 3000 Index, which represents approxiately 8% of the total arket capitalization of the Russell 3000 Index. The Russell 3000 Index easures the perforance of the 3,000 largest U.S. copanies based on total arket capitalization, which represents approxiately 98% of the investable U.S. equity arket. The Russell 2000 Index and Russell 3000 Index are tradearks/service arks of the Frank Russell Copany. Russell is a tradeark of the Frank Russell Copany. 5 The Lipper VUF Sall-Cap Core Funds Index is an equally weighted representation of the largest variable insurance underlying funds in the Lipper Sall-Cap Core Funds category. These funds typically have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, copared to the S&P SallCap 600 Index. The S&P SallCap 600 Index is a arket-valued weighted index that consists of 600 sall cap doestic stocks chosen for arket size, liquidity, and industry group representation. Fee Table and Expense Exaple FEES AND EXPENSES OF THE FUND The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable product owner buys, holds, or redees interest in an insurance copany separate account that invests in the Series I shares of the fund but does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher. Shareholder Fees (fees paid directly fro your investent) Series I Shares Maxiu Sales Charge (Load) Maxiu Deferred Sales Charge (Load) N/A in the above tables eans not applicable. Annual Fund Operating Expenses (Series I shares) 1 (expenses that are deducted fro Series I share assets) Series I Shares Manageent Fees 0.75% Other Expenses 0.34 Acquired Fund Fees and Expenses 0.01 Total Annual Fund Operating Expenses Except as otherwise noted, figures shown in the table are for the year ended Deceber 31, 2008 and are expressed as a percentage of the fund s average daily net assets. There is no guarantee that actual expenses will be the sae as those shown in the table. 2 The fund s advisor has contractually agreed, through at least April 30, 2010, to waive advisory fees and/or reiburse expenses of Series I shares to the extent necessary to liit Total Annual Fund Operating Expenses (excluding certain ites discussed below) of Series I shares to 1.15% of average daily net assets. In deterining the advisor s obligation to waive advisory fees and/ or reiburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the nuber reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary ites; (v) expenses related to a erger or reorganization, as approved by the fund s Board of Trustees; and (vi) expenses that the fund has incurred but did not actually pay because of an expense offset arrangeent. Currently, the expense offset arrangeents fro which the fund ay benefit are in the for of credits that the fund receives fro banks where the fund or its transfer agent has deposit accounts in which it holds uninvested cash. These credits are used to pay certain expenses incurred by the fund. EXPENSE EXAMPLE This exaple is intended to help you copare the costs of investing in the Series I shares of the fund with the cost of investing in other utual funds. This exaple does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher. The expense exaple assues you: (i) invest $10,000 in the fund s Series I shares for the tie periods indicated; (ii) earn a 5% return on your investent before operating expenses each year; and (iii) incur the sae aount in operating expenses each year (after giving effect to any applicable contractual fee waivers and/or expense reiburseents). N/A N/A 3

6 Fee Table and Expense Exaple (continued) To the extent fees are waived and/or expenses are reibursed voluntarily, your expenses will be lower. Although your actual returns and costs ay be higher or lower, based on these assuptions your costs would be: Series I Shares 1 Year 3 Years 5 Years 10 Years AIM V.I. Sall Cap Equity Fund $112 $350 $606 $1,340 Hypothetical Investent and Expense Inforation The settleent agreeent between Invesco Ai Advisors, Inc. and certain of its affiliates and the New York Attorney General requires Invesco Ai Advisors, Inc. and certain of its affiliates to provide certain hypothetical inforation regarding investent and expense inforation. The chart below is intended to reflect the annual and cuulative ipact of the fund s expenses, including investent advisory fees and other fund costs, on the fund s return over a 10-year period. The exaple reflects the following: You invest $10,000 in the fund and hold it for the entire 10-year period; Your investent has a 5% return before expenses each year; and The fund s current annual expense ratio includes any applicable contractual fee waiver or expense reiburseent for the period coitted. There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Ai Advisors, Inc. and certain of its affiliates ake any fee waivers and/or expense reiburseents pursuant to a voluntary arrangeent, your actual expenses ay be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation ade to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) fro those shown below. Series I Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Annual Expense Ratio % 1.10% 1.10% 1.10% 1.10% 1.10% 1.10% 1.10% 1.10% 1.10% Cuulative Return Before Expenses 5.00% 10.25% 15.76% 21.55% 27.63% 34.01% 40.71% 47.75% 55.13% 62.89% Cuulative Return After Expenses 3.90% 7.95% 12.16% 16.54% 21.08% 25.80% 30.71% 35.81% 41.10% 46.61% End of Year Balance $10, $10, $11, $11, $12, $12, $13, $13, $14, $14, Estiated Annual Expenses $ $ $ $ $ $ $ $ $ $ Your actual expenses ay be higher or lower than those shown. Disclosure of Portfolio Holdings The fund s portfolio holdings are disclosed on a regular basis in its sei-annual and annual reports to shareholders, and on For N-Q, which is filed with the Securities and Exchange Coission (SEC) within 60 days of the fund s first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these docuents have not been ade available on our website. However, these docuents are available on the SEC s website at In addition, the fund s portfolio holdings as of each calendar quarter-end are ade available to insurance copanies issuing variable products that invest in the fund. A description of the fund s policies and procedures with respect to the disclosure of the fund s portfolio holdings is available in the fund s Stateent of Additional Inforation. Fund Manageent THE ADVISORS Invesco Ai Advisors, Inc. (the advisor or Invesco Ai) serves as the fund s investent advisor and anages the investent operations of the fund and has agreed to perfor or arrange for the perforance of the fund s day-to-day anageent. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas The advisor has acted as an investent advisor since its organization in Today, the advisor, together with its subsidiaries, advises or anages over 225 investent portfolios, including the fund, encopassing a broad range of investent objectives. 4

7 Fund Manageent (continued) The following affiliates of the advisor (collectively, the affiliated sub-advisors) serve as sub-advisors to the fund and ay be appointed by the advisor fro tie to tie to provide discretionary investent anageent services, investent advice, and/or order execution services to the fund: Invesco Asset Manageent Deutschland GbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Gerany 60313, which has acted as an investent advisor since Invesco Asset Manageent Liited (Invesco Asset Manageent), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdo, which has acted as an investent advisor since Invesco Asset Manageent (Japan) Liited (Invesco Japan), located at 25th Floor, Shiroyaa Trust Tower, 3-1, Toranoon 4-choe, Minato-ku, Tokyo , Japan, which has acted as an investent advisor since Invesco Australia Liited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investent advisor since Invesco Global Asset Manageent (N.A.), Inc. (Invesco Global), located at 1555 Peachtree Street, N.E., Atlanta, Georgia 30309, which has acted as an investent advisor since Invesco Hong Kong Liited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen s Road East, Hong Kong, which has acted as an investent advisor since Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at 1555 Peachtree Street, N.E., Atlanta, Georgia 30309, which has acted as an investent advisor since Invesco Senior Secured Manageent, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Aericas, New York, New York 10036, which has acted as an investent advisor since Invesco Triark Ltd. (Invesco Triark), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investent advisor since It is anticipated that, on or about the end of the fourth quarter of 2009, Invesco Ai, Invesco Global and Invesco Institutional will be cobined into a single entity, which will be naed Invesco Advisers, Inc. The cobined entity will serve as the fund s investent adviser. Invesco Advisers, Inc. will provide substantially the sae services as are currently provided by the three existing separate entities. Further inforation about this cobination will be posted on on or about the closing date of the transaction and will be available in the fund s Stateent of Additional Inforation. Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the forer investent advisor to certain AIM funds), Invesco Ai, Invesco Ai Distributors, Inc. (Invesco Ai Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging aong other things: (i) that the defendants peritted iproper arket tiing and related activity in the funds; and (ii) that certain funds inadequately eployed fair value pricing. Additional civil lawsuits related to the above or other atters ay be filed by regulators or private litigants against the AIM funds, IFG, Invesco Ai, Invesco Ai Distributors and/or related entities and individuals in the future. You can find ore detailed inforation concerning all of the above atters, including the parties to the civil lawsuits and suaries of the various allegations and reedies sought in such lawsuits, in the fund s Stateent of Additional Inforation. As a result of the atters discussed above, investors in the AIM funds ight react by redeeing their investents. This ight require the funds to sell investents to provide for sufficient liquidity and could also have an adverse effect on the investent perforance of the funds. ADVISOR COMPENSATION During the fiscal year ended Deceber 31, 2008, the advisor received copensation of 0.74% of average daily net assets. Invesco Ai, not the fund, pays sub-advisory fees, if any. A discussion regarding the basis for the Board s approval of the investent advisory agreeent and investent sub-advisory agreeents of the fund is available in the fund s ost recent report to shareholders for the six-onth period ended June 30. PORTFOLIO MANAGERS The following individuals are jointly and priarily responsible for the day-to-day anageent of the fund s portfolio: Juliet Ellis (lead anager), Senior Portfolio Manager, who has been responsible for the fund since 2004 and has been associated with Invesco Ai and/or its affiliates since Fro 2000 to 2004, she was Managing Director and fro 1993 to 2004, she was a senior portfolio anager with JPMorgan Fleing Asset Manageent. As the lead anager, Ms. Ellis generally has final authority over all aspects of the fund s investent portfolio, including but not liited to, purchases and sales of individual securities, portfolio construction techniques, portfolio risk assessent, and the anageent of daily cash flows in accordance with portfolio holdings. The degree to which Ms. Ellis ay perfor these functions, and the nature of these functions, ay change fro tie to tie. Juan Hartsfield, Portfolio Manager, who has been responsible for the fund since 2006 and has been associated with Invesco Ai and/or its affiliates since Fro 2000 to 2004, he was co-portfolio anager with JPMorgan Fleing Asset Manageent. 5

8 Fund Manageent (continued) More inforation on the portfolio anagers ay be found on the advisor s website The website is not part of this prospectus. The fund s Stateent of Additional Inforation provides additional inforation about the portfolio anagers investents in the fund, a description of their copensation structure, and inforation regarding other accounts they anage. Other Inforation PURCHASE AND REDEMPTION OF SHARES The fund ordinarily effects orders to purchase and redee shares at the fund s next coputed net asset value after it receives an order. Insurance copanies participating in the fund serve as the fund s designee for receiving orders of separate accounts that invest in the fund. The fund ay postpone the right of redeption only under unusual circustances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading. Although the fund generally intends to pay redeption proceeds solely in cash, the fund reserves the right to deterine, in its sole discretion, whether to satisfy redeption requests by aking payent in securities or other property (known as a redeption in kind). Shares of the fund are offered in connection with ixed and shared funding, i.e., to separate accounts of affiliated and unaffiliated insurance copanies funding variable products. The fund currently offers shares only to insurance copany separate accounts. In the future, the fund ay offer the to pension and retireent plans that qualify for special federal incoe tax treatent. Due to differences in tax treatent and other considerations, the interests of fund shareholders, including variable product owners and plan participants investing in the fund (whether directly or indirectly through fund of funds), ay conflict. Mixed and shared funding ay present certain conflicts of interest. For exaple, violation of the federal tax laws by one insurance copany separate account investing directly or indirectly in a fund could cause variable products funded through another insurance copany separate account to lose their tax-deferred status, unless reedial actions were taken. The Board will onitor for the existence of any aterial conflicts and deterine what action, if any, should be taken. A fund s net asset value could decrease if it had to sell investent securities to pay redeption proceeds to a separate account (or plan) withdrawing because of a conflict. EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES The fund s investent progras are designed to serve long-ter investors and are not designed to accoodate excessive short-ter trading activity in violation of our policies described below. Excessive short-ter trading activity in the fund s shares (i.e., purchases of fund shares followed shortly thereafter by redeptions of such shares, or vice versa) ay hurt the long-ter perforance of the fund by requiring it to aintain an excessive aount of cash or to liquidate portfolio holdings at a disadvantageous tie, thus interfering with the efficient anageent of the fund by causing it to incur increased brokerage and adinistrative costs. Where excessive short-ter trading activity seeks to take advantage of arbitrage opportunities fro stale prices for portfolio securities, the value of fund shares held by long-ter investors ay be diluted. The Board has adopted policies and procedures designed to discourage excessive short-ter trading of fund shares. The fund ay alter its policies and procedures at any tie without giving prior notice to fund shareholders, if the advisor believes the change would be in the best interests of long-ter investors. Pursuant to the fund s policies and procedures, Invesco Ai and its affiliates (collectively the Invesco Ai Affiliates) currently use the following tools designed to discourage excessive short-ter trading in the fund: (1) trade activity onitoring; and (2) the use of fair value pricing consistent with procedures approved by the Board. Each of these tools is described in ore detail below. In addition, restrictions designed to discourage or curtail excessive short-ter trading activity ay be iposed by the insurance copanies and/or their separate accounts that invest in the fund on behalf of the variable product owners. Variable product owners should refer to the applicable contract and related prospectus for ore details. TRADE ACTIVITY MONITORING To detect excessive short-ter trading activities, the Invesco Ai Affiliates will onitor, on a daily basis, selected aggregate purchase, or redeption trade orders placed by insurance copanies and/or their separate accounts. The Invesco Ai Affiliates will seek to work with insurance copanies to discourage variable product owners fro engaging in abusive trading practices. However, the ability of the Invesco Ai Affiliates to onitor trades that are placed by variable product owners is severely if not copletely liited due to the fact that the insurance copanies trade with the fund through onibus accounts, and aintain the exclusive relationship with, and are responsible for aintaining the account records of, their variable product owners. There ay also be legal and technological liitations on the ability of insurance copanies to 6

9 Other Inforation (continued) ipose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Ai Affiliates will be able to detect or deter arket tiing by variable product owners. If, as a result of this onitoring, the Invesco Ai Affiliates believe that a variable product owner has engaged in excessive short-ter trading (regardless of whether or not the insurance copany s own trading restrictions are exceeded), the Invesco Ai Affiliates will seek to act in a anner that they believe is consistent with the best interests of long-ter investors, which ay include taking steps such as (i) asking the insurance copany to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance copany s account with the fund. Invesco Ai Affiliates will use reasonable efforts to apply the fund s policies uniforly given the potential liitations described above. FAIR VALUE PRICING Securities owned by the fund are to be valued at current arket value if arket quotations are readily available. All other securities and assets of the fund for which arket quotations are not readily available are to be valued at fair value deterined in good faith using procedures approved by the Board of the fund. Fair value pricing ay reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting fro potentially stale prices of portfolio holdings. However, it cannot eliinate the possibility of frequent trading. See Pricing of Shares Deterination of Net Asset Value for ore inforation. RISKS There is the risk that the fund s policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-ter trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-ter trading, they do not eliinate the possibility that excessive short-ter trading activity in the fund will occur. Moreover, each of these tools involves judgents that are inherently subjective. The Invesco Ai Affiliates seek to ake these judgents to the best of their abilities in a anner that they believe is consistent with the best interests of long-ter investors. However, there can be no assurance that the Invesco Ai Affiliates will be able to gain access to any or all of the inforation necessary to detect or prevent excessive short-ter trading by a variable product owner. While the Invesco Ai Affiliates and the fund ay seek to take actions with the assistance of the insurance copanies that invest in the fund, there is the risk that neither the Invesco Ai Affiliates nor the fund will be successful in their efforts to iniize or eliinate such activity. PRICING OF SHARES Deterination of Net Asset Value The price of the fund s shares is the fund s net asset value per share. The fund values portfolio securities for which arket quotations are readily available at arket value. The fund values all other securities and assets for which arket quotations are unavailable or unreliable at their fair value in good faith using procedures approved by the Board of the fund. The Board has delegated the daily deterination of good faith fair value ethodologies to Invesco Ai s Valuation Coittee, which acts in accordance with Board approved policies. On a quarterly basis, Invesco Ai provides the Board various reports indicating the quality and effectiveness of its fair value decisions on portfolio holdings. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. Even when arket quotations are available, they ay be stale or they ay be unreliable because the security is not traded frequently, trading on the security ceased before the close of the trading arket or issuer specific events occurred after the security ceased trading or because of the passage of tie between the close of the arket on which the security trades and the close of the NYSE and when the fund calculates its net asset value. Issuer specific events ay cause the last arket quotation to be unreliable. Such events ay include a erger or insolvency, events which affect a geographical area or an industry segent, such as political events or natural disasters, or arket events, such as a significant oveent in the U.S. arket. Where arket quotations are not readily available, including where the advisor deterines that the closing price of the security is unreliable, the advisor will value the security at fair value in good faith using procedures approved by the Board. Fair value pricing ay reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting fro potentially stale prices of portfolio holdings. However, it cannot eliinate the possibility of frequent trading. Fair value is that aount that the owner ight reasonably expect to receive for the security upon its current sale. Fair value requires consideration of all appropriate factors, including indications of fair value available fro pricing services. A fair value price is an estiated price and ay vary fro the prices used by other utual funds to calculate their net asset values. The advisor ay use indications of fair value fro pricing services approved by the Board. In other circustances, the advisor valuation coittee ay fair value securities in good faith using procedures approved by the Board. As a eans of evaluating its fair value process, the advisor routinely copares closing arket prices, the next day s opening prices for the security in its priary arket if available, and indications of fair value fro other sources. Fair value pricing ethods and pricing services can change fro tie to tie as approved by the Board. 7

10 Other Inforation (continued) Specific types of securities are valued as follows: Doestic Exchange Traded Equity Securities: Market quotations are generally available and reliable for doestic exchange traded equity securities. If arket quotations are not available or are unreliable, the advisor will value the security at fair value in good faith using procedures approved by the Board. Foreign Securities: If arket quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the arket quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing arket quotations ay becoe unreliable. If between the tie trading ends on a particular security and the close of the custoary trading session on the NYSE events occur that are significant and ay ake the closing price unreliable, the fund ay fair value the security. If an issuer specific event has occurred that the advisor deterines, in its judgent, is likely to have affected the closing price of a foreign security, it will price the security at fair value. The advisor also relies on a screening process fro a pricing vendor to indicate the degree of certainty, based on historical data, that the closing price in the principal arket where a foreign security trades is not the current arket value as of the close of the NYSE. For foreign securities where the advisor believes, at the approved degree of certainty, that the price is not reflective of current arket value, the advisor will use the indication of fair value fro the pricing service to deterine the fair value of the security. The pricing vendor, pricing ethodology or degree of certainty ay change fro tie to tie. Fund securities priarily traded on foreign arkets ay trade on days that are not business days of the fund. Because the net asset value of fund shares is deterined only on business days of the fund, the value of the portfolio securities of a fund that invests in foreign securities ay change on days when you will not be able to purchase or redee shares of the fund. Fixed Incoe Securities: Governent, corporate, asset-backed and unicipal bonds and convertible securities, including high yield or junk bonds, and loans, norally are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing services ay be deterined without exclusive reliance on quoted prices, and ay reflect appropriate factors such as institution-size trading in siilar groups of securities, developents related to special securities, dividend rate, aturity and other arket data. Prices received fro pricing services are fair value prices. In addition, if the price provided by the pricing service and independent quoted prices are unreliable, the advisor valuation coittee will fair value the security using procedures approved by the Board. Short-ter Securities: The fund s short-ter investents are valued at aortized cost when the security has 60 days or less to aturity. Futures and Options: Futures contracts are valued at the final settleent price set by the exchange on which they are principally traded. Options are valued on the basis of arket quotations, if available. Swap Agreeents: Swap Agreeents are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are based on a odel that ay include end of day net present values, spreads, ratings, industry and copany perforance. Open-end Funds: To the extent the fund invests in other open-end funds, other than open-end funds that are exchange traded, the investing fund will calculate its net asset value using the net asset value of the underlying fund in which it invests. The fund discloses portfolio holdings at different ties and with different lag ties to insurance copanies issuing variable products that invest in the fund, and in annual and sei-annual shareholder reports. Refer to such reports to deterine the types of securities in which a fund has invested. You ay also refer to the Stateent of Additional Inforation to deterine what types of securities in which the fund ay invest. You ay obtain copies of these reports or of the Stateent of Additional Inforation fro the insurance copany that issued your variable product, or fro the advisor as described on the back cover of this prospectus. The fund deterines the net asset value of its shares on each day the NYSE is open for business, as of the close of the custoary trading session, or earlier NYSE closing tie that day. TAXES Insurance copany separate accounts ay invest in the fund and, in turn, ay offer variable products to investors through insurance contracts. Because the insurance copany separate accounts are generally the shareholders in the fund, all of the tax characteristics of the fund s investents flow into the separate accounts and not to each variable product owner. The tax consequences fro each variable product owner s investent in a variable product contract will depend upon the provisions of these contracts, and variable product owners should consult with their contract prospectus for ore inforation on these tax consequences. DIVIDENDS AND DISTRIBUTIONS The fund expects, based on its investent objective and strategies, that its incoe will consist of both ordinary incoe and capital gains. Dividends The fund generally declares and pays dividends, if any, annually to separate accounts of insurance copanies issuing the variable products. 8

11 Other Inforation (continued) Capital Gains Distributions The fund generally distributes long-ter and short-ter capital gains (net of any capital loss carryovers), if any, annually to separate accounts of insurance copanies issuing the variable products, but ay declare and pay capital gains distributions ore than once per year as peritted by law. At the election of insurance copanies issuing the variable products, dividends and distributions are autoatically reinvested at net asset value in shares of the fund. SHARE CLASSES The fund has two classes of shares, Series I shares and Series II shares. Each class is identical except that Series II shares has a distribution or Rule 12b-1 Plan. This prospectus relates to the Series I shares. PAYMENTS TO INSURANCE COMPANIES Invesco Ai Distributors, the distributor of the fund, or one or ore of its corporate affiliates (Invesco Ai Distributors Affiliates), ay ake cash payents to the insurance copany that issued your variable product or its affiliates in connection with prootion of the fund and certain other arketing support services. Invesco Ai Distributors Affiliates ake these payents fro their own resources. Invesco Ai Distributors Affiliates ake these payents as incentives to certain insurance copanies to proote the sale and retention of shares of the fund. The benefits Invesco Ai Distributors Affiliates receive when they ake these payents ay include, aong other things, adding the fund to the list of underlying investent options in the insurance copany s variable products, and access (in soe cases on a preferential basis over other copetitors) to individual ebers of an insurance copany s sales force or to an insurance copany s anageent. These payents are soeties referred to as shelf space payents because the payents copensate the insurance copany for including the fund in its variable products (on its sales shelf ). Invesco Ai Distributors Affiliates copensate insurance copanies differently depending typically on the level and/or type of considerations provided by the insurance copanies. The payents Invesco Ai Distributors Affiliates ake ay be calculated on sales of shares of the fund (Sales-Based Payents), in which case the total aount of such payents shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payents also ay be calculated on the average daily net assets of the fund attributable to that particular insurance copany (Asset-Based Payents), in which case the total aount of such cash payents shall not exceed 0.25% per annu of those assets during a defined period. Sales-Based Payents priarily create incentives to ake sales of shares of the fund and Asset-Based Payents priarily create incentives to retain assets of the fund in insurance copany separate accounts. Invesco Ai Distributors Affiliates are otivated to ake the payents described above in order to proote the sale of fund shares and the retention of those investents by clients of insurance copanies. To the extent insurance copanies sell ore shares of the fund or retain shares of the fund in their variable product owners accounts, Invesco Ai Distributors Affiliates ay directly or indirectly benefit fro the increental anageent and other fees paid to Invesco Ai Distributors Affiliates by the fund with respect to those assets. In addition to the payents listed above, the advisor ay also reiburse insurance copanies for certain adinistrative services provided to variable product owners. Under a Master Adinistrative Services Agreeent, between the fund and the advisor, the advisor is entitled to receive fro the fund reiburseent of its costs or such reasonable copensation as ay be approved by the Board. Under this arrangeent, the advisor provides, or assures that insurance copanies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not liited to, facilitation of variable product owners purchase and redeption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy aterials, periodic fund reports, and other aterials; aintenance of variable product owners records; and fund services and counications. Currently, these adinistrative service payents ade by the fund to the advisor are subject to an annual liit of 0.25% of the average daily net assets invested in the fund by each insurance copany. Any aounts paid by the advisor to an insurance copany in excess of 0.25% of the average daily net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund s assets. Insurance copanies ay earn profits on these payents for these services, since the aount of the payents ay exceed the cost of providing the service. You can find further details in the Stateent of Additional Inforation about these payents and the services provided by insurance copanies. In certain cases these payents could be significant to the insurance copany. Your insurance copany ay charge you additional fees or coissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance copany about any payents it receives fro the advisor, Invesco Ai Distributors, or the fund, as well as about fees and/or coissions it charges. 9

12 Financial Highlights The financial highlights table is intended to help you understand the financial perforance of the fund s Series I shares. Certain inforation reflects financial results for a single fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investent in the fund (assuing reinvestent of all dividends and distributions). The table shows the financial highlights for a share of the fund outstanding during the fiscal years indicated. The inforation for the fiscal years ended 2008, 2007, 2006 and 2005 has been audited by PricewaterhouseCoopers LLP, whose report along with the fund s financial stateents, is included in the fund s annual report, which is available upon request. Inforation prior to fiscal year 2005 was audited by other independent registered public accountants. For a discussion of how investents in IPOs affected the fund s perforance, see the Perforance Inforation section of this prospectus. Net asset value, beginning of period Net investent incoe (loss) (a) Net gains (losses) on securities (both realized and unrealized) Total fro investent operations AIM V.I. SMALL CAP EQUITY FUND Dividends fro net investent incoe Distributions fro net realized gains Total Distributions Net asset value, end of period Total Return (b) Net assets, end of period (000s oitted) Ratio of expenses to average net assets with fee waivers and/or expenses absorbed Ratio of expenses to average net assets without fee waivers and/or expenses absorbed Ratio of net investent incoe (loss) to average net assets Portfolio turnover (c) Series I Year ended 12/31/08 $15.53 $ 0.02 $(4.88) $(4.86) $ $(0.05) $(0.05) $10.62 (31.31)% $152, % (d) 1.09% (d) 0.16% (d) 55% Year ended 12/31/ (0.01) (0.01) (0.45) (0.46) , (0.07) 45 Year ended 12/31/ (0.01) (0.63) (0.63) , (0.06) 52 Year ended 12/31/ (0.06) , (0.44) 70 Year ended 12/31/ (0.06) (0.00) (0.00) , (0.56) 156 (a) (b) (c) (d) Calculated using average shares outstanding. Includes adjustents in accordance with accounting principles generally accepted in the United States of Aerica and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values ay differ fro the net asset value and returns for shareholder transactions. Total returns do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the period ending Deceber 31, 2007, the portfolio turnover calculation excludes the value of securities purchased of $17,709,035 and sold of $19,432,514 in the effort to realign the Fund s portfolio holdings after the reorganization of AIM V.I. Sall Cap Growth Fund into the Fund. Ratios are based on average daily net assets (000 s oitted) of $176,954 for Series I shares. 10