UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-4813
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MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST
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(Exact name of registrant as specified in charter)
Mellon Financial Center, One Boston Place, Boston, Massachusetts 02108
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(Address of principal executive offices) (Zip code)
Denise B. Kneeland
Assistant Vice President and Secretary
One Boston Place, Boston, MA 02108
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(Name and address of agent for service)
with a copy to:
Christopher P. Harvey, Esq.
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Registrant's telephone number, including area code: (617) 248-6000
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2007
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THIS FORM N-CSR REFLECTS A RESTATEMENT OF CERTAIN FINANCIAL INFORMATION
CONTAINED IN THE ANNUAL REPORTS FOR STANDISH MELLON FIXED INCOME FUND, STANDISH
MELLON INTERNATIONAL FIXED INCOME FUND AND STANDISH MELLON GLOBAL FIXED INCOME
FUND, EACH FOR THE FISCAL YEAR AND REPORTING PERIOD ENDED DECEMBER 31, 2007.
THESE FUNDS' ANNUAL REPORTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007 WERE
PREVIOUSLY POSTED ON THE FUNDS' WEBSITE BUT HAD NOT BEEN MAILED TO SHAREHOLDERS
OR FILED WITH THE COMMISSION IN ANY PREVIOUS FORM N-CSR.
Item 1. Reports to Stockholders.
MELLON INSTITUTIONAL FUNDS
Annual Report Standish Mellon
(As Restated; See Note 10) Fixed Income Fund
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Year Ended December 31, 2007
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. This report is not
authorized for distribution to prospective investors in the Fund unless preceded
or accompanied by an effective prospectus.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission (SEC) for the first and third quarters of each fiscal
year on Form N-Q. Forms N-Q are available on the SEC's web site at
http://www.sec.gov. The Fund's Forms N-Q may be reviewed and copied at the SEC's
Public Reference Room in Washington D.C. Information regarding the operation of
the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a
complete list of the Fund's portfolio holdings, view the most recent quarterly
holdings report, semi-annual report or annual report on the Fund's web site at
http://www.melloninstitutionalfunds.com.
To view the Fund's proxy voting guidelines and proxy voting record for the
12-month period ended June 30 visit http://www.melloninstitutionalfunds.com or
the SEC's web site at http://www.sec.gov. You may also call 1-800-221-4795 to
request a free copy of the proxy voting guidelines.
MELLON INSTITUTIONAL FUNDS
February 2008
Dear Mellon Institutional Fund Shareholder:
Enclosed you will find your Fund's annual report for the fiscal year ended
December 31, 2007.
The financial markets experienced a major bout of volatility in 2007 stemming
from two principal sources: troubles in the credit markets related to the
difficulties experienced by mortgage securities backed by subprime loans, and
the high degree of leverage employed by many hedge funds, whose impact on the
markets has swollen significantly over the past decade. While the S&P 500 Index
managed to gain 3.5% in 2007 in a very volatile environment, it lost 3.8% in the
fourth quarter. The U.S. Federal Reserve Board was concerned with market
instability enough to lower rates three times in 2007 even as confidence in the
dollar reached new lows. In December, central banks coordinated their efforts to
provide liquidity facilities to institutions with impaired assets.
Credit markets responded to the subprime troubles with a broad-based flight to
quality as investors fled to short-term Treasury securities, resulting in a
significant steepening of the yield curve. In a dramatic repricing of risk,
spreads widened in the corporate bond sector compared to Treasury issues, which
has the effect of making corporate borrowing more expensive. In another
indication of just how disruptive this period was in the credit markets, even
some issuers of commercial paper - typically viewed as the safest segment of the
corporate market - had trouble issuing or rolling over their issues.
Liquidity has slowly returned to the bond markets in general, but it is still
less than normal. The financial and mortgage sectors clearly have been shaken,
and this will likely exacerbate the housing recession as banks become more
restrictive in their lending. In the view of some, the likelihood of a broader
U.S. recession has become greater; indeed, some economists maintain that we have
already entered one. Our view is that a period of diminished growth - around
1.5% to 2% GDP growth in 2008 vs. the 2.5% long-term trend - is more likely. We
see U.S. exports boosted by the weaker dollar, multi-year global economic
expansion and monetary growth, and reasonable corporate profitability -
especially for multinational franchises - as being positives that may partially
offset the drag of the housing sector and lower consumption. However, should the
"credit crunch" intensify - contrary to our expectations - the odds would favor
a full-scale recession.
We wish to thank you for your business and confidence in Mellon Institutional
Funds. Please feel free to contact us with questions or comments.
Sincerely,
J. David Officer
President
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Management Discussion and Analysis
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As we began 2007, while the weakness in housing was a drag on the economy, the
risk of a recession was small given a low unemployment rate to support consumer
spending, solid corporate profits, and strong global growth. Additionally, a
weaker dollar boosted U.S. export growth and largely offset housing related
weakness. Despite inflation risks from higher energy prices, the level of core
inflation had fallen over the previous twelve months. However, as we progressed
through the year, mounting loss expectations due to rising subprime mortgage
delinquencies exacerbated the market's illiquidity. Risk aversion quickly spread
to other areas of the fixed income market. Global markets were also hit by the
subprime contagion as banks in Europe and the U.K. began reporting large
mortgage related losses. Commercial paper markets ground to a halt as investors
pulled back from asset backed commercial paper conduits and structured
investment vehicles due to their subprime mortgage holdings. To address the
liquidity crunch, central banks in Europe and the U.S. intervened by injecting
large sums of cash reserves. In August, and the months that followed, the U.S.
Federal Reserve Board also stepped up with 100 and 150 basis point reduction in
both the federal funds and discount rates, respectively. Despite the Fed's
intervention, risk aversion has remained quite high as banks and brokers pulled
back in their lending. Amid severe tightening in credit conditions and a slowing
economy, there has been a massive flight into Treasuries. The yield curve has
steepened substantially with the two-year Treasury yield ending the year 176
basis points lower at 3.05% while the ten-year Treasury yield declined 67 basis
points to 4.02%.
For 2007, the Standish Mellon Fixed Income Fund returned 3.64%, underperforming
its benchmark, the Lehman Brothers Aggregate Index, which returned 6.97%. Over
the past year, as risk aversion picked up, broad sectors significantly
underperformed Treasuries. The majority of the lag in the Fund's return as
compared to the benchmark was from its underweight position in Treasuries,
especially in the front end of the yield curve. While the flight to quality
drove Treasury yields much lower, the Fund's holdings in short maturity
corporate bonds, asset backed and commercial mortgage backed sectors did not
participate in the rally. In addition, as we sought to posture the Fund
defensively against leveraged buyout risk, we favored regulated corporate bond
sectors including banks and brokers. However, as the market turmoil escalated,
these sector exposures within the Fund were hardest hit. Spillover from the
subprime mortgage market also caused significantly wider spreads in other
securitized sectors including credit cards, auto loans, commercial mortgage
backed securities and GNMA project loans. With pricing under substantial
pressure across these sectors, performance was negatively impacted. However, the
Fund's longer-than-benchmark duration and bulleted yield curve positioning
contributed positively to the Fund's returns as interest rates fell and the
overweight to intermediate bonds benefited from a much steeper yield curve.
2
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Management Discussion and Analysis
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With much uncertainty in this environment, we remain cautious in our outlook.
Growth prospects in the U.S. are weak with a prolonged housing downturn and
slowdown in job gains. Globally, we also expect growth to decelerate due to a
drag from higher energy prices and a substantial slowdown in the U.S. Combined
with tighter credit conditions, we expect the Fed to continue to cut interest
rates in 2008. We are maintaining the Fund's overweight in intermediate bonds to
capitalize on a steeper yield curve. Internationally, we anticipate that
interest rates will likely fall, particularly in the U.K. and Europe, which will
provide an opportunity potentially to add duration in these markets. Gradually,
we expect the Fed's accommodative policy actions will restore liquidity to the
market. At that juncture, given much wider risk premiums, there should be
attractive buying opportunities among non-Treasury assets.
Catherine A. Powers, CFA Kent J. Wosepka, CFA
Portfolio Manager Portfolio Manager
Standish Mellon Asset Management Company, LLC Standish Mellon Asset Management Company, LLC
3
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Comparison of Change in Value of $100,000 Investment in Standish Mellon
Fixed Income Fund and the Lehman Brothers U.S. Aggregate Index
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[THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Standish Mellon Lehman Brothers
PERIOD Fixed Income Fund U. S. Aggregate Index*
12/31/97 $100,000 $100,000
3/31/98 $101,684 $101,555
6/30/98 $103,817 $103,928
9/30/98 $105,411 $108,322
12/31/98 $105,250 $108,687
3/31/99 $105,567 $108,148
6/30/99 $104,953 $107,197
9/30/99 $104,736 $107,925
12/31/99 $104,509 $107,793
3/31/00 $106,316 $110,172
6/30/00 $108,160 $112,091
9/30/00 $111,308 $115,469
12/31/00 $115,184 $120,325
3/31/01 $118,782 $123,978
6/30/01 $119,142 $124,677
9/30/01 $122,730 $130,427
12/31/01 $123,432 $130,486
3/31/02 $123,500 $130,607
6/30/02 $127,529 $135,433
9/30/02 $132,619 $141,638
12/31/02 $134,400 $143,867
3/31/03 $136,651 $145,870
6/30/03 $140,093 $149,518
9/30/03 $140,177 $149,301
12/31/03 $141,444 $149,772
3/31/04 $145,742 $153,754
6/30/04 $142,334 $149,997
9/30/04 $147,243 $154,792
12/31/04 $149,631 $156,270
3/31/05 $149,256 $155,520
6/30/05 $153,549 $160,199
9/30/05 $153,163 $159,119
12/31/05 $154,130 $160,066
3/31/06 $153,178 $159,030
6/30/06 $152,953 $158,908
9/30/06 $158,728 $164,959
12/31/06 $160,793 $167,002
3/31/07 $163,330 $169,512
6/30/07 $162,172 $168,635
9/30/07 $163,932 $173,431
12/31/07 $166,643 $178,637
Average Annual Total Returns
(for period ended 12/31/2007)
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Since
Inception
1 Year 3 Years 5 Years 10 Years (3/30/1987)
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Fund 3.64% 3.65% 4.39% 5.24% 7.21%
* Source: Lipper Inc.
Average annual total returns reflect the change in the value of an investment,
assuming reinvestment of the fund's dividend income and capital gains. The
$100,000 line graph and the fund's returns do not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares. During periods of reimbursement by the fund's investment adviser (if
applicable), the fund's total return will be greater than it would be had the
reimbursement not occurred. Past performance is not predictive of future
performance.
4
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Shareholder Expense Example (Unaudited)
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As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including redemption fees, and (2) ongoing costs, including management
fees and other Fund expenses. This Example is intended to help you understand
your ongoing costs (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (July 1, 2007 to December 31, 2007).
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000.00=8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs. Therefore, the
second line of the table is useful in comparing ongoing costs and will not help
you determine the relative total costs of owning different funds. In addition,
if these transactional costs were included, your costs would have been higher.
Expenses Paid
Beginning Ending During Period(+)
Account Value Account Value July 1, 2007
July 1, 2007 December 31, 2007 to December 31, 2007
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Actual $1,000.00 $1,027.60 $2.56
Hypothetical (5% return
per year before expenses) $1,000.00 $1,022.68 $2.55
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(+) Expenses are equal to the Fund's annualized expense ratio of 0.50%,
multiplied by the average account value over the period, multiplied by
184/365 (to reflect the one-half year period). The example reflects the
combined expenses of the Fund and the master portfolio in which it invests
all its assets.
5
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Portfolio Information as of December 31, 2007 (Unaudited)
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The Portfolio is actively managed. Current holdings may be different than those
presented below.
Percentage of
Summary of Combined Ratings Investments
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Quality Breakdown
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AAA and higher 62.0%
AA 5.6
A 13.3
BBB 15.8
BB 2.2
B 1.1
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100.0%
Based on ratings from Standard & Poor's and/or Moody's Investors Services. If a
security receives split (different) ratings from multiple rating organizations,
the Portfolio treats the security as being rated in the higher rating category.
Percentage of
Top Ten Holdings* Rate Maturity Investments
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FGLMC (TBA) 5.500% 1/14/2038 8.1%
FNMA (TBA) 5.000 1/1/2021 5.8
FNMA (TBA) 6.000 1/1/2036 5.3
U.S. Treasury Note 4.625 7/31/2012 4.0
U.S. Treasury Note 4.625 11/15/2016 1.8
U.S. Treasury Note 5.125 6/30/2008 1.6
Citibank Credit Card Issuance Trust 2006-C4 C4 5.470 1/9/2012 1.3
U.S. Treasury Bond 4.500 2/15/2036 1.2
FNMA 5.000 11/1/2036 1.2
U.S. Treasury Bond 5.000 5/15/2037 1.1
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31.4%
* Excluding short-term investments and investment of cash collateral.
Percentage of
Economic Sector Allocation Investments
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Government/Agency 11.1%
Corporate 29.5
Emerging Markets 1.6
Mortgage Pass-Thru 33.5
ABS/CMO/CMBS 17.4
Municipal 1.6
Cash & Equivalents 5.3
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100.0%
6
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
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Par Value
Security Description Rate Maturity Value (Note 1A)
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UNAFFILIATED INVESTMENTS--127.9%
BONDS AND NOTES--117.4%
Asset Backed--13.0%
Accredited Mortgage Loan Trust 2006-1 A1 (a) (b) 4.925% 4/25/2036 USD 178,163 $ 177,563
ACE Securities Corp. 2006-ASL1 A (a) (b) 5.005 2/25/2036 260,809 229,938
American Express Credit Account Master Trust 2004-C 144A (a) (b) 5.528 2/15/2012 1,165,273 1,164,991
American Express Credit Account Master Trust 2007-6A C 144A (a) 5.418 1/15/2013 4,275,000 4,114,889
American General Mortgage Loan Trust 2006-1 A1 144A (a) 5.750 12/25/2035 45,371 45,100
Americredit Prime Automobile Receivables 144A 6.960 1/8/2011 1,040,000 945,745
Bank of America Credit Card Trust 2007-B1 B1 (a) (b) 5.108 6/15/2012 5,700,000 5,598,604
Bank of America Credit Card Trust 2007-C1 C1 (a) 5.318 6/16/2014 5,250,000 4,856,250
Bank of America Credit Card Trust 2007-C2 C2 (a) 5.297 9/17/2012 15,000 14,509
Bank One Issuance Trust 2003-C4 C4 (a) 6.058 2/15/2011 100,000 100,238
Bank One Issuance Trust 2004-C1 C1 (a) 5.528 11/15/2011 120,000 118,453
Bayview Financial Acquisition Trust 2005-B 1A6 5.208 4/28/2039 200,000 170,260
Capital Auto Receivables Asset Trust 2004-2 D 144A (b) 5.820 5/15/2012 1,950,000 1,944,224
Capital Auto Receivables Asset Trust 2005-1 C (b) 4.730 9/15/2010 1,000,000 1,000,078
Capital One Auto Finance Trust 2007-C A3A (b) 5.130 4/16/2012 2,730,000 2,728,251
Carrington Mortgage Loan Trust 2006-RFC1 A1 (a) (b) 4.905 5/25/2036 380,784 377,440
Centex Home Equity 2006-A AV1 (a) (b) 4.915 6/25/2036 94,711 94,352
Chaseflex Trust 2006-2 A1A (a) (b) 5.590 9/25/2036 418,845 420,486
Citibank Credit Card Issuance Trust 2006-C4 C4 (a) (b) 5.470 1/9/2012 8,615,000 8,322,756
Citibank Credit Card Issuance Trust 2007-B1 B1 (a) 5.304 4/2/2012 70,000 68,576
Citicorp Residential Mortgage Securities 2006-2 A2 (b) 5.557 9/25/2036 2,600,000 2,566,855
Citicorp Residential Mortgage Securities 2007-2 A1A (b) 5.983 6/25/2037 2,985,584 2,971,250
Citicorp Residential Mortgage Securities 2007-2 M8 7.000 6/25/2037 400,000 74,198
Citicorp Residential Mortgage Securities 2007-2 M9 7.000 6/25/2037 2,095,000 314,250
Citigroup Mortgage Loan Trust, Inc. 2005-WF1 A5 (a) 5.010 2/25/2035 175,000 171,034
Citigroup Mortgage Loan Trust, Inc. 2005-WF2 AF2 (b) 4.922 8/25/2035 55,358 55,228
Citigroup Mortgage Loan Trust, Inc. 2005-WF2 AF7 5.249 8/25/2035 1,955,000 1,811,227
Citigroup Mortgage Loan Trust, Inc. 2006-WF1 A2A (b) 5.701 3/25/2036 4,152 4,152
Countrywide Asset-Backed Certificates 2006-1 AF1 (a) 4.995 7/25/2036 1,992 1,989
Countrywide Asset-Backed Certificates 2007-4 M5 6.920 3/25/2037 1,155,000 411,408
Credit Suisse Mortgage Capital Certificate 2007-1 1A6A (a) 5.863 2/25/2037 1,805,000 1,715,650
Credit-Based Asset Servicing and Securitization 2006-CB2 AF1 (b) 5.717 12/25/2036 117,599 116,664
CS First Boston Mortgage Securities Corp. 2002-HE4 6.940 8/25/2032 466,676 461,291
CSAB Mortgage Backed Trust 2006-3 A1A (b) 6.000 11/25/2036 3,058,881 3,065,593
First NLC Trust 2005-3 AV2 (a) (b) 5.095 12/25/2035 261,458 261,128
Ford Credit Auto Owner Trust 2005-A A4 (b) 3.720 10/15/2009 1,846,507 1,837,145
Ford Credit Auto Owner Trust 2005-B B (b) 4.640 4/15/2010 1,500,000 1,500,007
Ford Credit Auto Owner Trust 2005-C C 4.720 2/15/2011 755,000 756,948
Ford Credit Auto Owner Trust 2006-C C 5.470 9/15/2012 590,000 579,970
Ford Credit Auto Owner Trust 2007-A D 144A 7.050 12/15/2013 600,000 573,035
Green Tree Financial Corp. 1994-7 M1 (b) 9.250 3/15/2020 539,083 558,670
GSAA Home Equity Trust 2006-7 AV1 (a) (b) 4.945 3/25/2046 932,126 930,550
GSAMP Trust 2006-S4 A1 (a) (b) 4.955 5/25/2036 496,906 400,313
Hyundai Auto Receivables Trust 2004-A B 3.460 8/15/2011 27,214 27,045
Hyundai Auto Receivables Trust 2004-A C 3.360 8/15/2011 5,438 5,373
Hyundai Auto Receivables Trust 2006-B C 5.250 5/15/2013 10,000 9,913
Hyundai Auto Receivables Trust 2007-A A3A 5.040 1/17/2012 915,000 919,310
Indymac Index Mortgage Loan Trust 2006-AR25 4A2 (a) (b) 6.139 9/25/2036 2,270,550 2,295,550
JP Morgan Mortgage Acquisition Corp. 2006-CW1 A2 (a) (b) 4.905 5/25/2036 193,171 191,718
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
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Par Value
Security Description Rate Maturity Value (Note 1A)
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Asset Backed (continued)
JP Morgan Mortgage Acquisition Corp. 2007-HE1 AF1 (a) (b) 4.965% 2/25/2009 USD 2,386,396 $ 2,340,554
MBNA Credit Card Master Note Trust 2002-C1 C1 6.800 7/15/2014 65,000 65,945
Morgan Stanley ABS Capital I 2006-HE3 A2A (a) (b) 4.905 4/25/2036 188,657 187,287
Morgan Stanley Home Equity Loans 2006-1 B1 (a) 6.415 12/25/2035 175,000 68,013
Morgan Stanley Mortgage Loan Trust 2006-15XS A6B 5.830 11/25/2036 825,000 772,169
Newcastle Mortgage Securities Trust 2006-1 A1 (a) (b) 4.935 3/25/2036 312,348 309,991
Nomura Asset Acceptance Corp. 2005-AP1 2A5 4.855 2/25/2035 40,000 37,718
Nomura Asset Acceptance Corp. 2005-AP2 A5 4.976 5/25/2035 1,153,000 1,099,965
Nomura Asset Acceptance Corp. 2005-WF1 2A5 5.159 3/25/2035 1,033,000 952,353
Origen Manufactured Housing 2004-B A2 3.790 12/15/2017 48,535 48,158
Origen Manufactured Housing 2005-B A1 (b) 5.250 2/15/2014 245,446 245,065
Origen Manufactured Housing 2005-B A2 5.247 12/15/2018 200,000 200,465
Origen Manufactured Housing 2005-B A3 5.605 5/15/2022 100,000 101,014
Ownit Mortgage Loan Asset-Backed Certification 2006-1 AF1 (b) 5.424 12/25/2036 1,223,105 1,204,317
Popular ABS Mortgage Pass-Through Trust 2005-5 AF6 5.331 11/25/2035 25,000 23,342
Popular ABS Mortgage Pass-Through Trust 2005-6 M1 5.910 1/25/2036 180,000 159,939
Renaissance Home Equity Loan Trust 2005-2 M9 6.639 8/25/2035 25,000 11,159
Renaissance Home Equity Loan Trust 2006-2 AF1 (b) 5.999 8/25/2036 166,351 165,639
Residential Asset Mortgage Products, Inc. 2003-RS9 MI1 5.800 10/25/2033 14,674 13,745
Residential Asset Mortgage Products, Inc. 2004-RS12 AI6 4.547 12/25/2034 80,000 78,089
Residential Asset Securities Corp. 2003-KS7 MI3 (a) 5.750 9/25/2033 315,576 237,884
Residential Funding Mortgage Securities 2005-HI3 A4 5.490 9/25/2035 100,000 82,036
Residential Funding Mortgage Securities II 2006-HSA2 AI2 (a) (b) 5.496 3/25/2036 300,000 276,430
Soundview Home Equity Loan Trust 2005-B M2 5.725 5/25/2035 295,000 162,250
Soundview Home Equity Loan Trust 2005-M M3 5.825 5/25/2035 304,242 177,850
Specialty Underwriting & Residential Finance 2006-BC2 A2A (a) (b) 4.925 2/25/2037 575,685 571,996
Specialty Underwriting & Residential Finance 2006-BC2 A2B 5.978 2/25/2037 400,000 392,112
Structured Asset Securities Corp. 2005-S3 M1 (a) (b) 5.365 6/25/2035 996,874 993,744
Structured Asset Securities Corp. 2006-WF2 A1 (a) 4.895 7/25/2036 113,300 112,263
Terwin Mortgage Trust 2006-9HGA A1 144A (a) (c) 4.945 10/25/2037 320,766 313,388
USAA Auto Owner Trust 2004-2 A4 3.580 2/15/2011 18,589 18,572
Vanderbilt Mortgage Finance 1999-A 1A6 (a) 6.750 3/7/2029 1,130,000 1,156,786
Wachovia Auto Loan Owner Trust 2007-1 D 5.650 2/20/2013 1,865,000 1,753,249
Wells Fargo Home Equity Trust 2006-1 A1 (a) (b) 4.895 5/25/2036 105,734 105,508
Wells Fargo Mortgage Backed Securities Trust 2003-1 2A9 5.750 2/25/2033 225,000 223,203
WFS Financial Owner Trust 2004-3 B 3.510 2/17/2012 8,721 8,645
WFS Financial Owner Trust 2004-4 C (b) 3.210 5/17/2012 449,454 443,757
WFS Financial Owner Trust 2005-2 B (b) 4.570 11/19/2012 961,000 960,543
WFS Financial Owner Trust 2005-3 B (b) 4.500 5/17/2013 625,000 624,717
-----------
Total Asset Backed (Cost $77,882,607) 73,780,027
-----------
Collateralized Mortgage Obligations--8.7%
Banc of America Mortgage Securities 2004-F 2A7 (a) 4.146 7/25/2034 30,071 29,859
Countrywide Home Loans 2005-31 2A1 (a) (b) 5.494 1/25/2036 3,376,987 3,367,375
First Horizon Alternative Mortgage Securities 2004-FA1 1A1 6.250 10/25/2034 215,992 215,988
GNMA 2003-48 AC (b) 2.712 2/16/2020 1,589,155 1,567,799
GNMA 2003-72 A (b) 3.206 4/16/2018 1,193,174 1,182,813
GNMA 2003-88 AC (b) 2.914 6/16/2018 1,103,595 1,088,429
GNMA 2003-96 B (b) 3.607 8/16/2018 271,198 268,360
GNMA 2004-108 A 3.999 5/16/2027 39,491 38,957
GNMA 2004-12A (b) 3.110 1/16/2019 1,039,287 1,017,242
GNMA 2004-23 B (b) 2.946 3/16/2019 4,111,266 4,011,194
GNMA 2004-25 AC (b) 3.377 1/16/2023 730,270 716,741
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
Collateralized Mortgage Obligations (continued)
GNMA 2004-43 A (b) 2.822% 12/16/2019 USD 1,135,970 $ 1,107,467
GNMA 2004-51 A (b) 4.145 2/16/2018 1,273,205 1,261,406
GNMA 2004-57 A (b) 3.022 1/16/2019 806,398 789,047
GNMA 2004-67 A (b) 3.648 9/16/2017 310,325 306,759
GNMA 2004-77 A (b) 3.402 3/16/2020 462,477 455,664
GNMA 2004-9 A (b) 3.360 8/16/2022 58,693 57,598
GNMA 2004-97 AB (b) 3.084 4/16/2022 1,717,776 1,682,194
GNMA 2005-12 A (b) 4.044 5/16/2021 34,310 33,945
GNMA 2005-14 A (b) 4.130 2/16/2027 64,627 64,022
GNMA 2005-32 B (b) 4.385 8/16/2030 1,419,076 1,410,578
GNMA 2005-42 A 4.045 7/16/2020 30,894 30,580
GNMA 2005-50 A (b) 4.015 10/16/2026 49,321 48,780
GNMA 2005-52 A (b) 4.287 1/16/2030 84,516 83,900
GNMA 2005-67 A 4.217 6/16/2021 17,267 17,126
GNMA 2005-79 A 3.998 10/16/2033 21,298 21,056
GNMA 2005-87 A (b) 4.449 3/16/2025 1,235,899 1,229,815
GNMA 2005-9 A (b) 4.026 5/16/2022 1,537,144 1,520,647
GNMA 2005-90 A (b) 3.760 9/16/2028 1,767,118 1,738,241
GNMA 2006-5 A (b) 4.241 7/16/2029 1,564,259 1,551,429
GNMA 2006-55 A (b) 4.248 7/16/2029 2,329,551 2,308,897
GNMA 2006-6 A (b) 4.045 10/16/2023 223,706 221,425
GNMA 2006-67 A (b) 3.947 10/6/2011 2,785,213 2,746,892
GNMA 2006-9 A (b) 4.201 8/16/2026 2,639,028 2,615,794
GNMA 2007-46 A (b) 3.137 11/16/2029 1,279,368 1,256,688
GNMA 2007-52 A 4.054 10/16/2025 1,791,340 1,771,383
GNMA REMIC 2005-29 A (b) 4.016 7/16/2027 1,049,642 1,036,570
GNMA REMIC 2006-3 A (b) 4.212 1/16/2028 2,132,949 2,114,588
GNMA REMIC 2006-66 A (b) 4.087 8/16/2030 2,658,966 2,629,936
Indymac Index Mortgage Loan Trust 2006-AR9 B1 (a) 6.047 6/25/2036 149,656 128,868
Indymac Index Mortgage Loan Trust 2006-AR9 B2 (a) 6.047 6/25/2036 274,370 188,608
JP Morgan Mortgage Trust 2005-A1 5A1 (a) 4.485 2/25/2035 39,386 38,399
JP Morgan Mortgage Trust 2005-A7 1A2 (a) 4.987 10/25/2035 150,000 149,213
Structured Asset Mortgage Investments, Inc. 1998-2 B (a) 5.841 4/30/2030 37,799 37,649
Washington Mutual 2003-AR10 A5 (a) 4.056 10/25/2033 72,000 71,552
Washington Mutual 2003-AR10 A6 (a) (b) 4.056 10/25/2033 2,134,000 2,121,541
Washington Mutual 2004-AR7 A6 (a) (b) 3.940 7/25/2034 266,000 262,935
Washington Mutual 2004-AR9 A7 (a) (b) 4.143 8/25/2034 1,442,000 1,429,469
Washington Mutual 2005-AR4 A4B (a) (b) 4.672 4/25/2035 706,000 700,578
Wells Fargo Mortgage Backed Securities Trust 2005-AR1 1A1 (a) (b) 4.540 2/25/2035 607,631 603,366
-----------
Total Collateralized Mortgage Obligations (Cost $49,176,668) 49,349,362
-----------
Corporate--36.5%
Banking--9.8%
Bac Capital Trust XIV (a) 5.630 12/31/2049 55,000 48,808
Barclays Bank PLC 144A (a) 5.926 12/15/2049 535,000 497,808
Barclays Bank PLC 144A (a) 7.434 12/15/2049 245,000 254,592
Capital One Financial Co. (a) (b) 5.426 9/10/2009 2,620,000 2,476,345
CBA Capital Trust I 144A 5.805 6/30/2015 46,000 45,112
Chevy Chase Bank FSB 6.875 12/1/2013 1,527,000 1,454,468
Chuo Mitsui Trust & Banking Co. Ltd. 144A (a) 5.506 2/15/2049 1,435,000 1,319,468
Citigroup, Inc. 5.300 10/17/2012 1,330,000 1,347,303
City National Corp. 5.125 2/15/2013 640,000 638,663
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
Banking (continued)
Colonial Bank 8.000% 3/15/2009 USD 485,000 $ 501,172
Colonial Bank 6.375 12/1/2015 1,100,000 1,087,148
Compass Bank, Notes 5.500 4/1/2020 15,000 14,113
Export-Import Bank of Korea 4.500 8/12/2009 995,000 984,580
Glitnir Banking HF 144A (a) 5.403 10/15/2008 165,000 164,857
Glitnir Banking HF 144A (a) 6.693 6/15/2016 605,000 609,468
Greater Bay Bancorp 5.250 3/31/2008 100,000 100,089
ICICI Bank Ltd. 144A (a) 5.788 1/12/2010 755,000 745,261
Industrial Bank of Korea 144A (a) 4.000 5/19/2014 305,000 301,936
JPMorgan Chase & Co 5.125 9/15/2014 1,694,000 1,660,423
Kaupthing Bank 144A 7.125 5/19/2016 685,000 627,976
M&T Bank Corp. 5.375 5/24/2012 780,000 777,942
Manufacturers & Traders Trust Co. (a) 5.585 12/28/2020 625,000 579,375
Marshall and Ilsley Bank (a) (b) 5.401 12/4/2012 5,125,000 4,833,280
Marshall and Ilsley Corp. 5.626 8/17/2009 50,000 50,497
Mizuho JGB Investment 144A (a) 9.870 8/30/2049 1,825,000 1,841,666
MUFG Capital Financial 1 Ltd. (a) 6.346 3/15/2049 1,065,000 1,008,698
Northern Rock PLC 144A (a) 5.600 4/30/2014 730,000 452,600
Northern Rock PLC 144A (a) 6.594 6/28/2049 310,000 192,200
Regions Financial Corp. (a) (b) 4.978 8/8/2008 1,725,000 1,722,238
Resona Bank Ltd. 144a (a) 5.850 1/10/2049 1,015,000 943,597
Royal Bank of Scotland Group PLC 144A (a) 6.990 10/5/2049 2,675,000 2,666,954
SB Treasury Co. 144A (a) 9.400 6/30/2049 745,000 759,669
Shinsei Finance Cayman Ltd 144A (a) 6.418 7/20/2048 1,295,000 1,099,473
SMFG Preferred Capital 144A (a) 6.078 7/25/2049 1,500,000 1,381,830
Sovereign Bancorp (a) 5.404 3/1/2009 215,000 212,039
Sovereign Bancorp (a) (b) 5.114 3/23/2010 1,335,000 1,324,731
Sovereign Bancorp 4.800 9/1/2010 1,175,000 1,170,614
St. George Bank Ltd. 144A 5.300 10/15/2015 941,000 912,996
Suntrust Preferred Capital I (a) 5.853 12/15/2036 1,300,000 1,147,250
Tokai PFD Capital Co. 144A CVT (a) 9.980 6/30/2049 1,040,000 1,053,759
USB Capital IX (a) 6.189 4/15/2042 155,000 140,277
Wachovia Bank NA 5.000 8/15/2015 1,130,000 1,068,578
Wachovia Corp. (b) 6.375 1/15/2009 1,855,000 1,884,845
Washington Mutual, Inc. (a) (b) 5.543 1/15/2010 1,195,000 1,110,972
Washington Mutual, Inc. (a) (b) 5.170 8/24/2009 1,795,000 1,602,903
Wells Fargo & Co. 6.375 8/1/2011 850,000 888,489
Wells Fargo Bank NA 7.550 6/21/2010 5,920,000 6,327,337
Western Financial Bank FSB (b) 9.625 5/15/2012 975,000 1,048,654
Zions Bancorporation (a) (b) 5.363 4/15/2008 835,000 828,909
Zions Bancorporation 6.000 9/15/2015 1,391,000 1,350,546
-----------
55,262,508
-----------
Basic Materials--1.1%
Cabot Corp. 144A 5.250 9/1/2013 960,000 984,925
Enterprise Products Operations 4.625 10/15/2009 250,000 249,607
Enterprise Products Operations 5.600 10/15/2014 1,860,000 1,856,269
ICI Wilmington, Inc. (b) 4.375 12/1/2008 1,394,000 1,392,080
Lubrizol Corp. 4.625 10/1/2009 930,000 933,956
Rohm & Haas Holdings Co. 5.600 3/15/2013 445,000 462,400
-----------
5,879,237
-----------
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
Communications--1.7%
America Movil (a) 4.958% 6/27/2008 USD 10,000 $ 9,950
AT&T Corp. 7.300 11/15/2011 1,055,000 1,143,100
AT&T, Inc. (a) (b) 4.959 5/15/2008 895,000 894,168
AT&T, Inc. (a) 4.978 2/5/2010 50,000 49,553
Clear Channel Communication, Inc. 4.500 1/15/2010 50,000 46,250
Comcast Corp. (a) 5.543 7/14/2009 540,000 538,034
Comcast Corp. 5.500 3/15/2011 360,000 363,441
Comcast Corp. 6.300 11/15/2017 40,000 41,501
COX Communications, Inc. 7.125 10/1/2012 75,000 79,985
New Cingular Wireless Services, Inc. 8.750 3/1/2031 442,000 572,824
News America Holdings, Inc. 7.700 10/30/2025 1,020,000 1,145,806
News America, Inc. 6.150 3/1/2037 80,000 77,279
Qwest Corp. 5.625 11/15/2008 15,000 14,925
Qwest Corp. 7.875 9/1/2011 135,000 140,400
Qwest Corp. 8.875 3/15/2012 90,000 96,300
Qwest Corp. 7.500 10/1/2014 860,000 872,900
Qwest Corp. (a) 8.241 6/15/2013 85,000 86,700
TCI Communications, Inc. 7.875 2/15/2026 825,000 932,294
Time Warner Cable, Inc. 5.850 5/1/2017 1,140,000 1,142,814
Time Warner, Inc. (a) 5.109 11/13/2009 60,000 58,524
Time Warner, Inc. 6.750 4/15/2011 1,123,000 1,169,646
Time Warner, Inc. 5.875 11/15/2016 95,000 94,416
Verizon Global Funding Corp. 7.750 6/15/2032 11,000 12,880
-----------
9,583,690
-----------
Consumer Cyclical--0.7%
Caesars Entertainment, Inc. (b) 8.875 9/15/2008 900,000 930,673
Daimler Chrysler Finance NA LLC (a) 5.461 3/13/2009 85,000 84,526
Daimler Chrysler NA Holding Corp. (a) 5.541 3/13/2009 150,000 148,958
Daimler Chrysler NA Holding Corp. 4.875 6/15/2010 480,000 477,867
Federated Retail Holding, Inc. 5.350 3/15/2012 290,000 282,546
Federated Retail Holding, Inc. 5.900 12/1/2016 470,000 442,644
Heinz (H.J.) Co. 144A (b) 6.428 12/1/2008 780,000 794,079
May Department Stores Co. 5.950 11/1/2008 55,000 55,141
May Department Stores Co. 4.800 7/15/2009 30,000 29,830
MGM Mirage, Inc 8.500 9/15/2010 30,000 31,125
MGM Mirage, Inc. 8.375 2/1/2011 620,000 633,950
-----------
3,911,339
-----------
Consumer Noncyclical--0.2%
Safeway, Inc. 4.125 11/1/2008 85,000 84,086
Tyson Foods, Inc. 6.850 4/1/2016 705,000 723,439
Wyeth 5.500 2/1/2014 571,000 579,945
-----------
1,387,470
-----------
Energy--0.5%
Amerada Hess Corp. 6.650 8/15/2011 1,105,000 1,166,258
Anadarko Petroleum Corp. (a) 5.391 9/15/2009 110,000 108,298
ANR Pipeline Co. 7.000 6/1/2025 10,000 10,999
Chesapeake Energy Corp. 7.500 6/15/2014 275,000 279,813
Chevron Phillips 7.000 3/15/2011 18,000 19,355
El Paso Natural Gas Co. 7.500 11/15/2026 5,000 5,253
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
Energy (continued)
Gaz Capital 144A 6.510% 3/7/2022 USD 1,370,000 $ 1,302,459
Oneok, Inc. 5.510 2/16/2008 50,000 49,965
-----------
2,942,400
-----------
Financial--14.0%
Aegon Funding Corp. 5.750 12/15/2020 1,215,000 1,162,862
Allstate Corp. (a) 6.500 5/15/2057 550,000 511,872
American Express Credit Co. (a) (b) 5.303 11/9/2009 1,070,000 1,051,915
American International Group, Inc. 5.050 10/1/2015 595,000 574,606
Ameriprise Financial, Inc. (a) 7.518 6/1/2066 660,000 657,259
Amvescap PLC 5.625 4/17/2012 85,000 83,826
Amvescap PLC 5.375 2/27/2013 645,000 617,768
Arden Realty LP REIT 5.200 9/1/2011 820,000 843,154
Arden Realty LP REIT 5.250 3/1/2015 111,000 111,545
Avalonbay Communities REIT 6.625 9/15/2011 750,000 783,333
Bear Stearns Co., Inc. (b) 3.250 3/25/2009 2,710,000 2,624,131
Bear Stearns Co., Inc. 5.500 8/15/2011 1,120,000 1,105,880
Boeing Capital Corp. 7.375 9/27/2010 1,055,000 1,132,587
Boston Properties LP REIT 5.625 4/15/2015 695,000 672,122
Boston Properties LP REIT 5.000 6/1/2015 20,000 18,528
Boston Properties, Inc. REIT 6.250 1/15/2013 58,000 58,255
Capmark Financial Group 144A 5.875 5/10/2012 1,800,000 1,424,815
Chubb Corp. (b) 5.472 8/16/2008 2,600,000 2,603,123
CIT Group, Inc. (a) 5.019 8/15/2008 135,000 133,942
Commercial Net Lease Realtor REIT 6.150 12/15/2015 610,000 609,484
Countrywide Financial Corp. 5.800 6/7/2012 1,110,000 810,854
Countrywide Home Loan 3.250 5/21/2008 710,000 641,604
Credit Suisse Guernsey (a) 5.860 5/8/2049 1,320,000 1,181,661
Credit Suisse USA, Inc. 5.500 8/16/2011 1,740,000 1,787,892
Credit Suisse, Inc. 4.125 1/15/2010 2,665,000 2,652,280
Daimler Chrysler Holding Corp. (a) 5.441 10/31/2008 315,000 314,394
Duke Realty Corp REIT 5.250 1/15/2010 160,000 160,371
Duke Realty LP 7.750 11/15/2009 929,000 975,951
Duke Realty LP 6.950 3/15/2011 95,000 99,587
Duke Realty LP 5.875 8/15/2012 1,150,000 1,161,756
Erac USA Finance Co. 144A 7.350 6/15/2008 70,000 70,597
Erac USA Finance Co. 144A (a) (b) 5.234 4/30/2009 345,000 343,446
Erac USA Finance Co. 144A 7.950 12/15/2009 1,088,000 1,141,743
Erac USA Finance Co. 144A 6.375 10/15/2017 25,000 24,153
ERP Operating LP 4.750 6/15/2009 74,000 73,009
ERP Operating LP 6.625 3/15/2012 200,000 207,608
ERP Operating LP 5.500 10/1/2012 1,055,000 1,045,829
ERP Operating LP 5.125 3/15/2016 855,000 795,490
ERP Operating LP 5.375 8/1/2016 367,000 346,161
Federal Realty Investment Trust REIT 6.000 7/15/2012 410,000 420,804
Federal Realty Investment Trust REIT 5.400 12/1/2013 25,000 24,715
Federal Realty Investment Trust REIT 5.650 6/1/2016 760,000 731,593
Ford Motor Credit Co. LLC 7.375 10/28/2009 2,940,000 2,767,263
Ford Motor Credit Co. LLC 5.800 1/12/2009 45,000 42,714
General Electric Capital Corp. (a) (b) 5.280 10/21/2010 2,975,000 2,973,715
Goldman Sachs Capital II (a) 5.793 5/8/2049 1,020,000 908,132
Goldman Sachs Group, Inc. 5.625 1/15/2017 420,000 410,162
Goldman Sachs Group, Inc. 6.750 10/1/2037 80,000 78,382
Hanover Insurance Group 7.625 10/15/2025 25,000 24,156
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
Financial (continued)
Hartford Financial Services Group (b) 5.550% 8/16/2008 USD 1,020,000 $ 1,022,353
Hartford Financial Services Group 5.663 11/16/2008 485,000 489,787
Healthcare Realty Trust REIT 5.125 4/1/2014 210,000 199,638
HRPT Properties Trust REIT (a) (b) 5.591 3/16/2011 586,000 565,758
HSBC Finance Corp. 4.750 4/15/2010 18,000 17,901
HSBC Finance Corp. 5.500 1/19/2016 1,125,000 1,097,927
HSBC Financial Capital Trust IX (a) 5.911 11/30/2035 3,435,000 3,178,337
International Lease Finance Corp. (a) 5.250 5/24/2010 45,000 44,386
International Lease Finance Corp. 4.750 1/13/2012 23,000 22,690
Istar Financial, Inc. REIT (a) (b) 5.496 3/9/2010 2,060,000 1,847,266
Janus Capital Group, Inc. 6.250 6/15/2012 1,130,000 1,156,978
Jefferies Group, Inc. 7.750 3/15/2012 2,040,000 2,215,107
JPMorgan and Co., Inc. 6.250 1/15/2009 30,000 30,362
Kingsway America, Inc. 144A (c) 7.500 2/1/2014 50,000 52,761
Lehman Brothers Holdings (a) (b) 5.082 8/21/2009 1,850,000 1,797,732
Lehman Brothers Holdings 4.250 1/27/2010 2,925,000 2,874,125
Lehman Brothers Holdings 6.000 7/19/2012 435,000 442,932
Lehman Brothers Holdings 6.875 7/17/2037 80,000 78,215
Leucadia National Corp. 7.000 8/15/2013 1,280,000 1,225,600
Leucadia National Corp. 7.125 3/15/2017 75,000 69,375
Liberty Property LP REIT 5.500 12/15/2016 575,000 537,984
Liberty Property LP REIT 6.625 10/1/2017 40,000 40,022
Lincoln National Corp. (a) (b) 5.213 3/12/2010 1,385,000 1,360,149
Mack-Cali Realty LP REIT 5.050 4/15/2010 525,000 532,035
Mack-Cali Realty LP REIT 5.250 1/15/2012 895,000 907,582
Mack-Cali Realty LP REIT 5.125 1/15/2015 626,000 615,891
Mack-Cali Realty LP REIT 5.800 1/15/2016 645,000 644,576
MassMutual Global Funding II 144A 3.800 4/15/2009 687,000 682,216
MBNA Capital 8.278 12/1/2026 65,000 67,590
MBNA Corp. 6.125 3/1/2013 1,590,000 1,656,763
Merrill Lynch and Co. (a) 5.098 2/5/2010 15,000 14,617
Merrill Lynch and Co. 4.250 2/8/2010 162,000 158,808
Merrill Lynch and Co. 6.050 8/15/2012 50,000 50,960
Merrill Lynch and Co. 5.700 5/2/2017 2,170,000 2,068,214
Metlife, Inc. 5.000 6/15/2015 2,243,000 2,170,657
Morgan Stanley 3.875 1/15/2009 160,000 158,354
Morgan Stanley 5.750 8/31/2012 1,675,000 1,709,775
Morgan Stanley 4.750 4/1/2014 1,389,000 1,301,290
Morgan Stanley 5.750 10/18/2016 2,635,000 2,600,131
NB Capital Trust IV 8.250 4/15/2027 285,000 295,973
Nippon Life Insurance 144A 4.875 8/9/2010 1,000,000 1,010,299
Pacific Life Global Funding 144A 3.750 1/15/2009 45,000 44,473
Phoenix Cos., Inc. (b) 6.675 2/16/2008 535,000 535,631
Regency Centers LP 5.250 8/1/2015 444,000 420,833
Regency Centers LP 5.875 6/15/2017 355,000 343,051
Simon Property Group LP REIT 4.600 6/15/2010 70,000 69,584
Simon Property Group LP REIT 4.875 8/15/2010 25,000 24,775
Simon Property Group LP REIT 5.000 3/1/2012 906,000 883,722
Simon Property Group LP REIT 5.750 5/1/2012 836,000 841,001
Simon Property Group LP REIT 5.625 8/15/2014 55,000 53,808
Sprint Capital Corp. 6.875 1/15/2028 50,000 47,418
-----------
79,274,441
-----------
The accompanying notes are an integral part of the financial statements.
13
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care--0.6%
Baxter International, Inc. 5.196% 2/16/2008 USD 170,000 $ 170,028
Bayer Corp. 144A (a) 6.200 2/15/2008 275,000 275,523
Coventry Health Care, Inc. 5.875 1/15/2012 485,000 493,059
Coventry Health Care, Inc. 5.950 3/15/2017 750,000 735,383
Unitedhealth Group, Inc. 5.375 3/15/2016 760,000 744,907
Wellpoint, Inc. 5.875 6/15/2017 775,000 780,272
-----------
3,199,172
-----------
Industrials--4.0%
Allied Waste North America 5.750 2/15/2011 545,000 534,100
Allied Waste North America 6.375 4/15/2011 435,000 430,650
Altria Group, Inc. 7.750 1/15/2027 1,090,000 1,404,344
American Standard, Inc. 7.375 2/1/2008 195,000 195,233
Atlas Copco AB 144A 5.600 5/22/2017 575,000 575,210
Ball Corp. 6.875 12/15/2012 330,000 334,950
BJ Services Co. (a) 5.294 6/1/2008 725,000 725,687
British Sky Broadcasting PLC 6.875 2/23/2009 143,000 145,779
British Sky Broadcasting PLC 8.200 7/15/2009 1,055,000 1,103,728
Case New Holland, Inc. 7.125 3/1/2014 600,000 598,500
Centex Corp. 4.750 1/15/2008 15,000 14,972
Community Health Systems 8.875 7/15/2015 630,000 641,813
Crown Americas, Inc. 7.625 11/15/2013 780,000 797,550
D.R. Horton, Inc. 5.875 7/1/2013 25,000 21,644
France Telecom SA 7.750 3/1/2011 210,000 225,713
France Telecom SA 8.500 3/1/2031 1,000,000 1,296,657
Healthcare Realty Trust, Inc. REIT 8.125 5/1/2011 620,000 676,904
John Deere Capital Corp. (a) (b) 5.164 9/1/2009 707,000 708,374
Koninklijike KPN NV 8.000 10/1/2010 360,000 386,088
Kraft Foods, Inc. 6.000 2/11/2013 305,000 313,572
Masco Corp. (a) (b) 5.433 3/12/2010 775,000 748,604
Mohawk Industries, Inc. 5.750 1/15/2011 1,050,000 1,077,878
Mohegan Tribal Gaming Authority 6.125 2/15/2013 20,000 19,550
Northrop Grumman Corp. 7.125 2/15/2011 545,000 580,832
Oakmont Asset Trust 144A 4.514 12/22/2008 80,000 79,749
Pemex Finance Ltd. 9.690 8/15/2009 84,000 86,829
Pemex Finance Ltd. 9.030 2/15/2011 48,750 51,553
Pemex Project Funding Master Trust 144A 5.750 3/1/2018 1,225,000 1,221,938
Potash Corp. of Saskatchewan 4.875 3/1/2013 36,000 35,628
Raytheon Co. 5.500 11/15/2012 388,000 403,983
Republic Services, Inc. 7.125 5/15/2009 20,000 20,843
Republic Services, Inc. 6.750 8/15/2011 840,000 880,544
Royal KPN NV 8.375 10/1/2030 290,000 347,719
RPM International, Inc. 4.450 10/15/2009 255,000 252,561
Steel Dynamics, Inc. 144A 7.375 11/1/2012 830,000 834,150
Telefonica Emisiones 5.984 6/20/2011 1,240,000 1,275,573
Terex Corp. 7.375 1/15/2014 15,000 15,188
Teva Pharmaceutical Finance LLC 6.150 2/1/2036 865,000 859,001
Tyco International Group SA 6.875 1/15/2029 20,000 20,256
Union Pacific Corp. 3.875 2/15/2009 1,400,000 1,388,065
Waste Management, Inc. 6.500 11/15/2008 75,000 75,966
Waste Management, Inc. 7.375 8/1/2010 280,000 295,763
Waste Management, Inc. 7.000 7/15/2028 716,000 759,604
-----------
22,463,245
-----------
The accompanying notes are an integral part of the financial statements.
14
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
Services--0.7%
CSX Corp. (b) 6.250% 10/15/2008 USD 865,000 $ 872,631
CVS Caremark Corp. (a) (b) 5.441 6/1/2010 530,000 524,315
CVS Corp. 4.000 9/15/2009 360,000 353,241
CVS Corp. 5.750 8/15/2011 430,000 440,465
Delhaize America, Inc. 6.500 6/15/2017 370,000 378,520
Donnelley (R.R.) and Sons 6.125 1/15/2017 45,000 44,372
Home Depot, Inc. (a) 5.116 12/16/2009 15,000 14,695
Lowes Companies, Inc. 5.600 9/15/2012 365,000 374,868
Medco Health Solutions, Inc. 7.250 8/15/2013 385,000 421,749
Norfolk Southern Corp. 6.750 2/15/2011 337,000 361,115
Ryder System, Inc. 3.500 3/15/2009 155,000 153,255
------------
3,939,226
------------
Utilities--3.2%
AES Corp. 8.875 2/15/2011 25,000 26,063
Appalachian Power Co. 5.950 5/15/2033 19,000 17,571
Cinergy Corp. 6.530 12/16/2008 120,000 121,773
Cleveland Electric Illuminating Co. 5.700 4/1/2017 1,500,000 1,464,744
Consolidated Edison 5.300 12/1/2016 1,145,000 1,126,294
Consumers Energy Co. 5.000 2/15/2012 75,000 74,449
Consumers Energy Co. 5.375 4/15/2013 1,150,000 1,146,819
Dominion Resources, Inc. (a) 5.050 11/14/2008 30,000 29,942
Enel Finance Internation 144A 5.700 1/15/2013 550,000 558,405
Enel Finance Internation 144A 6.250 9/15/2017 60,000 60,715
FirstEnergy Corp. 6.450 11/15/2011 80,000 82,609
FPL Group Capital, Inc 5.625 9/1/2011 2,290,000 2,344,900
FPL Group Capital, Inc. 5.551 2/16/2008 295,000 295,077
Gulf Power Co. 5.300 12/1/2016 1,385,000 1,376,780
Ipalco Enterprises, Inc. 8.625 11/14/2011 30,000 31,350
National Grid PLC 6.300 8/1/2016 1,725,000 1,761,049
Nevada Power Co. 6.750 7/1/2037 805,000 832,124
Niagara Mohawk Power Corp. (b) 7.750 10/1/2008 1,038,000 1,058,675
Nisource Capital Markets 7.860 7/15/2014 20,000 22,580
Nisource Finance Corp. (a) (b) 5.585 11/23/2009 835,000 826,936
Nisource Finance Corp. 5.250 9/15/2017 820,000 753,837
Nisource Finance Corp. 6.400 3/15/2018 20,000 19,955
Ohio Power Co. (a) 5.424 4/5/2010 1,330,000 1,318,345
Pacific Gas & Electric Co. 3.600 3/1/2009 565,000 558,891
Pepco Holdings, Inc. (a) 5.749 6/1/2010 25,000 24,939
Public Service Co. of Colorado (b) 4.375 10/1/2008 958,000 953,181
Sierra Pacific Power Co. 6.750 7/1/2037 400,000 413,478
Southern Co. 5.300 1/15/2012 890,000 906,149
Windsor Financing LLC 144A (c) 5.881 7/15/2017 236,361 248,517
------------
18,456,147
------------
Total Corporate (Cost $209,784,353) 206,298,875
------------
Municipal Bonds--2.0%
California 3.500 10/1/2027 10,000 8,467
Delaware Housing Authority SFMR 5.800 7/1/2016 970,000 987,887
Erie County NY Tobacco Asset Securitization Corp. 6.000 6/1/2028 1,100,000 1,012,187
Michigan Tobacco Settlement Finance Authority (a) (b) 7.540 6/1/2034 970,000 919,657
The accompanying notes are an integral part of the financial statements.
15
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
Municipal Bonds (continued)
New York County Tobacco Trust IV 6.000% 6/1/2027 USD 210,000 $ 204,794
Tobacco Settlement Authority Iowa 6.500 6/1/2023 3,563,000 3,394,826
Tobacco Settlement Authority Michigan 7.309 6/1/2034 5,095,000 4,793,682
-----------
Total Municipal Bonds (Cost $11,901,307) 11,321,500
-----------
Sovereign Bonds--1.6%
Argentina Bonos (a) 5.389 8/3/2012 4,460,000 2,542,200
Banco Nacional de Desenvolvimento Economico e Social (a) 5.330 6/16/2008 1,510,000 1,487,350
Republic of Argentina 7.000 9/12/2013 1,400,000 1,232,000
Republic of El Salvador 144A 8.500 7/25/2011 870,000 948,300
Republic of South Africa 5.875 5/30/2022 1,524,000 1,490,762
Russian Federation 144A (c) 8.250 3/31/2010 1,475,065 1,530,380
-----------
Total Sovereign Bonds (Cost $9,482,464) 9,230,992
-----------
Pass Thru Securities--41.4%
Non-Agency Pass Thru Securities--10.4%
Banc of America Commercial Mortgage, Inc. 2005-2 A2 (b) 4.247 7/10/2043 1,805,847 1,803,213
Banc of America Commerical Mortgage, Inc. 2002-2 A3 5.118 7/11/2043 610,000 617,131
Bayview Commercial Asset Trust 2003-2 A 144A (a) (b) 5.445 12/25/2033 370,646 365,769
Bayview Commercial Asset Trust 2004-1 A 144A (a) (b) 5.225 4/25/2034 406,071 395,222
Bayview Commercial Asset Trust 2005-3A B1 144A (a) (b) 5.965 11/25/2035 143,441 104,712
Bayview Commercial Asset Trust 2005-3A B3 144A (a) (b) 7.865 11/25/2035 286,882 200,817
Bayview Commercial Asset Trust 2005-4A B3 144A (a) (b) 8.365 1/25/2036 198,037 151,931
Bayview Commercial Asset Trust 2006-1A B2 144A (a) (b) 6.565 4/25/2036 221,738 148,565
Bayview Commercial Asset Trust 2006-SP1 A1 144A (a) (b) 5.135 4/25/2036 297,218 288,070
Bayview Commercial Asset Trust 2006-SP2 A1 144A (a) (b) 5.145 4/25/2036 1,276,799 1,232,998
Bayview Commerical Asset Trust 2006-2A B2 144A (a) (b) 6.335 7/25/2036 406,995 284,896
Bear Stearns Commercial Mortgage Securities 2003-T12 A3 (a) 4.240 8/13/2039 2,248,000 2,228,053
Bear Stearns Commerical Mortgage Securities 2004-PWR5 A3 4.565 7/11/2042 25,000 24,858
Bear Stearns Commercial Mortgage Securities 2005-T20 A2 (a) 5.127 10/12/2042 45,000 45,056
Bear Stearns Commercial Mortgage Securities 2006-PW12 AAB (a) 5.686 9/11/2038 950,000 973,012
Bear Stearns Commercial Mortgage Securities 2006-PW13 A3 5.518 9/11/2041 540,000 543,347
Bear Stearns Commercial Mortgage Securities 2006-PW14 AAB 5.171 12/1/2038 1,780,000 1,767,642
Bear Stearns Commercial Mortgage Securities 2006-T24 AB 5.533 10/12/2041 1,390,000 1,404,901
Bear Stearns Commercial Mortgage Securities, Inc. 1998-C1 A2 (b) 6.440 6/16/2030 81,671 81,753
Bear Stearns Commercial Mortgage Securities, Inc. 2003-T10 A2 4.740 3/13/2040 60,000 59,456
Bear Stearns Commercial Mortgage Securities, Inc. 2004-PWR5 A2 4.254 7/11/2042 160,000 159,099
Bear Stearns Commercial Mortgage Securities, Inc. 2005-T18 A2 (a) 4.556 2/13/2042 105,000 104,105
Capco America Securitization Corp. 1998-D7 A1B (b) 6.260 10/15/2030 1,938,966 1,948,313
Citigroup/Deutsche Bank Commercial Mortgage 2005-CD1 A2FX (a) 5.225 7/15/2044 20,000 20,078
Citigroup/Deutsche Bank Commercial Mortgage 2006-CD2 A2 5.408 1/15/2046 775,000 780,820
Credit Suisse/Morgan Stanley Commerical
Mortgage Certificate 2006-HC1A A1 144A (a) (b) 5.218 5/15/2023 1,218,021 1,199,924
Crown Castle Towers LLC, 2005-1A D 144A 5.612 6/15/2035 660,000 653,789
Crown Castle Towers LLC, 2006-1A B 144A 5.362 11/15/2036 620,000 608,778
Crown Castle Towers LLC, 2006-1A C 144A 5.470 11/15/2036 1,680,000 1,635,614
Crown Castle Towers LLC, 2006-1A D 144A 5.772 11/15/2036 1,025,000 982,278
DLJ Commercial Mortgage Corp. 1998-CF2 A1B 6.240 11/12/2031 152,234 152,988
DLJ Commercial Mortgage Corp. 1998-CF2 B1 (a) (b) 7.031 11/12/2031 2,450,000 2,491,101
DLJ Commercial Mortgage Corp. 1998-CG1 A1B 6.410 6/10/2031 25,374 25,381
Global Signal Trust 2006-1 D 144A 6.052 2/15/2036 1,160,000 1,129,817
Global Signal Trust 2006-1 E 144A 6.495 2/15/2036 425,000 413,440
The accompanying notes are an integral part of the financial statements.
16
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
Non-Agency Pass Thru Securities (continued)
GMAC Commercial Mortgage Securities, Inc. 1998-C2 A2 (b) 6.420% 5/15/2035 USD 615,077 $ 616,735
GMAC Commercial Mortgage Securities, Inc. 2003-C3 A2 4.223 4/10/2040 155,000 153,999
Goldman Sachs Mortgage Securities Corp., Cl. B 144A (a) (b) 5.502 3/20/2020 3,215,000 3,078,834
Goldman Sachs Mortgage Securities Corp., Cl. E 144A (a) (b) 5.692 3/20/2020 1,220,000 1,170,790
Goldman Sachs Mortgage Securities Corp., Cl. K 144A (a) 6.302 3/20/2020 700,000 635,750
Goldman Sachs Mortgage Securities Corp., Cl. L 144A (a) 6.552 3/20/2020 60,000 56,400
GS Mortgage Securities Corp. II 2007-EOP F 144A (a) 5.732 3/20/2020 50,000 47,488
GS Mortgage Securities Corp. II 2007-EOP G 144A (a) 5.772 3/20/2020 25,000 23,563
Impac CMB Trust 2005-8 2M2 (a) 5.615 2/25/2036 127,345 94,490
Impac CMB Trust 2005-8 2M3 (a) 6.365 2/25/2036 100,998 68,948
Impac Secured Assets Corp. 2006-1 2A1 (a) (b) 5.215 5/25/2036 698,873 659,127
JP Morgan Chase Commerical Mortgage Security Co. 2004-C1 A2 4.302 1/15/2038 2,120,000 2,091,121
JP Morgan Chase Commercial Mortgage Security Co. 2005-LDP4 A2 4.790 10/15/2042 30,000 29,799
JP Morgan Chase Commercial Mortgage Security Co. 2006-LDP7 ASB (a) 5.875 4/15/2045 990,000 1,021,735
JP Morgan Chase Commerical Mortgage Security Co. 2005-LDP5 A2 5.198 12/15/2044 1,605,000 1,608,534
LB Commercial Conduit Mortgage Trust 1999-C1 B 6.930 6/15/2031 62,000 63,572
LB-UBS Commercial Mortgage Trust 2001-C3 A2 6.365 12/15/2028 1,950,000 2,049,929
LB-UBS Commercial Mortgage Trust 2006-C3 A2 5.532 3/15/2039 20,000 20,256
Merrill Lynch Mortgage Trust, Inc. 2002-MW1 A3 5.403 7/12/2034 1,725,000 1,752,468
Merrill Lynch Mortgage Trust, Inc. 2005-CIP1 A2 4.960 7/12/2038 1,090,000 1,087,702
Merrill Lynch Mortgage Trust, Inc. 2005-CKI1 A2 (a) 5.223 11/12/2037 375,000 376,990
Morgan Stanley Capital 1998-HF1 E (a) 7.193 3/15/2030 74,000 73,863
Morgan Stanley Capital 1998-HF1 F 144A (b) 7.180 3/15/2030 2,000,000 2,000,462
Morgan Stanley Capital I 1999-CAM1 A4 (a) 7.020 3/15/2032 18,996 19,252
Morgan Stanley Capital I 1999-RM1 A2 (a) 6.710 12/15/2031 130,151 131,151
Morgan Stanley Capital I 1999-RM1 E (a) 6.990 12/15/2031 100,000 101,735
Morgan Stanley Capital I 2005-HQ5 A2 4.809 1/14/2042 1,700,000 1,694,168
Morgan Stanley Capital I 2006-HQ9 A3 5.712 7/12/2044 2,630,000 2,671,970
Morgan Stanley Capital I 2006-HQ9 A4 (a) 5.731 7/12/2044 960,000 986,516
Morgan Stanley Capital I 2006-HQ9 AAB 5.685 7/12/2044 425,000 433,877
Morgan Stanley Capital I 2006-IQ12 AAB 5.325 12/15/2043 1,115,000 1,115,239
Morgan Stanley Capital I 2006-T21 A2 5.090 10/12/2052 1,350,000 1,350,221
Morgan Stanley Capital I 2007-T27 A2 (a) 5.651 6/11/2042 1,160,000 1,180,673
Morgan Stanley Dean Witter Capital I 2001-PPM A2 6.400 2/15/2031 25,794 26,630
Morgan Stanley Dean Witter Capital I 2001-PPM A3 6.540 2/15/2031 31,506 32,607
Nationslink Funding Corp. 1998-2 A2 (b) 6.476 8/20/2030 703,946 704,337
SBA CMBS Trust 2006-1A D 144A 5.852 11/15/2036 400,000 388,000
Sovereign Commerical Mortgage Securities 2007-C1 D 144A (a) 5.775 10/22/2011 830,000 664,739
TIAA Real Estate CDO Ltd. 2007-C4 A3 (a) 6.097 8/15/2039 1,010,000 1,040,116
Washington Mutual Asset Securities Corp. 2003-C1A A 144A (b) 3.830 1/25/2035 2,782,320 2,743,227
-----------
59,093,940
-----------
Agency Pass Thru Securities--31.0%
Fannie Mae Grantor Trust 2001-T11 B 5.503 9/25/2011 20,000 20,610
Fannie Mae Grantor Trust 2001-T6 B 6.088 5/25/2011 156,000 163,117
Fannie Mae Grantor Trust 2002-T11 A 4.769 4/25/2012 23,307 23,402
FGLMC 6.000 9/1/2037 49,643 50,384
FGLMC 6.000 10/1/2037 14,957 15,180
FGLMC 6.000 10/1/2037 14,971 15,194
FGLMC 6.000 10/1/2037 59,611 60,501
FGLMC 6.000 10/1/2037 24,948 25,320
FGLMC 6.000 11/1/2037 144,791 146,953
The accompanying notes are an integral part of the financial statements.
17
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
Agency Pass Thru Securities (continued)
FGLMC (TBA) (d) 5.500% 1/14/2038 USD 54,210,000 $ 54,091,389
FHLMC 6.000 6/1/2022 202,669 207,231
FHLMC (TBA) (d) 5.500 1/17/2022 4,780,000 4,836,763
FHLMC Gold 4.500 10/1/2009 32,401 32,165
FHLMC Gold 4.000 10/1/2009 429,734 424,810
FHLMC Gold 4.500 4/1/2010 36,744 36,587
FHLMC Gold 3.500 9/1/2010 343,675 336,004
FHLMC Gold 7.000 11/1/2031 106,255 111,483
FHLMC Gold 7.000 11/1/2031 123,968 130,067
FHLMC Gold 5.500 1/1/2034 694,689 694,070
FHLMC Gold 5.500 3/1/2034 242,576 242,360
FNMA 4.000 5/1/2010 1,475,268 1,461,893
FNMA 3.640 6/1/2010 2,665,000 2,626,605
FNMA 3.530 7/1/2010 1,349,656 1,326,010
FNMA 5.000 10/1/2011 48,091 48,593
FNMA 5.139 12/25/2011 683,558 688,710
FNMA 8.500 6/1/2012 7,854 8,277
FNMA 4.060 6/1/2013 53,000 51,665
FNMA 4.900 1/1/2014 444,568 449,030
FNMA 4.500 11/1/2014 20,685 20,747
FNMA 6.500 12/1/2015 5,460 5,658
FNMA 5.140 1/1/2016 75,000 76,152
FNMA 6.000 7/1/2017 6,024 6,175
FNMA 5.000 1/1/2019 322,849 323,444
FNMA 5.500 11/1/2024 1,266,712 1,273,669
FNMA 5.500 12/1/2024 17,290 17,385
FNMA 5.500 1/1/2025 3,194,630 3,212,175
FNMA 7.500 2/1/2029 9,293 9,943
FNMA 7.500 9/1/2029 604 646
FNMA 7.500 11/1/2029 442 473
FNMA 7.000 11/1/2031 1,940 2,046
FNMA 7.000 5/1/2032 17,142 18,047
FNMA 7.000 6/1/2032 22,983 24,196
FNMA 5.500 2/1/2033 101,483 101,664
FNMA 5.000 9/1/2033 1,046,599 1,022,741
FNMA 5.500 1/1/2034 666,700 667,194
FNMA 5.500 1/1/2034 1,539,177 1,540,318
FNMA 5.500 8/1/2034 51,072 51,075
FNMA 5.500 9/1/2034 87,884 87,889
FNMA 5.500 9/1/2034 78,219 78,224
FNMA 5.500 9/1/2034 20,715 20,716
FNMA 5.500 9/1/2034 60,821 60,824
FNMA 5.500 9/1/2034 193,179 193,190
FNMA 5.000 11/1/2036 7,909,616 7,721,940
FNMA 6.500 9/1/2037 74,786 76,875
FNMA 6.500 9/1/2037 64,778 66,588
FNMA 6.000 10/1/2037 24,943 25,331
FNMA 6.000 11/1/2037 44,834 45,531
FNMA 6.500 11/1/2037 64,946 66,760
FNMA (TBA) (d) 5.000 1/1/2021 2,045,000 2,046,918
FNMA (TBA) (d) 5.000 1/1/2021 39,440,000 38,478,650
FNMA (TBA) (d) 6.000 1/1/2021 1,840,000 1,882,550
FNMA (TBA) (d) 6.000 2/1/2021 6,240,000 6,380,400
The accompanying notes are an integral part of the financial statements.
18
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
Agency Pass Thru Securities (continued)
FNMA (TBA) (d) 6.000% 1/1/2036 USD 34,455,000 $ 34,982,575
FNMA (TBA) (d) 6.000 2/1/2036 5,350,000 5,426,906
GNMA 9.000 2/15/2021 16,626 18,016
GNMA 8.000 8/15/2025 8,800 9,513
GNMA 8.000 11/15/2025 11,434 12,361
GNMA 8.000 5/15/2026 2,272 2,457
GNMA 8.000 11/15/2026 11,124 12,032
GNMA 6.000 1/15/2032 3,188 3,270
GNMA 6.500 7/15/2032 5,676 5,885
------------
174,403,522
------------
Total Pass Thru Securities (Cost $232,925,352) 233,497,462
------------
U.S. Treasury Obligations--13.8%
U.S. Treasury Bond (e) 4.500 2/15/2036 8,138,000 8,179,325
U.S. Treasury Bond 5.000 5/15/2037 6,743,000 7,349,344
U.S. Treasury Note (b) 5.125 6/30/2008 10,272,000 10,357,062
U.S. Treasury Note (b) (e) 5.000 7/31/2008 4,210,000 4,246,838
U.S. Treasury Note (b) 3.375 9/15/2009 1,932,000 1,942,112
U.S. Treasury Note 4.625 12/31/2011 1,040,000 1,090,862
U.S. Treasury Note 4.500 4/30/2012 340,000 355,167
U.S. Treasury Note (e) 4.875 6/30/2012 4,080,000 4,327,350
U.S. Treasury Note 4.625 7/31/2012 25,215,000 26,475,750
U.S. Treasury Note 4.250 9/30/2012 505,000 522,714
U.S. Treasury Note 3.875 10/31/2012 585,000 596,471
U.S. Treasury Note (e) 4.625 11/15/2016 11,220,000 11,750,325
U.S. Treasury Note 4.500 5/15/2017 5,000 5,182
U.S. Treasury Note 4.750 8/15/2017 750,000 792,129
------------
Total U.S. Treasury Obligations (Cost $76,407,281) 77,990,631
------------
Foreign Denominated--0.4%
Brazil--0.4%
Republic of Brazil 12.500 1/5/2016 BRL 1,330,000 812,653
Republic of Brazil 12.500 1/5/2016 2,285,000 1,396,175
------------
2,208,828
------------
Mexico--0.0%
Mexican Bonos 10.000 11/20/2036 MXN 240,000 26,372
Mexican Fixed Rate Bonds 9.000 12/22/2011 555,000 52,857
------------
79,229
------------
TOTAL FOREIGN DENOMINATED (Cost $2,066,722) 2,288,057
------------
TOTAL BONDS AND NOTES (Cost $669,626,754) 663,756,906
------------
CONVERTIBLE PREFERRED STOCK--0.0% Shares
------
AES Trust VII 6.00% CVT PFD USD 1,450 71,775
CIT Group, Inc. 7.75% CVT PFD 1,025 19,219
Sovereign Capital Trust IV 4.375% CVT PFD 1,250 41,094
------------
TOTAL CONVERTIBLE STOCK (Cost $143,868) 132,088
------------
PURCHASED OPTIONS--0.0% Contract Size
-------------
2 Yr Floor 3M Libor, Strike Price 4.00%, 1/13/2009 262,500 70,646
U.S. Treasury 5 Year Note, Strike Price 111.50%, 1/25/2008 320,000 95,000
------------
TOTAL PURCHASED OPTIONS (Cost $229,436) 165,646
------------
The accompanying notes are an integral part of the financial statements.
19
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS--6.5%
U.S. Treasury Bill--0.1%
U.S. Treasury Bill (b) (f) (Cost $716,998) 2.900% 3/27/2008 USD 722,000 $ 716,998
------------
U.S. Government Agency--6.4%
FNMA Discount Note (f) (Cost $36,188,921) 4.230 3/17/2008 36,515,000 36,188,921
------------
TOTAL SHORT TERM INVESTMENTS (Cost $36,905,919) 36,905,919
------------
INVESTMENT OF CASH COLLATERAL--4.0% Shares
------
BlackRock Cash Strategies L.L.C (c) (Cost $22,489,858) 22,489,858 22,489,858
------------
TOTAL UNAFFILIATED INVESTMENTS (Cost $729,395,835) 723,450,417
------------
AFFILIATED INVESTMENTS--1.7%
Dreyfus Institutional Preferred Plus Money Market Fund (g) (Cost $9,802,717) 9,802,717 9,802,717
------------
TOTAL INVESTMENTS--129.6% (Cost $739,198,552) 733,253,134
-------------
LIABILITIES IN EXCESS OF OTHER ASSETS--(29.6%) (167,681,083)
-------------
NET ASSETS--100% $ 565,572,051
=============
Notes to Schedule of Investments:
144A-Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period end, the
value of these securities amounted to $59,787,320 or 10.6% of net assets.
BRL-Brazilian Real
CVT-Convertible
FGLMC-Federal Government Loan Mortgage Corporation
FHLMC-Federal Home Loan Mortgage Company
FNMA-Federal National Mortgage Association
GNMA-Government National Mortgage Association
MXN-Mexican New Peso PFD-Preferred
REIT-Real Estate Investment Trust
REMIC-Real Estate Mortgage Investment Conduit
SFMR-Single Family Mortgage Revenue
TBA-To Be Announced
(a) Variable Rate Security; rate indicated as of December 31, 2007.
(b) Denotes all or part of security segregated as collateral for delayed
delivery securities, futures and swap contracts.
(c) Illiquid security. At the period end, the value of these securities
amounted to $24,634,904 or 4.4% of net assets.
(d) Delayed delivery security.
(e) Security, or a portion of thereof, was on loan at December 31, 2007.
(f) Rate noted is yield to maturity
(g) Affiliated institutional money market fund.
(h) Investments of security lending cash collateral.
At December 31, 2007, the Fund held the following futures contracts:
Unrealized
Underlying Face Appreciation/
Contract Position Expiration Date Amount at Value (Depreciation)
- --------------------------------------------------------------------------------------------------------------------
U.S. 2 Year Treasury Note (127 Contracts) Long 3/31/2008 $ 26,701,750 $ 70,179
U.S. 5 Year Treasury Note (398 Contracts) Long 3/31/2008 43,891,938 222,638
U.S. 10 Year Treasury Note (123 Contracts) Short 3/19/2008 13,947,047 16,129
U.S. Long Bond CBT (121 Contracts) Long 3/19/2008 14,081,375 (3,889)
---------
$ 305,057
=========
The accompanying notes are an integral part of the financial statements.
20
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Schedule of Investments -- December 31, 2007
- --------------------------------------------------------------------------------
At December 31, 2007, the Fund held the following open swap agreements:
Unrealized
Credit Default Reference Buy/Sell (Pay)/Receive Expiration Notional Appreciation/
Swaps Counterparty Entity Protection Fixed Rate Date Amount (Depreciation)
- -----------------------------------------------------------------------------------------------------------------------------------
Citibank Century Tel, 7.875%, 8/15/2012 Buy (1.16%) 9/20/2015 853,000 USD $ (23,118)
Citibank Century Tel, 7.875%, 8/15/2012 Buy (1.19%) 9/20/2015 1,985,000 USD (57,659)
Deutsche Dow Jones CDX.NA.IG.9 Index Sell 0.80% 12/20/2017 1,357,000 USD (13,943)
Goldman, Sachs & Co. Autozone, 5.875%, 10/15/2012 Buy (0.62%) 6/20/2017 2,800,000 USD (7,120)
Goldman, Sachs & Co. Dow Jones CDX.NA.IG.8 Index Sell 0.60% 6/20/2017 2,800,000 USD (68,699)
Goldman, Sachs & Co. Dow Jones CDX.NA.IG.9 Index Sell 0.35% 12/20/2008 5,690,000 USD (19,437)
JPMorgan Georgia-Pacific, 7.75%, 11/15/2029 Sell 1.75% 6/20/2012 1,430,000 USD (86,802)
JPMorgan Meadwestvaco, 6.85%, 2012 Buy (1.10%) 6/20/2017 2,860,000 USD (24,797)
Lehman Brothers Liberty Mutual Insurance Company,
7.875%, 10/15/2026 Buy (0.35%) 12/20/2014 5,690,000 USD 3,948
Lehman Brothers Auto Receivables Asset Backed Securities,
2007-1, BBB Index Sell 1.50% 2/15/2014 1,410,000 USD (149,332)
Morgan Stanley Century Tel, 7.875%, 8/15/2012 Buy (1.15%) 9/20/2015 247,000 USD (6,534)
UBS AG TurAnlem Finance, 8%, 3/24/2014 Sell 1.15% 1/20/2008 890,000 USD (3,200)
---------
$(456,693)
=========
The accompanying notes are an integral part of the financial statements.
21
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Statement of Assets and Liabilities
December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Assets
Investments in securities (including securities on loan, valued at $20,698,968 (Note 7))
Unaffiliated issuers, at value (Note 1A) (cost $ 729,395,835) $ 723,450,417
Affiliated issuers, at value (Note 1A) (cost $9,802,717) (Note 1F) 9,802,717
Foreign currency, at value (identified cost, $2,435) 2,434
Receivable for investments sold 25,867,561
Interest and dividends receivable 4,987,056
Receivable for Fund shares sold 1,454,142
Receivable for variation margin on open futures contracts (Note 6) 193,891
Unamortized Swap premium paid 12,862
Unrealized appreciation on swap contracts (Note 6) 3,948
Prepaid expenses 1,835
-------------
Total assets 765,776,863
Liabilities
Payable for investments purchased $ 172,181,312
Collateral for securities on loan (Note 7) (Note 10) 15,297,585
Payable for securities lending collateral investment (Note 7) (Note 10) 7,192,273
Due to Custodian 1,907,273
Distributions payable 2,784,470
Unrealized depreciaton on swap contracts (Note 6) 460,641
Accrued shareholder services fee (Note 2) 179,632
Accrued accounting, administration, custody fees and transfer agent (Note 2) 85,892
Accrued professional fees 73,192
Unamortized Swap premium received 34,514
Accrued shareholder reporting expense (Note 2) 5,500
Accrued trustees' fees and expenses (Note 2) 2,278
Accrued chief compliance officer fees (Note 2) 236
Other accrued expenses and liabilities 14
-------------
Total liabilities 200,204,812
-------------
Net Assets $ 565,572,051
=============
Net Assets consist of:
Paid-in capital $ 733,318,713
Accumulated net realized loss (160,998,233)
Distributions in excess of net investment income (655,864)
Net unrealized depreciation (6,092,565)
-------------
Total Net Assets $ 565,572,051
=============
Shares of beneficial interest outstanding 29,286,050
=============
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 19.31
=============
The accompanying notes are an integral part of the financial statements.
22
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Statement of Operations
For the Year Ended December 31, 2007
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Interest income $ 29,663,936
Dividend income from affiliated investments (Note 1F) 993,046
Dividend income 4,860
Security lending income (Note 7) (Note 10) 172,264
-------------
Total investment income 30,834,106
Expenses
Investment advisory fee (Note 2) $ 2,078,567
Administrative service fees (Note 2) 335,726
Accounting, administration, custody and transfer agency fees (Note 2) 288,134
Professional fees 100,063
Trustees' fees and expenses (Note 2) 27,960
Registration fees 25,175
Insurance expense 13,350
Miscellaneous expenses 2,839
-------------
Total expenses 2,871,814
Deduct:
Waiver of investment advisory fee (Note 2) (41,745)
-------------
Net expenses 2,830,069
-------------
Net investment income 28,004,037
-------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (2,149,017)
Financial futures transactions (1,112,300)
Written options transactions 38,618
Foreign currency transactions and forward foreign currency exchange transactions 902,213
Swap transactions (1,152,343)
-------------
Net realized gain (loss) (3,472,829)
Change in unrealized appreciation (depreciation) on:
Investments (3,843,122)
Financial futures contracts (35,559)
Foreign currency translations and forward foreign currency exchange contracts (176,933)
Swap contracts (369,518)
-------------
Change in net unrealized appreciation (depreciation) (4,425,132)
-------------
Net realized and unrealized gain (loss) (7,897,961)
-------------
Net Increase in Net Assets from Operations $ 20,106,076
=============
The accompanying notes are an integral part of the financial statements.
23
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the For the
Year Ended Year Ended
December 31, 2007 December 31, 2006
----------------- -----------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income $ 28,004,037 $ 22,655,244
Net realized gain (loss) (3,472,829) (325,644)
Change in net unrealized appreciation (depreciation) (4,425,132) (1,264,069)
------------- -------------
Net increase (decrease) in net assets from investment operations 20,106,076 21,065,531
------------- -------------
Distributions to Shareholders (Note 1C)
From net investment income (28,878,320) (22,263,301)
------------- -------------
Total distributions to shareholders (28,878,320) (22,263,301)
------------- -------------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares 125,494,967 177,478,086
Value of shares issued to shareholders in reinvestment of distributions 19,716,752 15,312,591
Cost of shares redeemed (net of redemption fees of $8,049 and $4,451, respectively) (130,439,783) (87,911,791)
------------- -------------
Net increase (decrease) in net assets from Fund share transactions 14,771,936 104,878,886
------------- -------------
Total Increase (Decrease) in Net Assets 5,999,692 103,681,116
Net Assets
At beginning of year 559,572,359 455,891,243
------------- -------------
At end of year (including distributions in excess of
investment income of $655,864 and $752,376, respectively) $ 565,572,051 $ 559,572,359
============= =============
The accompanying notes are an integral part of the financial statements.
24
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Financial Highlights
- --------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------
2007 2006 2005 2004 2003
--------- --------- -------- --------- ---------
Net Asset Value, Beginning of Year $ 19.61 $ 19.66 $ 20.08 $ 20.08 $ 19.70
--------- --------- -------- --------- ---------
From Operations:
Net investment income* (a) 0.96 0.93 0.82 0.77 0.75
Net realized and unrealized gains (loss) on investments (0.26) (0.10) (0.23) 0.36 0.28
--------- --------- -------- --------- ---------
Total from investment operations 0.70 0.83 0.59 1.13 1.03
--------- --------- -------- --------- ---------
Less Distributions to Shareholders:
From net investment income (1.00) (0.88) (1.01) (1.13) (0.65)
--------- --------- -------- --------- ---------
Total distributions to shareholders (1.00) (0.88) (1.01) (1.13) (0.65)
--------- --------- -------- --------- ---------
Net Asset Value, End of Year $ 19.31 $ 19.61 $ 19.66 $ 20.08 $ 20.08
========= ========= ======== ========= =========
Total Return 3.64%(b) 4.38% 2.96% 5.74% 5.24%(b)
Ratios/Supplemental data:
Expenses (to average daily net assets)* (c) 0.50% 0.50% 0.49% 0.48% 0.42%
Net Investment Income (to average daily net assets)* 4.93% 4.75% 4.09% 3.77% 3.76%
Portfolio Turnover: (d) (e)
Inclusive 430% 382% 380% 301% 398%
Exclusive 166% 139% 106% 98% --
Net Assets, End of Year (000's omitted) $ 565,572 $ 559,572 $ 455,891 $ 463,307 $ 595,789
- ---------------
* For the periods indicated, the investment advisor voluntarily agreed not to impose a portion of its investment advisory fee
and/or reimbursed the Fund for all or a portion of its operating expenses. If this voluntary action had not been taken, the
investment income per share and the ratios without waivers and reimbursements would have been:
Net investment income per share (a) $ 0.96 N/A N/A N/A $ 0.73
Ratios (to average daily net assets):
Expenses (c) 0.51% N/A N/A N/A 0.45%
Net investment income 4.93% N/A N/A N/A 3.73%
(a) Calculated based on average shares outstanding.
(b) Total return would have been lower in the absence of expense waivers.
(c) Includes the Fund's share of the Standish Mellon Fixed Income Portfolio
(the "portfolio") allocated expenses.
(d) Beginning in 2004, the portfolio turnover rate is presented inclusive and
exclusive of the effect of rolling forward purchase commitments.
(e) On October 25, 2007, the Fund which had owned approximately 100% of the
Portfolio on such date, withdrew entirely from the Portfolio and received
the Portfolio's securities and cash in exchange for its interests in the
Portfolio. Effectively, on October 26, 2007, the Fund began investing
directly in the securities in which the Portfolio has invested. Portfolio
turnover represents investment activity of both the Fund and the Portfolio
for the year. The amounts shown for 2003-2006 are ratios for the Portfolio.
The accompanying notes are an integral part of the financial statements.
25
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
(1) Organization and Significant Accounting Policies:
Mellon Institutional Funds Investment Trust (the "Trust") is organized as a
Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended, as an open-end, management investment company.
Standish Mellon Fixed Income Fund (the "Fund") is a separate diversified
investment series of the Trust.
The objective of the Fund is primarily to achieve a high level of current
income, consistent with conserving principal and liquidity, and secondarily
to seek capital appreciation when changes in interest rates and economic
conditions indicate that capital appreciation may be available without
significant risk to principal. The Fund seeks to achieve its objective by
investing, under normal circumstances, at least 80% of net assets in fixed
income securities issued by U.S. and foreign governments and companies.
Prior to October 26, 2007, the Fund had invested substantially all of its
investable assets in Standish Mellon Fixed Income Portfolio (the
"Portfolio"), a subtrust of the Mellon I nstitutional Funds Master
Portfolio, a New York trust. The Portfolio had investment objectives,
policies and limitations substantially identical to those of the Fund. On
October 25, 2007, the Fund, which had owned 100% of the Portfolio on such
date, withdrew entirely from the Portfolio and received the Portfolio's
assets, including securities and cash, and assumed its stated liabilities,
in exchange for its interest in the Portfolio. This redemption in kind
transaction was effected based upon the net asset value of the Fund's
interest in the Portfolio. Effective October 26, 2007, the Fund began
investing directly in securities. Accordingly, the financial statements of
the Fund and Portfolio have been presented on a consolidated basis, and
represent all the activities of both the Fund and the Portfolio.
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in accordance with accounting principl es generally
accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those
estimates.
A. Investment security valuations
Fund shares are valued as of the close of regular trading (normally 4:00
p.m., Eastern Time) on each day that the New York Stock Exchange ("NYSE")
is open. Securities are valued at the last sale prices on the exchange or
national securities market on which they are primarily traded. Securities
not listed on an exchange or national securities market, or securities for
which there were no reported transactions, are valued at the last quoted
bid price. Securities that are fixed income securities, other than
short-term instruments with less than sixty days remaining to maturity, for
which market prices are readily available, are valued at their current
market value on the basis of quotations, which may be furnished by a
pricing service or dealers in such securities. Securities (including
illiquid securities) for which quotations are not readily available are
valued at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Trustees. With
respect to any portion of the Fund's assets that are invested in one or
more open-end registered investment companies ("RICs"), the Fund's net
asset value ("NAV") will be calculated based upon the NAVs of such RICs.
Exchange traded options and futures are valued at the settlement price
determined by the relevant exchange. Non-exchange traded derivatives are
normally valued on the basis of quotes obtained from brokers and dealers,
including counterparties, or pricing services.
Short-term instruments with less than sixty days remaining to maturity are
valued at amortized cost, which approximates market value. If the Fund
acquires a short-term instrument with more than sixty days remaining to its
maturity, it is valued at current market value until the sixtieth day prior
to maturity and then is valued at amortized cost based upon the value on
such date unless the Trustees determine during such sixty-day period that
amortized cost does not represent fair value.
Reduced investor demand for mortgage loans and mortgage-related securities
resulting from delinquencies and losses on residential mortgage loans
(especially subprime and second-lien mortgage loans) and related market
events have negatively impacted the performance and market value of certain
mortgage-related investments and other fixed income securities, and
increased investor yield requirements. This in turn has resulted in limited
liquidity in the secondary market for such securities, adversely affecting
the market value of mortgage-related securities and resulting in higher
than usual volatility in the credit markets generally. It is possible that
such limited liquidity in the secondary market for mortgage-related
securities, and the related credit market volatility, could continue or
worsen. To the extent that the market for securities in the Fund's
portfolio becomes illiquid, the Fund might realize upon sale of an affected
holding substantially less than the amount at which the Fund had previously
been valuing the security in calculating its net asset value, and the Fund
may incur substantial losses as a result.
B. Securities transactions and income
Securities transactions are recorded as of the trade date. Interest income
is determined on the basis of coupon interest earned, adjusted for
accretion of discount or amortization of premium using the
yield-to-maturity method on long-term debt securities and short-term
securities with greater than sixty days to maturity when required for
federal income tax purposes. Dividend income is recorded on the ex-dividend
date. Realized gains and losses from securities sold are recorded on the
identified cost basis. Dividends representing a return of capital are
reflected as a reduction of cost.
26
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
C. Distributions to shareholders
Distributions to shareholders are recorded on the ex-dividend date. The
Fund's distributions from capital gains, if any, after reduction of capital
losses are declared and distributed at least annually. Dividends from net
investment income and distributions from capital gains, if any, are
reinvested in additional shares of the Fund unless a shareholder elects to
receive them in cash.
Income and capital gain distributions are determined in accordance with
income tax regulations, which may differ from accounting principles
generally accepted in the United States of America. These differences which
may result in reclassifications, are primarily due to wash sales, foreign
currency gains and losses, post-October losses, capital loss carryovers,
amortization of swap premium and the timing of recognition of realized and
unrealized gains and losses on futures contracts.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications among undistributed net
investment income(loss), accumulated net realized gain (loss) and paid in
capital. Undistributed net investment income (loss) and accumulated net
realized gain (loss) on investments may include temporary book and tax
basis differences which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the following
year.
D. Expenses
The majority of expenses of the Trust are directly identifiable to an
individual fund. Expenses which are not readily identifiable to a specific
fund are allocated among the funds of the Trust taking into consideration,
among other things, the nature and type of expense and the relative size of
the funds.
E. Commitments and contingencies
In the normal course of business, the Fund may enter into contracts and
agreements that contain a variety of representations and warranties, which
provide general indemnifications. The maximum exposure to the Fund under
these arrangements is unknown, as this would involve future claims that may
be made against the Fund that have not yet occurred. However, based on
experience, the Fund expects the risks of loss to be remote.
F. Affiliated issuers
Affiliated issuers are investment companies advised by Standish Mellon
Asset Management Company LLC ("Standish Mellon"), a wholly-owned subsidiary
of The Bank of New York Mellon Corporation ("BNY Mellon"), or its
affiliates.
G. New accounting requirements
In September 2006, the Financial Accounting Standards Board ("FASB")
released Statement of Financial Accounting Standards No. 157 "Fair Value
Measurements" ("FAS 157"). FAS 157 establishes an authoritative definition
of fair value, sets out a framework for measuring fair value, and requires
additional disclosures about fair-value measurements. The application of
FAS 157 is required for fiscal years beginning after November 15, 2007 and
interim periods within those fiscal years. Management is evaluating the
implications of FAS 157 and its impact, if any, in the financial statements
has not yet been determined.
(2) Investment Advisory Fee and Other Transactions with Affiliates:
The investment advisory fee paid to Standish Mellon for overall investment
advisory administrative services, and general office facilities is paid
monthly at the annual rate of 0.40% of the Fund's first $250,000,000 of
average daily net assets, 0.35% of the next $250,000,000 of average daily
net assets, and 0.30% of the average daily net assets in excess of
$500,000,000. Standish Mellon voluntarily agreed to limit the total
operating expenses of the Fund (excluding brokerage commissions, taxes and
extraordinary expenses) to 0.50% of the Fund's average daily net assets.
Pursuant to this agreement, for the year ended December 31, 2007, Standish
Mellon voluntarily waived a portion of its investment advisory fee in the
amount of $41,745. This agreement is voluntary and temporary and may be
discontinued or revised by Standish Mellon at any time.
The Trust entered into an agreement with Dreyfus Transfer, Inc., a wholly
owned subsidiary of The Dreyfus Corporation, a wholly owned subsidiary of
BNY Mellon and an affi liate of Standish Mellon, to provide personnel and
facilities to perform transfer agency and certain shareholder services for
the Fund. For these services, the Fund pays Dreyfus Transfer, Inc. a fixed
fee plus per account and transaction based fees, as well as, out-of-pocket
expenses. Pursuant to this agreement the Fund was charged $21,061, for the
year ended December 31, 2007.
The Trust has entered into an agreement with Mellon Bank, N.A. ("Mellon
Bank"), a wholly owned subsidiary of BNY Mellon and an affiliate of
Standish Mellon, to provide custody, administration and fund accounting
services for the Fund. For these services the Fund pays Mellon Bank a fixed
fee plus asset and transaction based fees, as well as out-of-pocket
expenses. Pursuant to this agreement the Fund was charged $267,073 for the
year ended December 31, 2007.
27
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Trust, and previously the portfolio, also entered into an agreement
with Mellon Bank to perform certain securities lending activities and to
act as the Fund's lending agent. Mellon Bank receives an agreed upon
percentage of the net lending revenues. Pursuant to this agreement the Fund
was charged $74,168 for the year ended December 31, 2007. See Note 7 for
further details.
The Trust, and previously the Portfolio, entered into two separate
agreements with The Bank of New York that enables the Fund, and other funds
in the Trust, to borrow, in the aggregate, (i) up to $35 million from a
committed line of credit and (ii) up to $15 million from an uncommitted
line of credit. Interest is charged to each participating fund based on its
borrowings at a rate equal to the Federal Funds effective rate plus 1/2 of
1%. The participating funds also pay an annual fee, computed at a rate of
0.020 of 1% of the committed and uncommitted amounts and allocated ratably
to the participating funds. In addition, a facility fee, computed at an
annual rate of 0.060 of 1% on the committed amount, is allocated ratably
among the participating funds at the end of each quarter. Pursuant to these
agreements, the Fund was charged $1,722 for the year ended December 31,
2007, which amount is included in miscellaneous expenses on the statement
of operations. See Note 9 for further details.
The Trust reimburses BNY Mellon Asset Management for a portion of the
salary of the Trust's Chief Compliance Officer. For the year ended December
31, 2007, the Fund was charged $4,324, which amount is included in
miscellaneous expenses in the statement of operations. No other director,
officer or employee of Standish Mellon or its affiliates receives any
compensation from the Trust or the Fund for serving as an officer or
Trustee of the Trust. The Fund pays each Trustee who is not a director,
officer or employee of Standish Mellon or its affiliates an annual fee and
a per meeting fee as well as reimbursement for travel and out-of-pocket
expenses. In addition, the Trust pays the legal fees for the independent
counsel of the Trustees.
The Trust has contracted Mellon Investor Services LLC, a wholly owned
subsidiary of BNY Mellon and an affiliate of Standish Mellon, to provide
printing and fulfillment services for the Fund. Pursuant to this agreement,
the Fund was charged $5,500, which amount is included in miscellaneous
expenses in the statement of operations for the year ended December 31,
2007.
The Fund may pay administrative service fees. These fees are paid to
affiliated or unaffiliated retirement plans, omnibus accounts and platform
administrators and other entities ("Plan Administrators") that provide
record keeping and/or other administrative support services to accounts,
retirement plans and their participants. As compensation for such services,
the Fund may pay each Plan Administrator an administrative service fee in
an amount of up to 0.15% (on an annualized basis) of the Fund's average
daily net assets attributable to Fund shares that are held in accounts
serviced by such Plan Administrator. The Fund's adviser or its affiliates
may pay additional compensation from their own resources to Plan
Administrators and other entities for administrative services, as well as
in consideration of marketing or other distribution-related services. These
payments may provide an incentive for these entities to actively promote
the Fund or co operate with the distributor's promotional efforts. For the
year ended December 31, 2007, the Fund was charged $232,026 for fees
payable to BNY Mellon Wealth Management.
Effective June 30, 2007, MBSC Securities Corporation ("MBSC"), a wholly
owned subsidiary of BNY Mellon and affiliate of TBCAM, replaced Mellon
Funds Distributor, L.P. as the Fund's principal distributor.
Effective July 1, 2007, Mellon Financial Corporation ("MFC") and The Bank
of New York Company, Inc. ("BNY") each merged into BNY Mellon, with BNY
Mellon being the surviving entity of each merger.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the year ended December 31, 2007 were as follows:
Purchases Sales
-------------- --------------
U.S. Government Securities $1,059,990,953 $1,077,187,908
-------------- --------------
Non-U.S. Government Securities $ 209,006,844 $ 172,731,109
-------------- --------------
(4) Shares of Beneficial Interest:
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest having a par value of
one cent per share. Transactions in Fund shares were as follows:
For the For the
Year Ended Year Ended
December 31, December 31,
2007 2006
------------ ------------
Shares sold 6,411,187 9,061,206
Shares issued to shareholders in
reinvestment of distributions 1,016,283 788,837
Shares redeemed (6,670,212) (4,504,759)
------------ ------------
Net increase (decrease) 757,258 5,345,284
============ ============
At December 31, 2007, two shareholders of record, in the aggregate, held
approximately 24.9% of the total outstanding shares of the Fund. Investment
activities of these shareholders could have a material impact on the Fund.
28
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Fund imposes a redemption fee of 2% of the net asset value of the
shares, with certain exceptions, which are redeemed or exchanged less than
30 days from the day of their purchase. The redemption fee is paid directly
to the Fund, and is designed to offset brokerage commissions, market
impact, and other costs associated with short-term trading in the Fund. The
fee does not apply to shares that were acquired through reinvestment of
distributions. For the fiscal years ended December 31, 2007 and December
31, 2006, the Fund received redemption fees of $8,049 and $4,451,
respectively.
(5) Federal Taxes:
Each year, the Fund intends to qualify as a "regulated investment company"
under Subchapter M of the Code. As such and by complying with the
applicable provisions of the Code regarding the sources of its income, the
timely distributions of its income to its shareholders, and the
diversification of its assets, the Fund will not be subject to U.S. federal
income tax on its investment company taxable income and net capital gain
which are distributed to shareholders.
During the current year, the Fund adopted FASB Interpretation No. 48
"Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides
guidance for how uncertain tax positions should be recognized, measured,
presented and disclosed in the financial statements. FIN 48 requires the
evaluation of tax positions taken or expected to be taken in the course of
preparing the Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority,
and valuing the benefit management beli eves it would recover. Management
believes the Fund will realize the full benefit of the tax positions it has
taken and, therefore, no provision has been recorded in the accompanying
financial statements.
The tax basis components of distributable earnings and the federal tax cost
as of December 31, 2007 were as follows:
Cost for federal income tax purposes $732,400,622
============
Gross unrealized appreciation $ 6,385,516
Gross unrealized depreciation (12,725,277)
------------
Net unrealized appreciation (depreciation) $ (6,339,761)
============
The tax character of distributions paid during the fiscal years ended
December 31, 2007 and December 31, 2006, were as follows:
2007 2006
------------ ------------
Ordinary income $ 28,878,320 $ 22,263,301
------------ ------------
At December 31, 2007, the Fund for federal income tax purposes, has capital
loss carryovers which will reduce the Fund's taxable income arising from
net realized gain on investments, if any, to the extent permitted by the
Internal Revenue Code and thus will reduce the amount of distributions to
shareholders which would otherwise be necessary to relieve the Fund of any
liability for federal income tax. Such capital loss carryovers are as
follows:
Capital Loss
Carry Over Expiration Date
---------- ---------------
$118,614,149 12/31/2008
36,020,187 12/31/2009
963,957 12/31/2014
3,009,464 12/31/2015
------------
158,607,757
At December 31, 2007, $27,099,636 of capital loss carryovers expired. It is
uncertain whether the Fund will be able to realize the benefits of the
remaining capital loss carryovers before they expire.
The Fund elected to defer to its fiscal year ending December 31, 2008,
$1,691,076 of capital losses and $10,439 of currency losses recognized
during the period November 1, 2007 to December 31, 2007.
(6) Financial Instruments:
In general, the following instruments are used for hedging purposes as
described below. However, these instruments may also be used to seek to
enhance potential gain in circumstances where hedging is not involved.
The Fund may trade the following financial instruments with off-balance
sheet risk:
29
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
Call and put options give the holder the right to purchase or sell a
security or currency or enter into a swap arrangement on a future date at a
specified price. The Fund may use options to seek to hedge against risks of
market exposure and changes in security prices and foreign currencies, as
well as to seek to enhance returns. Writing puts and buying calls tend to
increase the Fund's exposure to the underlying instrument. Buying puts and
writing calls tend to decrease the Fund's exposure to the underlying
instrument, or hedge other Fund investments. Options, both held and written
by the Fund, are reflected in the accompanying Statement of Assets and
Liabilities at market value. The underlying face amount at value of any
open purchased option is shown in the Schedule of Investments. This amount
reflects each contract's exposure to the underlying instrument at year end.
Losses may arise from changes in the value of the underlying instruments,
if there is an illiquid secondary market for the contract, or if t he
counterparty does not perform under the contract's terms.
Premiums received from writing options which expire are treated as realized
gains. Premiums received from writing options which are exercised or are
closed are added to or offset against the proceeds or amount paid on the
transaction to determine the realized gain or loss. Realized gains and
losses on purchased options are included in realized gains and losses on
investment securities, except purchased options on foreign currency which
are included in realized gains and losses on foreign currency transactions.
If a put option written by the Fund is exercised, the premium reduces the
cost basis of the securities purchased by the Fund. The Fund, as a writer
of an option, has no control over whether the underlying securities may be
sold (call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written
option.
Exchange traded options are valued at the last sale price, or if no s ales
are reported, the last bid price for purchased options and the last ask
price for written options. Options traded over-the-counter are valued using
prices supplied by the dealers including counterparties.
For the year ended December 31, 2007, the Fund entered into the following
transactions:
Number of
Written Put Option Transactions Contracts Premiums
-------- --------
Outstanding, beginning of year -- $ --
Options written 428 82,331
Options closed (428) (82,331)
-------- --------
Outstanding, end of year -- $ --
======== ========
Number of Notional
Written Call Option Transactions Contracts Amount Premiums
--------- ------ --------
Outstanding, beginning of year -- $ -- $ --
Options written 475 22,770 137,181
Options closed (475) -- (116,119)
Options expired -- (22,770) (21,062)
-------- -------- --------
Outstanding, end of year -- -- $ --
======== ======== ========
At December 31, 2007, the Fund held purchased options. See Schedule of
Investments for further details.
Futures contracts
The Fund, and previously the Portfolio, may enter into financial futures
contracts for the purchase or sale of securities, or contracts based on
financial indices at a fixed price on a future date. Pursuant to margin
requirements, the Fund deposits either cash or securities in an amount
equal to a certain percentage of the contract amount. Subsequent payments
are made or received by the Fund each day, depending on the daily
fluctuations in the value of the underlying security, and are recorded for
financial statement purposes as unrealized appreciation or depreciation by
the Fund. There are several risks in connection with the use of futures
contracts as a hedging device. The change in value of futures contracts
primarily corresponds with the value of their underlying instruments or
indices, which may not correlate with changes in the value of hedged
investments. Buying futures tends to increase the Fund's exposure to the
underlying instrument, while selling futures tends to decrease the Fund's
exposure to t he underlying instrument or hedge other investments. In
addition, there is the risk that the Fund may not be able to enter into a
closing transaction because of an illiquid secondary market. Losses may
also arise if there is an illiquid secondary market or if the counterparty
does not perform under the contract's terms.
The Fund enters into financial futures transactions primarily to seek to
manage its exposure to certain markets and to changes in securities prices
and foreign currencies. Gains and losses are realized upon the expiration
or closing of the futures contracts. Futures contracts are valued at the
quoted daily settlement prices established by the exchange on which they
trade.
At December 31, 2007, the Fund held open financial futures contracts. See
the Schedule of Investments for further details.
30
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
Swap agreements
The Fund, and previously the Portfolio, may enter into swap agreements. A
swap is an agreement to exchange the return generated by one instrument for
the return generated by another instrument. The Fund may enter into
interest rate, credit default and total return swap agreements to manage
its exposure to interest rates and credit risk. Interest rate swap
agreements involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest, e.g., an exchange of
floating rate payments for fixed rate payments with respect to a notional
amount of principal. In a credit default swap, one party makes a stream of
payments to another party in exchange for the right to receive a specified
return in the event of a default by a third party on its obligation. The
Fund may use credit default swaps to provide a measure of protection
against defaults of issuers (i.e., to reduce risk where the Fund owns or
has exposure to the corporate or sovereign issuer) or to take an active
long or sh ort position with respect to the likelihood of a particular
corporate or sovereign issuer's default. Total return swap agreements
involve commitments to pay interest in exchange for a market-linked return,
both based on notional amounts. To the extent the total return of the
security or index underlying the transaction exceeds or falls short of the
offsetting interest rate obligation, the Portfolio will receive a payment
from or make a payment to the counterparty. In connection with these
agreements, cash or securities may be set aside as collateral in accordance
with the terms of the swap agreement. The Fund earns interest on cash set
aside as collateral. Swaps are marked to market daily based upon
quotations, which may be furnished by a pricing service or dealers in such
securities and the change in value, if any, is recorded as unrealized
appreciation or depreciation in the Statement of Operations. These
financial instruments are not actively traded on financial markets. The
values assigned to these instr uments are based upon the best available
information and because of the uncertainty of the valuation, these values
may differ significantly from the values that would have been realized had
a ready market for these instruments existed, and differences could be
material. Payments received or made at the beginning of the measurement
period are reflected as such on the Statement of Assets and Liabilities.
Payments received or made from credit default swaps at the end of the
measurement period are recorded as realized gains and losses in the
Statement of Operations. Net payments of interest on interest rate swap
agreements, if any, are included as part of realized gains and losses.
Entering into these agreements involves, to varying degrees, elements of
credit, market, and documentation risk in excess of the amounts recognized
in the Statement of Assets and Liabilities. Such risks involve the
possibility that there will be no liquid market for these agreements, that
the counterparty to the agreements may default on its obligation to perform
or disagree as to the meaning of contractual terms in the agreements, and
that there may be unfavorable changes in interest rates.
At December 31, 2007, the Fund held open swap agreements. See the Schedule
of Investments for further details.
(7) Security Lending:
The Fund, and previously the Portfolio, may lend its securities to
financial institutions which the Fund deems to be creditworthy. The loans
are collateralized at all times with cash or securities with a market value
at least equal to the market value of the securities on loan. The market
value of securities loaned is determined daily and any additional required
collateral is allocated to the Fund on the next business day. For the
duration of a loan, the Fund receives the equivalent of the interest or
dividends paid by the issuer on the securities loaned and also receives
compensation from the investment of the collateral. As with other
extensions of credit, the Fund bears the risk of delay in recovery or even
loss of rights in its securities on loan should the borrower of the
securities fail financially or default on its obligations to the Fund. In
the event of borrower default, the Fund generally has the right to use the
collateral to offset losses incurred. The Fund may incur a loss in the
event it was de layed or prevented from exercising its rights to dispose of
the collateral. The Fund also bears the risk in the event that the interest
and/or dividends received on invested collateral is not sufficient to meet
the Fund's obligations due on the loans.
The Fund, and previously the Portfolio, loaned securities during the year
ended December 31, 2007 and earned interest on the invested collateral of
$3,350,524 of which $3,178,260 was rebated to borrowers or paid in fees. At
December 31, 2007, the Fund had securities valued at $20,698,968 on loan of
which $15,297,585 was collateralized with cash and $6,030,532 was
collateralized with highly liquid securities. See Schedule of Investments
for further detail on the security positions on loan and collateral held.
See also Note 10.
(8) Delayed Delivery Transactions:
The Fund may purchase securities on a when-issued, delayed delivery or
forward commitment basis. Payment and delivery may take place a month or
more after the date of the transactions. The price of the underlying
securities and the date when the securities will be delivered and paid for
are fixed at the time the transaction is negotiated. Income on the
securities will not be earned until settlement date. The Fund instructs its
custodian to segregate securities having value at least equal to the amount
of the purchase commitment.
31
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Fund may enter into to be announced (TBA) purchase commitments to
purchase securities for a fixed unit price at a future date beyond
customary settlement time. Although the unit price has been established,
the principal value has not been finalized. However, the amount of the
commitments will not fluctuate more than 0.01% from the principal amount.
The Fund holds, and maintains until settlement date, cash or high-grade
debt obligations in an amount sufficient to meet the purchase price, or the
Fund may enter into offsetting contracts for the forward sale of other
securities it owns. Income on the securities will not be earned until
settlement date. TBA purchase commitments may be considered securities in
themselves, and involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date. Unsettled TBA purchase
commitments are valued at the current market value of the underlying
securities, according to the procedures described under "Investment
security valuations" above.
The Fund may enter into TBA sale commitments to hedge its Fund positions.
Proceeds of TBA sale commitments are not received until the contractual
settlement date. During the time a TBA sale commitment is outstanding, an
offsetting TBA purchase commitment deliverable is held as "cover" for the
transaction.
At December 31, 2007, the Fund held delayed delivery securities. See the
Schedule of Investments for further details.
(9) Line of Credit:
On behalf of the Fund, and other funds in the Trust, and previously the
portfolios in the Portfolio Trust, the Trust has access to a credit
facility, which enables each fund to borrow, in the aggregate, up to $35
million under a committed line of credit and up to $15 million under an
uncommitted line of credit. During the year ended December 31, 2007, the
Fund did not borrow from the credit line.
(10) Restatement:
The Statement of Assets and Liabilities and Schedule of Investments have
been restated to correct an error in the manner in which the Fund's
securities lending agent and custodian accounted for the investment in
pooled investment vehicles of cash collateral derived from the Fund's
securities lending activity.
During the fiscal year ended December 31, 2007, the Fund, together with
other investment series of the Trust, participated in a securities lending
program. Until December 10, 2007, all cash collateral received by the Fund
and other series of the Trust in connection with the securities lending
program was invested in the BlackRock Cash Strategies Fund LLC (the
"BlackRock Fund"), a private investment fund not affiliated with the Trust
or its investment adviser. On December 10, 2007, the BlackRock Fund
announced that it was suspending investor withdrawal privileges due to
conditions related to the credit markets and the adverse effect of such
conditions on the liquidity of the BlackRock Fund's portfolio holdings.
Commencing on December 11, 2007, all new cash collateral received in
connection with the securities lending activity of the Fund and other
series of the Trust was invested by the securities lending agent in the
Dreyfus Institutional Cash Advantage Fund (the "Dreyfus Fund"), an
affiliated money market f und registered as an investment company under the
Investment Company Act of 1940, as amended. To the extent that the
BlackRock Fund agreed to permit withdrawals during the period, cash
proceeds from such withdrawals by series of the Trust were reinvested in
shares of the Dreyfus Fund. Repayments of cash collateral during the period
were made from the proceeds of redemptions of the Dreyfus Fund.
The Fund determined that from December 11, 2007 through the December 31,
2007 closing date of the financial statements of the Fund and continuing
until March 10, 2008, the securities lending agent and custodian failed to
account properly for the Fund's investments in the BlackRock Fund and the
Dreyfus Fund. Specifically, the securities lending agent and custodian
maintained, for each series of the Trust, subaccounts reflecting each
series ownership of shares of the Dreyfus Fund and the BlackRock Fund which
considered each such series to own a percentage of the Trust series'
aggregate ownership of the Dreyfus Fund and the BlackRock Fund equal to
each series' pro rata balance of the aggregate Trust cash collateral in the
securities lending program, rather than according to each series' specific
cash purchase and withdrawal activity in shares of the Dreyfus Fund and/or
the BlackRock Fund. The management of the Trust determined that the
securities lending agent and custodian should have accounted for these
inves tments on a Fund specific basis in accordance with actual cash
purchases and withdrawals. This erroneous methodology caused differences in
the entries in the Fund's books and records on which the Fund's Schedule of
Investments and Statement of Assets and Liabilities are based. These
financial statements have been restated accordingly. (The Fund's annual
report for the fiscal year ended December 31, 2007 containing these
financial statements was previously posted on the Trust's website but had
not been mailed to shareholders or filed with the Commission.) The
liability listed as "Payable for securities lending collateral investment"
represents the extent to which the Fund's cash needs to repay collateral
exceeded the value of its interest in the Dreyfus Fund. The erroneous
sub-accounting methodology had no effect on the computation of the Fund's
net asset value.
Effective March 10, 2008, the accounting for cash collateral investments in
pooled vehicles was corrected to account for specific purchases and redem
ptions of interests in such vehicles by the Fund. All activity was
reprocessed to reflect correct ownership by the Fund in each vehicle and
the above described financial statements restated accordingly.
32
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
The amounts as originally reported and as restated are as follows:
As Originally
Statement of Asset and Liabilities Reported As Restated
---------------------------------- -------- -----------
Investments in securities: Unaffiliated issuers, at value $ 713,299,150 $ 723,450,417
Investments in securities: Affiliated issuers, at value $ 12,761,711 $ 9,802,717
Total Assets $ 758,584,590 $ 765,776,863
Payable for securities lending
collateral investment (Note7) (Note 10) -- $ 7,192,273
Total Liabilities $ 193,012,539 $ 200,204,812
Total assets $ 565,572,051 $ 565,572,051
Schedule of Investments
-----------------------
Blackrock Cash Strategies L.L.C $ 12,388,591 $ 22,489,858
Total Unaffiliated Investments $ 713,299,150 $ 723,450,417
Dreyfus Institutional Cash Advantage Fund $ 2,958,994 --
Total Investments $ 726,060,861 $ 733,253,134
Liabilities in Excess of Other Assets $(160,488,810) $(167,681,083)
Total assets $ 565,572,051 $ 565,572,051
33
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Report of Independent Registered Public Accounting Firm
- --------------------------------------------------------------------------------
To the Trustees of Mellon Institutional Funds Investment Trust and Shareholders
of Standish Mellon Fixed Income Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights, after the restatement
described in Note 10 to the financial statements, present fairly, in all
material respects, the financial position of Standish Mellon Fixed Income Fund
(the "Fund") at December 31, 2007, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial state ments in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 2007 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
March 4, 2008, except as to Note 10, for which the date is March 27, 2008
34
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreements (Unaudited)
- --------------------------------------------------------------------------------
The 1940 Act requires that the Board of Trustees, including a majority of its
Trustees who are not affiliated with the Fund's investment adviser or
underwriter (the "Independent Trustees") voting separately, approve the Fund's
advisory agreement and the related fees on an annual basis. Prior to October 26,
2007, the Fund was not a party to an investment advisory agreement directly with
any investment adviser and did not invest directly in portfolio securities.
Instead, the Fund had invested all of its investable assets in the Standish
Mellon Fixed Income Portfolio (the "Portfolio"), which was managed by Standish
Mellon Asset Management Company LLC ("Standish Mellon" or the "Adviser"). The
Portfolio had investment objectives, policies and limitations substantially
identical to those of the Fund. The Fund's Board of Trustees determined annually
whether the Fund should continue to invest in the Portfolio. The members of the
Fund's Board of Trustees also serve as the Board of Trustees of the Portfolio.
In that c apacity, they considered annually whether to continue the investment
advisory agreement between the Portfolio and Standish Mellon.
In their most recent deliberations concerning their decision to approve the
continuation of the investment advisory agreement, the Board of Trustees
conducted the review and made the determinations that are described below. In
conducting this review and in making such determinations, the Independent
Trustees received from Standish Mellon a broad range of information in response
to a written request prepared on their behalf by their own legal counsel. The
Independent Trustees met alone in a private session with their legal counsel on
September 27, 2007 to review these materials and to discuss the proposed
continuation of the Portfolio's advisory agreement. Representatives of
management attended a portion of the September meeting to provide an overview of
the Adviser's organization, personnel, resources and strategic plans, and to
respond to questions and comments arising from the Independent Trustees' review
of the materials and their deliberations. The entire Board then met on October
30, 2007.
The information requested by the Independent Trustees and reviewed by the entire
Board included:
(i) Financial and Economic Data: The Adviser's balance sheet and income
statements, as well as a profitability analysis of the Adviser, including a
separate presentation of the Adviser's profitability relative to that of several
publicly traded investment advisers;
(ii) Management Teams and Operations: The Adviser's Form ADV, as well as
information concerning the Adviser's executive management, portfolio management,
client service personnel and overall organizational structure, insurance
coverage, brokerage and soft dollar policies and practices;
(iii) Comparative Performance and Fees: Analyses prepared by Lipper Analytical
Services ("Lipper") regarding the Fund's historical performance, management fee
and expense ratio compared to other funds, and the Adviser's separate account
advisory fee schedules;
(iv) Specific Facts Relating to the Fund: The Adviser's commentary on the Fund's
(rather than the Portfolio alone) performance and any material portfolio manager
and strategy changes that may have affected the Fund in the prior year, as well
as the Fund's "fact sheets" prepared by the Adviser providing salient data about
the Fund and the Portfolio, including the Portfolio's holdings, strategies,
recent market conditions and outlook, as well as the Adviser's views concerning
the issues of breakpoints in the management fee schedule of the Portfolio and
potential economies of scale; and
(v) Other Benefits: The benefits flowing to The Bank of New York Mellon
Corporation ("BNY Mellon") and its affiliates in the form of fees for transfer
agency, custody, administration and securities lending services provided to the
Funds by affiliates of BNY Mellon.
In considering the continuation of the Portfolio's advisory agreement, the Board
of Trustees, including the Independent Trustees, did not identify any single
factor as all-important or controlling, and individual Trustees did not
necessarily attribute the same weight or importance to each factor. The Trustees
determined that the terms and conditions of the advisory agreement and the
compensation to the Adviser provided therein were fair and reasonable in light
of the services performed, expenses incurred and such other matters as the
Trustees considered relevant in the exercise of their reasonable judgment. The
following summary does not detail all the matters that were considered. Some of
the factors that figured prominently in the Trustees' determination are
described below.
Nature, Extent and Quality of Services
The Board considered the nature, scope and quality of the overall services
provided to the Portfolio by the Adviser. In their deliberations as to the
continuation of the advisory agreement, the Trustees were also mindful of the
fact that, by choosing to invest in the Fund, the Fund's shareholders have
chosen to entrust the Adviser, under the supervision of the Board, to manage the
portion of their assets invested in the Fund.
Among the specific factors the Board reviewed were the investment management,
administrative, compliance and related services provided by the Adviser. The
Board determined that the services provided were of high quality and at least
commensurate with industry standards.
The Trustees reviewed the background and experience of the Portfolio's two
portfolio managers and also met with senior management of the Adviser to receive
an overview of its organization, personnel, resources and strategic plans. Among
other things, the Trustees considered the size, education and experience of the
Advis er's investment staff, technological infrastructure and overall
responsiveness to changes in market conditions.
The Board determined that the Adviser had the expertise and resources to manage
the Portfolio effectively.
35
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreements (Unaudited)
- --------------------------------------------------------------------------------
Investment Performance
The Board considered the investment performance of the Fund (rather than the
Portfolio alone) against a peer group of investment companies selected by the
Adviser with input from the Trustees. The Board also compared the Fund's
investment performance against the average performance of a larger universe of
funds regarded by Lipper as having similar investment objectives and considered
the Fund's performance rankings against that universe. In addition to the
information received by the Board at the September 27, 2007 Board meeting, the
Trustees received similar detailed comparative performance information for the
Fund at each regular Board meeting during the year.
The Board considered the Fund's performance for the one-, three- and five-year
periods ended July 31, 2007 based on the Lipper materials provided to the Board
at the September 27, 2007 meeting. The Board found that the Fund outperformed
its peer group average returns for the one-year period (5.14% vs. 5.13%) and
three-year period (4.26% vs. 3.99%), but underperformed its peer group average
return for the five-year period (4.82% vs. 4.92%).
Advisory Fee and Other Expenses
The Board considered the advisory fee rate paid by the Portfolio to the Adviser.
The Lipper data presenting the Portfolio's "net management fees" included fees
paid by the Portfolio, as calculated by Lipper, for administrative services
provided by Mellon Bank, N.A., the Portfolio's custodian. Such reporting was
necessary, according to Lipper, to allow the Board to compare the Portfolio's
advisory fees to those peers that include administrative fees within a blended
advisory fee.
The Portfolio's effective contractual advisory fee was 0.363% (based on the
following breakpoints: 0.40% of the first $250 million; 0.35% of the next $250
million; and 0.30% over $500 million), which was in the 1st (best) quintile of
its peer group of funds, the median fee of which was 0.438%. The Portfolio's net
management fee was 0.378% (which included 0.003% in administrative services fees
under Lipper's calculation methodology), slightly higher than the peer group
median net management fee of 0.375%. Based on the Lipper data, as well as other
factors discussed at the September 27, 2007 meeting, the Board determined that
the Portfolio's advisory fee is reasonable relative to its peer group averages.
The Board also compared the fees payable by the Portfolio relative to those
payable by separate account clients of the Adviser. Based on the additional
scope and complexity of the services provided and responsibilities assumed by
the Adviser with respect to the Portfolio relative to these other types of
clients, the Board concluded that the fees payable under the advisory agreement
were reasonable relative to the nature and quality of the services provided.
The Board also considered the Fund's (rather than solely the Portfolio's)
expense ratio and compared it to that of its peer group of similar funds. The
Board found that the actual net expense ratio of 0.495% was higher than the
median net expense ratio of the peer group of 0.47%, largely due to the
Portfolio's small asset size compared to its peer group.
The Adviser's Profitability
The Board considered the Adviser's profitability in managing the Portfolio and
the Fund and the Mellon Institutional Funds as a group, as well as the
methodology used to compute such profitability, and the various direct and
indirect expenses incurred by the Adviser or its affiliated investment advisers
in managing the Portfolio and other funds in the Mellon Institutional Funds
family of funds. The Independent Trustees had observed that the Adviser, based
on the profitability information submitted to them by the Adviser, incurred
losses in managing all but one of the investment companies in the Mellon
Institutional Funds family of funds. The Trustees observed that the Adviser had
experienced profits in operating the Portfolio in both 2005 and 2006 and
concluded these were not excessive.
Economies of Scale
The Board also considered the extent to which economies of scale might be
realized as the Fund grows. They observed that the Portfolio and The Boston
Company International Core Equity Portfolio, two of the largest funds in the
complex, already had breakpoints in their fee arrangements that reflected
economies resulting from their size. The Board also noted that at the March 7,
2006 meeting, management had presented a Breakpoint Discussion Memorandum that
had proposed a framework for future breakpoints. The Board concluded that, at
existing asset levels and considering current asset growth projections, the
implementation of additional fee breakpoints or other fee reductions was not
necessary at this time.
36
Mellon Institutional Funds Investment Trust
Standish Mellon Fixed Income Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreements (Unaudited)
- --------------------------------------------------------------------------------
Other Benefits
The Board also considered the additional benefits flowing to BNY Mellon as a
result of its relationship with the Mellon Institutional Funds as a group,
including revenues received by BNY Mellon affiliates in consideration of
custodial, administrative, transfer agency and securities lending services
provided by such affiliates to the Funds. In each case, such affiliates were
selected by the Board on the basis of a comparative analysis of their
capabilities and fees relative to those of unaffiliated competitors.
The Board considered the fact that BNY Mellon operates businesses other than the
Mellon Institutional Funds, some of which businesses share personnel, office
space and other resources and that these were a component of the profitability
analysis provided. The Board also considered the intangible benefits that accrue
to BNY Mellon and its affiliates by virtue of its relationship with the Funds
and the Mellon Institutional Funds as a group.
* * *
The foregoing factors were among those weighed by the Trustees in determining
that the terms and conditions of the Portfolio's advisory agreement and the
compensation to the Adviser provided therein are fair and reasonable and, thus,
in approving the continuation of the agreement for a one-year period.
37
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their age, address
and date of birth; their position with the Trust; the length of time holding
that position with the Trust; their principal occupation(s) during the past five
years; the number of portfolios in the fund complex they oversee; other
directorships they hold in companies subject to registration or reporting
requirements of the Securities Exchange Act of 1934 (generally called "public
companies") or in registered investment companies; and total remuneration paid
as of the year ended December 31, 2007. The Fund's Statement of Additional
Information includes additional information about the Trust's trustees and is
available, without charge, upon request by writing Mellon Institutional Funds at
P.O. Box 8585, Boston, MA 02266-8585 or calling toll free 1-800-221-4795.
Independent Trustees
Trustee
Number of Remuneration**
Principal Portfolios in Other (period
Name (Age) Term of Office Occupation(s) Fund Complex Directorships ended
Address, and Position(s) and Length of During Past Overseen by Held by December 31,
Date of Birth Held with Trust Time Served* 5 Years Trustee Trustee 2007)
- -----------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $4,862
61 Meadowbrook Road 11/3/1986 Decision Resources, Inc.
Weston, MA 02493 ("DRI") (biotechnology
9/30/40 research and consulting
firm); formerly Chairman
of the Board and Chief
Executive Officer, DRI
Benjamin M. Friedman (63) Trustee Trustee since William Joseph Maier, 17 None Fund: $4,862
c/o Harvard University 9/13/1989 Professor of Political
Littauer Center 127 Economy, Harvard
Cambridge, MA 02138 University
8/5/44
John H. Hewitt (72) Trustee Trustee since Trustee, Mertens 17 None Fund: $4,862
P.O. Box 2333 11/3/1986 House, Inc. (hospice)
New London, NH 03257
4/11/35
Caleb Loring III (64) Trustee Trustee since Trustee, Essex Street 17 None Fund: $5,402
c/o Essex Street Associates 11/3/1986 Associates (family
P.O. Box 5600 investment trust office)
Beverly, MA 01915
11/14/43
Interested Trustees
J. David Officer (59) Trustee Since 2008 Director, Vice Chairman 17 None Fund: $0
The Dreyfus Corporation (Chairman), and Chief Operating Officer
200 Park Ave., 55th Fl. President and of The Dreyfus Corporation;
New York, NY 10166 Chief Executive Executive Vice President
8/24/48 Officer of The Bank of New York
Mellon Corporation; and
Director and President of
MBSC Securities Corporation
* Each Trustee serves for an indefinite term, until his successor is elected.
Each officer is elected annually.
**Trustee remuneration of the Fund and the Portfolio have been purchased on a
consolidated basis.
38
Principal Officers who are Not Trustees
Name (Age) Term of Office
Address, and Position(s) and Length of Principal Occupation(s)
Date of Birth Held with Trust Time Served During Past 5 Years
- ----------------------------------------------------------------------------------------------------------------------------------
Steven M. Anderson (42) Vice President, Vice President Vice President and Mutual Funds Controller,
BNY Mellon Asset Management Treasurer and since 1999; BNY Mellon Asset Management; formerly Assistant
One Boston Place Chief Financial Treasurer and Vice President and Mutual Funds Controller, Standish
Boston, MA 02108 Officer CFO since 2002 Mellon Asset Management Company, LLC
7/14/65
Denise B. Kneeland (56) Assistant Vice Assistant Vice First Vice President and Manager, Mutual Funds
BNY Mellon Asset Management President President Operations, BNY Mellon Asset Management; formerly
One Boston Place and Secretary since 1996; Vice President and Manager, Mutual Fund Operations,
Boston, MA 02108 Secretary Standish Mellon Asset Management Company, LLC
8/19/51 since 2007
Mary T. Lomasney (50) Chief Since 2005 First Vice President, BNY Mellon Asset Management and
BNY Mellon Asset Management Compliance Chief Compliance Officer, Mellon Optima L/S Strategy
One Boston Place Officer Fund, LLC; formerly Director, Blackrock, Inc., Senior
Boston, MA 02108 Vice President, State Street Research & Management
4/8/57 Company ("SSRM"), and Vice President, SSRM
39
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MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6923AR1207A
MELLON INSTITUTIONAL FUNDS
Annual Report Standish Mellon
(As Restated; See Note 10) Global Fixed Income Fund
- --------------------------------------------------------------------------------
Year Ended December 31, 2007
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. This report is not
authorized for distribution to prospective investors in the Fund unless preceded
or accompanied by an effective prospectus.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission (SEC) for the first and third quarters of each fiscal
year on Form N-Q. Forms N-Q are available on the SEC's web site at
http://www.sec.gov. The Fund's Forms N-Q may be reviewed and copied at the SEC's
Public Reference Room in Washington D.C. Information regarding the operation of
the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a
complete list of the Fund's portfolio holdings, view the most recent quarterly
holdings report, semi-annual report or annual report on the Fund's web site at
http://www.melloninstitutionalfunds.com.
To view the Fund's proxy voting guidelines and proxy voting record for the
12-month period ended June 30 visit http://www.melloninstitutionalfunds.com or
the SEC's web site at http://www.sec.gov. You may also call 1-800-221-4795 to
request a free copy of the proxy voting guidelines.
MELLON INSTITUTIONAL FUNDS
February 2008
Dear Mellon Institutional Fund Shareholder:
Enclosed you will find your Fund's annual report for the fiscal year ended
December 31, 2007.
The financial markets experienced a major bout of volatility in 2007 stemming
from two principal sources: troubles in the credit markets related to the
difficulties experienced by mortgage securities backed by subprime loans, and
the high degree of leverage employed by many hedge funds, whose impact on the
markets has swollen significantly over the past decade. While the S&P 500 Index
managed to gain 3.5% in 2007 in a very volatile environment, it lost 3.8% in the
fourth quarter. The U.S. Federal Reserve Board was concerned with market
instability enough to lower rates three times in 2007 even as confidence in the
dollar reached new lows. In December, central banks coordinated their efforts to
provide liquidity facilities to institutions with impaired assets.
Credit markets responded to the subprime troubles with a broad-based flight to
quality as investors fled to short-term Treasury securities, resulting in a
significant steepening of the yield curve. In a dramatic repricing of risk,
spreads widened in the corporate bond sector compared to Treasury issues, which
has the effect of making corporate borrowing more expensive. In another
indication of just how disruptive this period was in the credit markets, even
some issuers of commercial paper - typically viewed as the safest segment of the
corporate market - had trouble issuing or rolling over their issues.
Liquidity has slowly returned to the bond markets in general, but it is still
less than normal. The financial and mortgage sectors clearly have been shaken,
and this will likely exacerbate the housing recession as banks become more
restrictive in their lending. In the view of some, the likelihood of a broader
U.S. recession has become greater; indeed, some economists maintain that we have
already entered one. Our view is that a period of diminished growth - around
1.5% to 2% GDP growth in 2008 vs. the 2.5% long-term trend - is more likely. We
see U.S. exports boosted by the weaker dollar, multi-year global economic
expansion and monetary growth, and reasonable corporate profitability -
especially for multinational franchises - as being positives that may partially
offset the drag of the housing sector and lower consumption. However, should the
"credit crunch" intensify - contrary to our expectations - the odds would favor
a full-scale recession.
We wish to thank you for your business and confidence in Mellon Institutional
Funds. Please feel free to contact us with questions or comments.
Sincerely,
J. David Officer
President
1
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Management Discussion and Analysis
- --------------------------------------------------------------------------------
Global sovereign bonds provided solid returns in 2007 while most bonds with a
credit spread suffered. Despite the credit and liquidity crunch, global bonds
provided a year of risk adjusted returns very competitive with the Fund's
benchmark, the Lehman Brothers Global Aggregate Index, which returned 5.33% in
2007. The global bond market continues to be buffeted by concerns about
structured credit, banking sector vulnerabilities, and a potential U.S.
recession. We continue to believe that the U.S. Federal Reserve Board will need
to cut rates further in 2008 as the outlook for the U.S. economy continues to
deteriorate due to a weaker housing market and ongoing turmoil in the structured
credit markets and banking sector.
As we move into 2008, the market has also come to realize that the U.K. housing
market and economy will also likely be hurt significantly by tighter credit
conditions. The front end of the gilt yield curve rallied during the second half
of 2007 and the pound is weaker. The expected U.S. slowdown will, to some
extent, slow growth in Europe and Japan as well. Expectations for a global
decoupling from the U.S. are likely to be disappointed.
Weaker U.S. consumer demand and a depreciated U.S. currency, especially as
compared to the Euro, have reduced net exports for both Europe and Japan.
Furthermore, financial conditions have tightened in Europe as the result of the
credit and liquidity crunch.
However, emerging markets, led by China, India, Brazil, and Russia, continue to
do very well, as do other commodity exporting economies. Nevertheless, we
believe that the U.S. led downturn should take some of the shine off of these
regions' economic performance in 2008.
Performance
The Fund returned 4.30% in 2007, lagging its benchmark, but we believe it is
well positioned for better returns going forward if our "Outlook" below is
accurate. The Fund's underperformance relative to its benchmark in 2007 was
mainly driven by its exposure to the riskier parts of the global bond markets,
such as high yield and emerging market debt.
Even though we are disappointed that the Fund lost ground relative to its
benchmark, we are proud in that we restructured the portfolio in the first half
of 2007 and shed a lot of credit risk. The Fund has always invested heavily in
corporate credits and we avoided almost all of the blowups.
The Fund's main source of credit risk and underperformance has come from its
Northern Rock position. These securities were downgraded to high yield after we
purchased them at distressed levels when they were investment grade. We remain
optimistic, as to these holdings, however, as the restructuring and ownership
situation of the bank gets resolved. Unfortunately the process has taken much
longer than we had expected and so the mark-to-market impact on Fund performance
subtracted nearly 70 basis points.
The remaining drag on performance came from other high yield exposure in short
dated high yield bonds, which we believe will mature at par, and some other
one-off exposures to emerging market debt.
2
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Management Discussion and Analysis
- --------------------------------------------------------------------------------
On the positive side we had a great year in terms of our country, curve and
duration positioning for the Fund. The Fund consistently invested in the top
performing markets during 2007 which included Japan and Sweden during the first
half and then the U.K. and the U.S. during the second half of 2007.
The Fund was consistently long duration during 2007 which was not helpful during
the first half of 2007 but paid off when the credit crunch and flight to quality
occurred in the summer. We have been long duration in the U.S., Japan and the
U.K., while underweight duration in Europe.
Curve positioning was also helpful in 2007 as we anticipated a steeper yield
curve on the back of Fed rate cuts. We also benefited from a flattening of the
European yield curve even though the European Central Bank was raising interest
rates. The long end of the European yield curve is highly correlated with that
of the U.S. and was dragged lower as the global bond rally intensified late in
2007.
Currency positioning also added about 20 basis points to the portfolio over the
course of 2007 as we held mostly short dollar positions against a wide variety
of currencies.
Outlook
We remain negative on the outlook for the U.S. economy as we believe the
continuing housing market correction will translate into a weaker consumer
sector. We believe that the unemployment rate will increase further over the
coming months, and that this will also slow consumer spending. We believe that a
weaker job market, combined with lower inflation and capacity utilization,
should prompt the Fed to cut rates below 3% in 2008. We are therefore positioned
for lower rates and a steeper yield curve in the U.S. We are also overweight
U.K. duration and have shorted the pound as we expect the British economy to
weaken. In Japan, we are overweight duration as we continue to expect that the
economic recovery will be very gradual. We remain underweight in Europe as
inflation has increasingly become a concern for the European Central Bank.
However, given the uncertain growth outlook, our base case is that rates remain
on hold for a while, so the underweight must be viewed in conjunction with the
U.S. and U.K. overweight positions. We believe growth in several of the smaller
developed economies, like Norway, Sweden, and Australia, will likely remain
relatively robust, and we remain underweight duration in these countries.
Thomas F. Fahey David Leduc, CFA
Portfolio Manager Portfolio Manager
Standish Mellon Asset Management Company, LLC Standish Mellon Asset Management Company, LLC
3
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Comparison of Change in Value of $100,000 Investment in
Standish Mellon Global Fixed Income Fund and the
Lehman Brothers Global Aggregate Index
- --------------------------------------------------------------------------------
[THE FOLLOWING DATA IS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL.]
Standish Mellon Lehman Brothers
PERIOD Global Fixed Income Fund Global Aggregate Index*
12/31/97 $100,000 $100,000
3/31/98 $102,210 $102,218
6/30/98 $104,030 $104,546
9/30/98 $106,462 $109,372
12/31/98 $106,978 $109,770
3/31/99 $108,406 $110,600
6/30/99 $107,555 $109,785
9/30/99 $106,149 $110,070
12/31/99 $106,296 $110,634
3/31/00 $108,509 $112,970
6/30/00 $110,065 $114,776
9/30/00 $112,161 $117,468
12/31/00 $116,703 $122,072
3/31/01 $120,042 $125,658
6/30/01 $119,402 $126,428
9/30/01 $121,198 $130,534
12/31/01 $121,965 $130,912
3/31/02 $121,305 $130,828
6/30/02 $124,796 $134,597
9/30/02 $128,085 $139,807
12/31/02 $130,435 $141,978
3/31/03 $133,053 $143,938
6/30/03 $137,148 $146,742
9/30/03 $137,484 $146,179
12/31/03 $138,759 $146,393
3/31/04 $142,384 $149,473
6/30/04 $139,363 $147,037
9/30/04 $143,123 $151,054
12/31/04 $145,671 $153,560
3/31/05 $145,523 $154,314
6/30/05 $149,602 $159,096
9/30/05 $150,270 $159,039
12/31/05 $150,968 $160,133
3/31/06 $150,617 $159,063
6/30/06 $150,700 $158,985
9/30/06 $156,602 $164,438
12/31/06 $158,649 $165,953
3/31/07 $160,867 $167,904
6/30/07 $159,079 $166,669
9/30/07 $162,442 $171,037
12/31/07 $165,468 $174,794
Average Annual Total Returns
(for period ended 12/31/2007)
- --------------------------------------------------------------------------------
Since
Inception
1 Year 3 Years 5 Years 10 Years (1/1/1994)
- --------------------------------------------------------------------------------
Fund 4.30% 4.34% 4.87% 5.17% 6.11%
* Source: Lehman
Average annual total returns reflect the change in the value of an investment,
assuming reinvestment of the fund's dividend income and capital gains. The
$100,000 line graph and the fund's returns do not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares. During periods of reimbursement by the fund's investment adviser (if
applicable), the fund's total return will be greater than it would be had the
reimbursement not occurred. Past performance is not predictive of future
performance.
4
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Shareholder Expense Example (Unaudited)
- --------------------------------------------------------------------------------
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including redemption fees, and (2) ongoing costs, including management
fees and other Fund expenses. This Example is intended to help you understand
your ongoing costs (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (July 1, 2007 to December 31, 2007).
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000.00=8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs. Therefore, the
second line of the table is useful in comparing ongoing costs and will not help
you determine the relative total costs of owning different funds. In addition,
if these transactional costs were included, your costs would have been higher.
Expenses Paid
Beginning Ending During Period(+)
Account Value Account Value July 1, 2007
July 1, 2007 December 31, 2007 to December 31, 2007
- --------------------------------------------------------------------------------
Actual $1,000.00 $1,040.20 $3.34
Hypothetical (5% return
per year before expenses) $1,000.00 $1,021.93 $3.31
- ----------
+ Expenses are equal to the Fund's annualized expense ratio of 0.65%, multiplied
by the average account value over the period, multiplied by 184/365 (to
reflect the one-half year period). The example reflects the combined expenses
of the Fund and the master portfolio in which it invests all its assets.
5
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Portfolio Information as of December 31, 2007 (Unaudited)
- --------------------------------------------------------------------------------
The Fund is actively managed. Current holdings may be different than those
presented below.
Percentage of
Summary of Combined Ratings Investments
- ------------------------------------------------------------
Quality Breakdown
- ------------------------------------------------------------
AAA 58.7%
AA 12.5
A 10.0
BBB 11.9
BB 2.9
B 4.0
-----
Total 100.0%
Based on ratings from Standard & Poor's and/or Moody's Investors Services. If a
security receives split (different) ratings from multiple rating organizations,
the Fund treats the security as being rated in the higher rating category.
Percentage of
Top Ten Holdings* Rate Maturity Investments
- --------------------------------------------------------------------------------
Japan Government 1.100% 12/10/2016 5.8%
FNMA (TBA) 5.000 1/1/2021 5.3
FGLMC (TBA) 5.500 1/14/2038 5.2
US Treasury Notes 4.250 11/15/2013 3.9
UK Gilt Treasury 5.000 9/7/2014 3.8
United Kingdom Gilt 4.250 3/7/2011 3.5
United Kingdom Gilt 8.000 9/27/2013 3.5
FCE Bank PLC EMTN 5.765 9/30/2009 3.0
Japan Government 1.000 12/20/2012 2.7
United Kingdom Gilt 4.000 9/7/2016 2.7
----
39.4%
* Excluding short-term investments and investment of cash collateral
Percentage of
Economic Sector Allocation Investments
- ---------------------------------------------------------------
Government/Agency 41.8%
Corporate 29.3
Emerging Markets 3.3
Mortgage Pass-Thru 12.6
ABS/CMO/CMBS 8.5
Cash & Equivalents 4.5
-----
100.0%
6
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- --------------------------------------------------------------------------------------------------------------------------------
UNAFFILIATED INVESTMENTS--112.1%
BONDS AND NOTES--94.7%
Asset Backed--1.3%
Chase Issuance Trust 2007-A1 A1 (a) 5.048 3/15/2013 USD 280,000 $ 277,801
Credit Suisse Mortgage Capital Certificate 2007-1 1A6A (a) 5.863 2/25/2037 260,000 247,130
----------
Total Asset Backed (Cost $540,000) 524,931
----------
Collateralized Mortgage Obligations--8.1%
Government National Mortgage Association 2004-23 B 2.946 3/16/2019 253,417 247,248
Government National Mortgage Association 2005-76 A 3.963 5/16/2030 271,749 268,178
Government National Mortgage Association 2005-79 A 3.998 10/16/2033 242,797 240,041
Government National Mortgage Association 2006-5 A 4.241 7/16/2029 250,829 248,771
Government National Mortgage Association 2006-9 A 4.201 8/16/2026 633,367 627,790
Government National Mortgage Association 2006-15 A 3.727 3/16/2027 298,723 294,132
Government National Mortgage Association 2006-19 A 3.387 6/16/2030 225,413 220,737
Government National Mortgage Association 2006-39 A 3.772 6/16/2025 307,764 302,825
Government National Mortgage Association 2006-67 A 3.947 11/16/2030 479,703 473,103
Government National Mortgage Association 2006-68 A 3.888 7/16/2026 233,195 229,827
Government National Mortgage Association 2007-34 A 4.272 11/16/2026 172,416 171,101
----------
Total Collateralized Mortgage Obligations (Cost $3,266,851) 3,323,753
----------
Corporate--19.7%
Banking--5.1%
Bank of America Capital Trust XIII (a) 5.391 3/15/2043 140,000 117,286
Chevy Chase Bank FSB 6.875 12/1/2013 210,000 200,025
Citigroup, Inc. 5.300 10/17/2012 135,000 136,756
Mizuho JGB Investment 144A (a) 9.870 8/30/2049 200,000 201,826
Northern Rock PLC 144A (a) 5.600 4/30/2014 100,000 62,000
Northern Rock PLC 144A (a) 6.594 6/28/2049 1,065,000 660,300
Royal Bank of Scotland Group PLC 144A (a) 6.990 10/5/2049 200,000 199,398
SB Treasury Co. 144A (a) 9.400 6/30/2049 200,000 203,938
Sovereign Bancorp (a) 5.114 3/23/2010 75,000 74,423
Tokai PFD Capital Co. 144A CVT (a) 9.980 6/30/2049 195,000 197,580
Washington Mutual Bank (a) 5.001 5/1/2009 55,000 51,279
----------
2,104,811
----------
Communications--1.2%
News America, Inc. 6.150 3/1/2037 210,000 202,858
Qwest Corp. (a) 8.241 6/15/2013 85,000 86,700
Telefonica Emisiones 6.421 6/20/2016 75,000 78,927
Time Warner Cable, Inc. 5.400 7/2/2012 60,000 60,121
Time Warner, Inc. (a) 5.109 11/13/2009 55,000 53,647
----------
482,253
----------
Financial--7.1%
Boston Properties, Inc. REIT 6.250 1/15/2013 85,000 85,374
Capmark Financial Group 144A 5.875 5/10/2012 110,000 87,072
Citigroup, Inc. (a) 8.300 12/21/2077 190,000 198,396
Countrywide Home Loan, Inc. 3.250 5/21/2008 889,000 803,361
ERAC USA Finance Co. 144A 5.300 11/15/2008 190,000 188,725
ERP Operating LP 5.750 6/15/2017 110,000 104,748
General Electric Capital Corp. 5.625 9/15/2017 400,000 410,390
International Lease Finance Corp. 5.000 4/15/2010 180,000 179,467
Lincoln National Corp. (a) 7.000 5/17/2066 170,000 170,684
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- --------------------------------------------------------------------------------------------------------------------------------
Financial (continued)
Pricoa Global Funding 144A 5.400% 10/18/2012 USD 205,000 $ 212,604
Simon Property Group LP REIT 5.750 5/1/2012 165,000 165,987
Sprint Capital Corp. 8.375 3/15/2012 175,000 189,529
Willis North America, Inc. 6.200 3/28/2017 100,000 99,780
----------
2,896,117
----------
Health Care--0.2%
Coventry Health Care, Inc. 5.950 3/15/2017 85,000 83,343
----------
Industrial--2.1%
Koninklijike KPN NV 8.000 10/1/2010 180,000 193,044
Kraft Foods, Inc. 6.875 2/1/2038 115,000 119,392
Mohawk Industries, Inc. 6.125 1/15/2016 170,000 170,155
Nordic Telecommunication Co. Holdings 144A 8.875 5/1/2016 90,000 92,250
Rogers Wireless, Inc. 7.500 3/15/2015 45,000 49,211
SabMiller PLC 144A (a) 5.029 7/1/2009 75,000 75,242
Steel Dynamics, Inc. 144A 7.375 11/1/2012 60,000 60,300
Waste Management, Inc. 6.875 5/15/2009 100,000 102,667
----------
862,261
----------
Services--0.2%
Delhaize America, Inc. 6.500 6/15/2017 75,000 76,727
----------
Utilities--3.8%
Consumers Energy Co. 5.375 4/15/2013 140,000 139,613
Duke Energy Corp. 5.625 11/30/2012 96,000 99,637
Enel Finance International 144A 5.700 1/15/2013 100,000 101,528
Florida Power Corp. 6.350 9/15/2037 40,000 42,144
Jersey Central Power & Light Co. 6.400 5/15/2036 82,000 79,778
Kentucky Power Co. 144A 6.000 9/15/2017 210,000 209,459
Midamerican Energy Holdings Co. 6.500 9/15/2037 190,000 198,414
National Grid PLC 6.300 8/1/2016 75,000 76,567
Niagara Mohawk Power Corp. 7.750 10/1/2008 75,000 76,494
Nisource Finance Corp. 6.400 3/15/2018 120,000 119,730
PSEG Power LLC 7.750 4/15/2011 90,000 96,832
Public Service Co. of Colorado 7.875 10/1/2012 85,000 95,388
Virginia Electric Power Co. 5.950 9/15/2017 205,000 211,314
----------
1,546,898
----------
Total Corporate Bonds (Cost $8,208,951) 8,052,410
----------
Municipal--0.5%
Tobacco Settlement Authority Michigan (Cost $194,988) 7.309 6/1/2034 195,000 183,468
----------
Sovereign Bonds--1.3%
Argentina Bonos (a) 5.389 8/3/2012 270,000 153,900
Republic of Argentina 7.000 9/12/2013 290,000 255,200
Republic of South Africa 5.875 5/30/2022 120,000 117,383
----------
Total Sovereign Bonds (Cost $570,151) 526,483
----------
Yankee Bonds--0.5%
TNK-BP Finance SA 144A (Cost $198,332) 7.500 3/13/2013 200,000 199,500
----------
Pass-Thru Securities--15.6%
Agency Pass-Thru Securities--13.8%
FGLMC (TBA) (b) 5.500 1/14/2038 2,020,000 2,015,580
FHLMC 5.250 7/18/2011 600,000 630,524
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- --------------------------------------------------------------------------------------------------------------------------------
Agency Pass-Thru Securities (continued)
FNMA 5.500% 1/1/2034 USD 364,878 $ 365,149
FNMA (TBA) (b) 5.000 1/1/2021 2,115,000 2,063,447
FNMA (TBA) (b) 6.000 1/1/2036 560,000 568,575
----------
5,643,275
----------
Non-Agency Pass-Thru--1.8%
First Union-Chase Commercial Mortgage 5.950 6/15/2031 170,000 172,519
Goldman Sachs Mortgage Securities Corp., Cl. L 144A (a) 6.552 3/26/2020 140,000 131,600
Impac Secured Assets Corp. 2006-2 2A1 (a) 5.215 8/25/2036 310,081 291,558
Morgan Stanley Capital I 2006-IQ12 A1 5.257 12/15/2043 125,388 125,851
----------
721,528
----------
Total Pass-Thru Securities (Cost $6,303,212) 6,364,803
----------
U.S. Treasury Obligations--7.4%
U.S. Treasury Notes 4.875 5/31/2009 95,000 97,345
U.S. Treasury Notes 4.750 2/15/2010 564,000 583,475
U.S. Treasury Notes 4.500 11/15/2010 645,000 670,649
U.S. Treasury Notes 4.875 5/31/2011 180,000 189,703
U.S. Treasury Notes 4.250 11/15/2013 1,445,000 1,498,172
----------
Total U.S. Treasury Obligations (Cost $2,998,868) 3,039,344
----------
Foreign Denominated--40.3%
Argentina--0.4%
Republic of Argentina (a) 2.000 9/30/2014 ARS 520,000 159,798
----------
Brazil--0.5%
Republic of Brazil 12.500 1/5/2016 BRL 360,000 219,966
----------
Egypt--0.4%
Arab Republic of Egypt 0.000 7/18/2012 EGP 1,000,000 186,640
----------
Euro--15.6%
Autostrade SpA EMTN (a) 5.334 6/9/2011 EUR 300,000 438,661
Bes Finance (a) 4.500 3/16/2015 95,000 121,548
BNP Paribas (a) 5.190 4/29/2049 150,000 196,938
Carrefour SA EMTN 5.375 10/10/2014 50,000 72,530
Deutsche Republic 3.500 1/14/2016 100,000 138,361
Deutsche Republic 4.750 7/4/2034 230,000 341,650
E.ON International Finance EMTN 5.500 10/2/2017 130,000 191,786
FCE Bank PLC EMTN (a) 5.765 9/30/2009 880,000 1,168,688
Finmeccanica SpA 4.875 3/24/2025 80,000 99,861
GE Capital European Funding EMTN (a) 4.723 5/4/2011 370,000 537,211
HBOS Finance (a) 7.627 12/9/2049 125,000 189,129
Holcim Finance 4.375 6/23/2010 65,000 93,188
Household Finance Corp. EMTN 6.500 5/5/2009 100,000 148,195
HSBC (a) 5.369 12/24/2049 140,000 191,242
HVB Funding Trust VIII (a) 7.055 3/29/2049 130,000 191,105
Koninkijke KPN 4.750 1/17/2017 75,000 100,323
Lloyds TSB Bank (a) 6.350 10/29/2049 65,000 94,732
MPS Capital Trust I (a) 7.990 12/29/2049 60,000 92,460
National Westminster Bank PLC EMTN (a) 6.625 10/29/2049 70,000 104,109
Netherlands Government Bond 4.000 1/15/2037 470,000 614,642
RBS Capital Trust (a) 6.467 12/29/2049 65,000 94,698
Repsol International Finance EMTN 4.625 10/8/2014 100,000 136,361
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ----------------------------------------------------------------------------------------------------------------------------------
Euro (continued)
Schering-Plough 5.000% 10/1/2010 EUR 50,000 $ 72,976
Schering-Plough 5.375 10/1/2014 140,000 200,597
Societe Generale (a) 4.196 1/29/2049 150,000 190,336
Sogerim EMTN 7.250 4/20/2011 60,000 91,874
Swedish Government 3.000 7/12/2016 1,885,000 264,666
Telefonica Europe BV EMTN 5.125 2/14/2013 55,000 79,396
Veolia Environnement EMTN 4.875 5/28/2013 65,000 92,592
-----------
6,349,855
-----------
Japan--8.8%
Development Bank of Japan 1.050 6/20/2023 JPY 27,000,000 214,232
Japan Government 1.000 12/20/2012 117,000,000 1,048,119
Japan Government 1.100 12/10/2016 249,000,000 2,245,185
Japan Government 1.900 9/20/2023 10,000,000 89,881
-----------
3,597,417
-----------
Mexico--1.0%
Mexican Fixed Rate Bonds 8.000 12/19/2013 MXN 4,410,000 405,317
-----------
United Kingdom--13.6%
BAT International Finance PLC EMTN 6.375 12/12/2019 GBP 40,000 79,595
United Kingdom Gilt 4.250 3/7/2011 690,000 1,363,474
United Kingdom Gilt 8.000 9/27/2013 575,000 1,339,741
United Kingdom Gilt 5.000 9/7/2014 730,000 1,489,506
United Kingdom Gilt 4.000 9/7/2016 540,000 1,033,733
United Kingdom Gilt 4.250 6/7/2032 125,000 243,373
-----------
5,549,422
-----------
Total Foreign Denominated (Cost $15,814,144) 16,468,415
-----------
Total Bonds and Notes (Cost $38,095,497) 38,683,107
-----------
CONVERTIBLE PREFERRED STOCKS--0.2% Shares
-----------
FNMA 5.375% CVT Pfd (Cost $100,000) 1 84,549
-----------
SHORT-TERM INVESTMENTS--13.1% Par Value
-----------
Commercial Paper--1.0%
Cox Enterprises Inc. (c) (Cost $394,881) 5.58% 1/15/2008 USD 395,000 394,013
-----------
Federal Agency Bonds--11.4%
FHLB Discount Note (c) (d) (Cost $4,653,571) 4.20% 1/22/2008 4,665,000 4,653,571
-----------
U.S. Treasury Bill--0.7%
U.S. Treasury Bill (c) (d) (Cost $296,929) 2.90% 3/27/2008 299,000 296,929
-----------
Total Short Term Investments (Cost $5,345,381) 5,344,513
-----------
INVESTMENT OF CASH COLLATERAL--4.1% Shares
-----------
BlackRock Cash Strategies L.L.C. (e) (Cost $1,657,140) 1,657,140 1,657,140
-----------
TOTAL UNAFFILIATED INVESTMENTS (Cost $45,198,018) 45,769,309
-----------
AFFILIATED INVESTMENTS--3.3%
Dreyfus Institutional Preferred Plus Money Market Fund (f) (Cost $1,341,911) 1,341,911 1,341,911
-----------
TOTAL INVESTMENTS--115.4% (Cost $46,539,929) 47,111,220
-----------
LIABILITIES IN EXCESS OF OTHER ASSETS--(15.4%) (6,278,467)
-----------
NET ASSETS--100% $40,832,753
===========
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Notes to Schedule of Investment:
144A--Securities exempt form registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $2,883,322 or 7.1% of net
assets.
ARS--Argentine Peso
BRL--Brazilian Real
CVT--Convertible
EGP--Egyptian Pound
EMTN--Euro Medium term note
EUR--Euro
FGLMC--Federal Government Loan Mortgage Corporation
FHLB--Federal Home Loan Bank
FHLMC--Federal Home Loan Mortgage Company
FNMA--Federal National Mortgage Association
GBP--British Pound
JPY--Japanese Yen
MXN--Mexican New Peso
MYR--Malaysian Ringgit
NZD--New Zealand Dollar
PFD--Preferred
REIT--Real Estate Investment Trust
TBA--To be announced
THB--Thai Baht
USD--United States Dollar
(a) Variable Rate Security; rate indicated is as of December 31, 2007.
(b) Delayed delivery security.
(c) Rate denoted is yield to maturity.
(d) Denotes all or part of security segregated as collateral for delayed
delivery securities, futures and swap contracts.
(e) Illiquid security. At period end, the value of these securities amounted to
$1,657,140 or 4.1% of net assets.
(f) Affiliated money market fund.
At December 31, 2007, the Fund held the following futures contracts:
Unrealized
Underlying Face Appreciation/
Contract Position Expiration Date Amount at Value (Depreciation)
- -----------------------------------------------------------------------------------------------------------------------------
U.S. 2 Year Treasury Note (6 Contracts) Short 3/31/2008 1,261,500 $ (683)
U.S. 5 Year Treasury Note (39 Contracts) Long 3/31/2008 4,300,969 21,828
U.S. 10 Year Treasury Note (20 Contracts) Short 3/19/2008 2,267,812 (2,245)
U.S. Long Bond CBT (5 Contracts) Short 3/19/2008 581,875 3,022
EURO--Bobl (19 Contracts) Long 3/6/2008 2,993,025 (36,921)
EURO--Bund (21 Contracts) Long 3/6/2008 3,466,527 (80,591)
--------
$(95,590)
========
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Schedule of Investments -- December 31, 2007
At December 31, 2007, the Fund held the following forward exchange contracts:
Local Unrealized
Principal Contract Value at Amount Appreciation
Contracts to Deliver Amount Value Date December 31, 2007 to Receive (Depreciation)
- ------------------------------------------------------------------------------------------------------------------------------
Euro 510,000 3/19/2008 $ 744,826 $ 753,168 $ 8,342
Euro 40,000 3/19/2008 58,418 59,072 654
Euro 300,000 3/19/2008 438,133 443,307 5,174
Euro 3,788,000 3/19/2008 5,532,157 5,595,846 63,689
British Pounds 400,000 3/19/2008 792,478 809,820 17,342
British Pounds 2,385,000 3/19/2008 4,725,148 4,829,434 104,286
British Pounds 190,000 3/19/2008 376,427 379,942 3,515
Japanese Yen 224,950,000 3/19/2008 2,034,293 2,036,115 1,822
Japanese Yen 15,440,000 3/19/2008 139,629 139,823 194
Japanese Yen 177,810,000 3/19/2008 1,607,992 1,609,767 1,775
Mexican Peso 4,560,000 3/19/2008 418,118 418,675 557
New Zealand Dollar 510,000 3/19/2008 387,133 395,872 8,739
Swedish Krona 1,850,000 3/19/2008 286,442 289,026 2,584
----------- ----------- --------
$17,541,194 $17,759,867 $218,673
=========== =========== ========
Local Unrealized
Principal Contract Value at Amount Appreciation
Contracts to Receive Amount Value Date December 31, 2007 to Deliver (Depreciation)
- -------------------------------------------------------------------------------------------------------------------------------
Argentine Peso 320,000 1/7/2008 $ 101,559 $ 101,846 $ (287)
Australian Dollar 460,000 3/19/2008 401,061 399,045 2,016
Euro 400,000 3/19/2008 584,177 590,720 (6,543)
Euro 220,000 3/19/2008 321,297 323,917 (2,620)
Euro 90,000 3/19/2008 131,440 132,174 (734)
Hungary Forint 17,700,000 1/7/2008 102,454 103,328 (874)
Indonesian Rupiah 1,810,000,000 3/19/2008 192,297 193,749 (1,452)
Israeli Shekel 390,000 1/7/2008 101,250 101,367 (117)
Japanese Yen 89,560,000 3/19/2008 809,919 810,644 (725)
Malaysian Ringgit 660,000 3/19/2008 200,172 200,730 (558)
Norwegian Krone 2,500,000 3/19/2008 459,272 458,127 1,145
Norwegian Krone 2,100,000 3/19/2008 385,789 385,201 588
Russian Ruble 2,500,000 1/9/2008 101,809 102,493 (684)
Russian Ruble 9,660,000 3/19/2008 393,099 390,271 2,828
Russian Ruble 4,840,000 3/19/2008 196,957 195,540 1,417
Saudi Arabia Riyal 540,000 3/25/2008 144,833 144,733 100
Saudi Arabia Riyal 90,000 3/25/2008 24,139 24,194 (55)
Turkish Lira 120,000 1/7/2008 102,723 100,376 2,347
----------- ----------- --------
$ 4,754,247 $ 4,758,455 $ (4,208)
=========== =========== ========
The Fund held the following cross currency contracts at December 31, 2007:
Unrealized
Value at In Value at Contract Appreciation
Contracts to Deliver December 31, 2007 Exchange For December 31, 2007 Value Date (Depreciation)
- -------------------------------------------------------------------------------------------------------------------------------
British Pounds $ 396,239 Swiss Franc $ 402,226 3/19/2008 $ 5,987
Euro 200,132 Polish Zloty 198,760 3/19/2008 (1,372)
Euro 408,924 Swedish Krona 406,974 3/19/2008 (1,950)
New Zealand Dollar 850,176 Australian Dollar 860,955 3/19/2008 10,779
---------- ---------- --------
$1,855,471 $1,868,915 $ 13,444
========== ========== ========
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Schedule of Investments -- December 31, 2007
- --------------------------------------------------------------------------------
At December 31, 2007, the Fund held the following open swap agreements:
Unrealized
Credit Default Swaps Reference Buy/Sell (Pay)/Receive Expiration Notional Appreciation/
Counterparty Entity Protection Fixed Rate (%) Date Amount (Depreciation)
- ------------------------------------------------------------------------------------------------------------------------------------
Citibank Altria Group, 7%, 11/4/2013 Buy (0.270) 12/20/2011 720,000 USD $ 141
Citibank Northern Tobacco, 5%, 6/1/2046 Sell 1.350 12/20/2011 360,000 USD (16,368)
Citibank Southern California Tobacco, 5%, 6/1/2037 Sell 1.350 12/20/2011 360,000 USD (16,368)
Deutsche Capital One Financial, 6.25%, 11/15/2013 Buy (2.530) 12/20/2012 140,000 USD 739
Deutsche Northern Rock, 3.875%, 3/28/2008 Sell 7.000 3/20/2008 1,190,000 USD 10,017
Goldman, Sachs & Co. Autozone, 5.875%, 10/15/2012 Buy (0.620) 6/20/2017 570,000 USD (1,449)
Goldman, Sachs & Co. Capital One Financial, 6.25%, 11/15/2013 Buy (2.350) 12/20/2012 120,000 USD 1,535
Goldman, Sachs & Co. Capital One Financial, 6.25%, 11/15/2013 Buy (2.550) 12/20/2012 43,000 USD 191
Goldman, Sachs & Co. Dow Jones CDX.NA.IG.8 Index Buy (2.750) 6/20/2012 450,000 USD 552
JPMorgan Block Financial, 5.125%, 10/30/2014 Buy (1.900) 9/20/2012 360,000 USD 9,348
JPMorgan Block Financial, 5.125%, 10/30/2014 Buy (2.250) 12/20/2012 10,000 USD 120
JPMorgan Capital One Financial, 6.25%, 11/15/2013 Buy (2.350) 12/20/2012 107,000 USD 1,369
JPMorgan Commercial Mortgage Backed,
2007-3, AAA Index Buy (0.080) 12/13/2049 1,250,000 USD 17,671
JPMorgan Dow Jones CDX.NA.HY.8 Index Buy (2.750) 6/20/2012 450,000 USD 5,687
JPMorgan Dow Jones CDX.NA.HY.8 Index Buy (2.750) 6/20/2012 900,000 USD (13,403)
JPMorgan Dow Jones CDX.NA.HY.9 Index Buy (3.750) 12/20/2012 130,000 USD 4,419
JPMorgan Dow Jones CDX.NA.HY.9 Index Buy (3.750) 12/20/2012 820,000 USD 404
JPMorgan iTRAXX Europe Senior Financials Series 8 Buy (0.450) 12/20/2012 2,125,000 USD 19,719
JPMorgan Republic of the Philippines,
10.625%, 3/16/2025 Buy (2.480) 9/20/2017 190,000 USD (5,715)
JPMorgan Russian Federation, 7.5%, 3/31/2030 Sell 0.670 8/20/2012 210,000 USD (1,246)
JPMorgan Russian Federation, 7.5%, 3/31/2030 Sell 0.800 8/20/2012 380,000 USD (140)
Merrill Lynch State Street, 7.65%, 6/15/2010 Buy (0.545) 12/20/2012 140,000 USD (621)
Morgan Stanley Block Financial, 5.125%, 10/30/2014 Buy (2.325) 12/20/2012 40,000 USD 356
Morgan Stanley Commerical Mortgage Backed,
2007-3, AAA Index Buy (0.080) 12/13/2049 690,000 USD 17,049
Morgan Stanley Verizon Communications, 4.9%, 9/15/2015 Buy (0.410) 3/20/2018 400,000 USD 894
--------
$ 34,901
========
Unrealized
Interest Rate Swaps Reference Pay/Receive (Pay)/Receive Expiration Notional Appreciation/
Counterparty Entity Floating Rate Fixed Rate (%) Date Amount (Depreciation)
- ------------------------------------------------------------------------------------------------------------------------------
JPMorgan EUR--6 Month Euribor Receive (4.1595) 1/19/2012 1,230,000 EUR $(14,387)
JPMorgan JPY--6 Month Yenibor Pay 1.3600 1/19/2012 219,000,000 JPY 27,324
JPMorgan MYR--3 Month Kilbor Pay 4.1600 10/31/2011 838,925 MYR 1,660
JPMorgan NZD--3 Month Libor Pay 8.0475 6/21/2012 500,000 NZD (2,698)
JPMorgan THB--6 Month Bibor Pay 5.1800 11/2/2011 8,464,000 THB 5,987
JPMorgan USD--6 Month Libor Pay 4.8975 8/24/2009 5,820,000 USD 162,202
JPMorgan NZD--3 Month Libor Pay 7.8750 5/18/2010 2,850,000 NZD (32,230)
UBS AG JPY--6 Month Yenibor Pay 0.8775 5/11/2008 798,000,000 JPY (3,409)
UBS AG JPY--6 Month Yenibor Pay 2.5125 6/6/2026 159,000,000 JPY 76,180
--------
$220,629
========
The accompanying notes are an integral part of the financial statements.
13
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Schedule of Investments -- December 31, 2007
- --------------------------------------------------------------------------------
At December 31, 2007, the Fund held the following forward volatility options.
Expiration Unrealized
Counterparty Description Date Notional Amount ($) Appreciation
- -----------------------------------------------------------------------------------------------------------------------------------
Goldman, Sachs & Co. OTC contract to purchase a 2 year expiration
straddle (call and put) on a USD 10 Year Fixed/Floating
interest rate swap on 4/21/2008 for a premium of 7.04%
of notional. The option strikes will be determined on
the expiration date of the foward agreement using the
10 Year USD interest rate swap rate, 6 month forward. 4/21/2010 780,000 USD $ 5,525
=======
At December 31, 2007, the country allocation was as follows:
Percentage of
Country Allocation Investments
- ----------------------------------------------------------
Argentina 1.2%
Brazil 0.5
Egypt 0.4
Euro 11.5
Japan 9.2
Mexico 0.9
South Africa 0.3
Sweden 0.6
U.K. 16.9
U.S. 58.5
-----
100.0%
The accompanying notes are an integral part of the financial statements.
14
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Statement of Assets and Liabilities
December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Assets
Investment in securities:
Unaffiliated issuers, at value (Note 1A) (cost $45,198,018) $45,769,309
Affiliated issuers, at value (Note 1A) (cost $1,341,911) (Note1H) 1,341,911
Dividends and interest receivable 409,147
Unrealized appreciation on swap contracts--(Note 6) 363,564
Unrealized appreciation on forward foreign currency exchange contracts--(Note 6) 246,032
Unrealized appreciation on forward rate swaptions 5,525
Unamortized Swap premium paid 172,420
Receivable for investments sold 235,226
Receivable for variation margin on open futures contracts--Note 6 565
Prepaid expenses 7,047
-----------
Total assets 48,550,746
Liabilities
Payable for investments purchased $4,601,461
Payable for securities lending collateral investment (Note 7) (Note 10) 1,657,140
Distributions payable 123,554
Due to custodian--Foreign currency (cost $900,073) 913,101
Due to custodian 167,359
Unamortized Swap premium received 15,375
Unrealized depreciation on swap contracts--(Note 6) 108,034
Unrealized depreciation on forward currency exchange contracts--(Note 6) 17,971
Accrued professional fees 72,825
Accrued accounting, administration, custody fees and transfer agent (Note 2) 37,948
Accrued trustees' fees expenses (Note 2) 1,542
Accrued shareholder reporting expense (Note 2) 1,100
Accrued chief compliance officer fees (Note 2) 236
Other accrued expenses and liabilities 347
----------
Total liabilities 7,717,993
-----------
Net Assets $40,832,753
===========
Net Assets consist of:
Paid-in capital $46,270,052
Accumulated net realized loss (6,341,069)
Distributions in excess of net investment income (54,167)
Net unrealized appreciation 957,937
-----------
Total Net Assets $40,832,753
===========
Shares of beneficial interest outstanding 2,179,806
===========
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 18.73
===========
The accompanying notes are an integral part of the financial statements.
15
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Statement of Operations
For the Year Ended December 31, 2007
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Interest income (net of foreign withholding tax of $1,651) $2,042,907
Dividend income from affiliated investments (Note 1H) 40,205
Security lending income (Note 7) (Note 10) 9,151
Dividend income 5,375
----------
Net investment income 2,097,638
Expenses
Investment advisory fee (Note 2) $ 161,717
Accounting, administration and custody fees (Note 2) 111,728
Professional fees 77,896
Registration fees 15,555
Miscellaneous expenses 2,185
Administrative service fee (Note 2) 105
---------
Total expenses 369,186
Deduct:
Waiver of investment advisory fee (Note 2) (105,228)
---------
Net expenses 263,958
----------
Net investment income 1,833,680
----------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (233,030)
Financial futures transactions 22,324
Written options transactions 35,387
Foreign currency transactions and forward currency exchange transactions 41,851
Swap transactions (133,717)
---------
Net realized gain (loss) (267,185)
Change in unrealized appreciation (depreciation) on:
Investments (274,354)
Financial futures contracts (52,997)
Foreign currency translation and forward currency exchange contracts 151,618
Swap contracts 320,446
---------
Change in net unrealized appreciation (depreciation) 144,713
----------
Net realized and unrealized gain (loss) (122,472)
----------
Net Increase in Net Assets from Operations $1,711,208
==========
The accompanying notes are an integral part of the financial statements.
16
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the For the
Year Ended Year Ended
December 31, 2007 December 31, 2006
- ----------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income $ 1,833,680 $ 2,287,595
Net realized gain (loss) (267,185) (947,015)
Change in net unrealized appreciation (depreciation) 144,713 1,141,527
----------- ------------
Net increase (decrease) in net assets from investment operations 1,711,208 2,482,107
----------- ------------
Distributions to Shareholders (Note 1C)
From net investment income (1,391,614) (1,680,731)
----------- ------------
Total distributions to shareholders (1,391,614) (1,680,731)
----------- ------------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares 1,458,439 2,087,125
Value of shares issued to shareholders in reinvestment of distributions 1,231,978 1,379,153
Cost of shares redeemed (3,837,183) (32,775,521)
----------- ------------
Net increase (decrease) in net assets from Fund share transactions (1,146,766) (29,309,243)
----------- ------------
Total Increase (Decrease) in Net Assets (827,172) (28,507,867)
Net Assets
At beginning of year 41,659,925 70,167,792
----------- ------------
At end of year [including distributions in excess of
net investment income of $54,167 and $315,926, respectively] $40,832,753 $ 41,659,925
=========== ============
The accompanying notes are an integral part of the financial statements.
17
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Financial Highlights
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------
2007 2006 2005 2004 2003
------- ------- ------- ------- --------
Net Asset Value, Beginning of Year $ 18.60 $ 18.28 $ 19.64 $ 20.67 $ 19.43
------- ------- ------- ------- --------
From Operations:
Net investment income* (a) 0.85 0.70 0.75 0.83 0.75
Net realized and unrealized
gain (loss) on investments (0.06)(d) 0.22 (0.04) 0.20 0.49
------- ------- ------- ------- --------
Total from investment operations 0.79 0.92 0.71 1.03 1.24
------- ------- ------- ------- --------
Less Distributions to Shareholders:
From net investment income (0.66) (0.60) (2.07) (2.06) --
------- ------- ------- ------- --------
Total distributions to shareholders (0.66) (0.60) (2.07) (2.06) --
------- ------- ------- ------- --------
Net Asset Value, End of Year $ 18.73 $ 18.60 $ 18.28 $ 19.64 $ 20.67
======= ======= ======= ======= ========
Total Return (b) 4.30% 5.09% 3.64% 4.98% 6.38%
Ratios/Supplemental Data:
Expenses (to average daily net assets)*(c) 0.65% 0.65% 0.65% 0.65% 0.65%
Net Investment Income (to average daily net assets)* 4.54% 3.79% 3.75% 3.86% 3.74%
Portfolio Turnover (e)(f)
Inclusive 274% 152% 181% 166% 222%
Exclusive 128% 122% 167% 130% --
Net Assets, End of Year (000's omitted) $40,833 $41,660 $70,168 $72,241 $146,186
* For the periods indicated, the investment adviser voluntarily agreed not to
impose a portion of its investment advisory fee payable to the Portfolio and/
or reimbursed the Fund for a portion of its operating expenses. If this
voluntary action had not been taken, the investment income per share and the
ratios without waivers and reimbursement would have been:
Net investment income per share (a) $ 0.80 $ 0.67 $ 0.73 $ 0.83 $ 0.74
Ratios (to average daily net assets):
Expenses (c) 0.91% 0.81% 0.77% 0.68% 0.70%
Net investment income 4.28% 3.64% 3.63% 3.83% 3.69%
(a) Calculated based on average shares outstanding,
(b) Total return would have been lower in the absence of expense waivers.
(c) Includes the Fund's share of the The Standish Mellon Global Fixed Income
Portfolio's (the "portfolio") allocated expenses.
(d) Amounts include litigation proceeds received by the Fund of $0.01 for the
year ended December 31, 2007.
(e) On October 25, 2007, the Fund, which owned 100% of the Portfolio on such
date, withdrew entirely from the Portfolio and received the Portfolio's
securties and cash in excahnge for its interests in the Portfolio. Effective
October 26, 2007, the Fund began investing directly in the securities in
which the Portfolio had invested. Portfolio turnover represents activity of
both the Fund and the Portfolio for the year. The amounts shown for
2003-2006 are ratios for the Portfolio.
(f) Beginning in 2004, the portfolio turnover rate is presented inclusive and
exclusive of the effect of rolling forward purchase commitments.
The accompanying notes are an integral part of the financial statements.
18
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
(1) Organization and Significant Accounting Policies:
Mellon Institutional Funds Investment Trust (the "Trust") is organized as a
Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended, as an open-end, management investment company.
Standish Mellon Global Fixed Income Fund (the "Fund") is a separate
non-diversified investment series of the Trust.
The objective of the Fund is to maximize total return while realizing a
market level of income consistent with preserving principal and liquidity.
The Fund seeks to achieve its objective by investing, under normal
circumstances, at least 80% of its net assets in U.S. dollar and non-U.S.
dollar denominated fixed income securities of governments and companies
located in various countries, including emerging markets.
Effective May 1, 2007, the Board approved Fund strategy changes to ease
limits on investments in emerging markets and high yield investments and
lower the minimum average credit quality of the Fund. Specifically, the
changes: (i) increased the limitations on high yield exposure from 15% to
25% of Fund's total assets; (ii) changed the description of the Fund's
average credit quality from a "target in the range of A to AA/Aa" to "a
minimum of A/A3" and (iii) increased the general limitation on investing in
issuers located in emerging markets from 10% to 25% of the total assets of
the Fund.
Prior to October 26, 2007, the Fund had invested substantially all of its
investable assets in Standish Mellon Fixed Income Portfolio (the
"Portfolio"), a subtrust of the Mellon Institutional Funds Master Portfolio,
a New York trust. The Portfolio had investment objectives, policies and
limitations substantially identical to those of the Fund. On October 25,
2007, the Fund, which owned 100% of the Portfolio on such date, withdrew
entirely from the Portfolio and received the Portfolio's assets, including
securities and cash, and assumed its stated liabilities, in exchange for its
interests in the Portfolio. This redemption in kind transaction was effected
based upon the net assets value of the Fund's interests in the Portfolio.
Effective October 26, 2007, the Fund began investing directly in securities.
Accordingly, the financial statements of the Fund and Portfolio have been
presented on a consolidated basis, and represent all the activities of both
the Fund and the Portfolio.
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in accordance with accounting principles generally
accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those
estimates.
A. Investment security valuations
Fund shares are valued as of the close of regular trading (normally 4:00
p.m., Eastern Time) on each day that the New York Stock Exchange ("NYSE") is
open. Securities are valued at the last sale prices on the exchange or
national securities market on which they are primarily traded. Securities
not listed on an exchange or national securities market, or securities for
which there were no reported transactions, are valued at the last quoted bid
price. Securities that are fixed income securities, other than short-term
instruments with less than sixty days remaining to maturity, for which
market prices are readily available, are valued at their current market
value on the basis of quotations, which may be furnished by a pricing
service or dealers in such securities. Securities (including illiquid
securities) for which quotations are not readily available are valued at
their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Trustees. With respect to
any portion of the Fund's assets that are invested in one or more open-end
registered investment companies ("RICs"), the Fund's net asset value ("NAV")
will be calculated based upon the NAVs of such RICs.
Exchange traded options and futures are valued at the settlement price
determined by the relevant exchange. Non-exchange traded derivatives are
normally valued on the basis of quotes obtained from brokers and dealers,
including counterparties, or pricing services.
Because foreign markets may be open at different times than the NYSE, the
value of the Fund's shares may change on days when shareholders are not able
to buy or sell them. Many securities markets and exchanges outside the U.S.
close prior to the close of the NYSE and therefore the closing prices for
securities in such markets or on such exchanges may not fully reflect the
events that occur after such close but before the close of the NYSE.
Short-term instruments with less than sixty days remaining to maturity are
valued at amortized cost, which approximates market value. If the Fund
acquires a short-term instrument with more than sixty days remaining to its
maturity, it is valued at current market value until the sixtieth day prior
to maturity and then is valued at amortized cost based upon the value on
such date unless the Trustees determine during such sixty-day period that
amortized cost does not represent fair value.
Reduced investor demand for mortgage loans and mortgage-related securities
resulting from delinquencies and losses on residential mortgage loans
(especially subprime and second-lien mortgage loans) and related market
events have negatively impacted the performance and market value of certain
mortgage-related investments and other fixed income securities, and
increased investor yield requirements. This in turn has resulted in limited
liquidity in the secondary market for such securities, adversely affecting
the market value of mortgage-related securities and resulting in higher than
usual volatility in the credit markets generally. It is possible that such
limited liquidity in the secondary market for mortgage-related securities,
and the related credit market volatility, could continue or worsen. To the
extent that the market for securities in the Fund's portfolio becomes
illiquid, the Fund might realize upon sale of an affected holding
substantially less than the amount at which the Fund had previously been
valuing the security in calculating its net asset value, and the Fund may
incur substantial losses as a result.
19
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Notes to Financial Statements
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B. Securities transactions and income
Securities transactions are recorded as of the trade date. Interest income
is determined on the basis of coupon interest earned, adjusted for accretion
of discount or amortization of premium using the yield-to-maturity method on
long-term debt securities and short-term securities with greater than sixty
days to maturity when required for federal income tax purposes. Dividend
income is recorded on the ex-dividend date. Realized gains and losses from
securities sold are recorded on the identified cost basis. Dividends
representing a return of capital are reflected as a reduction of cost.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments. Net realized gains and losses on foreign currency
transactions represent gains and losses on disposition of foreign currencies
and forward foreign currency exchange contracts, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of investment income and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent amounts actually received or paid.
C. Distributions to shareholders
Distributions to shareholders are recorded on the ex-dividend date. The
Fund's distributions from capital gains, if any, after reduction of capital
losses will be declared and distributed at least annually. Dividends from
net investment income and distributions from capital gains, if any, are
reinvested in additional shares of the Fund unless the shareholder elects to
receive them in cash.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from accounting principles generally
accepted in the United States of America. These differences, which may
result in reclassifications, are primarily due to wash sales, post-October
losses, amortization of swap premium, timing of recognition of realized and
unerealized appreciation and depreciation on futures contracts and differing
treatments for foreign currency transactions.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications among undistributed net
investment income (loss), accumulated net realized gain (loss) and paid in
capital. Undistributed net investment income (loss) and accumulated net
realized gain (loss) on investments may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income or
gain remaining at fiscal year end is distributed in the following year.
Section 988 of the Internal Revenue Code ("Code") provides that gains or
losses on certain transactions attributable to fluctuations in foreign
currency exchange rates must be treated as ordinary income or loss. For
financial statement purposes, such amounts are included in net realized
gains or losses.
D. Foreign currency transactions
The Fund maintains its books and records in U.S. dollars. Investment
security valuations, other assets, and liabilities initially expressed in
foreign currencies are converted into U.S. dollars based upon current
currency exchange rates. Purchases and sales of foreign investment
securities and income and expenses are converted into U.S. dollars based
upon currency exchange rates prevailing on the respective dates of such
transactions.
E. Foreign investment risk
There are certain additional risks involved in investing in foreign
securities that are not inherent in investments in domestic securities.
These risks may involve adverse political and economic developments,
including the possible imposition of capital controls or other foreign
governmental laws or restrictions. In addition, the securities of some
foreign companies and securities markets are less liquid and at times may be
more volatile than securities of comparable U.S. companies and U.S.
securities markets. The risks described above apply to an even greater
extent to investments in emerging markets. The securities markets of
emerging countries are generally smaller, less developed, less liquid, and
more volatile than the securities markets of the U.S. and developed foreign
markets.
F. Commitments and contingencies
In the normal course of business, the Fund may enter into contracts and
agreements that contain a variety of representations and warranties, which
provide general indemnifications. The maximum exposure to the Fund under
these arrangements is unknown, as this would involve future claims that may
be made against the Fund that have not yet occurred. However, based on
experience, the Fund expects the risks of loss to be remote.
20
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Notes to Financial Statements
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G. Expenses
The majority of expenses of the Trust are directly identifiable to an
individual fund. Expenses which are not readily identifiable to a specific
fund are allocated among funds of the Trust taking into consideration, among
other things, the nature and type of expense and the relative size of the
funds.
H. Affiliated issuers
Affiliated issuers are investment companies advised by Standish Mellon Asset
Management Company LLC ("Standish Mellon"), a wholly-owned subsidiary of The
Bank of New York Mellon Corporation ("BNY Mellon"), or its affiliates.
I. New Accounting Requirements
On September 20, 2006, the Financial Accounting Standards Board ("FASB")
released Statement of Financial Accounting Standards No. 157 "Fair Value
Measurements" ("FAS 157"). FAS 157 establishes an authoritative definition
of fair value, sets out a framework for measuring fair value, and requires
additional disclosures about fair-value measurements. The application of FAS
157 is required for fiscal years beginning after November 15, 2007 and
interim periods within those fiscal years. At this time, management is
evaluating the implications of FAS 157 and its impact, if any, in the
financial statements has not yet been determined.
(2) Investment Advisory Fee and Other Transactions with Affiliates:
The investment advisory fee paid to Standish Mellon for overall investment
advisory, administrative services, and general office facilities is paid
monthly at the annual rate of 0.40% of the Fund's average daily net assets.
Standish Mellon voluntarily agreed to limit the total annual operating
expenses of the Fund (excluding brokerage commissions, taxes and
extraordinary expenses) to 0.65% of the Fund's average daily net assets.
Pursuant to this agreement, for the year ended December 31, 2007, Standish
Mellon voluntarily waived a portion of its investment advisory fee in the
amount of $105,228. This agreement is voluntary and temporary and may be
discontinued or revised by Standish Mellon at any time.
The Trust entered into an agreement with Dreyfus Transfer, Inc., a wholly
owned subsidiary of The Dreyfus Corporation, a wholly owned subsidiary of
BNY Mellon and an affiliate of Standish Mellon, to provide personnel and
facilities to perform transfer agency and certain shareholder services for
the Fund. For these services, the Fund pays Dreyfus Transfer, Inc. a fixed
fee plus per account and transaction based fees, as well as, out-of-pocket
expenses. Pursuant to this agreement the Fund was charged $5,977, for the
year ended December 31, 2007.
The Trust has entered into an agreement with Mellon Bank, N.A. ("Mellon
Bank"), a wholly owned subsidiary of BNY Mellon and an affiliate of Standish
Mellon, to provide custody, administration and fund accounting services for
the Fund. For these services the Fund pays Mellon Bank a fixed fee plus
asset and transaction based fees, as well as out-of-pocket expenses.
Pursuant to this agreement the Fund was charged $105,751 for the year ended
December 31, 2007.
The Trust, and previously the Portfolio, also entered into an agreement
with Mellon Bank to perform certain securities lending activities and to
act as the Fund's lending agent. Mellon Bank receives an agreed upon
percentage of the net lending revenues. Pursuant to this agreement, the
Fund was charged $3,924 for the year ended December 31, 2007. See Note 7
for further details.
The Trust, and previously the Portfolio, entered into two separate
agreements with The Bank of New York that enables the Fund, and other funds
in the Trust, to borrow, in the aggregate, (i) up to $35 million from a
committed line of credit and (ii) up to $15 million from an uncommitted line
of credit. Interest is charged to each participating fund based on its
borrowings at a rate equal to the Federal Funds effective rate plus 1/2 of
1%. The participating funds also pay an annual fee, computed at a rate of
0.020 of 1% of the committed and uncommitted amounts and allocated ratably
to the participating funds. In addition, a facility fee, computed at an
annual rate of 0.060 of 1% on the committed amount, is allocated ratably
among the participating funds at the end of each quarter. Pursuant to these
agreements, the Fund was charged $2,277 for the year ended December 31,
2007, which amount is included in miscellaneous expenses on the statement of
operations. See Note 9 for further details.
The Trust reimburses BNY Mellon Asset Management for a portion of the salary
of the Trust's Chief Compliance Officer. For the year ended December 31,
2007, the Fund was charged $4,294, which amount is included in miscellaneous
expenses in the statement of operations. No other director, officer or
employee of Standish Mellon or its affiliates receives any compensation from
the Trust or the Fund for serving as an officer or Trustee of the Trust. The
Fund pays each Trustee who is not a director, officer or employee of
Standish Mellon or its affiliates an annual fee and a per meeting fee as
well as reimbursement for travel and out-of-pocket expenses. In addition,
the Trust pays the legal fees for the independent counsel of the Trustees.
21
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Notes to Financial Statements
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The Trust has contracted Mellon Investor Services LLC, a wholly owned
subsidiary of BNY Mellon and an affiliate of Standish Mellon, to provide
printing and fulfillment services for the Fund. Pursuant to this agreement,
the Fund was charged $400, which amount is included in miscellaneous
expenses in the statement of operations for the year ended December 31,
2007.
The Fund may pay administrative service fees. These fees are paid to
affiliated or unaffiliated retirement plans, omnibus accounts and platform
administrators and other entities ("Plan Administrators") that provide
record keeping and/or other administrative support services to accounts,
retirement plans and their participants. As compensation for such services,
the Fund may pay each Plan Administrator an administrative service fee in an
amount of up to 0.15% (on an annualized basis) of the Fund's average daily
net assets attributable to Fund shares that are held in accounts serviced by
such Plan Administrator. The Fund's adviser or its affiliates may pay
additional compensation from their own resources to Plan Administrators and
other entities for administrative services, as well as in consideration of
marketing or other distribution-related services. These payments may provide
an incentive for these entities to actively promote the Fund or cooperate
with the distributor's promotional efforts. For the year ended December 31,
2007, the Fund was charged $101 for fees payable to BNY Mellon Wealth
Management.
Effective June 30, 2007, MBSC Securities Corporation ("MBSC"), a wholly
owned subsidiary of BNY Mellon and affiliate of TBCAM, replaced Mellon Funds
Distributor, L.P. as the Fund's principal distributor.
Effective July 1, 2007, Mellon Financial Corporation ("MFC") and The Bank of
New York Company, Inc. ("BNY") each merged into BNY Mellon, with BNY Mellon
being the surviving entity of each merger.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the year ended December 31, 2007 were as follows:
Purchases Sales
----------- -----------
U.S. Government Securities $35,065,776 $33,626,679
=========== ===========
Non-U.S. Government Securities $14,651,158 $22,900,517
=========== ===========
(4) Shares of Beneficial Interest:
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest having a par value of
one cent per share. Transactions in Fund shares were as follows:
For the For the
Year Ended Year Ended
December 31, 2007 December 31, 2006
----------------- -----------------
Shares sold 77,048 112,735
Shares issued to shareholders in
reinvestment of distributions 66,120 74,640
Shares redeemed (203,625) (1,786,209)
-------- ----------
Net increase (decrease) (60,457) (1,598,834)
======== ==========
At December 31, 2007, two shareholders of record, in the aggregate, held
approximately 93.5% of the total outstanding shares of the Fund. Investment
activities of these shareholders could have a material impact on the Fund.
The Fund imposes a redemption fee of 2% of the net asset value of the
shares, with certain exceptions, which are redeemed or exchanged less than
30 days from the day of their purchase. The redemption fee is paid directly
to the Fund, and is designed to offset brokerage commissions, market impact,
and other costs associated with short-term trading in the Fund. The fee does
not apply to shares that were acquired through reinvestment of
distributions. For the fiscal years ended December 31, 2007 and December 31,
2006, the Fund did not assess any redemption fees.
(5) Federal Taxes:
Each year, the Fund intends to qualify as a "regulated investment company"
under Subchapter M of the Code. As such and by complying with the applicable
provisions of the Code regarding the sources of its income, the timely
distributions of its income to its shareholders, and the diversification of
its assets, the Fund will not be subject to U.S. federal income tax on its
investment company taxable income and net capital gain which are distributed
to shareholders.
22
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Notes to Financial Statements
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During the current year, the Fund adopted FASB Interpretation No. 48
"Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides
guidance for how uncertain tax positions should be recognized, measured,
presented and disclosed in the financial statements. FIN 48 requires the
evaluation of tax positions taken or expected to be taken in the course of
preparing the Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority,
and valuing the benefit management believes it would recover. Management
believes the Fund will realize the full benefit of the tax positions it has
taken and, therefore, no provision has been recorded in the accompanying
financial statements.
The tax basis components of distributable earnings and the federal tax cost
as of December 31, 2007 were as follows:
Cost for federal income tax purposes $44,917,900
===========
Gross unrealized appreciation $ 990,328
Gross unrealized depreciation (454,148)
-----------
Net unrealized appreciation (depreciation) $ 536,180
===========
Undistributed ordinary income $ 173,647
Undistributed capital gains --
-----------
Total distributable earnings $ 173,647
===========
The tax character of distributions paid during the fiscal years ended
December 31, 2007 and December 31, 2006, were as follows:
2007 2006
---------- ----------
Ordinary income $1,391,614 $1,680,731
========== ==========
At December 31, 2007, the Fund for federal income tax purposes, has capital
loss carryovers which will reduce the Fund's taxable income arising from net
realized gain on investments, if any, to the extent permitted by the
Internal Revenue Code and thus will reduce the amount of distributions to
shareholders which would otherwise be necessary to relieve the Fund of any
liability for federal income tax. Such capital loss carryovers are as
follows:
Capital Loss
Carry Over Expiration Date
---------- ---------------
$2,034,497 12/31/2008
408,689 12/31/2009
3,621,061 12/31/2010
200,502 12/31/2014
----------
$6,264,749
During 2007, the Fund utilized $211,573 in capital loss carryovers. At
December 31, 2007, $1,834,072 of capital loss carryovers expired. The Fund
also treated as expired $13,518,811 of capital losses due to limitations
imposed by the Internal Revenue Service Code related to share ownership
activity. It is uncertain whether the Fund will be able to realize the
benefits of the remaining capital loss carryovers before they expire and
utilization of the remaining capital loss carryovers could be subject to
future limitations imposed by the Internal Revenue Code related to share
ownership activity.
The Fund elected to defer to its fiscal year ending December 31, 2008,
$19,247 of capital losses during the period November 1, 2007 to December 31,
2007.
(6) Financial Instruments:
In general, the following instruments are used for hedging purposes as
described below. However, these instruments may also be used to seek to
enhance potential gain in circumstances where hedging is not involved.
The Fund may trade the following financial instruments with off-balance
sheet risk:
Options
Call and put options give the holder the right to purchase or sell a
security or currency or enter into a swap arrangement on a future date at a
specified price. The Fund, and previously the Portfolio, may use options to
seek to hedge against risks of market exposure and changes in security
prices and foreign currencies, as well as to seek to enhance returns.
Writing puts and buying calls tend to increase the Fund's exposure to the
underlying instrument. Buying puts and writing calls tend to decrease the
Fund's exposure to the underlying instrument, or hedge other Fund
investments. Options, both held and written by the Fund, are reflected in
the accompanying Statement of Assets and Liabilities at market value. The
23
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
underlying face amount at value of any open purchased option is shown in the
Schedule of Investments. This amount reflects each contract's exposure to
the underlying instrument at year end. Losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contract, or if the counterparty does not perform under the
contract's terms.
Premiums received from writing options which expire are treated as realized
gains. Premiums received from writing options which are exercised or are
closed are added to or offset against the proceeds or amount paid on the
transaction to determine the realized gain or loss. Realized gains and
losses on purchased options are included in realized gains and losses on
investment securities, except purchased options on foreign currency which
are included in realized gains and losses on foreign currency transactions.
If a put option written by the Fund is exercised, the premium reduces the
cost basis of the securities purchased by the Fund. The Fund, as a writer of
an option, has no control over whether the underlying securities may be sold
(call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written
option.
Exchange traded options are valued at the last sale price, or if no sales
are reported, the last bid price for purchased options and the last ask
price for written options. Options traded over-the-counter are valued using
prices supplied by the dealers including counterparties.
For the year ended December 31, 2007, the Fund entered into the following
transactions:
Number of Notional
Written Put Option Transactions Contracts Amount Premiums
--------- -------- --------
Outstanding, beginning of year -- $ -- $ --
Options written 18 10,300 10,476
Options expired (18) (10,300) (10,476)
--------- -------- --------
Outstanding, end of year -- $ -- $ --
========= ======== ========
Number of Notional
Written Call Option Transactions Contracts Amount Premiums
--------- -------- --------
Outstanding, beginning of year -- $ -- $ --
Options written 19 11,544 24,910
Options expired (19) (11,544) (24,910)
Outstanding, end of year -- $ -- $ --
At December 31, 2007, the Fund held a forward volatility option. See the
Schedule of Investments for further details.
Forward foreign currency exchange contracts
The Fund, and previously the Portfolio, may enter into forward foreign
currency and cross currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date. Risks may arise
upon entering these contracts from the potential inability of counterparties
to meet the terms of their contracts and from unanticipated movements in the
value of a foreign currency relative to the U.S. dollar and other foreign
currencies. The forward foreign currency and cross currency exchange
contracts are marked to market using the forward foreign currency rate of
the underlying currency and any appreciation or depreciation are recorded
for financial statement purposes as unrealized until the contract settlement
date or upon the closing of the contract. Forward currency exchange
contracts are used by the Fund primarily to protect the value of the Fund's
foreign securities from adverse currency movements. Unrealized appreciation
and depreciation of forward currency exchange contracts is included in the
Statement of Assets and Liabilities.
At December 31, 2007, the Fund held forward foreign currency exchange
contracts. See the Schedule of Investments for further details.
Futures contracts
The Fund, and previously the Portfolio, may enter into financial futures
contracts for the purchase or sale of securities, or contracts based on
financial indices at a fixed price on a future date. Pursuant to margin
requirements, the Fund deposits either cash or securities in an amount equal
to a certain percentage of the contract amount. Subsequent payments are made
or received by the Fund each day, depending on the daily fluctuations in the
value of the underlying security, and are recorded for financial statement
purposes as unrealized appreciation or depreciation by the Fund. There are
several risks in connection with the use of futures contracts as a hedging
device. The change in value of futures contracts primarily corresponds with
the value of their underlying instruments or indices, which may not
correlate with changes in the value of hedged investments. Buying futures
tends to increase the Fund's exposure to the underlying instrument, while
selling futures tends to decrease the Fund's exposure to the underlying
instrument or hedge other investments. In addition, there is the risk that
the Fund may not be able to enter into a closing transaction because of an
illiquid secondary market. Losses may also arise if there is an illiquid
secondary market or if the counterparty does not perform under the
contract's terms.
24
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Notes to Financial Statements
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The Fund enters into financial futures transactions primarily to seek to
manage its exposure to certain markets and to changes in securities prices
and foreign currencies. Gains and losses are realized upon the expiration or
closing of the futures contracts. Futures contracts are valued at the quoted
daily settlement prices established by the exchange on which they trade.
At December 31, 2007, the Fund held open financial futures contracts. See
the Schedule of Investments for further details.
Swap agreements
The Fund, and previously the Portfolio, may enter into swap agreements. A
swap is an agreement to exchange the return generated by one instrument for
the return generated by another instrument. The Fund may enter into interest
rate, credit default and total return swap agreements to manage its exposure
to interest rates and credit risk. Interest rate swap agreements involve the
exchange by the Fund with another party of their respective commitments to
pay or receive interest, e.g., an exchange of floating rate payments for
fixed rate payments with respect to a notional amount of principal. In a
credit default swap, one party makes a stream of payments to another party
in exchange for the right to receive a specified return in the event of a
default by a third party on its obligation. The Fund may use credit default
swaps to provide a measure of protection against defaults of issuers (i.e.,
to reduce risk where the Fund owns or has exposure to the corporate or
sovereign issuer) or to take an active long or short position with respect
to the likelihood of a particular corporate or sovereign issuer's default.
Total return swap agreements involve commitments to pay interest in exchange
for a market-linked return, both based on notional amounts. To the extent
the total return of the security or index underlying the transaction exceeds
or falls short of the offsetting interest rate obligation, the Fund will
receive a payment from or make a payment to the counterparty. In connection
with these agreements, cash or securities may be set aside as collateral in
accordance with the terms of the swap agreement. The Fund earns interest on
cash set aside as collateral. Swaps are marked to market daily based upon
quotations, which may be furnished by a pricing service or dealers in such
securities and the change in value, if any, is recorded as unrealized
appreciation or depreciation in the Statement of Operations. These financial
instruments are not actively traded on financial markets. The values
assigned to these instruments are based upon the best available information
and because of the uncertainty of the valuation, these values may differ
significantly from the values that would have been realized had a ready
market for these instruments existed, and differences could be material.
Payments received or made at the beginning of the measurement period are
reflected as such on the Statement of Assets and Liabilities. Payments
received or made from credit default swaps at the end of the measurement
period are recorded as realized gains and losses in the Statement of
Operations. Net payments of interest on interest rate swap agreements, if
any, are included as part of realized gains and losses. Entering into these
agreements involves, to varying degrees, elements of credit, market, and
documentation risk in excess of the amounts recognized in the Statement of
Assets and Liabilities. Such risks involve the possibility that there will
be no liquid market for these agreements, that the counterparty to the
agreements may default on its obligation to perform or disagree as to the
meaning of contractual terms in the agreements, and that there may be
unfavorable changes in interest rates.
At December 31, 2007, the Fund held open swap agreements. See the Schedule
of Investments for further details.
(7) Security Lending:
The Fund, and previously the Portfolio, may lend its securities to financial
institutions which the Fund deems to be creditworthy. The loans are
collateralized at all times with cash or securities with a market value at
least equal to the market value of the securities on loan. The market value
of securities loaned is determined daily and any additional required
collateral is allocated to the Fund on the next business day. For the
duration of a loan, the Fund receives the equivalent of the interest or
dividends paid by the issuer on the securities loaned and also receives
compensation from the investment of the collateral. As with other extensions
of credit, the Fund bears the risk of delay in recovery or even loss of
rights in its securities on loan should the borrower of the securities fail
financially or default on its obligations to the Fund. In the event of
borrower default, the Fund generally has the right to use the collateral to
offset losses incurred. The Fund may incur a loss in the event it was
delayed or prevented from exercising its rights to dispose of the
collateral. The Fund also bears the risk in the event that the interest
and/or dividends received on invested collateral is not sufficient to meet
the Fund's obligations due on the loans.
The Fund, and previously the Portfolio, loaned securities during the year
ended December 31, 2007 and earned interest on the invested collateral of
$156,867 of which $147,716 was rebated to borrowers or paid in fees. At
December 31, 2007, the Fund did not have any securities out on loan. See
also Note 10.
(8) Delayed Delivery Transactions:
The Fund may purchase securities on a when-issued, delayed delivery or
forward commitment basis. Payment and delivery may take place a month or
more after the date of the transactions. The price of the underlying
securities and the date when the securities will be delivered and paid for
are fixed at the time the transaction is negotiated. Income on the
securities will not be earned until settlement date. The Fund instructs its
custodian to segregate securities having value at least equal to the amount
of the purchase commitment.
25
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Fund may enter into to be announced (TBA) purchase commitments to
purchase securities for a fixed unit price at a future date beyond
customary settlement time. Although the unit price has been established,
the principal value has not been finalized. However, the amount of the
commitments will not fluctuate more than 0.01% from the principal amount.
The Fund holds, and maintains until settlement date, cash or high-grade
debt obligations in an amount sufficient to meet the purchase price, or the
Fund may enter into offsetting contracts for the forward sale of other
securities it owns. Income on the securities will not be earned until
settlement date. TBA purchase commitments may be considered securities in
themselves, and involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date. Unsettled TBA purchase
commitments are valued at the current market value of the underlying
securities, according to the procedures described under "Investment
security valuations" above.
The Fund may enter into TBA sale commitments to hedge its Fund positions.
Proceeds of TBA sale commitments are not received until the contractual
settlement date. During the time a TBA sale commitment is outstanding, an
offsetting TBA purchase commitment deliverable is held as "cover" for the
transaction.
At December 31, 2007, the Fund had delayed delivery securities. See the
Schedule of Investments for further details.
(9) Line of Credit:
On behalf of the Fund, and other funds in the Trust, and previously the
portfolios in the Portfolio Trust, the Trust has access to a credit
facility, which enables each fund to borrow, in the aggregate, up to $35
million under a committed line of credit and up to $15 million under an
uncommitted line of credit. During the year ended December 31, 2007, the
Fund and the Portfolio had combined average borrowings outstanding of
$2,395,333 for a total of six days and incurred $2,327 of interest expense.
At December 31, 2007, the Fund did not have an outstanding loan balance.
(10) Restatement:
The Statement of Assets and Liabilities and Schedule of Investments have
been restated to correct an error in the manner in which the Fund's
securities lending agent and custodian accounted for the investment in
pooled investment vehicles of cash collateral derived from the Fund's
securities lending activity.
During the fiscal year ended December 31, 2007, the Fund, together with
other investment series of the Trust, participated in a securities lending
program. Until December 10, 2007, all cash collateral received by the Fund
and other series of the Trust in connection with the securities lending
program was invested in the BlackRock Cash Strategies Fund LLC (the
"BlackRock Fund"), a private investment fund not affiliated with the Trust
or its investment adviser. On December 10, 2007, the BlackRock Fund
announced that it was suspending investor withdrawal privileges due to
conditions related to the credit markets and the adverse effect of such
conditions on the liquidity of the BlackRock Fund's portfolio holdings.
Commencing on December 11, 2007, all new cash collateral received in
connection with the securities lending activity of the Fund and other
series of the Trust was invested by the securities lending agent in the
Dreyfus Institutional Cash Advantage Fund (the "Dreyfus Fund"), an
affiliated money market fund registered as an investment company under the
Investment Company Act of 1940, as amended. To the extent that the
BlackRock Fund agreed to permit withdrawals during the period, cash
proceeds from such withdrawals by series of the Trust were reinvested in
shares of the Dreyfus Fund. Repayments of cash collateral during the period
were made from the proceeds of redemptions of the Dreyfus Fund.
The Fund determined that from December 11, 2007 through the December 31,
2007 closing date of the financial statements of the Fund and continuing
until March 10, 2008, the securities lending agent and custodian failed to
account properly for the Fund's investments in the BlackRock Fund and the
Dreyfus Fund. Specifically, the securities lending agent and custodian
maintained, for each series of the Trust, subaccounts reflecting each
series ownership of shares of the Dreyfus Fund and the BlackRock Fund which
considered each such series to own a percentage of the Trust series'
aggregate ownership of the Dreyfus Fund and the BlackRock Fund equal to
each series' pro rata balance of the aggregate Trust cash collateral in the
securities lending program, rather than according to each series' specific
cash purchase and withdrawal activity in shares of the Dreyfus Fund and/or
the BlackRock Fund. The management of the Trust determined that the
securities lending agent and custodian should have accounted for these
investments on a Fund specific basis in accordance with actual cash
purchases and withdrawals. This erroneous methodology caused differences in
the entries in the Fund's books and records on which the Fund's Schedule of
Investments and Statement of Assets and Liabilities are based. These
financial statements have been restated accordingly. (The Fund's annual
report for the fiscal year ended December 31, 2007 containing these
financial statements was previously posted on the Trust's website but had
not been mailed to shareholders or filed with the Commission.) The
liability listed as "Payable for securities lending collateral investment"
represents the extent to which the Fund's cash needs to repay collateral
exceeded the value of its interest in the Dreyfus Fund. The erroneous
sub-accounting methodology had no effect on the computation of the Fund's
net asset value.
26
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
Effective March 10, 2008, the accounting for cash collateral investments in
pooled vehicles was corrected to account for specific purchases and
redemptions of interests in such vehicles by the Fund. All activity was
reprocessed to reflect correct ownership by the Fund in each vehicle and
the above described financial statements restated accordingly.
The amounts as originally reported and as restated are as follows:
Statement of Asset and Liabilities As Originally Reported As Restated
---------------------------------- ---------------------- -----------
Investments in securities: Unaffiliated issuers, at value $44,112,169 $45,769,309
Total Assets $46,893,606 $48,550,746
Payable for securities lending
collateral investment(Note7)(Note 10) -- $ 1,657,140
Total Liabilities $ 6,060,853 $ 7,717,993
Net assets $40,832,753 $40,832,753
Schedule of Investments
-----------------------
Blackrock Cash Strategies L.L.C. -- $ 1,657,140
Total Unaffiliated Investments $44,112,169 $45,769,309
Total Investments $45,454,080 $47,111,220
Liabilities in Excess of Other Assets $(4,621,327) $(6,278,467)
Net assets $40,832,753 $40,832,753
27
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Report of Independent Registered Public Accounting Firm
- --------------------------------------------------------------------------------
To the Trustees of Mellon Institutional Funds Investment Trust and Shareholders
of Standish Mellon Global Fixed Income Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights, after the restatement
described in Note 10 to the financial statements, present fairly, in all
material respects, the financial position of Standish Mellon Global Fixed Income
Fund (the "Fund") at December 31, 2007, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 2007 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers
LLP New York, New York
February 29, 2008, except as to Note 10, for which the date is March 27, 2008
28
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreements (Unaudited)
- --------------------------------------------------------------------------------
The 1940 Act requires that the Board of Trustees, including a majority of
its Trustees who are not affiliated with the Fund's investment adviser or
underwriter (the "Independent Trustees") voting separately, approve the
Fund's advisory agreement and the related fees on an annual basis. Prior to
October 26, 2007, the Fund was not a party to an investment advisory
agreement directly with any investment adviser and did not invest directly
in portfolio securities. Instead, the Fund had invested all of its
investable assets in the Standish Mellon Global Fixed Income Portfolio (the
"Portfolio"), which was managed by Standish Mellon Asset Management Company
LLC ("Standish Mellon" or the "Adviser"). The Portfolio had investment
objectives, policies and limitations substantially identical to those of
the Fund. The Fund's Board of Trustees determined annually whether the Fund
should continue to invest in the Portfolio. The members of the Fund's Board
of Trustees also serve as the Board of Trustees of the Portfolio. In that
capacity, they considered annually whether to continue the investment
advisory agreement between the Portfolio and Standish Mellon.
In their most recent deliberations concerning their decision to approve the
continuation of the investment advisory agreement, the Board of Trustees
conducted the review and made the determinations that are described below.
In conducting this review and in making such determinations, the
Independent Trustees received from Standish Mellon a broad range of
information in response to a written request prepared on their behalf by
their own legal counsel. The Independent Trustees met alone in a private
session with their legal counsel on September 27, 2007 to review these
materials and to discuss the proposed continuation of the Portfolio's
advisory agreement. Representatives of management attended a portion of the
September meeting to provide an overview of the Adviser's organization,
personnel, resources and strategic plans, and to respond to questions and
comments arising from the Independent Trustees' review of the materials and
their deliberations. The entire Board then met on October 30, 2007.
The information requested by the Independent Trustees and reviewed by the
entire Board included:
(i) Financial and Economic Data: The Adviser's balance sheet and income
statements, as well as a profitability analysis of the Adviser, including a
separate presentation of the Adviser's profitability relative to that of
several publicly traded investment advisers;
(ii) Management Teams and Operations: The Adviser's Form ADV, as well as
information concerning the Adviser's executive management, portfolio
management, client service personnel and overall organizational structure,
insurance coverage, brokerage and soft dollar policies and practices;
(iii) Comparative Performance and Fees: Analyses prepared by Lipper
Analytical Services ("Lipper") regarding the Fund's historical performance,
management fee and expense ratio compared to other funds, and the Adviser's
separate account advisory fee schedules;
(iv) Specific Facts Relating to the Fund: The Adviser's commentary on the
Fund's (rather than the Portfolio alone) performance and any material
portfolio manager and strategy changes that may have affected the Fund in
the prior year, as well as the Fund's "fact sheets" prepared by the Adviser
providing salient data about the Fund and the Portfolio, including the
Portfolio's holdings, strategies, recent market conditions and outlook, as
well as the Adviser's views concerning the issues of breakpoints in the
management fee schedule of the Portfolio and potential economies of scale;
and
(v) Other Benefits: The benefits flowing to The Bank of New York Mellon
Corporation ("BNY Mellon") and its affiliates in the form of fees for
transfer agency, custody, administration and securities lending services
provided to the Funds by affiliates of BNY Mellon.
In considering the continuation of the Portfolio's advisory agreement, the
Board of Trustees, including the Independent Trustees, did not identify any
single factor as all-important or controlling, and individual Trustees did
not necessarily attribute the same weight or importance to each factor. The
Trustees determined that the terms and conditions of the advisory agreement
and the compensation to the Adviser provided therein were fair and
reasonable in light of the services performed, expenses incurred and such
other matters as the Trustees considered relevant in the exercise of their
reasonable judgment. The following summary does not detail all the matters
that were considered. Some of the factors that figured prominently in the
Trustees' determination are described below.
Nature, Extent and Quality of Services
The Board considered the nature, scope and quality of the overall services
provided to the Portfolio by the Adviser. In their deliberations as to the
continuation of the advisory agreement, the Trustees were also mindful of
the fact that, by choosing to invest in the Fund, the Fund's shareholders
have chosen to entrust the Adviser, under the supervision of the Board, to
manage the portion of their assets invested in the Fund.
Among the specific factors the Board reviewed were the investment
management, administrative, compliance and related services provided by the
Adviser. The Board determined that the services provided were of high
quality and at least commensurate with industry standards.
The Trustees reviewed the background and experience of the Portfolio's two
portfolio managers and also met with senior management of the Adviser to
receive an overview of its organization, personnel, resources and strategic
plans. Among other things, the Trustees considered the size, education and
experience of the Adviser's investment staff, technological infrastructure
and overall responsiveness to changes in market conditions.
The Board determined that the Adviser had the expertise and resources to
manage the Portfolio effectively.
29
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreements (Unaudited)
- --------------------------------------------------------------------------------
Investment Performance
The Board considered the investment performance of the Fund (rather than
the Portfolio alone) against a peer group of investment companies selected
by the Adviser with input from the Trustees. The Board also compared the
Fund's investment performance against the average performance of a larger
universe of funds regarded by Lipper as having similar investment
objectives and considered the Fund's performance rankings against that
universe. In addition to the information received by the Board at the
September 27, 2007 Board meeting, the Trustees received similar detailed
comparative performance information for the Fund at each regular Board
meeting during the year.
The Board considered the Fund's performance for the one-, three- and
five-year periods ended July 31, 2007 based on the Lipper materials
provided to the Board at the September 27, 2007 meeting. The Board found
that the Fund underperformed its peer group average returns for the
one-year period (4.97% vs. 5.29%), three-year period (4.58% vs. 4.85%) and
five-year period (5.13% vs. 6.47%).
Advisory Fee and Other Expenses
The Board considered the advisory fee rate paid by the Portfolio to the
Adviser. The Lipper data presenting the Portfolio's "net management fees"
included fees paid by the Portfolio, as calculated by Lipper, for
administrative services provided by Mellon Bank, N.A., the Portfolio's
custodian. Such reporting was necessary, according to Lipper, to allow the
Board to compare the Portfolio's advisory fees to those peers that include
administrative fees within a blended advisory fee.
The Portfolio's contractual advisory fee was 0.40%, which was in the 1st
(best) quintile of its peer group of funds, the median fee of which was
0.57%. The Portfolio's net management fee (after giving effect to expense
limitations) was 0.266% (which included 0.025% of administrative services
fees under Lipper's calculation methodology), below the peer group median
net management fee of 0.469%. Based on the Lipper data, as well as other
factors discussed at the September 27, 2007 meeting, the Board determined
that the Portfolio's advisory fee is reasonable relative to its peer group
averages.
The Board also compared the fees payable by the Portfolio relative to those
payable by separate account clients of the Adviser. Based on the additional
scope and complexity of the services provided and responsibilities assumed
by the Adviser with respect to the Portfolio relative to these other types
of clients, the Board concluded that the fees payable under the advisory
agreement were reasonable relative to the nature and quality of the
services provided.
The Board also considered the Fund's (rather than solely the Portfolio's)
expense ratio and compared it to that of its peer group of similar funds.
The Board found that the actual net expense ratio of 0.648% (after giving
affect to expense limitations) was lower than the median net expense ratio
of the peer group of 0.906%, notwithstanding the fact that all of the other
funds in the peer group were larger than the Portfolio.
The Adviser's Profitability
The Board considered the Adviser's profitability in managing the Portfolio
and the Fund and the Mellon Institutional Funds as a group, as well as the
methodology used to compute such profitability, and the various direct and
indirect expenses incurred by the Adviser or its affiliated investment
advisers in managing the Portfolio and other funds in the Mellon
Institutional Funds family of funds. The Independent Trustees had observed
that the Adviser, based on the profitability information submitted to them
by the Adviser, incurred losses in managing all but one of the investment
companies in the Mellon Institutional Funds family of funds. The Trustees
observed that the Adviser had incurred losses in operating the Portfolio in
2005 and 2006.
Economies of Scale
The Board also considered the extent to which economies of scale might be
realized as the Fund grows. They observed that the Standish Mellon Fixed
Income Portfolio and The Boston Company International Core Equity
Portfolio, two of the largest funds in the complex, already had breakpoints
in their fee arrangements that reflected economies resulting from their
size. The Board also noted that at the March 7, 2006 meeting, management
had presented a Breakpoint Discussion Memorandum that had proposed a
framework for future breakpoints. The Board concluded that, at existing
asset levels and considering current asset growth projections, the
implementation of additional fee breakpoints or other fee reductions was
not necessary at this time.
30
Mellon Institutional Funds Investment Trust
Standish Mellon Global Fixed Income Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreements (Unaudited)
- --------------------------------------------------------------------------------
Other Benefits
The Board also considered the additional benefits flowing to BNY Mellon as
a result of its relationship with the Mellon Institutional Funds as a
group, including revenues received by BNY Mellon affiliates in
consideration of custodial, administrative, transfer agency and securities
lending services provided by such affiliates to the Funds. In each case,
such affiliates were selected by the Board on the basis of a comparative
analysis of their capabilities and fees relative to those of unaffiliated
competitors.
The Board considered the fact that BNY Mellon operates businesses other
than the Mellon Institutional Funds, some of which businesses share
personnel, office space and other resources and that these were a component
of the profitability analysis provided. The Board also considered the
intangible benefits that accrue to BNY Mellon and its affiliates by virtue
of its relationship with the Funds and the Mellon Institutional Funds as a
group.
* * *
The foregoing factors were among those weighed by the Trustees in
determining that the terms and conditions of the Portfolio's advisory
agreement and the compensation to the Adviser provided therein are fair and
reasonable and, thus, in approving the continuation of the agreement for a
one-year period.
31
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their age, address
and date of birth; their position with the Trust; the length of time holding
that position with the Trust; their principal occupation(s) during the past five
years; the number of portfolios in the fund complex they oversee; other
directorships they hold in companies subject to registration or reporting
requirements of the Securities Exchange Act of 1934 (generally called "public
companies") or in registered investment companies; and total remuneration paid
as of the year ended December 31, 2007. The Fund's Statement of Additional
Information includes additional information about the Trust's trustees and is
available, without charge, upon request by writing Mellon Institutional Funds at
P.O. Box 8585, Boston, MA 02266-8585 or calling toll free 1-800-221-4795.
Independent Trustees
Number of Trustee
Principal Portfolios in Other Remuneration**
Name (Age) Term of Office Occupation(s) Fund Complex Directorships (period ended
Address, and Position(s) and Length of During Past Overseen by Held by December 31,
Date of Birth Held with Trust Time Served* 5 Years Trustee Trustee 2007)
- ------------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $1,264
61 Meadowbrook Road 11/3/1986 Decision Resources, Inc.
Weston, MA 02493 ("DRI") (biotechnology
9/30/40 research and consulting
firm); formerly Chairman
of the Board and Chief
Executive Officer, DRI
Benjamin M. Friedman (63) Trustee Trustee since William Joseph Maier, 17 None Fund: $1,264
c/o Harvard University 9/13/1989 Professor of Political
Littauer Center 127 Economy, Harvard
Cambridge, MA 02138 University
8/5/44
John H. Hewitt (72) Trustee Trustee since Trustee, Mertens 17 None Fund: $1,264
P.O. Box 2333 11/3/1986 House, Inc. (hospice)
New London, NH 03257
4/11/35
Caleb Loring III (64) Trustee Trustee since Trustee, Essex Street 17 None Fund: $1,306
c/o Essex Street Associates 11/3/1986 Associates (family
P.O. Box 5600 investment trust office)
Beverly, MA 01915
11/14/43
Interested Trustees
J. David Officer (59) Trustee Since 2008 Director, Vice Chairman 17 None Fund: $0
The Dreyfus Corporation (Chairman), and Chief Operating Officer
200 Park Ave., 55th Fl. President and of The Dreyfus Corporation;
New York, NY 10166 Chief Executive Executive Vice President
8/24/48 Officer of The Bank of New York
Mellon Corporation; and
Director and President of
MBSC Securities Corporation
* Each Trustee serves for an indefinite term, until his successor is elected.
Each officer is elected annually.
** Trustee remuneration of the Fund and the Portfolio have been presented on
a consolidated basis.
32
Principal Officers who are Not Trustees
Name (Age) Term of Office
Address, and Position(s) and Length of Principal Occupation(s)
Date of Birth Held with Trust Time Served During Past 5 Years
- ------------------------------------------------------------------------------------------------------------------------------------
Steven M. Anderson (42) Vice President, Vice President Vice President and Mutual Funds Controller,
BNY Mellon Asset Management Treasurer and since 1999; BNY Mellon Asset Management; formerly Assistant
One Boston Place Chief Financial Treasurer and Vice President and Mutual Funds Controller, Standish
Boston, MA 02108 Officer CFO since 2002 Mellon Asset Management Company, LLC
7/14/65
Denise B. Kneeland (56) Assistant Vice Assistant Vice First Vice President and Manager, Mutual Funds
BNY Mellon Asset Management President President Operations, BNY Mellon Asset Management; formerly
One Boston Place and Secretary since 1996; Vice President and Manager, Mutual Fund Operations,
Boston, MA 02108 Secretary Standish Mellon Asset Management Company, LLC
8/19/51 since 2007
Mary T. Lomasney (50) Chief Since 2005 First Vice President, BNY Mellon Asset Management and
BNY Mellon Asset Management Compliance Chief Compliance Officer, Mellon Optima L/S Strategy
One Boston Place Officer Fund, LLC; formerly Director, Blackrock, Inc., Senior
Boston, MA 02108 Vice President, State Street Research & Management
4/8/57 Company ("SSRM"), and Vice President, SSRM
33
MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6934AR1207A
MELLON INSTITUTIONAL FUNDS
Annual Report Standish Mellon
(As Restated; See Note 10) International Fixed Income Fund
- --------------------------------------------------------------------------------
Year Ended December 31, 2007
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. This report is not
authorized for distribution to prospective investors in the Fund unless preceded
or accompanied by an effective prospectus.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission (SEC) for the first and third quarters of each fiscal
year on Form N-Q. Forms N-Q are available on the SEC's web site at
http://www.sec.gov. The Fund's Forms N-Q may be reviewed and copied at the SEC's
Public Reference Room in Washington D.C. Information regarding the operation of
the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a
complete list of the Fund's portfolio holdings, view the most recent quarterly
holdings report, semi-annual report or annual report on the Fund's web site at
http://www.melloninstitutionalfunds.com.
To view the Fund's proxy voting guidelines and proxy voting record for the
12-month period ended June 30 visit http://www.melloninstitutionalfunds.com or
the SEC's web site at http://www.sec.gov. You may also call 1-800-221-4795 to
request a free copy of the proxy voting guidelines.
MELLON INSTITUTIONAL FUNDS
February 2008
Dear Mellon Institutional Fund Shareholder:
Enclosed you will find your Fund's annual report for the fiscal year ended
December 31, 2007.
The financial markets experienced a major bout of volatility in 2007 stemming
from two principal sources: troubles in the credit markets related to the
difficulties experienced by mortgage securities backed by subprime loans, and
the high degree of leverage employed by many hedge funds, whose impact on the
markets has swollen significantly over the past decade. While the S&P 500 Index
managed to gain 3.5% in 2007 in a very volatile environment, it lost 3.8% in the
fourth quarter. The U.S. Federal Reserve Board was concerned with market
instability enough to lower rates three times in 2007 even as confidence in the
dollar reached new lows. In December, central banks coordinated their efforts to
provide liquidity facilities to institutions with impaired assets.
Credit markets responded to the subprime troubles with a broad-based flight to
quality as investors fled to short-term Treasury securities, resulting in a
significant steepening of the yield curve. In a dramatic repricing of risk,
spreads widened in the corporate bond sector compared to Treasury issues, which
has the effect of making corporate borrowing more expensive. In another
indication of just how disruptive this period was in the credit markets, even
some issuers of commercial paper - typically viewed as the safest segment of the
corporate market - had trouble issuing or rolling over their issues.
Liquidity has slowly returned to the bond markets in general, but it is still
less than normal. The financial and mortgage sectors clearly have been shaken,
and this will likely exacerbate the housing recession as banks become more
restrictive in their lending. In the view of some, the likelihood of a broader
U.S. recession has become greater; indeed, some economists maintain that we have
already entered one. Our view is that a period of diminished growth - around
1.5% to 2% GDP growth in 2008 vs. the 2.5% long-term trend - is more likely. We
see U.S. exports boosted by the weaker dollar, multi-year global economic
expansion and monetary growth, and reasonable corporate profitability -
especially for multinational franchises - as being positives that may partially
offset the drag of the housing sector and lower consumption. However, should the
"credit crunch" intensify - contrary to our expectations - the odds would favor
a full-scale recession.
We wish to thank you for your business and confidence in Mellon Institutional
Funds. Please feel free to contact us with questions or comments.
Sincerely,
J. David Officer
President
1
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Management Discussion and Analysis
- --------------------------------------------------------------------------------
Global sovereign bonds provided solid returns in 2007 while most bonds with a
credit spread suffered. Despite the credit and liquidity crunch, global bonds
provided a year of risk adjusted returns very competitive with the Fund's
benchmark, the J.P. Morgan Non-U.S. Government Bond Index, which achieved a
total return of 5.06% during 2007. The international bond market continues to be
buffeted by concerns about structured credit, banking sector vulnerabilities,
and a potential U.S. recession. We continue to believe that the major central
banks in the U.S., Europe and the U.K. will need to cut rates further in 2008 as
the outlook for the U.S. economy continues to deteriorate due to a weaker
housing market and ongoing turmoil in the structured credit markets and banking
sector.
As we move into 2008, the market has also come to realize that the U.K. housing
market and economy will also likely be hurt significantly by tighter credit
conditions. The front end of the gilt yield curve rallied during the second half
of 2007 and the pound is weaker. The expected U.S. slowdown will, to some
extent, slow growth in Europe and Japan as well. Expectations for a global
decoupling from the U.S. are likely to be disappointed.
Weaker U.S. consumer demand and a depreciated U.S. currency, especially as
compared to the Euro, have reduced net exports for both Europe and Japan.
Furthermore, financial conditions have tightened in Europe as the result of the
credit and liquidity crunch.
However, emerging markets, led by China, India, Brazil, and Russia, continue to
do very well, as do other commodity exporting economies. Nevertheless, we
believe that the U.S. led downturn should take some of the shine off of these
regions' economic performance in 2008.
Performance
The Fund returned 4.35% in 2007, lagging its benchmark, but we believe it is
well positioned for better returns going forward if our "Outlook" below is
accurate. The Fund's underperformance relative to its benchmark in 2007 was
mainly driven by its exposure to the riskier parts of the global bond markets,
such as high yield and emerging market debt.
Even though we are disappointed that the Fund lost ground relative to its
benchmark, we are proud in that we restructured the portfolio in the first half
of 2007 and shed a lot of credit risk. The Fund has always invested heavily in
corporate credits and we avoided almost all of the blowups.
The Fund's main source of credit risk and underperformance has come from its
Northern Rock position. These securities were downgraded to high yield after we
purchased them at distressed levels when they were investment grade. We remain
optimistic, as to these holdings, however, as the restructuring and ownership
situation of the bank gets resolved. Unfortunately the process has taken much
longer than we had expected and so the mark-to-market impact on Fund performance
subtracted nearly 70 basis points.
The remaining drag on performance came from our other high yield exposure in
short dated high yield bonds, which we believe will mature at par, and some
other one-off exposures to emerging market debt.
2
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Management Discussion and Analysis
- --------------------------------------------------------------------------------
On the positive side we had a great year in terms of our country, curve and
duration positioning for the Fund. The Fund consistently invested in the top
performing markets during 2007 which included Japan and Sweden during the first
half and then the U.K. and the U.S. during the second half of 2007.
The Fund was consistently long duration during 2007 which was not helpful during
the first half of 2007 but paid off when the credit crunch and flight to quality
occurred in the summer. We have been long duration in the U.S., Japan and the
U.K., while underweight duration in Europe. Even though U.S. bonds are not
represented in the benchmark index we thought the U.S. economy would lead the
international bond markets as the housing recession intensified.
Curve positioning was also helpful in 2007 as we anticipated a steeper yield
curve on the back of U.S. Federal Reserve rate cuts. We also benefited from a
flattening of the European yield curve even though the European Central Bank was
raising interest rates. The long end of the European yield curve is highly
correlated with that of the U.S. and was dragged lower as the global bond rally
intensified late in 2007.
Currency positioning also added about 20 basis points to the portfolio over the
course of 2007 as we held mostly short dollar positions against a wide variety
of currencies.
Outlook
We remain negative on the outlook for the U.S. economy as we believe the
continuing housing market correction will translate into a weaker consumer
sector. We believe that the unemployment rate will increase further over the
coming months, and that this will also slow consumer spending. We believe that a
weaker job market, combined with lower inflation and capacity utilization,
should prompt the Fed to cut rates below 3% in 2008. We are therefore positioned
for lower rates and a steeper yield curve in the U.S. We are also overweight
U.K. duration and have shorted the pound as we expect the British economy to
weaken. In Japan, we are overweight duration as we continue to expect that the
economic recovery will be very gradual. We remain underweight in Europe as
inflation has increasingly become a concern for the European Central Bank.
However, given the uncertain growth outlook, our base case is that rates remain
on hold for a while, so the underweight must be viewed in conjunction with the
U.S. and U.K. overweight positions. We believe growth in several of the smaller
developed economies, like Norway, Sweden, and Australia, will likely remain
relatively robust, and we remain underweight duration in these countries.
Thomas F. Fahey David Leduc, CFA
Portfolio Manager Portfolio Manager
Standish Mellon Asset Management Standish Mellon Asset Management
Company, LLC Company, LLC
3
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Comparison of Change in Value of $100,000 Investment in Standish Mellon
International Fixed Income Fund and the J.P. Morgan Non-U.S. Government Bond
Index (Hedged)
- --------------------------------------------------------------------------------
[THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Standish Mellon J.P. Morgan Non-U.S. Government
PERIOD International Fixed Income Fund Bond Index (Hedged)*
12/31/97 $100,000 $100,000
3/31/98 $102,546 $103,124
6/30/98 $104,332 $105,488
9/30/98 $107,451 $111,134
12/31/98 $108,732 $112,136
3/31/99 $110,982 $114,108
6/30/99 $110,132 $113,279
9/30/99 $108,552 $113,591
12/31/99 $109,592 $114,856
3/31/00 $111,907 $117,357
6/30/00 $113,939 $119,448
9/30/00 $115,940 $121,232
12/31/00 $120,205 $125,719
3/31/01 $123,870 $129,271
6/30/01 $123,486 $129,741
9/30/01 $124,514 $132,575
12/31/01 $125,101 $133,316
3/31/02 $124,584 $132,901
6/30/02 $127,375 $135,890
9/30/02 $130,497 $140,434
12/31/02 $133,155 $142,662
3/31/03 $135,547 $144,588
6/30/03 $138,936 $146,449
9/30/03 $138,870 $145,358
12/31/03 $139,667 $145,482
3/31/04 $142,524 $147,926
6/30/04 $140,531 $146,337
9/30/04 $143,255 $149,853
12/31/04 $146,480 $153,057
3/31/05 $146,895 $154,981
6/30/05 $151,015 $159,952
9/30/05 $152,294 $160,361
12/31/05 $153,405 $161,623
3/31/06 $152,465 $160,275
6/30/06 $152,200 $160,231
9/30/06 $158,461 $165,646
12/31/06 $159,960 $166,634
3/31/07 $161,758 $168,149
6/30/07 $159,726 $166,596
9/30/07 $163,790 $171,509
12/31/07 $166,909 $175,059
Average Annual Total Returns
(for period ended 12/31/2007)
- --------------------------------------------------------------------------------
Since
Inception
1 Year 3 Years 5 Years 10 Years (1/3/1991)
- -------------------------------------------------------------------------------------------
Fund 4.35% 4.45% 4.62% 5.26% 7.75%
* Source: Bloomberg Inc.
Average annual total returns reflect the change in the value of an investment,
assuming reinvestment of the fund's dividend income and capital gains. The
$100,000 line graph and the fund's returns do not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares. During periods of reimbursement by the fund's investment adviser (if
applicable), the fund's total return will be greater than it would be had the
reimbursement not occurred. Past performance is not predictive of future
performance.
4
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Shareholder Expense Example (Unaudited)
- --------------------------------------------------------------------------------
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including redemption fees, and (2) ongoing costs, including management
fees and other Fund expenses. This Example is intended to help you understand
your ongoing costs (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (July 1, 2007 to December 31, 2007).
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000.00=8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs. Therefore, the
second line of the table is useful in comparing ongoing costs and will not help
you determine the relative total costs of owning different funds. In addition,
if these transactional costs were included, your costs would have been higher.
Expenses Paid
Beginning Ending During Period(+)
Account Value Account Value July 1, 2007
July 1, 2007 December 31, 2007 to December 31, 2007
- -----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,021.75 $3.71
Hypothetical (5% return
per year before expenses) $1,000.00 $1,021.58 $3.67
- -----------
+ Expenses are equal to the Fund's annualized expense ratio of 0.72%, multiplied
by the average account value over the period, multiplied by 184/365 (to
reflect the one-half year period).
5
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Portfolio Information as of December 31, 2007 (Unaudited)
- --------------------------------------------------------------------------------
The Fund is actively managed. Current holdings may be different than those
presented below.
Percentage of
Summary of Combined Ratings Investments
- --------------------------------------------------------------------------------
Quality Breakdown
- --------------------------------------------------------------------------------
AAA 60.9%
AA 11.8
A 10.3
BBB 9.4
BB 3.7
B 3.9
-----
Total 100.0%
Based on ratings from Standard & Poor's and/or Moody's Investors Services. If a
security receives split (different) ratings from multiple rating organizations,
the Fund treats the security as being rated in the higher rating category.
Percentage of
Top Ten Holdings* Rate Maturity Investments
- ---------------------------------------------------------------------------------------------
Deutsche Republic 5.750% 7/4/2034 7.9%
United Kingdom Gilt 8.000 9/27/2013 6.7
Japan Government 1.100 12/10/2016 6.4
Development Bank of Japan 1.700 9/20/2022 4.7
FNMA (TBA) 6.000 1/1/2036 3.7
Swedish Government 5.250 3/15/2011 3.4
United Kingdom Gilt 5.000 9/7/2014 3.3
FCE Bank PLC EMTN 5.765 9/30/2009 3.1
United Kingdom Gilt 5.000 3/7/2012 3.1
United Kingdom Gilt 4.000 9/7/2016 3.1
----
45.4%
* Excluding short-term investments and investment of cash collateral.
Percentage of
Economic Sector Allocation Investments
- --------------------------------------------------------------------------------
ABS/CMBS/CMO 3.9%
Corporate 31.1
Emerging Markets 3.5
Government/Agency 49.9
Mortgage Pass Thru 4.4
Cash & Equivalents 7.2
-----
100.0%
6
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
UNAFFILIATED INVESTMENTS--98.8%
BONDS AND NOTES--93.2%
Asset Backed--0.7%
Chase Issuance Trust 2007-A1 A1 (a) (Cost $660,000) 5.048% 3/15/2013 USD 660,000 $ 654,816
Collateralized Mortgage Bonds--3.3%
GNMA 2004-23 B 2.946 3/16/2019 506,834 494,497
GNMA 2005-76 A 3.963 5/16/2030 548,265 541,062
GNMA 2005-79 A 3.998 10/16/2033 489,853 484,294
GNMA 2006-67 A 3.947 10/6/2011 939,826 926,895
GNMA 2006-68 A 3.888 7/16/2026 466,390 459,653
GNMA 2007-34-A 4.272 11/16/2026 389,168 386,199
----------
Total Collateralized Mortgage Obligations (Cost $3,249,918) 3,292,600
----------
Corporate--15.0%
Banking--4.8%
Bank of America Capital Trust XIII (a) 5.391 3/15/2049 330,000 276,460
Chevy Chase Bank FSB 6.875 12/1/2013 270,000 257,175
Citigroup, Inc. 5.300 10/17/2012 340,000 344,423
Mizuho JGB Investment 144A (a) 9.870 8/30/2049 500,000 504,566
Northern Rock PLC 144A (a) 5.600 4/30/2014 250,000 155,000
Northern Rock PLC 144A (a) 6.594 6/28/2049 2,750,000 1,705,000
Royal Bank of Scotland Group PLC 144A (a) 6.990 10/5/2049 320,000 319,037
SB Treasury Co. 144A (a) 9.400 6/30/2049 500,000 509,845
Sovereign Bancorp (a) 5.114 3/23/2010 200,000 198,462
Tokai PFD Capital Co. 144A CVT (a) 9.980 6/30/2049 490,000 496,483
----------
4,766,451
----------
Communications--0.6%
News America, Inc. 6.150 3/1/2037 270,000 260,817
Qwest Corp. (a) 8.241 6/15/2013 170,000 173,400
Time Warner Cable, Inc. 5.400 7/2/2012 155,000 155,312
----------
589,529
----------
Finance--5.4%
Capmark Financial Group 144A 5.875 5/10/2012 250,000 197,891
Citigroup, Inc. (a) 8.300 12/21/2077 465,000 485,549
Countrywide Home Loan 3.250 5/21/2008 2,162,000 1,953,730
Erac USA Finance Co. 144A 5.300 11/15/2008 490,000 486,712
ERP Operating LP 5.750 6/15/2017 285,000 271,393
General Electric Capital Corp. 5.625 9/15/2017 1,020,000 1,046,496
Pricoa Global Funding 144A 5.400 10/18/2012 515,000 534,103
Sprint Capital Corp. 8.375 3/15/2012 230,000 249,096
Willis North America 6.200 3/28/2017 235,000 234,483
----------
5,459,453
----------
Health Care--0.2%
Coventry Health Care, Inc. 5.950 3/15/2017 195,000 191,200
----------
Industrials--2.1%
Kraft Foods, Inc. 6.875 2/1/2038 285,000 295,884
Nordic Telecommunication Co. Holdings 144A 8.875 5/1/2016 210,000 215,250
Repsol International Finance EMTN 4.625 10/8/2014 255,000 347,721
Rogers Wireless, Inc. 7.500 3/15/2015 255,000 278,864
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
Industrials (continued)
SabMiller PLC 144A (a) 5.531% 7/1/2009 USD 200,000 $ 200,645
Schering-Plough 5.000 10/1/2010 85,000 124,059
Schering-Plough 5.375 10/1/2014 350,000 501,492
Steel Dynamics, Inc. 144A 7.375 11/1/2012 155,000 155,775
----------
2,119,690
----------
Services--0.2%
Delhaize America, Inc. 6.500 6/15/2017 200,000 204,605
----------
Utilities--1.7%
Enel Finance International 144A 5.700 1/15/2013 190,000 192,904
Kentucky Power Co. 144A 6.000 9/15/2017 540,000 538,609
Midamerican Energy Holdings Co. 6.500 9/15/2037 250,000 261,071
National Grid PLC 6.300 8/1/2016 195,000 199,075
Nisource Finance Corp. (a) 5.585 11/23/2009 200,000 198,069
Virginia Electric Power Co. 5.950 9/15/2017 280,000 288,624
----------
1,678,352
----------
Total Corporate Bonds (Cost $15,441,550) 15,009,280
----------
Sovereign Bonds--1.1%
Argentina Bonos (a) 5.389 8/3/2012 705,000 401,850
Republic of Argentina 7.000 9/12/2013 490,000 431,200
Republic of South Africa 5.875 5/30/2022 280,000 273,893
----------
Total Sovereign Bonds (Cost $1,189,358) 1,106,943
----------
Yankee Bonds--0.5%
TNK-BP Finance SA 144A (Cost $495,830) 7.500 3/13/2013 500,000 498,750
----------
Foreign Denominated--68.2%
Brazil--0.6%
Republic of Brazil 12.500 1/5/2016 BRL 935,000 571,301
----------
Egypt--0.5%
Arab Republic of Egypt 144A 8.750 7/18/2012 EGP 2,600,000 485,264
----------
Euro--19.2%
Atlantia SpA EMTN (a) 5.334 6/9/2011 EUR 500,000 731,101
BES Finance Ltd. EMTN (a) 4.500 12/16/2023 180,000 230,302
BNP Paribas (a) 5.019 4/13/2049 400,000 525,167
Bombardier, Inc. 5.750 2/22/2008 245,000 357,768
Carrefour SA EMTN 5.125 10/10/2014 200,000 290,122
Citigroup Inc. EMTN (a) 4.926 6/3/2011 675,000 964,212
Deutsche Capital 5.330 9/29/2049 290,000 397,270
Deutsche Republic 5.750 7/4/2034 4,925,000 7,315,756
E. ON International Finance EMTN 5.500 10/2/2017 335,000 494,219
FCE Bank PLC EMTN (a) 5.765 9/30/2009 2,200,000 2,921,719
HBOS Euro Finance LP (a) 7.627 12/9/2049 325,000 491,736
HSBC Capital Funding LP (a) 5.369 3/24/2049 360,000 491,765
HVB Funding Trust VIII (a) 7.055 3/28/2049 330,000 485,113
Koninklijke KPN 4.750 1/17/2017 175,000 234,088
MPS Capital Trust I (a) 7.990 2/7/2011 550,000 847,547
Netherlands Government Bond 4.000 1/15/2037 855,000 1,118,124
RBS Capital Trust (a) 6.467 6/30/2049 170,000 247,671
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
Euro (continued)
Societe Generale (a) 4.196% 1/26/2049 EUR 385,000 $ 488,529
Sogerim EMTN 7.250 4/20/2011 195,000 298,589
Telefonica Europe BV EMTN 5.125 2/14/2013 145,000 209,317
----------
19,140,115
----------
Japan--21.9%
Development Bank of Japan 1.600 6/20/2014 JPY 280,000,000 2,576,434
Development Bank of Japan 1.700 9/20/2022 499,000,000 4,391,925
Development Bank of Japan 1.050 6/20/2023 65,000,000 515,745
Dexia Municipal Agency EMTN 0.800 5/21/2012 152,000,000 1,347,047
European Investment Bank 1.400 6/20/2017 185,700,000 1,652,479
European Investment Bank (b) 1.900 1/26/2026 110,000,000 964,397
Japan Finance Corp. 1.350 11/26/2013 234,000,000 2,119,821
Japan Government 1.100 12/10/2016 663,000,000 5,978,143
Japan-244 (10 Year Issue) 1.000 12/20/2012 255,000,000 2,284,362
----------
21,830,353
----------
Mexico--1.3%
Mexican Fixed Rate Bonds 8.000 12/19/2013 MXN 14,700,000 1,351,056
----------
Sweden--3.1%
Swedish Government 5.250 3/15/2011 SEK 19,700,000 3,144,681
----------
United Kingdom--21.6%
BAT International Finance PLC EMTN 6.375 12/12/2019 GBP 155,000 308,430
Lloyds TSB Bank PLC (a) 6.350 2/25/2049 170,000 247,759
Transco Holdings PLC 7.000 12/16/2024 140,000 316,592
United Kingdom Gilt 4.750 6/7/2010 1,280,000 2,566,372
United Kingdom Gilt 4.250 3/7/2011 1,270,000 2,509,582
United Kingdom Gilt 5.000 3/7/2012 1,420,000 2,884,397
United Kingdom Gilt 8.000 9/27/2013 2,695,000 6,279,308
United Kingdom Gilt 5.000 9/7/2014 1,485,000 3,030,022
United Kingdom Gilt 4.000 9/7/2016 1,490,000 2,852,337
United Kingdom Gilt 4.250 6/7/2032 275,000 535,420
----------
21,530,219
----------
Total Foreign Denominated (Cost $64,331,846) 68,052,989
----------
Pass Thru Securities--4.4%
Non-Agency Pass Thru Securities--1.0%
First Union-Chase Commercial Mortgage 5.950 6/15/2031 USD 427,582 433,918
Goldman Sachs Mortgage Securities Corp., 2007-EOP L 144A (a) 6.552 3/20/2020 360,000 338,400
Morgan Stanley Capital I 2006-IQ12 A1 5.257 12/15/2043 242,129 243,022
----------
1,015,340
----------
Agency Pass Thru Securities--3.4%
FNMA (TBA) (c) 6.000 1/1/2036 3,375,000 3,426,678
----------
Total Pass Thru (Cost $4,407,527) 4,442,018
----------
TOTAL BONDS AND NOTES (Cost $89,776,029) 93,057,396
----------
SHORT-TERM INVESTMENTS--4.9%
Commercial Paper--1.0%
Cox Enterprises, Inc. (d) (Cost $1,029,691) 5.580 1/15/2008 1,030,000 1,027,425
----------
Federal Agency Bond--3.5%
FHLB Discount Note (d) (e) (Cost $3,541,302) 4.200 1/22/2008 3,550,000 3,541,302
----------
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Schedule of Investments -- December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Par Value
Security Description Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bill--0.4%
U.S. Treasury Bill (d) (e) (Cost $355,520) 2.900% 3/27/2008 USD 358,000 $ 355,520
------------
TOTAL SHORT-TERM INVESTMENTS (Cost $4,926,513) 4,924,247
------------
INVESTMENT OF CASH COLLATERAL--0.7% Shares
-----------
BlackRock Cash Strategies L.L.C. (b) (Cost $733,732) 733,732 733,732
------------
TOTAL UNAFFILIATED INVESTMENTS (Cost $95,436,274) 98,715,375
------------
AFFILIATED INVESTMENTS--3.4%
Dreyfus Institutional Preferred Plus
Money Market Fund (f) (Cost $3,387,799) 3,387,799 3,387,799
------------
TOTAL INVESTMENTS--102.2% (Cost $98,824,073) 102,103,174
------------
LIABILITIES IN EXCESS OF OTHER ASSETS--(2.2%) (2,226,662)
------------
NET ASSET--100% $ 99,876,512
============
Notes to Schedule of Investments:
144A--Securities exempt from registration under Rule 144A of the Securities Act
of 1933.
These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
At the period end, the value of these securities amounted to $7,534,234 or 7.5%
of net assets.
BRL--Brazilian Real
CVT--Convertible
EGP--Egyptian Pound
EMTN--Euro Medium Term Note
EUR--Euro
FHLB--Federal Home Loan Bank
FNMA--Federal National Mortgage Association
GBP--British Pound
GNMA--Government National Mortgage Association
JPY--Japanese Yen
MYR--Malaysian Ringgit
MXN--Mexican New Peso
NZD--New Zealand Dollar
PFD--Preferred Security
SEK--Swedish Krona
TBA--To Be Announced
THB--Thai Baht
USD--United States Dollar
(a) Variable Rate Security; rate indicated is as of December 31, 2007.
(b) Illiquid security. At period end, the value of these securities amounted to
$1,698,129 or 1.7% of net assets.
(c) Delayed delivery security.
(d) Rate noted is yield to maturity.
(e) Denotes all or part of security segregated as collateral for delayed
delivery securities, futures and swap contracts.
(f) Affiliated money market fund.
At December 31, 2007, the Fund held the following futures contracts:
Unrealized
Underlying Face Appreciation/
Contract Position Expiration Date Amount at Value (Depreciation)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. 2 Year Treasury (33 Contracts) Short 3/31/2008 $ 6,938,250 $ (3,984)
U.S. 5 Year Treasury (32 Contracts) Long 3/31/2008 3,529,000 17,943
U.S. 10 Year Treasury (19 Contracts) Short 3/19/2008 2,154,422 (3,072)
U.S. Long Bond CBT (33 Contracts) Short 3/19/2008 3,840,375 29,396
Euro--Bobl (77 Contracts) Long 3/6/2008 12,129,628 (129,827)
Euro--Bund (42 Contracts) Long 3/6/2008 6,933,055 (161,194)
---------
$(250,738)
=========
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Schedule of Investments -- December 31, 2007
- --------------------------------------------------------------------------------
At December 31, 2007, the Fund held the following forward exchange contracts:
Local
Principal Contract Value at Amount Unrealized
Contracts to Deliver Amount Value Date December 31, 2007 to Receive Appreciation
- ------------------------------------------------------------------------------------------------------------------------------------
Euro 1,040,000 3/19/2008 $ 1,518,861 $ 1,535,872 $ 17,011
Euro 180,000 3/19/2008 262,880 265,824 2,944
Euro 940,000 3/19/2008 1,372,816 1,389,029 16,213
Euro 15,560,000 3/19/2008 22,724,490 22,986,103 261,613
British Pounds 9,131,000 3/19/2008 18,090,282 18,489,545 399,263
British Pounds 1,500,000 3/19/2008 2,971,791 3,036,825 65,034
British Pounds 490,000 3/19/2008 970,785 979,850 9,065
Japanese Yen 579,730,000 3/19/2008 5,242,680 5,247,375 4,695
Japanese Yen 895,250,000 3/19/2008 8,096,026 8,107,313 11,287
Japanese Yen 1,023,130,000 3/19/2008 9,252,485 9,262,700 10,215
Mexican Peso 15,180,000 3/19/2008 1,391,893 1,393,747 1,854
New Zealand Dollar 1,310,000 3/19/2008 994,402 1,016,848 22,446
Swedish Krona 22,130,000 3/19/2008 3,426,475 3,457,380 30,905
----------- ----------- --------
$76,315,866 $77,168,411 $852,545
=========== =========== ========
Local Unrealized
Principal Contract Value at Amount Appreciation/
Contracts to Receive Amount Value Date December 31, 2007 to Deliver (Depreciation)
- ------------------------------------------------------------------------------------------------------------------------------------
Argentine Peso 790,000 1/7/2008 $ 250,724 $ 251,432 $ (708)
Australian Dollar 1,190,000 3/19/2008 1,037,526 1,032,313 5,213
Euro 790,000 3/19/2008 1,153,750 1,166,672 (12,922)
Euro 940,000 3/19/2008 1,372,816 1,384,009 (11,193)
Euro 100,000 3/19/2008 146,044 146,860 (816)
Euro 100,000 3/19/2008 146,044 146,860 (816)
Euro 1,890,000 3/19/2008 2,760,237 2,724,870 35,367
Euro 740,000 3/19/2008 1,080,728 1,062,374 18,354
Hungary Forint 43,500,000 1/7/2008 251,793 253,940 (2,147)
Indonesian Rupiah 4,610,000,000 3/19/2008 489,773 493,470 (3,697)
Israeli Shekel 960,000 1/7/2008 249,232 249,519 (287)
Japanese Yen 229,440,000 3/19/2008 2,074,898 2,076,756 (1,858)
Japanese Yen 73,060,000 3/19/2008 660,704 645,749 14,955
Malaysian Ringgit 1,670,000 3/19/2008 506,494 507,908 (1,414)
Norwegian Krone 5,630,000 3/19/2008 1,034,281 1,031,702 2,579
Norwegian Krone 5,860,000 3/19/2008 1,076,534 1,074,894 1,640
Russian Ruble 6,150,000 1/10/2008 250,453 252,132 (1,679)
Russian Ruble 12,480,000 3/19/2008 507,855 504,202 3,653
Russian Ruble 24,890,000 3/19/2008 1,012,862 1,005,575 7,287
Saudi Arabia Riyal 1,370,000 3/25/2008 367,447 367,194 253
Saudi Arabia Riyal 270,000 3/25/2008 72,416 72,581 (165)
Turkish Lira 300,000 1/7/2008 256,808 250,941 5,867
----------- ----------- --------
$16,759,419 $16,701,953 $ 57,466
=========== =========== ========
The Fund held the following cross currency contracts at December 31, 2007:
Unrealized
Value at In Value at Contract Appreciation/
Contracts to Deliver December 31, 2007 Exchange For December 31, 2007 Value Date (Depreciation)
British Pounds $ 970,785 Swiss Franc $ 985,453 3/19/2008 $ 14,668
Euro 514,626 Polish Zloty 511,097 3/19/2008 (3,529)
Euro 1,080,728 Swedish Krona 1,075,575 3/19/2008 (5,153)
New Zealand Dollar 2,216,530 Australian Dollar 2,244,634 3/19/2008 28,104
---------- ----------- --------
$4,782,669 $ 4,816,759 $ 34,090
========== =========== ========
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Schedule of Investments -- December 31, 2007
- --------------------------------------------------------------------------------
At December 31, 2007, the Fund held the following open swap agreements:
Credit Default Swaps: Reference Buy/Sell (Pay)/Receive Expiration Notional
Counterparty Entity Protection Fixed Rate (%) Date Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Barclays Block Financial, 5.125%, 10/30/2014 Buy (2.300) 12/20/2012 15,000 USD
Citibank Altria Group, 7%, 11/4/2013 Buy (0.270) 12/20/2011 1,390,000 USD
Citibank Northern Tobacco, 5%, 6/1/2046 Sell 1.350 12/20/2011 695,000 USD
Citibank Southern California Tobacco, 5%, 6/1/2037 Sell 1.350 12/20/2011 695,000 USD
Deutsche Capital One Financial, 6.25%, 11/15/2013 Buy (2.530) 12/20/2012 340,000 USD
Deutsche Northern Rock, 3.875%, 3/28/2008 Sell 7.000 3/20/2008 2,960,000 USD
Goldman, Sachs & Co. Autozone, 5.875%, 10/15/2012 Buy (0.620) 6/20/2017 1,450,000 USD
Goldman, Sachs & Co. Capital One Financial, 6.25%, 11/15/2013 Buy (2.350) 12/20/2012 300,000 USD
Goldman, Sachs & Co. Capital One Financial, 6.25%, 11/15/2013 Buy (2.550) 12/20/2012 122,000 USD
Goldman, Sachs & Co. Dow Jones CDX.NA.IG.8 Index Buy (2.750) 6/20/2012 950,000 USD
JPMorgan Capital One Financial, 6.25%, 11/15/2013 Buy (2.350) 12/20/2012 268,000 USD
JPMorgan Block Financial, 5.125%, 10/30/2014 Buy (1.900) 9/20/2012 940,000 USD
JPMorgan Block Financial, 5.125%, 10/30/2014 Buy (2.250) 12/20/2012 10,000 USD
JPMorgan Block Financial, 5.125%, 10/30/2014 Buy (2.800) 12/20/2012 15,000 USD
JPMorgan iTRAXX Europe Senior Financials Series 8 Ver 1 Buy (0.450) 12/20/2012 5,400,000 USD
JPMorgan Republic of the Philippines, 10.625%, 3/16/2025 Buy (2.480) 9/20/2017 500,000 USD
JPMorgan Russian Federation, 7.5%, 3/31/2030 Sell 0.670 8/20/2012 540,000 USD
JPMorgan Russian Federation, 7.5%, 3/31/2030 Sell 0.800 8/20/2012 1,000,000 USD
JPMorgan Dow Jones CDX.NA.HY.8 Index Buy (2.750) 6/20/2012 1,900,000 USD
JPMorgan Dow Jones CDX.NA.HY.8 Index Buy (2.750) 6/20/2012 950,000 USD
JPMorgan Dow Jones CDX.NA.HY.9 Index Buy (3.750) 12/20/2012 1,100,000 USD
JPMorgan Dow Jones CDX.NA.HY.9 Index Buy (3.750) 12/20/2012 2,060,000 USD
JPMorgan Commercial Mortgage Backed, 2007-3, AAA Index Buy (0.080) 12/13/2049 3,400,000 USD
Merrill Lynch State Street, 7.65%, 6/15/2010 Buy (0.545) 12/20/2012 360,000 USD
Morgan Stanley Block Financial, 5.125%, 10/30/2014 Buy (2.325) 12/20/2012 60,000 USD
Morgan Stanley Verizon Communications, 4.9%, 9/15/2015 Buy (0.410) 3/20/2018 970,000 USD
Morgan Stanley Commercial Mortgage Backed, 2007-3, AAA Index Buy (0.080) 12/31/2049 1,690,000 USD
Unrealized
Credit Default Swaps: Appreciation/
Counterparty (Depreciation)
- ----------------------------------------
Barclays $ 149
Citibank 272
Citibank (31,598)
Citibank (31,598)
Deutsche 1,795
Deutsche 24,916
Goldman, Sachs & Co. (3,687)
Goldman, Sachs & Co. 3,837
Goldman, Sachs & Co. 542
Goldman, Sachs & Co. 1,164
JPMorgan 3,428
JPMorgan 24,408
JPMorgan 120
JPMorgan (163)
JPMorgan 50,110
JPMorgan (15,040)
JPMorgan (3,204)
JPMorgan (369)
JPMorgan (28,296)
JPMorgan 12,007
JPMorgan 37,394
JPMorgan 1,015
JPMorgan 48,065
Merrill Lynch (1,596)
Morgan Stanley 534
Morgan Stanley 2,168
Morgan Stanley 41,759
--------
($138,132)
=========
Unrealized
Interest Rate Swaps: Reference Floating Rate Expiration Notional Appreciation/
Counterparty Entity Index Fixed Rate (%) Date Amount (Depreciation)
- ------------------------------------------------------------------------------------------------------------------------------------
JPMorgan JPY--6 Month Yenibor Pay 1.3600 1/19/2012 595,000,000 JPY $ 74,237
JPMorgan JPY--6 Month Yenibor Pay 2.0750 7/28/2016 304,000,000 JPY 134,856
JPMorgan MYR--3 Month Kilbor Pay 4.1600 10/31/2011 1,659,613 MYR 3,283
JPMorgan NZD--3 Month Libor Pay 8.0475 6/21/2012 2,210,000 NZD (11,929)
JPMorgan THB--6 Month Thibor Pay 5.1800 11/2/2011 16,744,000 THB 11,844
JPMorgan USD--3 Month Libor Pay 4.8975 8/24/2009 15,300,000 USD 426,407
JPMorgan NZD--3 Month Libor Pay 7.8750 5/18/2010 5,900,000 NZD (66,721)
UBS AG JPY--6 Month Yenibor Pay 0.8775 5/11/2008 1,336,000,000 JPY (5,707)
UBS AG JPY--6 Month Yenibor Receive 2.5125 6/6/2026 326,000,000 JPY 156,192
--------
$722,462
========
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Schedule of Investments -- December 31, 2007
- --------------------------------------------------------------------------------
At December 31, 2007, the Fund held the following forward volatility option:
Expiration Unrealized
Counterparty Description Date Notional Amount Appreciation
- -----------------------------------------------------------------------------------------------------------------------------------
Goldman, Sachs & Co. OTC contract to purchase a 2 year expiration straddle
(call and put) on a USD 10 Year Fixed/Floating
interest rate swap on 4/21/2008 for a premium of 7.04%
of notional. The option strikes will be determined on
the expiration date of the foward agreement using the
10 Year USD interest rate swap rate, 6 month forward. 4/21/2010 1,980,000 USD ($14,026)
========
At December 31, 2007, the country allocation was as follows:
Percentage of
Country Allocation Investments
- --------------------------------------------------------------------------------
Argentina 0.8%
Brazil 0.6
Canada 0.3
Egypt 0.5
Euro 21.4
Japan 19.1
Mexico 1.3
South Africa 0.3
Sweden 3.1
U.K. 26.0
U.S. 26.6
-----
100.0%
The accompanying notes are an integral part of the financial statements.
13
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Statement of Assets and Liabilities
December 31, 2007 (As restated; see Note 10)
- --------------------------------------------------------------------------------
Assets
Investments in securities:
Unaffiliated issuers, at value (Note 1A) (cost $95,436,274) $ 98,715,375
Affiliated issuers, at value (Note 1A) (cost $3,387,799) 3,387,799
Foreign currency, at value (cost $448,156) 452,984
Interest and dividends receivable 1,176,923
Unrealized appreciation on swap contracts (Note 6) 1,060,502
Unrealized appreciation on forward currency exchange contracts (Note 6) 990,869
Receivable for investments sold 552,017
Unamortized swap premiums paid (Note 6) 407,080
Unrealized appreciation on forward volatility options 14,026
Receivable for Fund shares sold 4,864
Prepaid expenses 10,725
------------
Total assets 106,773,164
Liabilities
Payable for investments purchased $ 5,172,108
Payable for securities lending collateral investment (Note 7) (Note 10) 733,732
Due to Custodian 409,525
Unrealized depreciation on swap contracts (Note 6) 199,908
Distributions payable 130,754
Unrealized depreciation on forward currency exchange contracts (Note 6) 46,384
Unamortized swap premiums received (Note 6) 39,070
Payable for variation margin on open futures contracts (Note 6) 22,445
Accrued professional fees 54,627
Accrued accounting, administration, custody and transfer agent fees (Note 2) 43,712
Accrued administrative service fees (Note 2) 28,692
Accrued shareholder reporting expense (Note 2) 11,500
Accrued trustees' fees and expenses (Note 2) 1,372
Accrued chief compliance officer fee (Note 2) 237
Other accrued expenses and liabilities 2,586
-----------
Total liabilities 6,896,652
------------
Net Assets $ 99,876,512
============
Net Assets consist of:
Paid-in capital $110,344,558
Accumulated net realized loss (15,167,198)
Distributions in excess of net investment income (168,544)
Net unrealized appreciation 4,867,696
------------
Total Net Assets $ 99,876,512
============
Shares of beneficial interest outstanding 5,379,553
============
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 18.57
============
The accompanying notes are an integral part of the financial statements.
14
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Statement of Operations
For the Year Ended December 31, 2007
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Interest income (including $2,746 of foreign tax expense) $4,271,458
Dividend income from affiliated investments (Note 1H) 91,621
Security lending income (Note 7) (Note 10) 12,742
----------
4,375,821
Expenses
Investment advisory fee (Note 2) $394,869
Accounting, custody, administration and transfer agent fees (Note 2) 131,283
Professional fees 63,136
Miscellaneous expenses 37,754
Administrative service fees (Note 2) 36,846
Registration fees 19,300
Trustees' fees and expenses (Note 2) 7,257
Insurance expense 3,709
----------
Total expenses 694,154
----------
Net investment income 3,681,667
----------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (694,654)
Financial futures transactions (278,435)
Written options transactions 84,888
Swap transactions (311,320)
Foreign currency transactions and forward foreign currency exchange transactions (500,515)
----------
Net realized gain (loss) (1,700,036)
Change in unrealized appreciation (depreciation) on:
Investments 1,034,540
Financial futures contracts (248,769)
Swap contracts 972,100
Foreign currency translation and forward foreign currency exchange contracts 533,880
----------
Change in net unrealized appreciation (depreciation) 2,291,751
----------
Net realized and unrealized gain (loss) on investments 591,715
----------
Net Increase in Net Assets from Operations $4,273,382
==========
The accompanying notes are an integral part of the financial statements.
15
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the For the
Year Ended Year Ended
December 31, 2007 December 31, 2006
----------------- -----------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income $ 3,681,667 $ 3,206,542
Net realized gain (loss) (1,700,036) (2,018,753)
Change in net unrealized appreciation (depreciation) 2,291,751 2,636,919
----------- -----------
Net increase (decrease) in net assets from investment operations 4,273,382 3,824,708
----------- -----------
Distributions to Shareholders (Note 1C)
From net investment income (1,884,405) (1,050,622)
----------- -----------
Total distributions to shareholders (1,884,405) (1,050,622)
----------- -----------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares 35,367,635 12,137,236
Value of shares issued to shareholders in reinvestment of distributions 1,735,508 968,978
Cost of shares redeemed (net of redemption fees of $47 and $0, respectively) (32,960,098) (45,257,096)
----------- -----------
Net increase (decrease) in net assets from Fund share transactions 4,143,045 (32,150,882)
----------- -----------
Total Increase (Decrease) in Net Assets 6,532,022 (29,376,796)
Net Assets
At beginning of year 93,344,490 122,721,286
----------- -----------
At end of year [including distributions in excess of
net investment income of $168,544 and $729,885, respectively] $99,876,512 $93,344,490
=========== ===========
The accompanying notes are an integral part of the financial statements.
16
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Financial Highlights
- --------------------------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------------------
2007 2006 2005 2004 2003
------- ------- ------- -------- --------
Net Asset Value, Beginning of Year $ 18.14 $ 17.55 $ 21.35 $ 21.02 $ 20.04
------- ------- ------- -------- --------
From Operations:
Net investment income (a) 0.69 0.53 0.75 0.75 0.66
Net realized and unrealized gain (loss) on investments 0.10 0.21 0.23 0.27 0.32
------- ------- ------- -------- --------
Total from investment operations 0.79 0.74 0.98 1.02 0.98
------- ------- ------- -------- --------
Less Distributions to Shareholders:
From net investment income (0.36) (0.15) (4.78) (0.69) --
------- ------- ------- -------- --------
Net Asset Value, End of Year $ 18.57 $ 18.14 $ 17.55 $ 21.35 $ 21.02
======= ======= ======= ======== ========
Total Return 4.35% 4.27% 4.72% 4.90% 4.89%
Ratios/Supplemental Data:
Expenses (to average daily net assets) 0.70% 0.68% 0.58% 0.57% 0.59%
Net Investment Income (to average daily net assets) 3.73% 3.01% 3.49% 3.43% 3.20%
Portfolio Turnover (b)
Inclusive 168% -- -- -- --
Exclusive 140% 89% 168% 170% 185%
Net Assets, End of Year (000's omitted) $99,877 $93,344 $122,721 $302,406 $369,706
- ----------
(a) Calculated based on average shares outstanding.
(b) The portfolio's turnover rate is presented inclusive and exclusive of the
effect of rolling forward purchase commitments.
The accompanying notes are an integral part of the financial statements.
17
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
(1) Organization and Significant Accounting Policies:
Mellon Institutional Funds Investment Trust (the "Trust") is organized as a
Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended, as an open-end, management investment company.
Standish Mellon International Fixed Income Fund (the "Fund") is a separate
diversified investment series of the Trust.
The objective of the Fund is to maximize total return while realizing a
market level of income consistent with preserving principal and liquidity.
The Fund seeks to achieve its objective by investing, under normal
circumstances, at least 80% of net assets in fixed income securities, and
at least 65% of net assets in non-U.S. dollar denominated fixed income
securities of foreign governments and companies located in various
countries, including emerging markets.
Effective May 1, 2007, the Board approved Fund strategy changes to ease
limits on investments in emerging markets and high yield investments and
lower the minimum average credit quality of the Fund. Specifically, the
changes: (i) increased the limitations on high yield exposure from 15% to
25% of Fund's total assets; (ii) changed the description of the Fund's
average credit quality from a "target in the range of A to AA/Aa" to "a
minimum of A-/A3" and (iii) increased the general limitation on investing
in issuers located in emerging markets from 10% to 25% of the total assets
of the Fund.
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in accordance with accounting principles generally
accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those
estimates.
A. Investment security valuations
Fund shares are valued as of the close of regular trading (normally 4:00
p.m., Eastern Time) on each day that the New York Stock Exchange ("NYSE")
is open. Securities are valued at the last sale prices on the exchange or
national securities market on which they are primarily traded. Securities
not listed on an exchange or national securities market, or securities for
which there were no reported transactions, are valued at the last quoted
bid price. Securities that are fixed income securities, other than
short-term instruments with less than sixty days remaining to maturity, for
which market prices are readily available, are valued at their current
market value on the basis of quotations, which may be furnished by a
pricing service or dealers in such securities. Securities (including
illiquid securities) for which quotations are not readily available are
valued at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Trustees. With
respect to any portion of the Fund's assets that are invested in one or
more open-end registered investment companies ("RICs"), the Fund's net
asset value ("NAV") will be calculated based upon the NAVs of such RICs.
Exchange traded options and futures are valued at the settlement price
determined by the relevant exchange. Non-exchange traded derivatives are
normally valued on the basis of quotes obtained from brokers and dealers,
including counterparties or pricing services.
Because foreign markets may be open at different times than the NYSE, the
value of the Fund's shares may change on days when shareholders are not
able to buy or sell them. Many securities markets and exchanges outside the
U.S. close prior to the close of the NYSE and therefore the closing prices
for securities in such markets or on such exchanges may not fully reflect
the events that occur after such close but before the close of the NYSE.
Short-term instruments with less than sixty days remaining to maturity are
valued at amortized cost, which approximates market value. If the Fund
acquires a short-term instrument with more than sixty days remaining to its
maturity, it is valued at current market value until the sixtieth day prior
to maturity and will then be valued at amortized cost based upon the value
on such date unless the Trustees determine during such sixty-day period
that amortized cost does not represent fair value.
Reduced investor demand for mortgage loans and mortgage-related securities
resulting from delinquencies and losses on residential mortgage loans
(especially subprime and second-lien mortgage loans) and related market
events have negatively impacted the performance and market value of certain
mortgage-related investments and other fixed income securities, and
increased investor yield requirements. This in turn has resulted in limited
liquidity in the secondary market for such securities, adversely affecting
the market value of mortgage-related securities and resulting in higher
than usual volatility in the credit markets generally. It is possible that
such limited liquidity in the secondary market for mortgage-related
securities, and the related credit market volatility, could continue or
worsen. To the extent that the market for securities in the Fund's
portfolio becomes illiquid, the Fund might realize upon sale of an affected
holding substantially less than the amount at which the Fund had previously
been valuing the security in calculating its net asset value, and the Fund
may incur substantial losses as a result.
B. Securities transactions and income
Securities transactions are recorded as of the trade date. Interest income
is determined on the basis of coupon interest earned, adjusted for
accretion of discount or amortization of premium using the
yield-to-maturity method on long-term debt securities and short-term
securities with greater than sixty days to maturity. Dividend income is
recorded on the ex-dividend date. Realized gains and losses from securities
sold are recorded on the identified cost basis.
18
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments. Net realized gains and losses on foreign currency
transactions represent gains and losses on disposition of foreign
currencies and forward foreign currency exchange contracts, currency gains
and losses realized between the trade and settlement dates on securities
transactions, and the difference between the amount of investment income
and foreign withholding taxes recorded on the Fund's books and the U.S.
dollar equivalent amounts actually received or paid.
C. Distributions to shareholders
Distributions to shareholders are recorded on the ex-dividend date. The
Fund's distributions from capital gains, if any, after reduction of capital
losses will be declared and distributed at least annually. Dividends from
net investment income and distributions from capital gains, if any, are
reinvested in additional shares of the Fund unless the shareholder elects
to receive them in cash.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from accounting principles
generally accepted in the United States of America. These differences,
which may result in reclassifications, are primarily due to wash sales,
post-October losses, capital loss carryovers, amortization of swap premium,
timing of recognition of realized and unerealized appreciation and
depreciation on futures contracts and differing treatments for foreign
currency transactions.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications among undistributed net
investment income (loss), accumulated net realized gain (loss) and paid in
capital. Undistributed net investment income (loss) and accumulated net
realized gain (loss) on investments may include temporary book and tax
basis differences which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the following
year.
Section 988 of the Internal Revenue Code ("Code") provides that gains or
losses on certain transactions attributable to fluctuations in foreign
currency exchange rates must be treated as ordinary income or loss. For
financial statement purposes, such amounts are included in net realized
gains or losses.
D. Foreign currency transactions
The Fund maintains its books and records in U.S. dollars. Investment
security valuations and other assets and liabilities initially expressed in
foreign currencies are converted into U.S. dollars based upon current
currency exchange rates. Purchases and sales of foreign investment
securities and income and expenses are converted into U.S. dollars based
upon currency exchange rates prevailing on the respective dates of such
transactions.
E. Foreign investment risk
There are certain additional risks involved in investing in foreign
securities that are not inherent in investments in domestic securities.
These risks may involve adverse political and economic developments,
including the possible imposition of capital controls or other foreign
governmental laws or restrictions. In addition, the securities of some
foreign companies and securities markets are less liquid and at times may
be more volatile than securities of comparable U.S. companies and U.S.
securities markets. The risks described above apply to an even greater
extent to investments in emerging markets. The securities markets of
emerging countries are generally smaller, less developed, less liquid, and
more volatile than the securities markets of the U.S. and developed foreign
markets.
F. Commitments and contingencies
In the normal course of business, the Fund may enter into contracts and
agreements that contain a variety of representations and warranties, which
provide general indemnifications. The maximum exposure to the Fund under
these arrangements is unknown, as this would involve future claims that may
be made against the Fund that have not yet occurred. However, based on
experience, the Fund expects the risks of loss to be remote.
G. Expenses
The majority of expenses of the Trust are directly identifiable to an
individual fund. Expenses which are not readily identifiable to a specific
fund are allocated among funds of the Trust taking into consideration,
among other things, the nature and type of expense and the relative size of
the funds.
H. Affiliated issuers
Affiliated issuers are investment companies advised by Standish Mellon
Asset Management Company LLC ("Standish Mellon"), a wholly-owned subsidiary
of The Bank of New York Mellon Corporation ("BNY Mellon"), or its
affiliates.
19
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
I. New Accounting Requirements
On September 20, 2006, the Financial Accounting Standards Board ("FASB")
released Statement of Financial Accounting Standards No. 157 "Fair Value
Measurements" ("FAS 157"). FAS 157 establishes an authoritative definition
of fair value, sets out a framework for measuring fair value, and requires
additional disclosures about fair-value measurements. The application of
FAS 157 is required for fiscal years beginning after November 15, 2007 and
interim periods within those fiscal years. At this time, management is
evaluating the implications of FAS 157 and its impact, if any, in the
financial statements has not yet been determined.
(2) Investment Advisory Fee and Other Transactions with Affiliates:
The investment advisory fee paid to Standish Mellon for overall investment
advisory and administrative services, and general office facilities, is
payable monthly at the annual rate of 0.40% of the Fund's average daily net
assets.
The Trust entered into an agreement with Dreyfus Transfer, Inc., a wholly
owned subsidiary of The Dreyfus Corporation, a wholly owned subsidiary of
BNY Mellon and an affiliate of Standish Mellon, to provide personnel and
facilities to perform transfer agency and certain shareholder services for
the Fund. For these services, the Fund pays Dreyfus Transfer, Inc. a fixed
fee plus per account and transaction based fees, as well as, out-of-pocket
expenses. Pursuant to this agreement the Fund was charged $9,241, for the
year ended December 31, 2007.
The Trust has entered into an agreement with Mellon Bank, N.A. ("Mellon
Bank"), a wholly owned subsidiary of BNY Mellon and an affiliate of
Standish Mellon, to provide custody, administration and fund accounting
services for the Fund. For these services the Fund pays Mellon Bank a
fixed fee plus asset and transaction based fees, as well as out-of-pocket
expenses. Pursuant to this agreement the Fund was charged $122,042 for the
year ended December 31, 2007.
The Trust also entered into an agreement with Mellon Bank to perform
certain securities lending activities and to act as the Fund's lending
agent. Mellon Bank receives an agreed upon percentage of the net lending
revenues. Pursuant to this agreement, the Fund was charged $5,483 for the
year ended December 31, 2007. See Note 7 for further details.
The Trust entered into two separate agreements with The Bank of New York
that enables the Fund, and other funds in the Trust, to borrow, in the
aggregate, (i) up to $35 million from a committed line of credit and (ii)
up to $15 million from an uncommitted line of credit. Interest is charged
to each participating fund based on its borrowings at a rate equal to the
Federal Funds effective rate plus 1/2 of 1%. The participating funds also
pay an annual fee, computed at a rate of 0.020 of 1% of the committed and
uncommitted amounts and allocated ratably to the participating funds. In
addition, a facility fee, computed at an annual rate of 0.060 of 1% on the
committed amount, is allocated ratably among the participating funds at the
end of each quarter. Pursuant to these agreements, the Fund was charged
$4,280 for the year ended December 31, 2007, which amount is included in
miscellaneous expenses on the statement of operations. See Note 9 for
further details.
The Trust reimburses BNY Mellon Asset Management for a portion of the
salary of the Trust's Chief Compliance Officer. For the year ended December
31, 2007, the Fund was charged $4,295, which amount is included in
miscellaneous expenses in the statement of operations. No other director,
officer or employee of Standish Mellon or its affiliates receives any
compensation from the Trust or the Fund for serving as an officer or
Trustee of the Trust. The Fund pays each Trustee who is not a director,
officer or employee of Standish Mellon or its affiliates an annual fee and
a per meeting fee as well as reimbursement for travel and out-of-pocket
expenses. In addition, the Trust pays the legal fees for the independent
counsel of the Trustees.
The Trust has contracted Mellon Investor Services LLC, a wholly owned
subsidiary of BNY Mellon and an affiliate of Standish Mellon, to provide
printing and fulfillment services for the Fund. Pursuant to this agreement,
the Fund was charged $11,500, which amount is included in miscellaneous
expenses in the statement of operations for the year ended December 31,
2007.
The Fund may pay administrative service fees. These fees are paid to
affiliated or unaffiliated retirement plans, omnibus accounts and platform
administrators and other entities ("Plan Administrators") that provide
record keeping and/or other administrative support services to accounts,
retirement plans and their participants. As compensation for such services,
the Fund may pay each Plan Administrator an administrative service fee in
an amount of up to 0.15% (on an annualized basis) of the Fund's average
daily net assets attributable to Fund shares that are held in accounts
serviced by such Plan Administrator. The Fund's adviser or its affiliates
may pay additional compensation from their own resources to Plan
Administrators and other entities for administrative services, as well as
in consideration of marketing or other distribution-related services. These
payments may provide an incentive for these entities to actively promote
the Fund or cooperate with the distributor's promotional efforts. For the
year ended December 31, 2007, the Fund was charged $693 for fees payable to
BNY Mellon Wealth Management.
Effective June 30, 2007, MBSC Securities Corporation ("MBSC"), a wholly
owned subsidiary of BNY Mellon and affiliate of TBCAM, replaced Mellon
Funds Distributor, L.P. as the Fund's principal distributor.
Effective July 1, 2007, Mellon Financial Corporation ("MFC") and The Bank
of New York Company, Inc. ("BNY") each merged into BNY Mellon, with BNY
Mellon being the surviving entity of each merger.
20
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the year ended December 31, 2007 were as follows:
Purchases Sales
------------ ------------
U.S. Government Securities $ 93,496,303 $ 86,668,743
============ ============
Non-U.S. Government Securities $ 37,903,246 $ 47,901,961
============ ============
(4) Shares of Beneficial Interest:
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest having a par value of
one cent per share. Transactions in Fund shares were as follows:
For the For the
Year Ended Year Ended
December 31, 2007 December 31, 2006
----------------- -----------------
Shares sold 1,931,769 686,385
Shares issued to shareholders
in reinvestment of distributions 93,535 55,850
Shares redeemed (1,792,271) (2,589,759)
---------- ----------
Net increase (decrease) 233,033 (1,847,524)
========== ==========
At December 31, 2007, two shareholders of record, in the aggregate, held
approximately 58.4% of the total outstanding shares of the Fund. Investment
activities of these shareholders could have a material impact on the Fund.
The Fund imposes a redemption fee of 2% of the net asset value of the
shares, with certain exceptions, which are redeemed or exchanged less than
30 days from the day of their purchase. The redemption fee is paid directly
to the Fund, and is designed to offset brokerage commissions, market
impact, and other costs associated with short-term trading in the Fund. The
fee does not apply to shares that were acquired through reinvestment of
distributions. For the fiscal years ended December 31, 2007 and December
31, 2006, the Fund received redemption fees of $47 and $0, respectively.
(5) Federal Taxes:
Each year, the Fund intends to qualify as a "regulated investment company"
under Subchapter M of the Code. As such and by complying with the
applicable provisions of the Code regarding the sources of its income, the
timely distributions of its income to its shareholders, and the
diversification of its assets, the Fund will not be subject to U.S. federal
income tax on its investment company taxable income and net capital gain
which are distributed to shareholders.
During the current year, the Fund adopted FASB Interpretation No. 48
"Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides
guidance for how uncertain tax positions should be recognized, measured,
presented and disclosed in the financial statements. FIN 48 requires the
evaluation of tax positions taken or expected to be taken in the course of
preparing the Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority,
and valuing the benefit management believes it would recover. Management
believes the Fund will realize the full benefit of the tax positions it has
taken and, therefore, no provision has been recorded in the accompanying
financial statements.
The tax basis components of distributable earnings and the federal tax cost
as of December 31, 2007 were as follows:
Cost for federal income tax purposes $98,127,056
===========
Gross unrealized appreciation $ 4,104,440
Gross unrealized depreciation (862,054)
-----------
Net unrealized appreciation (depreciation) $ 3,242,386
===========
Undistributed ordinary income $ 775,151
Undistributed capital gains --
-----------
Total distributable earnings $ 775,151
===========
21
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
The tax character of distributions paid during the fiscal years ended
December 31, 2007 and December 31, 2006, were as follows:
2007 2006
---------- ----------
Ordinary income $1,884,405 $1,050,622
========== ==========
At December 31, 2007, the Fund for federal income tax purposes, has capital
loss carryovers which will reduce the Fund's taxable income arising from
net realized gain on investments, if any, to the extent permitted by the
Internal Revenue Code and thus will reduce the amount of distributions to
shareholders which would otherwise be necessary to relieve the Fund of any
liability for federal income tax. Such capital loss carryovers are as
follows:
Capital Loss
Carry Over Expiration Date
------------ ---------------
$ 4,991,253 12/31/2008
4,991,253 12/31/2009
4,991,253 12/31/2010
-----------
$14,973,759
During 2007, the Fund utilized $235,158 in capital loss carryovers. At
December 31, 2007, $7,578,424 of capital loss carryovers expired. The Fund
also treated as expired $24,569,330 of capital losses due to limitations
imposed by the Internal Revenue Service Code related to share ownership
activity. It is uncertain whether the Fund will be able to realize the
benefits of the remaining capital loss carryovers before they expire and
utilization of the remaining capital loss carryovers could be subject to
future limitations imposed by the Internal Revenue Code related to share
ownership activity.
The Fund elected to defer to its fiscal year ending December 31, 2008,
$116,441 of capital losses during the period November 1, 2007 to December
31, 2007.
(6) Financial Instruments:
In general, the following instruments are used for hedging purposes as
described below. However, these instruments may also be used to seek to
enhance potential gain in circumstances where hedging is not involved.
The Fund may trade the following financial instruments with off-balance
sheet risk:
Options
Call and put options give the holder the right to purchase or sell a
security or currency or enter into a swap arrangement on a future date at a
specified price. The Fund may use options to seek to hedge against risks of
market exposure and changes in security prices and foreign currencies, as
well as to seek to enhance returns. Writing puts and buying calls tend to
increase the Fund's exposure to the underlying instrument. Buying puts and
writing calls tend to decrease the Fund's exposure to the underlying
instrument, or hedge other Fund investments. Options, both held and written
by the Fund, are reflected in the accompanying Statement of Assets and
Liabilities at market value. The underlying face amount at value of any
open purchased option is shown in the Schedule of Investments. This amount
reflects each contract's exposure to the underlying instrument at year end.
Losses may arise from changes in the value of the underlying instruments,
if there is an illiquid secondary market for the contract, or if the
counterparty does not perform under the contract's terms. Premiums received
from writing options which expire are treated as realized gains.
Premiums received from writing options which are exercised or are closed
are added to or offset against the proceeds or amount paid on the
transaction to determine the realized gain or loss. Realized gains and
losses on purchased options are included in realized gains and losses on
investment securities, except purchased options on foreign currency which
are included in realized gains and losses on foreign currency transactions.
If a put option written by the Fund is exercised, the premium reduces the
cost basis of the securities purchased by the Fund. The Fund, as a writer
of an option, has no control over whether the underlying securities may be
sold (call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written
option.
Exchange traded options are valued at the last sale price, or if no sales
are reported, the last bid price for purchased options and the last ask
price for written options. Options traded over-the-counter are valued using
prices supplied by the dealers including counterparties.
22
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
For the year ended December 31, 2007, the Fund entered into the following
transactions:
Number of Notional
Written Put Option Transactions Contracts Amount Premiums
--------- -------- ---------
Outstanding, beginning of year -- $ -- $ --
Options written 47 25,900 26,516
Options expired (47) (25,900) (26,516)
--- -------- --------
Outstanding, end of year -- $ -- $ --
=== ======== ========
Number of Notional
Written Call Option Transactions Contracts Amount Premiums
--------- -------- ---------
Outstanding, beginning of year -- $ -- $ --
Options written 47 28,640 58,372
Options expired 47) (28,640) (58,372)
--- -------- --------
Outstanding, end of year -- $ -- $ --
=== ======== ========
At December 31, 2007, the Fund held a forward volatility option. See the
Schedule of Investments for further details.
Forward foreign currency exchange contracts
The Fund may enter into forward foreign currency and cross currency
exchange contracts for the purchase or sale of a specific foreign currency
at a fixed price on a future date. Risks may arise upon entering these
contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar and other foreign currencies.
The forward foreign currency and cross currency exchange contracts are
marked to market using the forward foreign currency rate of the underlying
currency and any appreciation or depreciation are recorded for financial
statement purposes as unrealized until the contract settlement date or upon
the closing of the contract. Forward currency exchange contracts are used
by the Fund primarily to protect the value of the Fund's foreign securities
from adverse currency movements. Unrealized appreciation and depreciation
of forward currency exchange contracts is included in the Statement of
Assets and Liabilities.
At December 31, 2007, the Fund held forward foreign currency exchange
contracts. See the Schedule of Investments for further details.
Futures contracts
The Fund may enter into financial futures contracts for the purchase or
sale of securities, or contracts based on financial indices at a fixed
price on a future date. Pursuant to margin requirements, the Fund deposits
either cash or securities in an amount equal to a certain percentage of the
contract amount. Subsequent payments are made or received by the Fund each
day, depending on the daily fluctuations in the value of the underlying
security, and are recorded for financial statement purposes as unrealized
appreciation or depreciation by the Fund. There are several risks in
connection with the use of futures contracts as a hedging device. The
change in value of futures contracts primarily corresponds with the value
of their underlying instruments or indices, which may not correlate with
changes in the value of hedged investments. Buying futures tends to
increase the Fund's exposure to the underlying instrument, while selling
futures tends to decrease the Fund's exposure to the underlying instrument
or hedge other investments. In addition, there is the risk that the Fund
may not be able to enter into a closing transaction because of an illiquid
secondary market. Losses may also arise if there is an illiquid secondary
market or if the counterparty does not perform under the contract's terms.
The Fund enters into financial futures transactions primarily to seek to
manage its exposure to certain markets and to changes in securities prices
and foreign currencies. Gains and losses are realized upon the expiration
or closing of the futures contracts. Futures contracts are valued at the
quoted daily settlement prices established by the exchange on which they
trade.
At December 31, 2007, the Fund held open financial futures contracts. See
the Schedule of Investments for further details.
23
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
Swap agreements
The Fund may enter into swap agreements. A swap is an agreement to exchange
the return generated by one instrument for the return generated by another
instrument. The Fund may enter into interest rate, credit default and total
return swap agreements to manage its exposure to interest rates and credit
risk. Interest rate swap agreements involve the exchange by the Fund with
another party of their respective commitments to pay or receive interest,
e.g., an exchange of floating rate payments for fixed rate payments with
respect to a notional amount of principal. In a credit default swap, one
party makes a stream of payments to another party in exchange for the right
to receive a specified return in the event of a default by a third party on
its obligation. The Fund may use credit default swaps to provide a measure
of protection against defaults of issuers (i.e., to reduce risk where the
Fund owns or has exposure to the corporate or sovereign issuer) or to take
an active long or short position with respect to the likelihood of a
particular corporate or sovereign issuer's default. Total return swap
agreements involve commitments to pay interest in exchange for a
market-linked return, both based on notional amounts. To the extent the
total return of the security or index underlying the transaction exceeds or
falls short of the offsetting interest rate obligation, the Fund will
receive a payment from or make a payment to the counterparty. In connection
with these agreements, cash or securities may be set aside as collateral in
accordance with the terms of the swap agreement. The Fund earns interest on
cash set aside as collateral. Swaps are marked to market daily based upon
quotations, which may be furnished by a pricing service or dealers in such
securities and the change in value, if any, is recorded as unrealized
appreciation or depreciation in the Statement of Operations. These
financial instruments are not actively traded on financial markets. The
values assigned to these instruments are based upon the best avail able
information and because of the uncertainty of the valuation, these values
may differ significantly from the values that would have been realized had
a ready market for these instruments existed, and differences could be
material. Payments received or made at the beginning of the measurement
period are reflected as such on the Statement of Assets and Liabilities.
Payments received or made from credit default swaps at the end of the
measurement period are recorded as realized gains and losses in the
Statement of Operations. Net payments of interest on interest rate swap
agreements, if any, are included as part of realized gains and losses.
Entering into these agreements involves, to varying degrees, elements of
credit, market, and documentation risk in excess of the amounts recognized
in the Statement of Assets and Liabilities. Such risks involve the
possibility that there will be no liquid market for these agreements, that
the counterparty to the agreements may default on its obligation to perform
or disagree as to the meaning of contractual terms in the agreements, and
that there may be unfavorable changes in interest rates.
At December 31, 2007, the Fund held open swap agreements. See the Schedule
of Investments for further details.
(7) Security Lending:
The Fund may lend its securities to financial institutions which the Fund
deems to be creditworthy. The loans are collateralized at all times with
cash or securities with a market value at least equal to the market value
of the securities on loan. The market value of securities loaned is
determined daily and any additional required collateral is allocated to the
Fund on the next business day. For the duration of a loan, the Fund
receives the equivalent of the interest or dividends paid by the issuer on
the securities loaned and also receives compensation from the investment of
the collateral. As with other extensions of credit, the Fund bears the risk
of delay in recovery or even loss of rights in its securities on loan
should the borrower of the securities fail financially or default on its
obligations to the Fund. In the event of borrower default, the Fund
generally has the right to use the collateral to offset losses incurred.
The Fund may incur a loss in the event it was delayed or prevented from
exercising its rights to dispose of the collateral. The Fund also bears
the risk in the event that the interest and/or dividends received on
invested collateral is not sufficient to meet the Fund's obligations due on
the loans.
The Fund loaned securities during the year ended December 31, 2007 and
earned interest on the invested collateral of $242,474 of which $229,732
was rebated to borrowers or paid in fees. At December 31, 2007, the Fund
did not have any securities out on loan. See also Note 10.
(8) Delayed Delivery Transactions:
The Fund may purchase securities on a when-issued, delayed delivery or
forward commitment basis. Payment and delivery may take place a month or
more after the date of the transactions. The price of the underlying
securities and the date when the securities will be delivered and paid for
are fixed at the time the transaction is negotiated. Income on the
securities will not be earned until settlement date. The Fund instructs its
custodian to segregate securities having value at least equal to the amount
of the purchase commitment.
24
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Fund may enter into to be announced (TBA) purchase commitments to
purchase securities for a fixed unit price at a future date beyond
customary settlement time. Although the unit price has been established,
the principal value has not been finalized. However, the amount of the
commitments will not fluctuate more than 0.01% from the principal amount.
The Fund holds, and maintains until settlement date, cash or high-grade
debt obligations in an amount sufficient to meet the purchase price, or the
Fund may enter into offsetting contracts for the forward sale of other
securities it owns. Income on the securities will not be earned until
settlement date. TBA purchase commitments may be considered securities in
themselves, and involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date. Unsettled TBA purchase
commitments are valued at the current market value of the underlying
securities, according to the procedures described under "Investment
security valuations" above.
The Fund may enter into TBA sale commitments to hedge its Fund positions.
Proceeds of TBA sale commitments are not received until the contractual
settlement date. During the time a TBA sale commitment is outstanding, an
offsetting TBA purchase commitment deliverable is held as "cover" for the
transaction.
At December 31, 2007, the Fund had delayed delivery securities. See the
Schedule of Investments for further details.
(9) Line of Credit:
On behalf of the Fund, and other funds in the Trust, the Trust has access
to a credit facility, which enables each fund to borrow, in the aggregate,
up to $35 million under a committed line of credit and up to $15 million
under an uncommitted line of credit. During the year ended December 31,
2007, the Fund had average borrowings outstanding of $932,160 for a total
of twenty-five days and incurred $4,047 of interest expense. The Fund did
not have an outstanding loan balance at December 31, 2007.
(10) Restatement:
The Statement of Assets and Liabilities and Schedule of Investments have
been restated to correct an error in the manner in which the Fund's
securities lending agent and custodian accounted for the investment in
pooled investment vehicles of cash collateral derived from the Fund's
securities lending activity.
During the fiscal year ended December 31, 2007, the Fund, together with
other investment series of the Trust, participated in a securities lending
program. Until December 10, 2007, all cash collateral received by the Fund
and other series of the Trust in connection with the securities lending
program was invested in the BlackRock Cash Strategies Fund LLC (the
"BlackRock Fund"), a private investment fund not affiliated with the Trust
or its investment adviser. On December 10, 2007, the BlackRock Fund
announced that it was suspending investor withdrawal privileges due to
conditions related to the credit markets and the adverse effect of such
conditions on the liquidity of the BlackRock Fund's portfolio holdings.
Commencing on December 11, 2007, all new cash collateral received in
connection with the securities lending activity of the Fund and other
series of the Trust was invested by the securities lending agent in the
Dreyfus Institutional Cash Advantage Fund (the "Dreyfus Fund"), an
affiliated money market fund registered as an investment company under the
Investment Company Act of 1940, as amended. To the extent that the
BlackRock Fund agreed to permit withdrawals during the period, cash
proceeds from such withdrawals by series of the Trust were reinvested in
shares of the Dreyfus Fund. Repayments of cash collateral during the period
were made from the proceeds of redemptions of the Dreyfus Fund.
The Fund determined that from December 11, 2007 through the December 31,
2007 closing date of the financial statements of the Fund and continuing
until March 10, 2008, the securities lending agent and custodian failed to
account properly for the Fund's investments in the BlackRock Fund and the
Dreyfus Fund. Specifically, the securities lending agent and custodian
maintained, for each series of the Trust, subaccounts reflecting each
series ownership of shares of the Dreyfus Fund and the BlackRock Fund which
considered each such series to own a percentage of the Trust series'
aggregate ownership of the Dreyfus Fund and the BlackRock Fund equal to
each series' pro rata balance of the aggregate Trust cash collateral in the
securities lending program, rather than according to each series' specific
cash purchase and withdrawal activity in shares of the Dreyfus Fund and/or
the BlackRock Fund. The management of the Trust determined that the
securities lending agent and custodian should have accounted for these
investments on a Fund specific basis in accordance with actual cash
purchases and withdrawals. This erroneous methodology caused differences in
the entries in the Fund's books and records on which the Fund's Schedule of
Investments and Statement of Assets and Liabilities are based. These
financial statements have been restated accordingly. (The Fund's annual
report for the fiscal year ended December 31, 2007 containing these
financial statements was previously posted on the Trust's website but had
not been mailed to shareholders or filed with the Commission.) The
liability listed as "Payable for securities lending collateral investment"
represents the extent to which the Fund's cash needs to repay collateral
exceeded the value of its interest in the Dreyfus Fund. The erroneous
sub-accounting methodology had no effect on the computation of the Fund's
net asset value.
25
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
Effective March 10, 2008, the accounting for cash collateral investments in
pooled vehicles was corrected to account for specific purchases and
redemptions of interests in such vehicles by the Fund. All activity was
reprocessed to reflect correct ownership by the Fund in each vehicle and
the above described financial statements restated accordingly.
The amounts as originally reported and as restated are as follows:
Statement of Asset and Liabilities As Originally Reported As Restated
---------------------------------- ---------------------- -----------
Investments in securities: Unaffiliated issuers, at value $ 97,981,643 $ 98,715,375
Total assets $106,039,432 $106,773,164
Payable for securities lending
collateral investment (Note7) (Note 10) -- $ 733,732
Total liabilities $ 6,162,920 $ 6,896,652
Net Assets $ 99,876,512 $ 99,876,512
Schedule of Investments
-----------------------
Blackrock Cash Strategies L.L.C. $ -- $ 733,732
Total Unaffiliated Investments $ 97,981,643 $ 98,715,375
Total Investments $101,369,442 $102,103,174
Liabilities in Excess of Other Assets $ (1,492,930) $ (2,226,662)
Net Assets $ 99,876,512 $ 99,876,512
26
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Report of Independent Registered Public Accounting Firm
- --------------------------------------------------------------------------------
To the Trustees of Mellon Institutional Funds Investment Trust and Shareholders
of Standish Mellon International Fixed Income Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights, after the restatement
described in Note 10 to the financial statements, present fairly, in all
material respects, the financial position of Standish Mellon International Fixed
Income Fund (the "Fund") at December 31, 2007, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the five years in
the period then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 2007 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 29, 2008, except as to Note 10, for which the date is March 27, 2008
27
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Factors Considered by the Trustees in Approving the Investment Advisory
Agreements (Unaudited)
- --------------------------------------------------------------------------------
The 1940 Act requires that the Board of Trustees, including a majority of its
Trustees who are not affiliated with the Fund's investment adviser or
underwriter (the "Independent Trustees") voting separately, approve the Fund's
advisory agreement and the related fees on an annual basis. In their most recent
deliberations concerning their decision to approve the continuation of the
investment advisory agreement, the Board of Trustees conducted the review and
made the determinations that are described below. In conducting this review and
in making such determinations, the Independent Trustees received from the Fund's
investment adviser, Standish Mellon Asset Management Company LLC ("Standish
Mellon" or the "Adviser"), a broad range of information in response to a written
request prepared on their behalf by their own legal counsel. The Independent
Trustees met alone in a private session with their legal counsel on September
27, 2007 to review these materials and to discuss the proposed continuation of
the Fund's advisory agreement. Representatives of management attended a portion
of the September meeting to provide an overview of the Adviser's organization,
personnel, resources and strategic plans, and to respond to questions and
comments arising from the Independent Trustees' review of the materials and
their deliberations. The entire Board then met on October 30, 2007.
The information requested by the Independent Trustees and reviewed by the entire
Board included:
(i) Financial and Economic Data: The Adviser's balance sheet and income
statements, as well as a profitability analysis of the Adviser, including a
separate presentation of the Adviser's profitability relative to that of several
publicly traded investment advisers;
(ii) Management Teams and Operations: The Adviser's Form ADV, as well as
information concerning the Adviser's executive management, portfolio management,
client service personnel and overall organizational structure, insurance
coverage, brokerage and soft dollar policies and practices;
(iii) Comparative Performance and Fees: Analyses prepared by Lipper Analytical
Services ("Lipper") regarding the Fund's historical performance, management fee
and expense ratio compared to other funds, and the Adviser's separate account
advisory fee schedules;
(iv) Specific Facts Relating to the Fund: The Adviser's commentary on the Fund's
performance and any material portfolio manager and strategy changes that may
have affected the Fund in the prior year, as well as the Fund's "fact sheets"
prepared by the Adviser providing salient data about the Fund, including the
Fund's holdings, strategies, recent market conditions and outlook, as well as
the Adviser's views concerning the issues of breakpoints in the management fee
schedule of the Fund and potential economies of scale; and
(v) Other Benefits: The benefits flowing to The Bank of New York Mellon
Corporation ("BNY Mellon") and its affiliates in the form of fees for transfer
agency, custody, administration and securities lending services provided to the
Funds by affiliates of BNY Mellon.
In considering the continuation of the Fund's advisory agreement, the Board of
Trustees, including the Independent Trustees, did not identify any single factor
as all-important or controlling, and individual Trustees did not necessarily
attribute the same weight or importance to each factor. The Trustees determined
that the terms and conditions of the advisory agreement and the compensation to
the Adviser provided therein were fair and reasonable in light of the services
performed, expenses incurred and such other matters as the Trustees considered
relevant in the exercise of their reasonable judgment. The following summary
does not detail all the matters that were considered. Some of the factors that
figured prominently in the Trustees' determination are described below.
Nature, Extent and Quality of Services
The Board considered the nature, scope and quality of the overall services
provided to the Fund by the Adviser. In their deliberations as to the
continuation of the advisory agreement, the Trustees were also mindful of the
fact that, by choosing to invest in the Fund, the Fund's shareholders have
chosen to entrust the Adviser, under the supervision of the Board, to manage the
portion of their assets invested in the Fund.
Among the specific factors the Board reviewed were the investment management,
administrative, compliance and related services provided by the Adviser. The
Board determined that the services provided were of high quality and at least
commensurate with industry standards.
The Trustees reviewed the background and experience of the Fund's two portfolio
managers and also met with senior management of the Adviser to receive an
overview of its organization, personnel, resources and strategic plans. Among
other things, the Trustees considered the size, education and experience of the
Adviser's investment staff, technological infrastructure and overall
responsiveness to changes in market conditions.
The Board determined that the Adviser had the expertise and resources to manage
the Fund effectively.
Investment Performance
The Board considered the investment performance of the Fund against a peer group
of investment companies selected by the Adviser with input from the Trustees.
The Board also compared the Fund's investment performance against the average
performance of a larger universe of funds regarded by Lipper as having similar
investment objectives and considered the Fund's performance rankings against
that universe. In addition to the information received by the Board at the
September 27, 2007 Board meeting, the Trustees received similar detailed
comparative performance information for the Fund at each regular Board meeting
during the year.
28
Mellon Institutional Funds Investment Trust
Standish Mellon International Fixed Income Fund
Factors Considered by the Trustees in Approving the Investment Advisory
Agreements (Unaudited)
- --------------------------------------------------------------------------------
The Board considered the Fund's performance for the one-, three- and five-year
periods ended July 31, 2007 based on the Lipper materials provided to the Board
at the September 27, 2007 meeting. The Board found that the Fund outperformed
its peer group average return for the one-year period (4.76% vs. 4.37%), but
underperformed its peer group average returns for the three-year period (4.63%
vs. 4.68%) and five-year period (4.87% vs. 6.42%).
Advisory Fee and Other Expenses
The Board considered the advisory fee rate paid by the Fund to the Adviser. The
Lipper data presenting the Fund's "net management fees" included fees paid by
the Fund, as calculated by Lipper, for administrative services provided by
Mellon Bank, N.A., the Trust's custodian. Such reporting was necessary,
according to Lipper, to allow the Board to compare the Fund's advisory fees to
those peers that include administrative fees within a blended advisory fee.
The Fund's contractual advisory fee was 0.40%, which was in the 1st (best)
quintile of its peer group of funds, the median fee of which was 0.535%. The
Fund's net management fee was 0.414% (which included 0.014% in administrative
services fees under Lipper's calculation methodology), below the peer group
median net management fee of 0.471%. Based on the Lipper data, as well as other
factors discussed at the September 27, 2007 meeting, the Board determined that
the Fund's advisory fee is reasonable relative to its peer group averages.
The Board also compared the fees payable by the Fund relative to those payable
by separate account clients of the Adviser. Based on the additional scope and
complexity of the services provided and responsibilities assumed by the Adviser
with respect to the Fund relative to these other types of clients, the Board
concluded that the fees payable under the advisory agreement were reasonable
relative to the nature and quality of the services provided.
The Board also considered the Fund's expense ratio and compared it to that of
its peer group of similar funds. The Board found that the actual net expense
ratio of 0.676% was lower than the median net expense ratio of the peer group of
0.76%, notwithstanding the fact that most of the other funds in the peer group
were larger than the Fund.
The Adviser's Profitability
The Board considered the Adviser's profitability in managing the Fund and the
Mellon Institutional Funds as a group, as well as the methodology used to
compute such profitability, and the various direct and indirect expenses
incurred by the Adviser or its affiliated investment advisers in managing the
Fund and other funds in the Mellon Institutional Funds family of funds. The
Independent Trustees had observed that the Adviser, based on the profitability
information submitted to them by the Adviser, incurred losses in managing all
but one of the investment companies in the Mellon Institutional Funds family of
funds. The Trustees observed that the Adviser had incurred losses in operating
the Fund in 2005 and 2006.
Economies of Scale
The Board also considered the extent to which economies of scale might be
realized as the Fund grows. They observed that the Standish Mellon Fixed Income
Portfolio and The Boston Company International Core Equity Portfolio, two of the
largest funds in the complex, already had breakpoints in their fee arrangements
that reflected economies resulting from their size. The Board also noted that at
the March 7, 2006 meeting, management had presented a Breakpoint Discussion
Memorandum that had proposed a framework for future breakpoints. The Board
concluded that, at existing asset levels and considering current asset growth
projections, the implementation of additional fee breakpoints or other fee
reductions was not necessary at this time.
Other Benefits
The Board also considered the additional benefits flowing to BNY Mellon as a
result of its relationship with the Mellon Institutional Funds as a group,
including revenues received by BNY Mellon affiliates in consideration of
custodial, administrative, transfer agency and securities lending services
provided by such affiliates to the Funds. In each case, such affiliates were
selected by the Board on the basis of a comparative analysis of their
capabilities and fees relative to those of unaffiliated competitors.
The Board considered the fact that BNY Mellon operates businesses other than the
Mellon Institutional Funds, some of which businesses share personnel, office
space and other resources and that these were a component of the profitability
analysis provided. The Board also considered the intangible benefits that accrue
to BNY Mellon and its affiliates by virtue of its relationship with the Funds
and the Mellon Institutional Funds as a group.
* * *
The foregoing factors were among those weighed by the Trustees in determining
that the terms and conditions of the Fund's advisory agreement and the
compensation to the Adviser provided therein are fair and reasonable and, thus,
in approving the continuation of the agreement for a one-year period.
29
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their age, address
and date of birth; their position with the Trust; the length of time holding
that position with the Trust; their principal occupation(s) during the past five
years; the number of portfolios in the fund complex they oversee; other
directorships they hold in companies subject to registration or reporting
requirements of the Securities Exchange Act of 1934 (generally called "public
companies") or in registered investment companies; and total remuneration paid
as of the year ended December 31, 2007. The Fund's Statement of Additional
Information includes additional information about the Trust's trustees and is
available, without charge, upon request by writing Mellon Institutional Funds at
P.O. Box 8585, Boston, MA 02266-8585 or calling toll free 1-800-221-4795.
Independent Trustees
Number of Trustee
Principal Portfolios in Other Remuneration
Name (Age) Term of Office Occupation(s) Fund Complex Directorships (period ended
Address, and Position(s) and Length of During Past Overseen by Held by December 31,
Date of Birth Held with Trust Time Served* 5 Years Trustee Trustee 2007)
- ------------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $1,426
61 Meadowbrook Road 11/3/1986 Decision Resources, Inc.
Weston, MA 02493 ("DRI") (biotechnology
9/30/40 research and consulting
firm); formerly
Chairman of the Board
and Chief Executive
Officer, DRI
Benjamin M. Friedman (63) Trustee Trustee since William Joseph Maier, 17 None Fund: $1,426
c/o Harvard University 9/13/1989 Professor of Political
Littauer Center 127 Economy, Harvard
Cambridge, MA 02138 University
8/5/44
John H. Hewitt (72) Trustee Trustee since Trustee, Mertens 17 None Fund: $1,426
P.O. Box 2333 11/3/1986 House, Inc. (hospice)
New London, NH 03257
4/11/35
Caleb Loring III (64) Trustee Trustee since Trustee, Essex Street 17 None Fund: $1,519
c/o Essex Street Associates 11/3/1986 Associates (family
P.O. Box 5600 investment trust office)
Beverly, MA 01915
11/14/43
Interested Trustees
J. David Officer (59) Trustee Since 2008 Director, Vice Chairman 17 None Fund: $0
The Dreyfus Corporation (Chairman), and Chief Operating Officer
200 Park Ave., 55th Fl. President and of The Dreyfus Corporation;
New York, NY 10166 Chief Executive Executive Vice President
8/24/48 Officer of The Bank of New York
Mellon Corporation; and
Director and President of
MBSC Securities Corporation
* Each Trustee serves for an indefinite term, until his successor is elected.
Each officer is elected annually.
30
Principal Officers who are Not Trustees
Name (Age) Term of Office
Address, and Position(s) and Length of Principal Occupation(s)
Date of Birth Held with Trust Time Served During Past 5 Years
- ------------------------------------------------------------------------------------------------------------------------------------
Steven M. Anderson (42) Vice President, Vice President Vice President and Mutual Funds Controller,
BNY Mellon Asset Management Treasurer and since 1999; BNY Mellon Asset Management; formerly Assistant
One Boston Place Chief Financial Treasurer and Vice President and Mutual Funds Controller, Standish
Boston, MA 02108 Officer CFO since 2002 Mellon Asset Management Company, LLC
7/14/65
Denise B. Kneeland (56) Assistant Vice Assistant Vice First Vice President and Manager, Mutual Funds
BNY Mellon Asset Management President President Operations, BNY Mellon Asset Management; formerly
One Boston Place and Secretary since 1996; Vice President and Manager, Mutual Fund Operations,
Boston, MA 02108 Secretary Standish Mellon Asset Management Company, LLC
8/19/51 since 2007
Mary T. Lomasney (50) Chief Since 2005 First Vice President, BNY Mellon Asset Management and
BNY Mellon Asset Management Compliance Chief Compliance Officer, Mellon Optima L/S Strategy
One Boston Place Officer Fund, LLC; formerly Director, Blackrock, Inc., Senior
Boston, MA 02108 Vice President, State Street Research & Management
4/8/57 Company ("SSRM"), and Vice President, SSRM
31
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MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6931AR1207A
Item 2. Code of Ethics.
As of December 31, 2007, the Registrant has adopted a Code of Ethics,
as defined in Item 2(b) of Form N-CSR, that applies to the Principal
Executive Officer and Principal Financial Officer. For the fiscal year
ended December 31, 2007, there were no substantive amendments to a
provision of the Code of Ethics nor were there any waivers granted from
a provision of the Code of Ethics. A copy of the Registrant's Code of
Ethics that applies to the Principal Executive Officer and Principal
Financial Officer is filed as an exhibit to this Form N-CSR under Item
12(a)(1).
Item 3. Audit Committee Financial Expert.
The Registrant's Board of Trustees has determined that the Registrant
has more than one audit committee financial expert, as defined in Item
3 of Form N-CSR, serving on its audit committee. The audit committee
financial experts serving on the Registrant's audit committee are John
H. Hewitt and Caleb Loring III, both of whom are "independent" pursuant
to paragraph (a)(2) of Item 3 of Form N-CSR. Mr. Hewitt served at
Morgan Stanley as a securities analyst and also in a supervisory role
regarding analysis. He has held a chartered financial analyst
designation, as well as a master's degree in business administration
from Harvard University. He has been a member of the Registrant's audit
committee since its inception. Mr. Loring served as an executive in the
commercial lending division of the Bank of Boston, N.A., performing and
supervising credit analyses and reviewing financial statements of
potential and existing borrowers. Also, Mr. Loring has served as a
private trustee in the Ayer Family Office, where his duties involve
financial statement analysis. He has been a member of the Registrant's
audit committee since its inception, and has served on the audit
committees of several privately held companies.
Item 4. Principal Accountant Fees and Services.
(a) AUDIT FEES: The aggregate fees billed for professional services
rendered by the principal accountant, PricewaterhouseCoopers LLP,
for the audit of the Registrant's annual financial statements or
services that are normally provided by the accountant in
connection with statutory and regulatory filings for the fiscal
years ended December 31, 2007 and 2006 were $576,940 and $741,015,
respectively.
(b) AUDIT RELATED FEES: The aggregate fees billed for the fiscal years
ended December 31, 2007 and 2006 for assurance and related
services by PricewaterhouseCoopers LLP that are reasonably related
to the performance of the audit of the Registrant's financial
statements and are not reported under paragraph (a) of this Item
were $61,950 and $61,000, respectively. The nature of the services
comprising the fees disclosed under this Item for both years
included: the examination of compliance with requirements of Rule
17f-2 of the Investment Company Act of 1940.
(c) TAX FEES: The aggregate fees billed for the fiscal years ended
December 31, 2007 and 2006 for professional services rendered by
PricewaterhouseCoopers LLP for tax compliance, tax advice, and tax
planning were $155,690 and $260,010, respectively. Services
rendered in both years included asset diversification testing, the
preparation of tax returns and extensions, the review of periodic
distributions.
(d) ALL OTHER FEES: No such fees were billed to the Registrant by
PricewaterhouseCoopers LLP for 2007 or 2006.
(e) (1) AUDIT COMMITTEE PRE-APPROVAL POLICY: The Registrant's audit
committee pre-approves all audit and non-audit services to be
performed by the Registrant's accountant before the accountant is
engaged by the Registrant to perform such services.
(e) (2) 100% of the services described in each of paragraphs (b)
through (d) of this Item 4 were pre-approved by the Registrant's
audit committee before the accountant was engaged by the
Registrant to perform such services.
(f) Not applicable.
(g) The aggregate non-audit fees billed by PricewaterhouseCoopers LLP
for services rendered to the Registrant and the Registrant's
investment advisers, and any entity controlling, controlled by or
under common control with the advisers that provides ongoing
services to the Registrant for the fiscal years ended December
31, 2007 and 2006 were $0 and $0, respectively. The aggregate
non-audit fees billed by the Registrant's accountant for services
rendered to the Registrant's transfer agent by
PricewaterhouseCoopers LLP for the fiscal years ended December
31, 2007 and 2006 were $98,628 and $105,570, respectively.
Services provided in both years included a review of the transfer
agency function and to issue a report under Rule 17Ad-13(a)(3) of
the Securities and Exchange Act of 1934.
(h) Because all of the non-audit services rendered to the
Registrant's investment adviser or any entity controlling,
controlled by, or under common control with the investment
adviser that provides ongoing services to the registrant were
pre-approved by the Registrant's Audit Committee of the Board of
Trustees and no such non-audit services were not pre-approved,
the Audit Committee was not asked to consider whether the
provision of non-audit services rendered to the Registrant's
investment adviser or any entity controlling, controlled by, or
under common control with the investment adviser that provides
ongoing services to the registrant which were not pre-approved by
the Registrant's Audit Committee is compatible with maintaining
the principal accountant's independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable to the Registrant.
Item 6. Schedule of Investments
Included as part of the report to shareholders filed under Item 1 of
this Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies.
Not applicable to the Registrant.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable to the Registrant.
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
Not applicable to the Registrant.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes.
Item 11. Controls and Procedures.
(a) The Chief Executive and Financial Officers concluded that the
Registrant's Disclosure Controls and Procedures are effective based on
the evaluation of the Disclosure Controls and Procedures as of a date
within 90 days of the filing date of this report.
These officers have determined, however, that as of and prior to
December 31, 2007 and continuing until March 10, 2008, the Registrant
had a significant deficiency in its internal control over financial
reporting related to the accounting for the investment of cash
collateral derived from securities lending activities in interests in
cash collateral pooled investment vehicles. Since December 31, 2007,
but prior to the date of this filing, management has revised its
internal control over financial
reporting to improve the effectiveness of the controls to ensure that
the investment in pooled investment vehicles of cash collateral
derived from securities lending activities is accounted for properly.
As a result of this deficiency, the statements of assets and
liabilities, including the schedules of investments as of December 31,
2007, of the Standish Mellon Fixed Income Fund, Standish Mellon Global
Fixed Income Fund and Standish Mellon International Fixed Income Fund
(the "Funds") were restated from those initially posted to the Funds'
website but not yet mailed to shareholders or filed with the
Commission in any previous Form N-CSR, in order to appropriately
account for such investments. However, there was no impact to the net
asset value of these Funds' shares for the report period.
(b) There have been no changes in the Registrant's internal control
over financial reporting that occurred during the Registrant's second
fiscal quarter covered by this report that have materially affected, or
are reasonably likely to materially affect, the Registrant's internal
control over financial reporting. However, as discussed above,
subsequent to December 31, 2007, the Registrant's internal control over
financial reporting was enhanced.
Item 12. Exhibits.
(a)(1) Code of Ethics required by Item 2 is attached hereto as an
exhibit.
(a)(2) Certifications of the Principal Executive Officer and Principal
Financial Officer of the Registrant as required by Rule 30a-2(a) under
the Investment Company Act of 1940 are attached hereto as Exhibit
99CERT.302
(b) Certifications as required by Rule 30a-2(b) under the Investment
Company Act of 1940 and pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 are attached hereto as Exhibit 99CERT.906.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Mellon Institutional Funds Investment Trust
By (Signature and Title): /s/ DENISE B. KNEELAND
---------------------------------------------
Denise B. Kneeland, Assistant Vice President
and Secretary
Date: March 31, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities, and on the
dates indicated.
By (Signature and Title): /s/ J. DAVID OFFICER
--------------------------------------
J. David Officer, President and Chief
Executive Officer
Date: March 31, 2008
By (Signature and Title): /s/ STEVEN M. ANDERSON
--------------------------------------------------
Steven M. Anderson, Vice President, Treasurer and
Chief Financial Officer
Date: March 31, 2008