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
-------------------------------------------------------------
(Exact name of registrant as specified in charter)
BNY 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: September 30
------------------------------------------
Date of reporting period: March 31, 2008
--------------------------------------
Item 1. Reports to Stockholders.
MELLON INSTITUTIONAL FUNDS
Newton
Semiannual Report International Equity Fund
- --------------------------------------------------------------------------------
March 31, 2008 (Unaudited)
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 Investment Trust
Newton International Equity 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 (October 1, 2007 to March 31, 2008).
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 transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the second line
of the table is useful in comparing ongoing costs only, 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 AND VALUE OF A $1,000 INVESTMENT (assuming actual returns for the six months ended March 31, 2008+)
Class A Class C Class I Class R
------- ------- ------- -------
Expenses paid per $1,000++ $ 0.04 $ 0.06 $ 5.60 $ 0.05
Ending value (after expenses) $1,000.90 $1,000.90 $946.90 $1,000.90
EXPENSES AND VALUE OF A $1,000 INVESTMENT (assuming a hypothetical 5% annualized return for the six months ended March 31, 2008)
Class A+++ Class C+++ Class I Class R+++
------- ------- ------- -------
Expenses paid per $1,000++++ $ 7.06 $ 10.83 $ 5.81 $ 8.32
Ending value (after expenses) $1,018.00 $1,014.25 $1,019.25 $1,016.75
- ----------------
+ For Class A, Class C and Class R shares from March 31, 2008 (commencement
of initial offering).
++ The Actual expense calculation is equal to the Fund's annualized expense
ratio of 1.40% for Class A, 2.15% for Class C and 1.65% for Class R shares,
multiplied by the average account value over the period, multiplied by
1/366 (to reflect actual days in the period) and 1.15% for Class I shares,
multiplied by the average account value over the period, multiplied by
183/366 (to reflect the one half year period).
+++ Please note that while Class A, Class C and Class R shares commenced
initial offering on March 31, 2008, the hypothetical expenses paid during
the period reflect projected activity for the full six month period for
purposes of comparability. This projection assumes that annualized expense
ratios were in effect during the period October 1, 2007 to March 31, 2008.
++++ The Hypothetical expense calculation is equal to the Fund's annualized
expense ratio of 1.40% for Class A, 2.15% for Class C, 1.15% for Class I
and 1.65% for Class R shares multiplied by the average account value over
the period, multiplied by 183/366 (to reflect the one half year period).
3
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Portfolio Information as of March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
The Fund is actively managed. Current holdings may be different than those
presented below:
Percentage of
Top Ten Holdings* Country Sector Investments
- ------------------------------------------------------------------------------------
Nestle SA Switzerland Consumer Staples 2.9%
E On AG Germany Utilities 2.6
Jardine Matheson Holdings Ltd. Hong Kong Financials 2.6
Unilever NV Netherlands Consumer Staples 2.5
Statoil Hydro ASA Norway Energy 2.5
Standard Chartered PLC United Kingdom Financials 2.3
British American Tobacco PLC United Kingdom Consumer Staples 2.2
Anglo American PLC United Kingdom Materials 2.2
Roche Holding AG Switzerland Health Care 2.1
Japan Tobacco, Inc. Japan Consumer Staples 2.1
----
24.0%
*Excludes short-term securities.
Percentage of
Geographic Region Allocation* Investments
- -------------------------------------------------------------
Europe ex U.K. 42.5%
United Kingdom 21.2
Far East ex Japan 15.2
Japan 11.1
Latin America 5.0
North America 2.7
Other 2.3
-----
100.0%
*Excludes short-term securities.
4
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------
UNAFFILIATED INVESTMENTS--96.2%
EQUITIES--94.9%
Argentina--0.3%
Pampa Holding SA--GDR 7,036 a 133,332
Australia--1.9%
QBE Insurance Group Ltd. 11,600 235,479
Telstra Corp. Ltd. 272,125 698,910
934,389
Brazil--3.8%
All America Latina Logistica 21,174 213,732
Companhia de Bebidas das Americas--ADR 4,063 306,960
GVT Holding SA 14,300 a 269,934
Petroleo Brasileiro SA--ADR 7,334 621,116
Tele Norte Leste Participacoes SA--ADR 16,026 425,330
1,837,072
Canada--2.6%
EnCana Corp. 6,324 481,864
Nexen, Inc. 8,389 248,981
Oncolytics Biotech, Inc. 81,674 a 145,633
Suncor Energy, Inc. 3,890 376,037
1,252,515
Denmark--0.7%
A P Moller-Maersk AS, Class B 32 357,084
Finland--1.5%
Elisa Oyj 10,604 264,802
Nokia Oyj 14,364 454,378
719,180
France--3.7%
Alstom 2,286 495,513
Suez SA 11,350 744,767
Thales SA 8,628 558,527
1,798,807
Germany--10.4%
Bayer AG 7,782 623,530
Deutsche Boerse AG 4,438 714,759
E On AG 6,529 1,208,485
Fresenius Medical Care AG & Co. KGaA 6,901 346,949
Gerry Weber International AG 10,093 360,855
K+S AG 2,566 839,695
SAP AG 8,398 417,307
Symrise AG 18,180 469,485
4,981,065
The accompanying notes are an integral part of the financial statements.
5
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------
Hong Kong--5.2%
Harbin Power Equipment Co., Ltd. 110,000 198,181
Huabao International Holdings Ltd. 430,000 353,427
Jardine Matheson Holdings Ltd. 37,840 1,198,179
Peace Mark Holdings Ltd. 410,000 368,883
SRE Group Ltd. 209,000 37,045
Swire Pacific Ltd., Class A 28,500 323,366
2,479,081
Indonesia--1.2%
PT Astra International Tbk 96,000 254,781
PT Indosat Tbk 420,000 324,594
579,375
Italy--0.7%
Unipol Gruppo Finanziari SA 121,745 349,565
Japan--10.6%
Asahi Breweries Ltd. 43,500 900,131
Ibiden Co., Ltd. 5,500 217,499
Japan Tobacco, Inc. 194 972,896
KDDI Corp. 83 513,113
Mitsubishi Corp. 15,000 462,325
Nintendo Co., Ltd. 500 259,070
NTT Urban Development Corp. 437 636,887
Sawai Pharmaceutical Co., Ltd. 5,800 283,370
Takeda Pharmaceutical Co., Ltd. 6,400 323,696
Yamada Denki Co., Ltd. 5,850 506,908
5,075,895
Luxembourg--2.0%
Arcelor 4,083 334,432
Millicom International Cellular SDR 6,532 a 622,525
956,957
Malaysia--0.6%
Bursa Malaysia Bhd 70,000 199,159
Telekom Malaysia Bhd 28,600 95,136
294,295
Netherlands--3.2%
Koninklijke Philips Electronics NV 10,319 394,671
Unilever NV 34,255 1,150,101
1,544,772
Norway--3.6%
Aker Kvaerner ASA 11,152 a 254,212
Statoil Hydro ASA 37,556 1,126,208
Subsea 7, Inc. 14,591 a 329,737
1,710,157
The accompanying notes are an integral part of the financial statements.
6
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------
Philippines--0.4%
Ayala Corp 21,791 208,222
Russia--2.0%
AFK Sistema--GDR 9,101 a 292,142
Evraz Group SA--GDR 5,003 431,759
OAO Gazprom--ADR 4,460 227,460
951,361
Singapore--1.5%
DBS Group Holdings Ltd. 24,000 315,777
Indofood Agri Resources Ltd. 224,000 a 385,247
701,024
South Africa--2.2%
ArcelorMittal South Africa Ltd. 14,639 356,272
Gold Fields Ltd. 21,957 a 311,943
MTN Group Ltd. 24,621 374,124
1,042,339
South Korea--1.9%
KT&G Corp. GDR 8,602 335,478
LG Telecom Ltd. 25,678 203,613
Samsung Fire & Marine Insurance Co., Ltd. 820 169,572
Shinsegae Co., Ltd. 350 220,847
929,510
Spain--1.5%
Telefonica SA 25,408 729,939
Sweden--0.6%
Tele2 AB, Class B 14,513 274,307
Switzerland--10.7%
ABB Ltd. 14,930 400,880
Actelion Ltd. 5,265 a 287,138
Bank Sarasin & Cie AG 65 282,808
Nestle SA 2,708 1,353,455
Nobel Biocare Holding AG 1,948 453,206
Novartis AG 12,714 651,770
Panalpina Welttransport Holdings AG 1,688 206,559
Roche Holding AG 5,198 978,453
Syngenta AG 1,815 531,942
5,146,211
Thailand--1.8%
Advanced Info Service PCL 122,600 392,376
Bangkok Bank Public Co., Ltd. 74,300 324,139
Bank of Ayudhya PCL 183,400 a 129,358
845,873
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------
United Kingdom--20.3%
Admiral Group PLC 22,264 354,717
Anglo American PLC 16,846 1,012,083
BAE Systems PLC 41,100 395,704
BHP Billition PLC 27,985 830,099
British American Tobacco PLC 27,514 1,032,307
Cable & Wireless PLC 288,463 852,213
GlaxoSmithKline PLC 30,090 636,419
ICAP PLC 31,380 354,265
Prudential PLC 25,234 333,194
Sibir Energy PLC 43,120 469,694
Smith & Nephew PLC 29,250 386,803
St. James's Place PLC 65,366 335,904
Standard Chartered PLC 30,786 1,051,841
Tesco PLC 68,518 515,238
Vodafone Group PLC 263,846 789,957
Xstrata PLC 6,140 429,672
9,780,110
TOTAL EQUITIES (Cost $43,499,938) 45,612,437
PREFERRED STOCKS--0.7%
Brazil--0.7%
Companhia Vale do Rio Doce ADR (Cost $216,568) 10,884 317,269
Contract
PURCHASED OPTIONS--0.6% Size
----
Japanese Yen, Call, Strike Price 100.50, 6/6/2008 92,500 248,825
Japanese Yen, Call, Strike Price 105.00, 9/5/2008 25,000 59,500
(Cost $228,850) 308,325
TOTAL UNAFFILIATED INVESTMENTS (Cost $43,945,356) 46,238,031
AFFILIATED INVESTMENT--3.2% Shares
------
Dreyfus Institutional Preferred Plus Money Market Fund
(Cost $1,543,816) 1,543,816 b 1,543,816
-----------
TOTAL INVESTMENTS--99.4% (Cost $45,489,172) 47,781,847
OTHER ASSETS, LESS LIABILITIES--0.6% 265,181
-----------
NET ASSETS--100% 48,047,028
===========
Notes to Schedule of Investments:
ADR--American Depository Receipts
GDR--Global Depository Receipts
a Non-income producing security.
b Affiliated institutional money market fund.
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
At March 31, 2008 the Fund held the following foward foreign currency exchange
contracts:
Local Unrealized
Principal Contract Value at USD Amount Appreciation
Contracts to Deliver Amount Value Date March 31, 2008 to Receive (Depreciation)
- ------------------------------------------------------------------------------------------------------------------------------------
Argentine Peso 1,626,408 5/15/2008 $ 511,442 $ 510,646 $ (796)
Hong Kong Dollar 3,901,666 5/15/2008 502,061 500,918 (1,143)
Indonesian Rupiah 5,805,670,000 4/15/2008 631,051 609,519 (21,532)
Japanese Yen 303,040 4/1/2008 3,041 3,050 9
Malaysian Ringgit 2,348,370 7/15/2008 738,064 717,279 (20,785)
South African Rand 703,926 4/1/2008 86,962 86,974 12
South African Rand 2,628,596 4/15/2008 323,495 356,175 32,680
Swiss Franc 86,623 4/2/2008 87,242 87,207 (35)
-------------- -------------- --------------
$ 2,883,358 $ 2,871,768 $ (11,590)
============== ============== ==============
Unrealized
Principal Contract Value at USD Amount Appreciation
Contracts to Receive Amount Value Date March 31, 2008 to Deliver (Depreciation)
- ------------------------------------------------------------------------------------------------------------------------------------
Argentine Peso 1,626,408 5/15/2008 $ 511,442 $ 504,000 $ 7,442
British Pound 201,226 4/2/2008 399,252 399,816 (564)
Hong Kong Dollar 3,901,666 5/15/2008 502,061 504,000 (1,939)
Indonesian Rupiah 5,805,670,000 4/15/2008 631,051 629,000 2,051
Malaysian Ringgit 2,348,370 7/15/2008 738,063 725,701 12,362
Singapore Dollar 964,661 8/15/2008 704,401 685,000 19,401
South African Rand 2,628,596 4/15/2008 323,496 378,000 (54,504)
-------------- -------------- --------------
$ 3,809,766 $ 3,825,517 $ (15,751)
============== ============== ==============
Percentage of Net
Economic Sector Allocation Assets
- --------------------------------------------------------------
Consumer Discretionary 2.4%
Consumer Staples 13.4
Energy 6.3
Financials 15.9
Health Care 14.7
Industrials 8.5
Information Technology 4.2
Materials 13.6
Telecommunication Services 12.5
Utilities 4.1
Short-term and Other Assets 4.4
-----
100.0%
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Statement of Assets and Liabilities
March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investment in securities, at value (Note 1A):
Unaffiliated investments (cost $43,945,356) $46,238,031
Affiliated investments (Note 1H) (cost $1,543,816) 1,543,816
Cash 8
Foreign currency, at value (cost $87,453) 88,129
Receivable for investments sold 374,883
Interest and dividends receivable 241,482
Unrealized appreciation on forward foreign currency exchange contracts
(Note 6) 73,957
Receivable for Fund shares sold 5,593
Prepaid expenses 36,056
-----------
Total assets 48,601,955
Liabilities
Payable for investments purchased $ 399,252
Unrealized depreciation on forward foreign currency exchange contracts
(Note 6) 101,298
Accrued accounting, custody, administration and transfer agent fees (Note 2) 34,428
Accrued professional fees 15,618
Payable to investment advisor (Note 2) 2,186
Accrued shareholder reporting expense (Note 2) 740
Accrued chief compliance officer fee (Note 2) 541
Accrued trustees' fees (Note 2) 54
Other accrued expenses and liabilities 810
-----------
Total liabilities 554,927
-----------
Net Assets $48,047,028
===========
Net Assets consist of:
Paid-in capital $42,628,287
Accumulated net realized gain 3,068,495
Undistributed net investment income 75,758
Net unrealized appreciation 2,274,488
-----------
Total Net Assets $48,047,028
===========
Net Asset Value Per Share
Class A Class C Class I Class R
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets $10,010 $10,010 $48,016,998 $10,010
Shares of beneficial interest outstanding 428 428 2,052,475 428
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 23.39 $ 23.39 $ 23.39 $ 23.39
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Statement of Operations
For the Six Months Ended March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Dividend income from unaffiliated investments (net of foreign
withholding taxes $40,965) $ 369,679
Dividend income from affiliated investments (Note 1H) 10,600
Interest income 445
-----------
Total investment income 380,724
Expenses
Investment advisory fee (Note 2) $ 188,921
Accounting, custody, administration and transfer agent fees (Note 2) 95,446
Professional fees 51,674
Registration fees 17,104
Trustees' fees and expenses (Note 2) 2,223
Insurance expense 1,418
Miscellaneous expenses 15,481
----------
Total expenses 372,267
Deduct:
Waiver of invesment advisory fee (Note 2) (101,052)
Waiver of class operating expenses (Note 2) (48)
----------
Total expense deductions (101,100)
----------
Net Expenses 271,167
-----------
Net investment income 109,557
-----------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 4,082,900
Foreign currency transactions and forward foreign currency exchange transactions 7,594
----------
Net realized gain (loss) 4,090,494
Change in unrealized appreciation (depreciation) on:
Investments (6,640,120)
Foreign currency translations and forward foreign currency exchange contracts (36,571)
----------
Change in net unrealized appreciation (depreciation) (6,676,691)
-----------
Net realized and unrealized gain (loss) on investments (2,586,197)
-----------
Net Increase (Decrease) in Net Assets from Operations $(2,476,640)
===========
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited)a September 30, 2007
------------ ------------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income (loss) $ 109,557 $ 629,470
Net realized gain (loss) 4,090,494 2,746,314
Change in net unrealized appreciation (depreciation) (6,676,691) 6,887,012
------------ ------------
Net increase (decrease) in net assets from investment operations (2,476,640) 10,262,796
------------ ------------
Distributions to Shareholders (Note 1C)
From investment income (367,825) (368,981)
From net realized gains on investments (3,740,816) (228,378)
------------ ------------
Total distributions to shareholders (4,108,641) (597,359)
------------ ------------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares:
Class A shares 10,000 --
Class C shares 10,000 --
Class I shares 4,738,225 6,010,275
Class R shares 10,000 --
Dividend reinvestment:
Class I shares 729,966 105,224
Cost of shares redeemed:
Class I shares (319) --
------------ ------------
Net increase (decrease) in net assets from Fund share transactions 5,497,872 6,115,499
------------ ------------
Total Increase (Decrease) in Net Assets (1,087,409) 15,780,936
Net Assets
At beginning of period 49,134,437 33,353,501
------------ ------------
At end of year (including undistributed net investment income of
$75,758 and $334,026, respectively) $ 48,047,028 $ 49,134,437
============ ============
a The Fund commenced offering four classes of shares on March 31, 2008. The
existing shares were redesignated Class I shares and the Fund added Class
A, Class C and Class R shares.
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Financial Highlights
- --------------------------------------------------------------------------------
Class A Shares Class C Shares
For the Period For the Period
March 31, 2008 March 31, 2008
(commencement of (commencement of
initial offering) to initial offering) to
March 31, 2008 March 31, 2008
(Unaudited) (Unaudited)
-------------------- --------------------
Net Asset Value, Beginning of Period $ 23.37 $ 23.37
--------- ---------
From Operations:
Net investment income * (a) (0.00)(b) (0.00)(b)
Net realized and unrealized gains (loss) on investments 0.02 0.02
--------- ---------
Total from operations 0.02 0.02
--------- ---------
Net Asset Value, End of Period $ 23.39 $ 23.39
========= =========
Total Return (c) 0.09%(d) 0.09%(d)
Ratios/Supplemental data:
Expenses (to average daily net assets)* 1.40%(e) 2.15%(e)
Net Investment Income (to average daily net assets)* (1.17%)(e) (1.94%)(e)
Portfolio Turnover 77%(d) 77%(d)
Net Assets, End of Period (000's omitted) $ 10 $ 10
- -----------------
* 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, excluding waivers and reimbursement, would have been:
Net investment income per share (a) $ (0.00)(b) $ (0.00)(b)
Ratios (to average daily net assets):
Expenses 60.37%(e) 61.10%(e)
Net investment income (60.14%)(e) (60.89%)(e)
(a) Calculated based on average shares outstanding.
(b) Amount represents less than $0.01 per share.
(c) Total return would have been lower in the absence of expense waivers.
Returns for periods of less than one year have not been annualized.
(d) Not annualized.
(e) Computed on an annualized basis.
The accompanying notes are an integral part of the financial statements.
13
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Financial Highlights
- --------------------------------------------------------------------------------
Class I Shares
---------------------------------------------------------------
For the Period
For the December 21, 2005
Six Months Ended For the (commencement of
March 31, 2008 Year Ended operations) to
(Unaudited)a September 30, 2007 September 30, 2006
---------------- -------------------- ------------------
Net Asset Value, Beginning of Period $ 26.94 $ 21.51 $ 20.00
------------- ------------- -------------
From Operations:
Net investment income * (b) 0.06 0.35 0.27
Net realized and unrealized gains (loss) on investments (1.36) 5.41 1.54
------------- ------------- -------------
Total from operations (1.30) 5.76 1.81
------------- ------------- -------------
Less Distributions to Shareholders:
From net investment income (0.20) (0.20) (0.30)
From net realized gains on investments (2.05) (0.13) --
------------- ------------- -------------
Total distributions to shareholders (2.25) (0.33) (0.30)
------------- ------------- -------------
Net Asset Value, End of Period $ 23.39 $ 26.94 $ 21.51
============= ============= =============
Total Return (c) (5.31%)(d) 26.92% 9.15%(d)
Ratios/Supplemental data:
Expenses (to average daily net assets)* 1.15%(e) 1.15% 1.15%(e)
Net Investment Income (to average daily net assets)* 0.46%(e) 1.45% 1.63%(e)
Portfolio Turnover 77%(d) 87% 84%(d)
Net Assets, End of Period (000's omitted) $ 48,017 $ 49,134 $ 33,354
- ----------------
* For the periods indicated, the investment advisor voluntarily agreed not to impose a portion of its investment advisory fee. If
this voluntary action had not been taken, the investment income per share and the ratios, excluding waivers and reimbursement,
would have been:
Net investment income per share (b) $ 0.00(f) $ 0.30 $ 0.21
Ratios (to average daily net assets):
Expenses 1.58%(e) 1.36% 1.53%(e)
Net investment income 0.03%(e) 1.24% 1.25%(e)
(a) The Fund commenced offering four classes of shares on March 31, 2008. The
existing shares were redesignated Class I shares and the Fund added Class
A, Class C and Class R shares.
(b) Calculated based on average shares outstanding.
(c) Total return would have been lower in the absence of expense waivers.
Returns for periods of less than one year have not been annualized.
(d) Not annualized.
(e) Computed on an annualized basis.
(f) Amount represents less than $0.01 per share.
The accompanying notes are an integral part of the financial statements.
14
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Financial Highlights
- --------------------------------------------------------------------------------
Class R Shares
For the Period
March 31, 2008
(commencement of
initial offering) to
March 31, 2008
(Unaudited)
--------------------
Net Asset Value, Beginning of Period $ 23.37
---------
From Operations:
Net investment income * (a) (0.00)(b)
Net realized and unrealized gains (loss) on investments 0.02
---------
Total from operations 0.02
---------
Net Asset Value, End of Period $ 23.39
=========
Total Return (c) 0.09%(d)
Ratios/Supplemental data:
Expenses (to average daily net assets)* 1.65%(e)
Net Investment Income (to average daily net assets)* (1.43%)(e)
Portfolio Turnover 77%(d)
Net Assets, End of Period (000's omitted) $ 10
- ----------------
* 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, excluding waivers and reimbursement, would have been:
Net investment income per share (a) $ 0.00(b)
Ratios (to average daily net assets):
Expenses 60.62%(e)
Net investment income (60.40%)(e)
(a) Calculated based on average shares outstanding.
(b) Amount represents less than $0.01 per share.
(c) Total return would have been lower in the absence of expense waivers.
Returns for periods of less than one year have not been annualized.
(d) Not annualized.
(e) Computed on an annualized basis.
The accompanying notes are an integral part of the financial statements.
15
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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. The
Newton International Equity Fund (the "Fund"), which commenced operation on
December 21, 2005, is a separate diversified investment series of the
Trust.
The Fund is authorized to issue an unlimited number of shares of beneficial
interest in each of the following classes of shares: Class A, Class C,
Class I and Class R. On March 31, 2008, the Fund's Class A, C and Class R
shares commenced operations and the existing shares of the Fund were
redesignated as Class I shares. Class A, Class C and R shares are sold
primarily to retail investors through financial intermediaries and bear a
distribution fee and/or shareholder services fee. Class A shares are sold
with a front-end sales charge, while Class C shares are subject to a
contingent deferred sales charge ("CDSC"). Class I shares are sold
primarily to bank trust departments and other financial service providers
(including Mellon Bank, N.A. and its affiliates) acting on behalf of
customers having a qualified trust or an investment account or relationship
at such institution or to qualified institutional investors who are
advisory clients of the fund's investment adviser, and bear no distribution
or shareholder services fees. Class I shares are offered without a
front-end sales charge or CDSC. Each class of shares has identical rights
and privileges, except with respect to distribution and service fees and
voting rights on matters affecting a single class. Income, expenses (other
than expenses attributable to a specific class), and realized and
unrealized gains or losses on investments are allocated to each class of
shares based on its relative net assets.
As of March 31, 2008, MBC Investments Corp., a wholly-owned subsidiary of
The Bank of New York Mellon Corporation and an affiliate of the Fund's
investment adviser, held all of the outstanding Class A, Class C, and Class
R shares of the fund.
The objective of the Fund is to achieve long-term growth of capital. The
Fund seeks to achieve its objective by investing, under normal
circumstances, at least 80% of net assets in common stocks or securities
convertible into common stocks (such as convertible preferred stocks,
warrants and convertible bonds) of foreign companies and depositary
receipts evidencing ownership in such securities. At least 75% of the
Fund's net assets will be invested in countries represented in the Morgan
Stanley Capital International Europe, Australasia and the Far East (MSCI
EAFE) Index. The Fund may invest up to 20% of its assets in emerging market
countries.
Effective March 5, 2008, Jon Bell replaced Paul Butler as a co-portfolio
manager 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
calculated mean price (average of last bid and last offer). Securities that
are fixed income securities, other than short-term instruments with less
than sixty days remaining to maturity, for which accurate 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, or if such quotations do not accurately reflect
fair value, 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 regulated 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.
If market quotations are not readily available or do not accurately reflect
fair value, or the value of a security has been materially affected by
events occurring after the close of the exchange or market on which the
security is principally traded (for example, a foreign exchange or market),
the Fund may value its assets by a method the Trustees believe accurately
reflects the fair value. The Trustees have adopted fair value pricing
procedures, which, among other things, require the Fund to fair value such
securities if there has been a movement in the U.S. market that exceeds a
specified threshold. Although the threshold may be revised by the Trustees
from time to time and the number of days on which fair value prices will be
used will depend on market activity, it is possible that fair value prices
for foreign securities will be used by the Fund to a significant extent.
16
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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.
B. Securities transactions and income
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of coupon interest accrued, adjusted for accretion
of discount or amortization of premium using the yield-to-maturity method
on debt securities with greater than sixty days remaining 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.
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 differing
treatments for foreign currency transactions and losses deferred due to
wash sales and passive foreign investment companies (PFIC).
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 be distributed in a subsequent period. Any
taxable income or gain remaining at fiscal year end will be distributed in
the following year.
Section 988 of the Internal Revenue Code (the "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. 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. Investment income, common expenses and realized and unrealized
gains and losses are allocated among the share classes of the Fund based on
the relative net assets of each class. Transfer agent fees, which are
directly attributable to a class of shares, are charged to that share
class. Rule 12b-1 fees, which are directly attributable to Class C and R
shares, and shareholder service fees, which are directly attributable to
Class A, C and R shares, are charged to Class A, C and R shares, as
appropriate.
E. 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.
17
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
F. 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.
G. 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.
H. Affiliated issuers
Affiliated issuers are investment companies advised by Newton Capital
Management Ltd. ("Newton"), a wholly-owned subsidiary of The Bank of New
York Mellon Corporation ("BNY Mellon"), or its affiliates.
I. New accounting requirements
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.
In March 2008, the FASB released Statement of Financial Accounting
Standards No. 161 "Disclosures about Derivative Instruments and Hedging
Activities" ("FAS 161"). FAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of gains and losses on derivative instruments and
disclosures about credit-risk-related contingent features in derivative
agreements. The application of FAS 161 is required for fiscal years
beginning after November 15, 2008 and interim periods within those fiscal
years. At this time, management is evaluating the implications of FAS 161
and its impact on the financial statements and the accompanying notes has
not yet been determined.
(2) Investment Advisory Fee and Other Transactions with Affiliates:
The investment advisory fee paid to Newton for overall investment advisory
and administrative services, and general office facilities, is paid payable
monthly at the annual rate of 0.80% of the Fund's average daily net assets.
Newton voluntarily agreed to limit the Fund's total annual operating
expenses (excluding brokerage commissions, taxes and extraordinary expenses
for Class A, C, I and R shares, and also excluding Rule 12b-1 fees,
shareholder services fees for Class A and C shares) to 1.15% of the average
daily net assets of Class A, C, I and R shares. Pursuant to this agreement,
for the six months ended March 31, 2008, Newton voluntarily waived a
portion of its investment advisory fee in the amount of $101,052, and for
March 31, 2008 (commencement of operations), reimbursed Class A, C and R
shares for class specific and fund operating fees in the amounts of $16,
$16, $16, respectively. This arrangement is voluntary and temporary and may
be discontinued or revised by Newton at any time.
MBSC Securities Corporation ("MBSC"), a wholly-owned subsidiary of BNY
Mellon and affiliate of Newton, is the distributor of the Fund's shares.
Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, Class C and Class R shares pay MBSC for distributing their
shares at an annual rate of 0.75% of the value of the average daily net
assets of Class C shares and 0.25% of the value of the average daily net
assets of Class R shares. During the period ended March 31, 2008, Class C
and Class R shares were charged $0.20 and $0.07, respectively, pursuant to
the Plan.
Under the Shareholder Services Plan, Class A, Class C and Class R shares
pay MBSC at an annual rate of 0.25% of the value of their average daily net
assets for the provision of certain services. The services provided may
include personal services relating to shareholder accounts, such as
18
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
answering shareholder inquiries regarding the Fund and providing reports
and other information, and services related to the maintenance of
shareholder accounts. MBSC may make payments to Service Agents (a
securities dealer, financial institution or other industry professional) in
respect of these services. MBSC determines the amounts to be paid to
Service Agents. During the period ended March 31, 2008, Class A, Class C
and Class R shares were charged $ 0.07, $0.07 and $0.07, respectively,
pursuant to the Shareholder Services Plan. Under its terms, the Plan and
Shareholder Services Plan shall remain in effect from year to year,
provided such continuance is approved annually by a vote of majority of
those Trustees who are not "interested persons" of the Trust and who have
no direct or indirect financial interest in the operation of or in any
agreement related to the Plan or Shareholder Services Plan.
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 Newton, 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
$2,814 for Class I shares, for the six months ended March 31, 2008, and the
amounts of $16, $16, $16, for Class A, C and R shares, respectively, for
March 31, 2008 (commencement of operations).
The Trust entered into an agreement with Mellon Bank, N.A. ("Mellon Bank"),
a wholly-owned subsidiary of BNY Mellon and an affiliate of Newton, 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 $92,584 for the six months ended March 31,
2008.
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
$862 for the six months ended March 31, 2008, which amount is included in
miscellaneous expenses in the statement of operations. See Note 7 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 six months ended
March 31, 2008, the Fund was charged $2,830, which amount is included in
miscellaneous expenses in the statement of operations. No other director,
officer or employee of Newton 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 Newton 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 Newton, to provide printing
and fulfillment services for the Fund. Pursuant to this agreement, the Fund
was charged $740, which amount is included in miscellaneous expenses in the
statement of operations, for the six months ended March 31, 2008.
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
six months ended March 31, 2008, the Fund was not charged an administrative
service fee by an affiliate of BNY Mellon.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the six months ended March 31, 2008 were as follows:
Purchases Sales
----------- -----------
Non-U.S. Government Securities $36,330,899 $36,081,123
=========== ===========
19
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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 period
March 31, 2008
(commencement of
operations) to
March 31, 2008
Class A (Unaudited)
-----------
Shares sold 428
-------
Net increase (decrease) 428
=======
For the period
March 31, 2008
(commencement of
operations) to
March 31, 2008
Class C (Unaudited)
-----------
Shares sold 428
-------
Net increase(decrease) 428
=======
For the
Six Months Ended For the
March 31, 2008 Year Ended
Class I (Unaudited)* September 30, 2007
------------ ------------------
Shares sold 199,049 269,340
Shares issued to shareholders
in reinvestment of distributions 29,363 4,269
Shares redeemed (14) --
--------- ---------
Net increase(decrease) 228,398 273,609
========= =========
For the period
March 31, 2008
(commencement of
operations) to
March 31, 2008
Class R (Unaudited)
-----------
Shares sold 428
-------
Net increase(decrease) 428
=======
* The existing shares were redesignated Class I.
20
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
At March 31, 2008, four shareholders of record (including MBC Investments
Corp., a wholly-owned subsidiary of BNY Mellon and an affiliate of Newton),
in the aggregate held approximately 100%, 100%, 87.6% and 100% of the total
outstanding shares of the Fund's Class A, C, I and R shares, respectively.
Investment activities of these shareholders could have a material impact on
the Fund. For example, a significant redemption by such shareholders could
result in illiquid or less liquid investments comprising a large portion of
the Fund's portfolio.
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 (for Class I shares) or 60 days (for Class A, C and R shares) from
the day of their purchase. The redemption fee is paid directly to the
applicable share class of 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 six months ended March 31,
2008, 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.
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 cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 2008, as computed on a federal
income tax basis, were as follows:
Cost for federal income tax purposes $ 45,489,172
------------
Gross unrealized appreciation $ 4,948,102
Gross unrealized depreciation (2,655,427)
------------
Net unrealized appreciation
(depreciation) $ 2,292,675
============
(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.
21
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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.
At March 31, 2008, the Fund held purchased options. 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 foreign 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 foreign currency exchange contracts is included in
the Statement of Assets and Liabilities.
At March 31, 2008, the Fund held forward foreign currency exchange
contracts. See the Schedule of Investments for further details.
(7) 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. For the six months ended March 31, 2008, the
Fund had average borrowings outstanding of $318,667 for a total of 27 days
and incurred interest expense of $1,189. At March 31, 2008, the Fund did
not have a loan balance outstanding.
22
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (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, Newton
Capital Management Ltd. ("Newton" 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.
The Board considered the Fund's performance for the one-year period 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 return for the one-year period (20.14% vs. 22.99%).
The Board noted that the Fund recently commenced operations and had a very
short performance history and that the other funds in its peer group were
substantially larger than the Fund.
23
Mellon Institutional Funds Investment Trust
Newton International Equity Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (Unaudited)
- --------------------------------------------------------------------------------
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 0.80%, which was in the 3rd (1st
being the best) quintile of its peer group of funds, the median fee of
which was 0.80%. The Fund's net management fee (after giving effect to
expense limitations) was 0.47% (which included administrative services fees
under Lipper's calculation methodology), well below the peer group median
net management fee of 0.777%. 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 1.15% (after giving effect to expense limitations) was
higher than the median net expense ratio of the peer group of 0.94%,
largely due to the Fund's small asset size compared to its peer group.
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 many of the investment companies in the Mellon Institutional
Funds family of funds. The Trustees observed that the Adviser had incurred
a gain in operating the Fund in 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 Fund and The Boston Company International Core Equity Fund, 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.
24
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their ages,
addresses and dates of birth; their positions 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 period ended March 31, 2008. 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) Position(s) Term of Office Occupation(s) Fund Complex Directorships (period ended
Address, and Held with and Length of During Past Overseen by Held by March 31,
Date of Birth Trust Time Served* 5 Years Trustee Trustee 2008)
- ------------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $597
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: $597
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 (73) Trustee Trustee since Trustee, Mertens 17 None Fund: $597
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: $642
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.
25
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 (51) 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
26
THIS PAGE INTENTIONALLY LEFT BLANK
MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6912SA0308
MELLON INSTITUTIONAL FUNDS
Mellon Capital
Semiannual Report Large Cap Growth Fund
- --------------------------------------------------------------------------------
March 31, 2008 (Unaudited)
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 Investment Trust
Mellon Capital Large Cap Growth 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 (October 1, 2007 to March 31, 2008).
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 October 1, 2007
October 1, 2007 March 31, 2008 to March 31, 2008
- ------------------------------------------------------------------------------------------------------
Actual $1,000.00 $ 889.50 $4.49
Hypothetical (5% return
per year before expenses) $1,000.00 $1,020.25 $4.80
- --------
+ Expenses are equal to the Fund's annualized expense ratio of 0.95%,
multiplied by the average account value over the period, multiplied by
183/366 (to reflect the one-half year period).
3
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Portfolio Information as of March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
The Fund is actively managed. Current holdings may be different than those
presented below:
Percentage of
Top Ten Holdings* Sector Investments
- ------------------------------------------------------------------------------------
Microsoft Corp. Technology 3.9%
Cisco Systems, Inc. Technology 2.7
Apple Computer, Inc. Technology 2.6
Pepsico, Inc. Consumer Staples 2.5
International Business Machines Corp. Technology 2.3
Monsanto Co. Materials 2.2
Hewlett-Packard Co. Technology 1.9
Walt Disney Co. Information 1.7
Exxon Mobil Corp. Oil and Gas Producer 1.7
Johnson & Johnson Health Care 1.6
----
23.1%
* Excludes short-term securities and investment of cash collateral.
Percentage of
Economic Sector Allocation Net Assets
- ------------------------------------------------------------------
Consumer Cyclicals 7.9%
Consumer Hard Goods 1.1
Consumer Staples 8.1
Financials 6.6
Health Care 16.2
Industrials 12.3
Information 8.6
Materials 5.2
Oil And Gas Producer 8.0
Technology 24.2
Telecommunication Services 0.8
Utilities 0.6
Short-term and Other Liabilities 0.4
-----
100.0%
4
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------
UNAFFILIATED INVESTMENTS--100.6%
EQUITIES--99.6%
Consumer Cyclicals--7.9%
Coach, Inc. 800 a 24,120
Costco Wholesale Corp. 550 35,733
CVS Caremark Corp. 850 34,433
Dick's Sporting Goods, Inc. 400 a 10,712
McDonald's Corp. 800 44,616
NIKE, Inc., Class B 600 40,800
Weight Watchers International, Inc. 300 13,899
Wynn Resorts Ltd. 150 15,096
219,409
Consumer Hard Goods--1.1%
International Game Technology 450 18,095
WABCO Holdings, Inc. 250 11,405
29,500
Consumer Staples--8.1%
Altria Group, Inc. 800 17,760
Coca-Cola Co. 700 42,609
Kimberly-Clark Corp. 250 16,138
Pactiv Corp. 500 a 13,105
Pepsico, Inc. 950 68,590
Philip Morris International, Inc. 800 a 40,464
Procter & Gamble Co. 350 24,525
223,191
Financials--6.6%
AFLAC, Inc. 350 22,733
American Express Co. 500 21,860
Assurant, Inc. 200 12,172
Franklin Resources, Inc. 150 14,549
Goldman Sachs Group, Inc. 50 8,270
IntercontinentalExchange, Inc. 100 a 13,050
Investment Technology Group, Inc. 300 a 13,854
Lazard Ltd., Class A 300 11,460
MasterCard, Inc., Class A 100 b 22,299
Nasdaq OMX Group 450 a 17,397
NYSE Euronext 150 9,257
ProLogis REIT 250 14,715
181,616
Health Care--16.2%
Aetna, Inc. 350 14,731
Amerisourcebergen Corp. 400 16,392
Amgen, Inc. 800 a 33,424
The accompanying notes are an integral part of the financial statements.
5
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------
Health Care (continued)
Becton Dickinson & Co. 350 30,047
Celgene Corp. 450 a 27,580
Cigna Corp. 250 10,142
Endo Pharmaceuticals Holdings, Inc. 650 a 15,561
Forest Laboratories, Inc. 550 a 22,005
Genentech, Inc. 300 a 24,354
Herbalife Ltd. 500 23,750
Humana, Inc. 300 a 13,458
Johnson & Johnson 700 45,409
Laboratory Corp. of America Holdings 250 a,b 18,420
Medtronic, Inc. 700 33,859
Merck & Co., Inc. 500 18,975
UnitedHealth Group, Inc. 800 27,488
Warner Chilcott Ltd., Class A 750 a 13,500
Wyeth 850 35,496
Zimmer Holdings, Inc. 300 a 23,358
447,949
Industrials--12.3%
Alliant Techsystems, Inc. 150 a 15,529
Boeing Co. 500 37,185
CSX Corp. 400 22,428
Emerson Electric Co. 750 38,595
Fluor Corp. 250 35,290
Hewitt Associates, Inc., Class A 300 a 11,931
Honeywell International, Inc. 450 25,389
Jacobs Engineering Group, Inc. 300 a 22,077
Kirby Corp. 400 a 22,800
Lennox International, Inc. 400 14,388
Parker Hannifin Corp. 375 25,976
Raytheon Co. 450 29,075
Rockwell Collins, Inc. 300 17,145
The Manitowoc Company, Inc. 300 12,240
Woodward Governor Co. 400 10,688
340,736
Information--8.6%
Accenture Ltd., Class A 900 31,653
Akamai Technologies, Inc. 600 a,b 16,896
Amazon.com, Inc. 300 a 21,390
Cognizant Technology Solutions Corp., Class A 900 a 25,947
Google, Inc., Class A 100 a 44,047
News Corp., Class A 1,050 19,688
Priceline.com, Inc. 100 a,b 12,086
Walt Disney Co. 1,500 47,070
Watson Wyatt Worldwide, Inc., Class A 350 19,863
238,640
The accompanying notes are an integral part of the financial statements.
6
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------
Materials--5.2%
Celanese Corp., Class A 450 17,572
El Du Pont de Nemours & Co. 400 18,704
Freeport-McMoRan Cooper and Gold, Inc. 250 24,055
Monsanto Co. 550 61,325
Nucor Corp. 350 23,709
145,365
Oil And Gas Producer--8.0%
ConocoPhillips 400 30,484
ENSCO International, Inc. 350 b 21,917
Exxon Mobil Corp. 550 46,519
FMC Technologies, Inc. 200 a 11,378
Marathon Oil Corp. 200 9,120
McDermott International, Inc. 350 a 19,187
National-Oilwell Varco, Inc. 400 a 23,352
Noble Corp. 400 19,868
Schlumberger Ltd. 150 13,050
Valero Energy Corp. 550 27,011
221,886
Technology--24.2%
Adobe Systems, Inc. 400 a 14,236
Apple Computer, Inc. 500 a 71,750
Applied Materials, Inc. 1,750 34,142
Autodesk, Inc. 400 a 12,592
Cisco Systems, Inc. 3,050 a 73,474
Danaher Corp. 150 11,404
Dolby Laboratories, Inc., Class A 400 a 14,504
EMC Corp. 1,350 a 19,359
Harris Corp. 250 12,133
Hewlett-Packard Co. 1,150 52,509
Intel Corp. 1,300 27,534
International Business Machines Corp. 550 63,327
Linear Technology Corp. 450 b 13,811
McAfee, Inc. 300 a 9,927
Microsoft Corp. 3,800 107,844
National Semiconductor Corp. 400 7,328
Nokia OYJ--ADR 500 15,915
Nvidia Corp. 400 a 7,916
Oracle Corp. 2,050 a 40,098
Qualcomm, Inc. 600 24,600
Texas Instruments, Inc. 1,300 36,751
671,154
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ------------------------------------------------------------------------------------
Telecommunication Services--0.8%
NII Holdings, Inc. 300 a 9,534
SBA Communications Corp., Class A 450 a 13,424
22,958
Utilities--0.6%
Sempra Energy 300 15,984
TOTAL EQUITIES (Cost $2,720,774) 2,758,388
INVESTMENT OF CASH COLLATERAL--1.0%
BlackRock Cash Strategies L.L.C. (Cost $28,173) 28,173 c 28,173
TOTAL UNAFFILIATED INVESTMENTS (Cost $2,748,947) 2,786,561
AFFILIATED INVESTMENTS--2.7%
Dreyfus Institutional Preferred Plus Money Market Fund 5,161 d 5,161
Dreyfus Institutional Cash Advantage Fund 69,377 d,e 69,377
---------
TOTAL AFFILIATED INVESTMENTS (Cost $74,538) 74,538
TOTAL INVESTMENTS--103.3% (Cost $2,823,485) 2,861,099
LIABILITIES IN EXCESS OF OTHER ASSETS--(3.3%) (91,582)
---------
NET ASSETS--100% 2,769,517
=========
Notes to Schedule of Investments:
ADR--American Depository Receipts
REIT--Real Estate Invesnment Trust
a Non-income producing security.
b Security, or a portion of thereof, was on loan at March 31, 2008.
c Illiquid security. At the period end, the value of this security amounted to
$28,173 or 1.0% of net assets.
d Affiliated institutional money market fund.
e Investment of security lending cashcollateral.
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Statement of Assets and Liabilities
March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investment in securities, at value (Note 1A) (including securities on loan, valued at$94,930 (Note 6)):
Unaffiliated investments (cost $2,748,947) $2,786,561
Affiliated investments (Note 1F) (cost $74,538) 74,538
Receivable from advisor (Note 2) 25,782
Interest and dividends receivable 2,341
Prepaid expenses 5,879
---------
Total assets 2,895,101
Liabilities
Payable for securities lending collateral investment (Note 6) $97,550
Accrued professional fees 13,514
Accrued accounting, administration, custody and transfer agent fees (Note 2) 11,540
Accrued shareholder reporting fees (Note 2) 1,500
Accrued trustees' fees and expenses (Note 2) 424
Other accrued expenses and liabilities 1,056
- -------
Total liabilities 125,584
----------
Net Assets $2,769,517
----------
Net Assets consist of:
Paid-in capital $2,764,200
Accumulated net realized loss (34,182)
Undistributed net investment income 1,885
Net unrealized appreciation 37,614
----------
Total Net Assets $2,769,517
==========
Shares of beneficial interest outstanding 150,682
==========
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 18.38
==========
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Statement of Operations
For the Six Months Ended March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Dividend income from unaffiliated investments (net of foreign withholding taxes $16) $ 18,185
Dividend income from affiliated investments (Note 1F) 436
Securities lending income (Note 6) 560
---------
Total investment income 19,181
Expenses
Investment advisory fee (Note 2) $ 9,617
Accounting, administration, custody and transfer agent fees (Note 2) 25,294
Professional fees 19,182
Registration fees 10,528
Trustees' fees and expenses (Note 2) 1,504
Insurance expense 523
Miscellaneous expenses 8,188
-------
Total expenses 74,836
Deduct:
Waiver of invesment advisory fee (Note 2) (9,617)
Reimbursement of Fund operating expenses (Note 2) (51,152)
-------
Total expense deduction (60,769)
-------
Net Expenses 14,067
---------
Net investment income 5,114
---------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 9,516
Change in unrealized appreciation (depreciation) on:
Investments (358,517)
---------
Net realized and unrealized gain (loss) on investments (349,001)
---------
Net Increase (Decrease) in Net Assets from Operations $(343,887)
=========
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income $ 5,114 $ 23,670
Net realized gain (loss) 9,516 406,171
Change in net unrealized appreciation (depreciation) (358,517) 299,538
---------- ----------
Net increase (decrease) in net assets from investment operations (343,887) 729,379
---------- ----------
Distributions to Shareholders (Note 1C)
From net investment income (11,065) (20,067)
From net realized gains on investments (389,748) --
---------- ----------
Total distributions to shareholders (400,813) (20,067)
---------- ----------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares -- 3,129,260
Values of shares issued in reinvestment distributions 400,815 20,067
Cost of shares redeemed -- 3,290,807)
---------- ----------
Net increase (decrease) in net assets from Fund share transactions 400,815 (141,480)
---------- ----------
Total Increase (Deccrease) in Net Assets (343,885) 567,832
Net Assets
At beginning of period 3,113,402 2,545,570
---------- ----------
At end of period (including net investment income of $1,885 and $7,836, respectively) $2,769,517 $3,113,402
========== ==========
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Financial Highlights
- --------------------------------------------------------------------------------
For the period
For the December 21, 2005
Six Months Ended For the (commencement of
March 31, 2008 Year Ended operations) to
(Unaudited) September 30, 2007 September 30, 2006
---------------- ------------------ -------------------
Net Asset Value, Beginning of Period $ 23.74 $20.32 $20.00
------- ------ ------
From Operations:
Net investment income* (a) 0.04 0.11 0.07
Net realized and unrealized gains (loss) on investments (2.35) 3.44 0.29
------- ------ ------
Total from operations (2.31) 3.55 0.36
------- ------ ------
Less Distributions to Shareholders:
From net investment income (0.08) (0.13) (0.04)
From net realized gains on investments (2.97) -- --
------- ------ ------
Total distributions to shareholders (3.05) (0.13) (0.04)
------- ------ ------
Net Asset Value, End of Period $ 18.38 $23.74 $20.32
======= ====== ======
Total Return (b) (11.05%)(c) 17.49% 1.81%(c)
Ratios/Supplemental Data:
Expenses (to average daily net assets)* 0.95%(d) 0.95% 0.95%(d)
Net Investment Income (to average daily net assets)* 0.35%(d) 0.49% 0.47%(d)
Portfolio Turnover 34%(c) 109% 23%(c)
Net Assets, End of Period (000's omitted) $ 2,770 $3,113 $2,546
- --------
* For the periods indicated, the investment advisor voluntarily agreed 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 reimbursement
would have been:
Net investment income (loss) per share (a) $ (0.39) $(0.42) $(0.87)
Ratios (to average daily net assets):
Expenses 5.06%(d) 3.35% 7.06%(d)
Net investment income (loss) (3.76%)(d) (1.91%) (5.64%)(d)
(a) Calculated based on average shares outstanding.
(b) Total return would have been lower in the absence of expense waivers.
(c) Not annualized.
(d) Calculated on an annualized basis.
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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. The
Mellon Capital Large Cap Growth Fund (the "Fund"), which commenced
operation on December 21, 2005, is a separate diversified investment series
of the Trust.
Through December 31, 2007, Mellon Equity Associates LLP ("Mellon Equity")
had served as the investment adviser to the Fund. Effective on that date,
Mellon Equity and Mellon Capital Management Corporation ("Mellon Capital"),
each a wholly-owned subsidiary of The Bank of New York Mellon Corporation
("BNY Mellon"), merged into one surviving investment adviser, Mellon
Capital. After the merger, Mellon Capital remains an indirect wholly-owned
subsidiary of BNY Mellon. Effective January 1, 2008, Mellon Capital
replaced Mellon Equity as the investment adviser to the Fund and the Fund
changed its name from "Mellon Equity Large Cap Growth Fund." There have
been no changes to the terms of the investment advisory agreement or to the
portfolio manager line-up of the Fund.
The objective of the Fund is to achieve long-term growth of capital. The
Fund seeks to achieve its objective by investing, under normal
circumstances, at least 80% of net assets in equity securities of large
capitalization companies that have total market capitalizations within the
range of capitalizations of the companies in the top 80% of the Russell
1000 Growth Index at the time of purchase.
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
calculated mean price (average of last bid and last offer). Securities that
are fixed income securities, other than short-term instruments with less
than sixty days remaining to maturity, for which accurate 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, or if such quotations do not accurately reflect
fair value, 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 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.
B. Securities transactions and income
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of coupon interest accrued, adjusted for accretion
of discount or amortization of premium using the yield-to-maturity method
on debt securities with greater than sixty days remaining 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.
Dividends representing a return of capital are reflected as a reduction of
cost.
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.
13
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 be distributed 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 Mellon Capital, a
wholly-owned subsidiary of BNY Mellon, or its affiliates.
G. New accounting requirements
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.
In March 2008, the FASB released Statement of Financial Accounting
Standards No. 161, Disclosures about Derivative Instruments and Hedging
Activities ("FAS 161"). FAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. The application of FAS 161 is required for fiscal years
beginning after November 15, 2008 and interim periods within those fiscal
years. At this time, management is evaluating the implications of FAS 161
and its impact on the financial statements and the accompanying notes has
not yet been determined.
(2) Investment Advisory Fee and Other Transactions with Affiliates:
The investment advisory fee paid to Mellon Capital for overall investment
advisory, administrative services, and general office facilities, is paid
monthly at the annual rate of 0.65% of the Fund's average daily net assets.
Mellon Capital voluntarily agreed to limit the Fund's total annual
operating expenses (excluding brokerage commissions, taxes and
extraordinary expenses) to 0.95% of the Fund's average daily net assets for
the six months ended March 31, 2008. Pursuant to this agreement, for the
six months ended March 31, 2008, Mellon Capital voluntarily waived its
investment advisory fee in the amount of $9,617 and reimbursed $51,152 of
the Fund's operating expenses. This arrangement is voluntary and temporary
and may be discontinued or revised by Mellon Capital 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 Mellon Capital, 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
$3,065, for the six months ended March 31, 2008.
The Trust entered into an agreement with Mellon Bank, N.A. ("Mellon Bank"),
a wholly-owned subsidiary of BNY Mellon and an affiliate of Mellon Capital,
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 $22,229 for the six months ended March
31, 2008.
14
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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, Mellon Bank earned $240 for the six
months ended March 31, 2008. See Note 6 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 $40
for the six months ended March 31, 2008, which is included in miscellaneous
expenses on the statement of operations. See Note 8 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 six months ended
March 31, 2008, the Fund was charged $2,130, which amount is included in
miscellaneous expenses in the statement of operations. No other director,
officer or employee of Mellon Capital 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 Mellon Capital 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 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
six months ended March 31, 2008, the Fund was not charged an administrative
service fee by an affiliate of BNY Mellon.
The Trust has contracted Mellon Investor Services LLC, a wholly owned
subsidiary of BNY Mellon and an affiliate of Mellon Capital, to provide
printing and fulfillment services for the Fund. Pursuant to this agreement,
the Fund was charged $1,500, which amount is included in miscellaneous
expenses in the statement of operations, for the six months ended March 31,
2008.
MBSC Securities Corporation ("MBSC"), a wholly-owned subsidiary of BNY
Mellon and affiliate of Mellon Capital, is the distributor of the Fund's
shares.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the six months ended March 31, 2008 were as follows:
Purchases Sales
----------- -----------
Non-U.S. Government Securities $1,122,214 $1,026,356
========== ==========
(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
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Shares sold -- 149,038
Shares issued to shareholders
in reinvestment of distributions 19,533 888
Shares redeemed -- (144,039)
------ --------
Net increase (decrease) 19,533 5,887
====== ========
15
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
At March 31, 2008, one shareholder of record, (MBC Investment Corp., a
wholly owned subsidiary of BNY Mellon and an affiliate of Mellon Capital)
in the aggregate held approximately 96% of the total outstanding shares of
the Fund. Investment activities of these shareholders could have a material
impact on the Fund. For example, a significant redemption by such
shareholders could result in illiquid or less liquid investments comprising
a larger portion of the Fund's Portfolio.
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 six months ended March 31, 2008, the Fund did not
assess any redemption fees.
(5) Federal Taxes:
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 cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 2008, as computed on a federal
income tax basis, were as follows:
Cost for federal income tax purposes $2,823,485
==========
Gross unrealized appreciation $ 271,115
Gross unrealized depreciation (233,501)
----------
Net unrealized appreciation (depreciation) $ 37,614
==========
(6) 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.
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 affect 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 December 11, 2007 through March 31, 2008, the security lending agent
effected such withdrawals and the cash
16
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
proceeds from such withdrawals by the Fund were reinvested in shares of the
Dreyfus Fund. Repayments of cash collateral during the period were made
from the proceeds of redemptions of shares of the Dreyfus Fund. See
Schedule of Investments for further detail on the Fund's investment of cash
collateral in the BlackRock Fund and the Dreyfus Fund as of March 31, 2008.
The Fund loaned securities during the six months ended March 31, 2008 and
earned interest on the invested collateral of $1,622 of which $1,062 was
rebated to borrowers or paid in fees. See Schedule of Investments for
further detail on the security positions on loan and collateral held.
(7) 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 six months ended March 31, 2008,
the Fund had average borrowing outstanding of $3,600 for a total of ten
days an incurred $6 of interest expense. At March 31, 2008, the Fund did
not have an outstanding loan balance.
17
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (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, Mellon
Capital Corporation ("Mellon Capital" 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.
18
Mellon Institutional Funds Investment Trust
Mellon Capital Large Cap Growth Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (Unaudited)
- --------------------------------------------------------------------------------
The Board considered the Fund's performance for the one-year period 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 return for the one-year period (18.09% vs. 18.46%).
The Board noted that the Fund recently commenced operations and had a very
short performance history and that the other funds in its peer group were
substantially larger than the Fund.
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 0.65%, which was in the 2nd (1st
being the best) quintile of its peer group of funds, the median fee of
which was 0.695%. The Fund's entire management fee was reimbursed by the
Adviser. By comparison, the peer group median net management fee was
0.569%. 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 0.95% (after giving effect to expense limitations) was
higher than the median net expense ratio of the peer group of 0.767%,
largely due to the Fund's small asset size compared to its peer group.
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 many of the investment companies in the Mellon Institutional
Funds family of funds. The Trustees observed that the Adviser had incurred
a gain in operating the Fund in 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 Fund and The Boston Company International Core Equity Fund, 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.
19
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their ages,
addresses and dates of birth; their positions 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 period ended March 31, 2008. 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) Position(s) Term of Office Occupation(s) Fund Complex Directorships (period ended
Address, and Held with and Length of During Past Overseen by Held by March 31,
Date of Birth Trust Time Served* 5 Years Trustee Trustee 2008)
- ------------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $506
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: $506
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 (73) Trustee Trustee since Trustee, Mertens 17 None Fund: $506
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: $509
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.
20
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 (51) 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
21
THIS PAGE INTENTIONALLY LEFT BLANK
THIS PAGE INTENTIONALLY LEFT BLANK
MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6913SA0308
MELLON INSTITUTIONAL FUNDS
The Boston Company
Semiannual Report Emerging Markets Core Equity Fund
- --------------------------------------------------------------------------------
March 31, 2008 (Unaudited)
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 Investment Trust
The Boston Company Emerging Markets Core Equity 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 (October 1, 2007 to March 31, 2008).
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 October 1, 2007
October 1, 2007 March 31, 2008 to March 31, 2008
- ------------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $ 934.50 $7.01
Hypothetical (5% return
per year before expenses) $1,000.00 $1,017.75 $7.31
- ---------------
+ Expenses are equal to the Fund's annualized expense ratio of 1.45%,
multiplied by the average account value over the period, multiplied by
183/366 (to reflect the one-half year period).
3
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Portfolio Information as of March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
The Fund is actively managed. Current holdings may be different than those
presented below:
Percentage of
Top Ten Holdings* Country Sector Investments
- ---------------------------------------------------------------------------------------------------------------
Oao Gazprom ADR Russia Energy 3.6%
Companhia Vale do Rio Doce Preferred A Brazil Materials 3.5
Petroleo Brasileiro SA Preferred Brazil Energy 3.3
Samsung Electronics Co., Ltd. South Korea Information Technology 3.0
JSC MMC Norilsk Nickel ADR Russia Materials 2.7
China Mobile Ltd. Hong Kong Telecommunications Services 2.4
CNOOC Ltd. Hong Kong Energy 2.1
Lukoil ADR Russia Energy 1.9
Sasol Ltd. South Africa Energy 1.8
Alfa SA de CV Mexico Industrials 1.8
----
26.1%
* Excludes short-term securities and investment of cash collateral.
Percentage of
Geographic Region Allocation* Investments
- -------------------------------------------------------------
Europe ex U.K 18.1%
Asia ex Japan 47.0
America ex U.S 21.4
Middle East/Africa 13.5
100.0%
* Excludes short-term securities and investment of cash collateral.
4
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------
UNAFFILIATED INVESTMENTS-- 100.6%
Equities--97.7%
Brazil--15.6%
Banco Bradesco SA Preferred 4,500 125,235
Banco DO Brasil SA 11,000 144,973
Braskem SA Preferred 12,900 109,615
Cia Energetica de Minas Gerais Preferred 4,800 86,228
Companhia Paranaense de Energia-Copel Preferred 11,800 193,066
Companhia Vale do Rio Doce Preferred A 19,700 570,609
Perdigao SA 4,900 112,335
Petroleo Brasileiro SA Preferred 12,800 540,104
Sadia SA Preferred 21,200 125,737
Tele Norte Leste Participacoes SA Preferred 8,800 233,864
Uniao de Bancos Brasileiros SA 10,300 120,651
Uniao de Bancos Brasileiros SA GDR 790 a 92,090
Usinas Siderurgicas de Minas Gerais SA Preferred 2,050 115,038
2,569,545
China--6.3%
China Shipping Development Co., Ltd. 82,000 260,456
Dongfeng Motor Group Co., Ltd. 168,000 75,450
Industrial and Commercial Bank of China 356,000 247,606
PetroChina Co., Ltd. 56,000 70,250
Ping An Insurance Group Co. of China Ltd. 15,500 109,671
Shanda Interactive Entertainment Ltd. ADR 5,630 a 163,833
Weiqiao Textile Co., Ltd. 91,500 118,326
1,045,592
Czech Republic--0.5%
CEZ 1,133 86,657
Egypt--1.4%
Commercial International Bank 6,678 110,483
Telecom Egypt 33,126 123,549
234,032
Hong Kong--5.2%
China Mobile Ltd. 26,500 396,435
CNOOC Ltd. 235,000 345,567
CNPC Hong Kong Ltd. 240,000 110,854
852,856
Hungary--0.7%
MOL Hungarian Oil and Gas Nyrt 860 112,274
India--4.6%
Bharat Petroleum Corp., Ltd. 14,468 145,270
Grasim Industries Ltd. 2,464 155,831
Oil and Natural Gas Corp., Ltd. 7,315 177,866
Rolta India Ltd. 15,415 100,342
The accompanying notes are an integral part of the financial statements.
5
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------
India (continued)
Satyam Computer Services Ltd. ADR 4,930 111,369
Tata Steel Ltd. 3,880 67,318
757,996
Indonesia--1.3%
PT Bank Pan Indonesia Tbk 1,802,500 a 126,296
PT Gudang Garam Tbk 101,500 84,426
210,722
Israel--3.7%
Bank of Hapoalim BM 24,250 93,667
Cellcom Israel Ltd. 4,160 130,749
Check Point Software Technologies Ltd. 7,510 a 168,224
Teva Pharmaceutical Industries Ltd. ADR 4,830 b 223,098
615,738
Malaysia--3.0%
Hong Leong Bank Berhad 130,300 237,118
Resorts World Berhad 102,000 109,753
RHB Capital Berhad 95,000 142,773
489,644
Mexico--5.4%
Alfa SA de CV 43,500 291,022
America Movil SA ADR 1,870 119,100
Fomento Economico Mexicano ADR 5,180 216,420
Grupo Aeroportuario del Sureste 29,000 166,220
Grupo Financiero Banorte S.A.B. de CV 21,100 91,399
884,161
Philippines--0.5%
Manila Electric Co. 42,300 81,815
Poland--2.4%
BRE Bank SA 1,245 202,453
KGHM Polska Miedz SA 2,170 99,900
Telekomunikacja Polska SA 8,750 86,937
389,290
Russia--10.6%
JSC MMC Norilsk Nickel ADR 15,310 430,976
Lukoil ADR 3,640 312,312
Mechel ADR 1,900 b 216,201
Mobile TeleSystems ADR 2,860 216,931
Oao Gazprom ADR 11,300 576,300
1,752,720
South Africa--8.0%
ABSA Group Ltd. 5,138 64,433
ArcelorMittal South Africa Ltd. 7,156 174,157
Aveng Ltd. 31,550 226,064
The accompanying notes are an integral part of the financial statements.
6
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------
South Africa (continued)
Metropolitan Holdings Ltd. 48,548 80,368
MTN Group Ltd. 7,660 116,396
Nedbank Group Ltd. 5,400 77,919
Remgro Ltd. 5,622 136,081
Sasol Ltd. 6,180 296,662
Shoprite Holdings Ltd. 17,400 81,254
Telkom SA Ltd. 4,548 73,715
1,327,049
South Korea--11.7%
Dongbu Insurance Co., Ltd. 2,730 105,015
Dongkuk Steel Mill Co., Ltd. 2,700 105,920
Honam Petrochemical Corp. 993 81,117
Hyundai Department Store Co., Ltd. 910 87,997
Hyundai Heavy Industries 174 65,298
Hyundai Marine & Fire Insurance Co., Ltd. 5,890 124,668
Hyundai Motor Co. 2,551 203,590
LG Chem Ltd. 1,875 140,414
LG Corp. 3,411 257,857
LG Electronics, Inc. 1,605 206,322
Meritz Fire & Marine Insurance Co., Ltd. 8,490 77,447
Samsung Electronics Co., Ltd. 760 483,046
1,938,691
Taiwan--9.3%
Asia Cement Corp. 96,111 171,452
AU Optronics Corp. 42,000 72,320
Chi Mei Optoelectronics Corp. 130,400 172,116
Compal Electronics, Inc. 152,410 146,522
First Financial Holding Co., Ltd. 177,920 186,766
High Tech Computer Corp. 6,000 135,138
Polaris Securities Co., Ltd. 150,000 a 108,467
Taiwan Mobile Co., Ltd. 102,645 197,909
Taiwan Semiconductor Manufacturing Co., Ltd. ADR 17,023 174,826
Tong Yang Industry Co., Ltd. 93,770 86,709
Unimicron Technology Corp. 59,000 81,765
1,533,990
Thailand--4.0%
Bangkok Bank Public Co., Ltd. 50,300 219,738
Electricity Generating Public Co., Ltd. 38,000 119,342
PTT Public Co., Ltd. 7,600 77,054
Thai Airways International Public Co., Ltd. 86,300 80,034
Thai Oil Public Co., Ltd. 39,100 87,354
Thanachart Capital Public Co., Ltd. 163,700 80,743
664,265
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- -------------------------------------------------------------------------------------------
Turkey--3.5%
Anadolu Efes Biracilik ve Malt Sanayii AS 11,080 98,854
Selcuk Ecza Deposu Ticaret ve Sanayi AS 41,760 61,366
Trakya Cam Sanayii AS 44,620 56,202
Tupras-Turkiye Petrol Rafine AS 4,023 88,978
Turkcell Iletisim Hizmetleri AS 20,470 170,353
Turkiye Is Bankasi 29,650 109,815
585,568
TOTAL EQUITIES (Cost $15,063,420) 16,132,605
EXCHANGE TRADED FUNDS--0.5%
Ishares MSCI Emerging Markets Index 620 b 83,316
Total Exchange Traded Funds (Cost $82,187)
INVESTMENT OF CASH COLLATERAL--2.4%
BlackRock Cash Strategies L.L.C (Cost $403,925) 403,925 c 403,925
TOTAL UNAFFILIATED INVESTMENTS (Cost $15,549,532) 16,619,846
AFFILIATED INVESTMENTS--0.7%
Dreyfus Institutional Preferred Plus Money Market Fund 2,163 d 2,163
Dreyfus Institutional Cash Advantage Fund 114,015 d,e 114,015
------------
TOTAL AFFILIATED INVESTMENTS (Cost $116,178) 116,178
TOTAL INVESTMENTS--101.3% (Cost $15,665,710) 16,736,024
LIABILITIES IN EXCESS OF OTHER ASSETS--(1.3%) (216,440)
------------
NET ASSETS--100% 16,519,584
============
Notes to Schedule of Investments:
ADR--American Depository Receipts
GDR--Global Depository Receipts
a Non-income producing security.
b Security, or a portion of thereof, was on loan at March 31, 2008.
c Illiquid security. At the period end, the value of this security amounted
to $403,925 or 2.4% of net assets.
d Affiliated institutional money market fund.
e Investment of security lending cash collateral.
Percentage of Net
Economic Sector Allocation Assets
- --------------------------------------------------------------
Consumer Discretionary 5.4%
Consumer Staples 4.4
Energy 17.8
Financials 19.5
Health Care 1.7
Industrials 8.5
Information Technology 10.9
Materials 14.8
Telecommunications Services 11.3
Utilities 3.4
Exchange Traded Funds 0.5
Short-term and Other Assets 1.8
-----
100.0%
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Statement of Assets and Liabilities
March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments in securities, at value (Note 1A) (including securities on loan,
valued at $498,471 (Note 7)):
Unaffiliated investments (cost $15,549,532) $16,619,846
Affiliated investments (Note 1H) (cost $116,178) 116,178
Foreign currency, at value (cost $267,080) 265,008
Receivable for investments sold 394,774
Interest and dividends receivable 30,150
Prepaid expenses 163
-----------
Total assets 17,426,119
Liabilities
Collateral for securities on loan (Note 7) $ 517,940
Payable for investments purchased 228,540
Bank loan payable (Note 8) 127,000
Payable to investment advisor (Note 2) 5,789
Accrued professional fees 16,735
Accrued accounting, administration, custody, and transfer agent fees (Note 2) 8,519
Accrued shareholder's reporting fees (Note 2) 775
Accrued trustee's and expenses fees (Note 2) 353
Other accrued expenses and liabilities 884
-----------
Total liabilities 906,535
-----------
Net Assets $16,519,584
===========
Net Assets consist of:
Paid-in capital $14,375,795
Accumulated net realized gain 1,086,192
Accumulated net investment loss (10,588)
Net unrealized appreciation 1,068,185
-----------
Total Net Assets $16,519,584
===========
Shares of beneficial interest outstanding 590,225
===========
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 27.99
===========
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Statement of Operations
For the Six Months Ended March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Dividend income from unaffiliated investments (net of foreign withholding
taxes $12,943) $ 89,800
Dividend income from affiliated investments (Note 1H) 3,661
Securities lending income (Note 7) 2,486
Interest income 581
-----------
Total investment income 96,528
Expenses
Investment advisory fee (Note 2) $ 81,966
Accounting, administration, custody and transfer agent fees (Note 2) 49,516
Professional fees 23,475
Registration fees 12,521
Trustees' fees and expenses (Note 2) 1,565
Miscellaneous expenses 9,404
------------
Total expenses 178,447
Deduct:
Waiver of investment advisory fee (Note 2) (71,456)
------------
Net Expenses 106,991
-----------
Net investment (loss) (10,463)
-----------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 1,556,799
Foreign currency transactions and forward foreign currency exchange transactions 19,696
------------
Net realized gain (loss) 1,576,495
Change in unrealized appreciation (depreciation) on:
Investments (2,636,815)
Foreign currency translations (5,081)
------------
Change in net unrealized appreciation (depreciation) (2,641,896)
-----------
Net realized and unrealized gain (loss) on investments (1,065,401)
-----------
Net Increase (Decrease) in Net Assets from Operations $(1,075,864)
===========
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
------------ ------------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income (loss) $ (10,463) $ 104,925
Net realized gain (loss) 1,576,495 920,690
Change in net unrealized appreciation (depreciation) (2,641,896) 3,541,091
------------ ------------
Net increase (decrease) in net assets from investment operations (1,075,864) 4,566,706
------------ ------------
Distributions to Shareholders (Note 1C)
From net investment income (68,091) (78,456)
From net realized gains on investments (1,349,478) --
------------ ------------
Total distributions to shareholders (1,417,569) (78,456)
------------ ------------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares 4,074,299 3,722,363
Value of shares issued to shareholders in reinvestment
of distributions 1,372,594 73,536
Cost of shares redeemed (104,830) (306,321)
------------ ------------
Net increase (decrease) in net assets from Fund share transactions 5,342,063 3,489,578
------------ ------------
Total Increase (Decrease) in Net Assets 2,848,630 7,977,828
------------ ------------
Net Assets
At beginning of period 13,670,954 5,693,126
------------ ------------
At end of period [including accumulated net investment income
(loss) of ($10,588) and $67,966, respectively] $ 16,519,584 $ 13,670,954
============ ============
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Financial Highlights
- --------------------------------------------------------------------------------
For the period
For the July 10, 2006
Six Months Ended For the (commencement of
March 31, 2008 Year Ended operations) to
(Unaudited) September 30, 2007 September 30, 2006
---------------- -------------------- ------------------
Net Asset Value, Beginning of Period $ 33.24 $ 20.55 $ 20.00
------------- ------------- -------------
From Operations:
Net investment income (loss) (a) (0.02) 0.31 0.06
Net realized and unrealized gains (loss) on investments (1.93) 12.62 0.49
------------- ------------- -------------
Total from operations (1.95) 12.93 0.55
------------- ------------- -------------
Less Distributions to Shareholders:
From net investment income (0.16) (0.24) --
From net realized gains on investments (3.14) -- --
------------- ------------- -------------
Total distributions to shareholders (3.30) (0.24) --
------------- ------------- -------------
Net Asset Value, End of Period $ 27.99 $ 33.24 $ 20.55
============= ============= =============
Total Return (b) (6.53%)(d) 63.25% 2.75%(d)
Ratios/Supplemental Data:
Expenses (to average daily net assets)* 1.45%(c) 1.45% 1.45%(c)
Net Investment Income (loss) (to average daily net assets)* (0.14)%(c) 1.15% 1.31%(c)
Portfolio Turnover 62%(d) 76% 31%(d)
Net Assets, End of Period (000's omitted) $ 16,520 $ 13,671 $ 5,693
- ----------------
* For the periods indicated, the investment advisor voluntarily agreed not to impose a portion of its investment advisory fee. If
this voluntary action had not been taken, the investment income (loss) per share and the ratios, without waivers and
reimbursement, would have been:
Net investment income (loss) per share (a) $ (0.17) $ (0.16) $ (0.27)
Ratios (to average daily net assets):
Expenses 2.41%(c) 3.18% 8.64%(c)
Net investment income (loss) (1.11%)(c) (0.59%) (5.88%)(c)
(a) Calculated based on average shares outstanding.
(b) Total return would have been lower in the absence of expense waivers.
Returns for periods of less than one year have not been annualized.
(c) Calculated on an annualized basis.
(d) Not annualized.
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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. The
Boston Company Emerging Markets Core Equity Fund (the "Fund"), is a
separate diversified investment series of the Trust.
The objective of the Fund is to achieve long-term growth of capital. The
Fund seeks to achieve its objective by investing, under normal
circumstances, at least 80% of net assets in equity securities of companies
that are located in foreign countries represented in the Morgan Stanley
Capital International Emerging Market (MSCI EM) Index. The Fund may also
enter into equity index futures contracts based primarily on the indices of
the countries included in the MSCI EM Index and Canada.
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
calculated mean price (average of last bid and last offer). Securities that
are fixed income securities, other than short-term instruments with less
than sixty days remaining to maturity, for which accurate 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, or if such quotations do not accurately reflect
fair value, 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 regulated 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.
If market quotations are not readily available or do not accurately reflect
fair value, or the value of a security has been materially affected by
events occurring after the close of the exchange or market on which the
security is principally traded (for example, a foreign exchange or market),
the Fund may value its assets by a method the Trustees believe accurately
reflects the fair value. The Trustees have adopted fair value pricing
procedures, which, among other things, require the Fund to fair value such
securities if there has been a movement in the U.S. market that exceeds a
specified threshold. Although the threshold may be revised by the Trustees
from time to time and the number of days on which fair value prices will be
used will depend on market activity, it is possible that fair value prices
for foreign securities will be used by the Fund to a significant extent.
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.
B. Securities transactions and income
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of coupon interest accrued, adjusted for accretion
of discount or amortization of premium using the yield-to-maturity method
on debt securities with greater than sixty days remaining 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.
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.
13
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 differing
treatments for foreign currency transactions and losses deferred due to
wash sales and post-October losses.
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 be distributed 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 (the "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. 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. 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.
F. 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.
G. 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.
H. Affiliated issuers
Affiliated issuers are investment companies advised by The Boston Company
Asset Management LLC ("TBCAM"), a wholly-owned subsidiary of The Bank of
New York Mellon Corporation ("BNY Mellon"), or its affiliates.
I. New accounting requirements
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.
14
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
In March 2008, the FASB released Statement of Financial Accounting
Standards No. 161, Disclosures about Derivative Instruments and Hedging
Activities ("FAS 161"). FAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. The application of FAS 161 is required for fiscal years
beginning after November 15, 2008 and interim periods within those fiscal
years. At this time, management is evaluating the implications of FAS 161
and its impact on the financial statements and the accompanying notes has
not yet been determined.
(2) Investment Advisory Fee and Other Transactions With Affiliates:
The investment advisory fee paid to TBCAM for overall investment advisory
and administrative services, and general office facilities, is paid monthly
at the annual rate of 1.10% of the Fund's average daily net assets. TBCAM
voluntarily agreed to limit the Fund's total annual operating expenses
(excluding brokerage commissions, taxes and extraordinary expenses) to
1.45% of the Fund's average daily net assets for the six months ended March
31, 2008. Pursuant to this agreement, for the six months ended March 31,
2008, TBCAM voluntarily waived a portion of its investment advisory fee in
the amount of $71,456. This arrangement is voluntary and temporary and may
be discontinued or revised by TBCAM 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 TBCAM, 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
$3,170, for the six months ended March 31, 2008.
The Trust entered into an agreement with Mellon Bank, N.A. ("Mellon Bank"),
a wholly-owned subsidiary of BNY Mellon and an affiliate of TBCAM, to
provide custody, administration and 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 $46,346 for the six months ended March 31,
2008.
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, Mellon Bank earned $1,030 for the six
months ended March 31, 2008. 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 $49
for the six months ended March 31, 2008, which amount is included in
miscellaneous expenses on the Statement of Operations. See Note 8 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 six months ended
March 31, 2008, the Fund was charged $2,130, which amount is included in
miscellaneous expenses in the statement of operations. No other director,
officer or employee of TBCAM 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 TBCAM 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 TBCAM, to provide printing and
fulfillment services for the Fund. Pursuant to this agreement, the Fund was
charged $775, which amount is included in miscellaneous expenses in the
Statement of Operations, for the six months ended March 31, 2008.
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
six months ended March 31, 2008, the Fund was not charged an administrative
service fee by an affiliate of BNY Mellon.
MBSC Securities Corporation ("MBSC"), a wholly-owned subsidiary of BNY
Mellon and affiliate of TBCAM, is the distributor of the Fund's shares.
15
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the six months ended March 31, 2008 were as follows:
Purchases Sales
----------- -----------
Non-U.S. Government Securities $ 12,964,161 $ 9,056,924
============ ===========
(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
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
----------- ------------------
Shares sold 136,796 144,213
Shares issued to shareholders
in reinvestment of distributions 45,815 2,828
Shares redeemed (3,639) (12,790)
------- -------
Net increase (decrease) 178,972 134,251
======= =======
At March 31, 2008, four shareholders of record, (including MBC Investment
Corp., a wholly-owned subsidiary of BNY Mellon and an affiiliate of the
Fund) in the aggregate held approximately 88.7% of the total outstanding
shares of the Fund. Investment activities of these shareholders could have
a material impact on the Fund. For example, a significant redemption by
such shareholders could result in illiquid or less liquid investments
comprising a larger portion of the Fund's Portfolio.
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 six months ended March 31, 2008, 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.
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 cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 2008, as computed on a federal
income tax basis, were as follows:
Cost for federal income tax purposes $ 15,665,710
===============
Gross unrealized appreciation $ 1,817,230
Gross unrealized depreciation (746,916)
---------------
Net unrealized appreciation (depreciation) $ 1,070,314
===============
16
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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:
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 foreign 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 foreign currency exchange contracts is included in
the Statement of Assets and Liabilities.
At March 31, 2008, the Fund did not hold forward foreign currency exchange
contracts.
(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.
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 affect 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 December 11, 2007 through March 31, 2008, the securities lending
agent effected such withdrawals and the cash proceeds from such withdrawals
by the Fund were reinvested in shares of the Dreyfus Fund. Repayments of
cash collateral during the period were made from the proceeds of
redemptions of shares of the Dreyfus Fund. See Schedule of Investments for
further detail on the Fund's investment of cash collateral in the BlackRock
Fund and the Dreyfus Fund as of March 31, 2008.
The Fund loaned securities during the six months ended March 31, 2008 and
earned interest on the invested collateral of $10,507 of which $8,021 was
rebated to borrowers or paid in fees. See Schedule of Investments for
further detail on the security positions on loan and collateral held.
(8) 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 six months ended March 31, 2008,
the Fund had average borrowings outstanding of $70,045 for a total of
forty-four days and incurred $279 of interest expense. At March 31, 2008,
the Fund had a $127,000 outstanding loan balance.
17
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (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, The
Boston Company Asset Management LLC ("TBCAM" 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 portfolio
manager 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.
18
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (Unaudited)
- --------------------------------------------------------------------------------
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.
The Board considered the Fund's performance for the one-year period 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 (53.11% vs. 48.04%). The
Board noted that the Fund recently commenced operations and had a very
short performance history and that the other funds in its peer group were
substantially larger than the Fund.
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 1.10%, which was in the 3rd (1st
being the best) quintile of its peer group of funds, the median fee of
which was 1.11%. The Fund's entire management fee was reimbursed by the
Adviser. By comparison, the peer group median net management fee was
1.108%. 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 1.45% (after giving effect to expense limitations) was
slightly higher than the median net expense ratio of the peer group of
1.428%, largely due to the Fund's small asset size compared to its peer
group.
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 many of the investment companies in the Mellon Institutional
Funds family of funds. The Trustees observed that the Adviser had incurred
a loss in operating the Fund in 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 Fund and The Boston Company International Core Equity Fund, 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.
19
Mellon Institutional Funds Investment Trust
The Boston Company Emerging Markets Core Equity Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (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 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.
20
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their ages,
addresses and dates of birth; their positions 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 period ended March 31, 2008. 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) Position(s) Term of Office Occupation(s) Fund Complex Directorships (period ended
Address, and Held with and Length of During Past Overseen by Held by March 31,
Date of Birth Trust Time Served* 5 Years Trustee Trustee 2008)
- -----------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $526
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: $526
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 (73) Trustee Trustee since Trustee, Mertens 17 None Fund: $526
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: $538
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.
21
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 (51) 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
22
THIS PAGE INTENTIONALLY LEFT BLANK
MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6914SA0308
MELLON INSTITUTIONAL FUNDS
Mellon Capital Micro
Semiannual Report Cap Fund
- --------------------------------------------------------------------------------
March 31, 2008 (Unaudited)
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 Investment Trust
Mellon Capital Micro Cap 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 (October 1, 2007 to March 31, 2008).
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 October 1, 2007
October 1, 2007 March 31, 2008 to March 31, 2008
- -------------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $ 837.30 $6.20
Hypothetical (5% return
per year before expenses) $1,000.00 $1,018.25 $6.81
- ----------
+ Expenses are equal to the Fund's annualized expense ratio of 1.35%,
multiplied by the average account value over the period, multiplied by
183/366 (to reflect the one-half year period).
3
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Portfolio Information as of March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
The Fund is actively managed. Current holdings may be different than those
presented below:
Percentage of
Top Ten Holdings* Sector Investments
- --------------------------------------------------------------------------------
Petroquest Energy, Inc. Oil And Gas Producer 1.0%
Kendle International, Inc. Information 0.9
American Physicians Capital, Inc. Financials 0.9
Enzon Pharmaceuticals, Inc. Health Care 0.9
Landauer, Inc. Technology 0.9
Datascope Corp. Health Care 0.8
FTD Group, Inc. Consumer Cyclicals 0.8
Gentiva Health Services, Inc. Health Care 0.8
S&T Bancorp, Inc. Financials 0.8
Vital Signs, Inc. Health Care 0.8
---
8.6%
* Excludes short-term securities and investment of cash collateral.
Percentage of
Economic Sector Allocation Net Assets
- -------------------------------------------------------------
Consumer Cyclicals 5.3%
Consumer Hard Goods 2.5
Consumer Staples 3.1
Financials 22.3
Health Care 18.1
Industrials 12.0
Information 7.8
Materials 5.0
Oil And Gas Producer 5.6
Technology 15.4
Telecommunications 1.3
Utilities 1.3
Short-term and Other Assets 0.3
-----
100.0%
4
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
UNAFFILIATED INVESTMENTS--106.6%
EQUITIES--99.7%
Consumer Cyclicals--5.3%
AFC Enterprises, Inc. 2,000 a 17,980
CEC Entertainment, Inc. 1,000 a 28,880
FTD Group, Inc. 4,900 65,758
Jos A Bank Clothiers, Inc. 1,700 a,b 34,850
Maidenform Brands, Inc. 2,400 a 39,048
Monarch Casino & Resort, Inc. 2,500 a 44,275
Papa John's International, Inc. 1,500 a 36,315
Perry Ellis International, Inc. 2,000 a 43,660
Republic Airways Holding, Inc. 1,500 a 32,490
School Specialty, Inc. 1,400 a 44,156
True Religion Apparel, Inc. 1,700 a,b 31,535
418,947
Consumer Hard Goods--2.5%
Aftermarket Technology Corp. 1,650 a 32,076
Ethan Allen Interiors, Inc. 1,200 b 34,116
JAKKS Pacific, Inc. 2,000 a 55,140
Knoll, Inc. 2,450 28,273
Midas, Inc. 1,500 a,b 25,785
Movado Group, Inc. 1,200 23,388
198,778
Consumer Staples--3.1%
Core-Mark Holding Co., Inc. 1,500 a 43,110
Diamond Foods, Inc. 2,300 41,722
Elizabeth Arden, Inc. 1,800 a 35,910
Omega Protein Corp. 3,200 a 43,680
Spartan Stores, Inc. 2,150 44,828
WD-40 Co. 1,100 36,575
245,825
Financials--22.3%
Abington Bancorp, Inc. 4,000 41,280
Agree Realty Corp. REIT 1,200 32,940
American Physicians Capital, Inc. 1,550 71,858
Amerisafe, Inc. 2,550 a 32,232
ASTA Funding, Inc. 1,300 b 18,109
BancFirst Corp. 1,150 53,896
Bank Mutual Corp. 3,400 36,516
Cedar Shopping Centers, Inc. REIT 3,000 35,040
City Bank Lynnwood WA 1,700 b 37,859
City Holding Co. 1,450 57,855
Community Bank System, Inc. 1,600 39,296
The accompanying notes are an integral part of the financial statements.
5
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
Financials (continued)
Community Trust Bancorp, Inc. 1,200 35,160
Dime Community Bancshares 3,250 56,810
Dollar Financial Corp. 1,250 a 28,750
Education Realty Trust, Inc. REIT 2,400 30,168
First Community Bancshares, Inc. 1,200 43,704
First Financial Bankshares, Inc. 1,200 49,176
First Financial Corp. 1,500 b 46,170
First Merchants Corp. 1,500 42,810
Flushing Financial Corp. 2,000 35,160
Hallmark Financial Services, Inc. 2,700 a 30,132
Iberiabank Corp. 700 30,975
Infinity Property & Casualty Corp. 900 37,440
OceanFirst Financial Corp. 1,700 29,695
Oriental Financial Group, Inc. 2,200 43,362
Parkway Properties, Inc. REIT 750 27,720
PMA Capital Corp., Class A 5,600 a 47,824
Portfolio Recovery Associates, Inc. 850 b 36,457
Provident New York Bancorp, Inc. 2,900 39,150
Renasant Corp. 2,300 51,750
S&T Bancorp, Inc. 2,000 64,340
S.Y. Bancorp, Inc. 1,000 23,240
Sandy Spring Bancorp, Inc. 1,200 b 33,024
Saul Centers, Inc. REIT 700 35,168
SCBT Financial Corp. 1,200 b 40,560
Simmons First National Corp., Class A 1,250 37,163
Southside Bancshares, Inc. 2,200 52,954
Stifel Financial Corp. 1,000 a 44,900
Suffolk Bancorp 1,250 39,600
Texas Capital Bancshares, Inc. 1,900 a 32,072
Tompkins Financial Corp. 1,250 b 61,500
Virginia Commerence Bancorp 2,200 a 25,256
WesBanco, Inc. 1,500 37,065
World Acceptance Corp. 850 a 27,073
1,753,209
Health Care--18.1%
Albany Molecular Research, Inc. 4,500 a 54,630
Allos Therapeutics, Inc. 4,400 a 26,752
Analogic Corp. 750 49,905
Animal Health International, Inc. 3,650 a 39,931
Cambrex Corp. 4,350 30,145
CONMED Corp. 1,650 a 42,306
Cubist Pharmaceuticals, Inc. 3,000 a 55,260
Cypress Bioscience, Inc. 7,000 a,b 50,120
The accompanying notes are an integral part of the financial statements.
6
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
Health Care (continued)
Datascope Corp. 1,600 66,288
Enzon Pharmaceuticals, Inc. 7,800 a 71,838
Genoptix, Inc. 1,800 a 45,018
Gentiva Health Services, Inc. 3,000 a 65,280
Hanger Orthopedic Group, Inc. 3,750 a 40,425
Martek Biosciences Corp. 1,350 a 41,269
Maxygen, Inc. 3,000 a 19,380
Medcath Corp. 2,000 a 36,400
Medical Action Industries, Inc. 1,100 a 18,073
Merit Medical Systems, Inc. 3,650 a 57,780
MWI Veterinary Supply, Inc. 1,500 a 52,890
Neogen Corp. 2,300 a 57,730
Noven Pharmaceuticals, Inc. 2,200 a 19,756
OSI Systems, Inc. 2,100 a 48,342
Pain Therapeutics, Inc. 7,100 a,b 59,995
Pharmenet Development Group, Inc. 1,100 a 27,753
Pozen, Inc. 4,600 a,b 47,656
RehabCare Group, Inc. 2,400 a 36,000
Symmetry Medical, Inc. 2,100 a 34,860
Viropharma, Inc. 6,800 a,b 60,792
Vital Signs, Inc. 1,250 63,313
VIVUS, Inc. 7,900 a,b 47,637
Zoll Medical Corp. 2,100 a 55,839
1,423,363
Industrials--12.0%
AAON, Inc. 2,750 55,082
American Commerical Lines, Inc. 2,500 a 39,500
American Ecology Corp. 2,000 50,660
AZZ, Inc. 1,100 a 39,138
Badger Meter, Inc. 1,300 b 56,160
Chart Industries, Inc. 700 a 23,688
CIRCOR International, Inc. 1,000 46,250
Columbus McKinnon Corp. 1,900 a 58,862
Comfort Systems USA, Inc. 4,600 59,846
Ducommun, Inc. 2,150 a 59,490
DXP Enterprises, Inc. 1,200 a 47,142
Dynamex, Inc. 1,850 a 46,805
Electro Rent Corp. 2,700 40,905
EnPro Industries, Inc. 1,100 a 34,309
Heico Corp. 1,250 60,937
Houston Wire & Cable Co. 2,400 38,448
Hurco Companies, Inc. 650 a 30,407
Kforce, Inc. 5,250 a 46,410
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
Industrials (continued)
LSI Industries, Inc. 2,000 26,420
Marten Transport Ltd. 2,600 a 40,352
Matrix Service Co. 1,250 a 21,475
TrueBlue, Inc. 1,500 a 20,160
942,446
Information--7.8%
Art Technology Group, Inc. 9,000 a 34,920
CBIZ, Inc. 5,200 a,b 42,224
Crown Media Holdings, Inc., Class A 4,600 a,b 23,782
DG Fastchannel, Inc. 1,250 a 23,975
Ennis, Inc. 2,000 33,560
Forrester Research, Inc. 1,900 a 50,502
Hill International, Inc. 2,000 a 25,020
HMS Holdings Corp. 1,100 a 31,405
ICF International, Inc. 2,000 a 40,100
Internet Brands, Inc., Class A 2,800 a 20,636
Interwoven, Inc. 3,650 a 38,982
Kendle International, Inc. 1,600 a 71,872
Layne Christensen Co. 900 a 31,518
NIC, Inc. 5,400 38,394
Online Resources Corp. 3,400 a 32,708
SonicWALL, Inc. 4,700 a 38,399
Sykes Enterprises, Inc. 1,800 a 31,662
609,659
Materials--5.0%
Buckeye Technologies, Inc. 3,600 a 40,176
Calgon Carbon Corp. 1,800 a,b 27,090
Innophos Holdings, Inc. 3,200 51,488
Koppers Holdings, Inc. 1,350 59,818
Olympic Steel, Inc. 1,000 45,100
Schulman A, Inc. 2,050 42,087
Superior Essex, Inc. 1,600 a 44,992
Tredegar Corp. 1,900 34,599
Universal Stainless and Alloy Products, Inc. 1,500 a 44,565
389,915
Oil And Gas Producer--5.6%
Approach Resources, Inc. 2,400 a 37,632
Brigham Exploration Co. 6,300 a 38,241
Buckeye GP Holdings LP 1,250 28,837
Dawson Geophysical Co. 900 a 60,750
Duncan Energy Partners LP 2,000 36,960
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
Oil And Gas Producer (continued)
EV Energy Partner LP 1,700 b 43,605
Gulfport Energy Corp. 3,300 a 34,980
NATCO Group, Inc., Class A 600 a 28,050
Petroquest Energy, Inc. 4,500 a,b 78,030
Trico Marine Services, Inc. 1,400 a 54,558
441,643
Technology--15.4%
Advanced Energy Industries, Inc. 2,100 a 27,846
Avocent Corp. 2,000 a 33,800
Bel Fuse, Inc., Class B 1,400 39,004
Brooks Automation, Inc. 2,550 a 24,786
Cabot Microelectronics Corp. 1,200 a 38,580
Cirrus Logic, Inc. 7,000 a 47,040
Computer Programs & Systems, Inc. 2,250 47,025
CPI International, Inc. 2,100 a 20,832
CTS Corp. 4,250 45,475
Digi International, Inc. 5,100 a 58,854
EMS Technologies, Inc. 2,000 a 54,280
Epicor Software Corp. 4,100 a,b 45,920
Excel Technology, Inc. 1,250 a 33,700
Ixia 3,500 a 27,160
JDA Software Group, Inc. 2,300 a 41,975
Landauer, Inc. 1,350 67,959
LoJack Corp. 1,600 a 20,224
Manhattan Associates, Inc. 2,100 a 48,153
Mattson Technology, Inc. 3,150 a 19,184
MTS Systems Corp. 1,000 32,260
Novatel Wireless, Inc. 2,600 a 25,168
Park Electrochemical Corp. 2,000 51,700
QAD, Inc. 2,600 21,866
Radiant Systems, Inc. 3,250 a 45,403
Rimage Corp. 1,650 a 36,135
Rudolph Technologies, Inc. 4,700 a 45,919
S1 Corp. 6,200 a 44,740
SPSS, Inc. 1,400 a 54,292
Supertex, Inc. 850 a 17,349
Techwell, Inc. 3,750 a 40,650
Vignette Corp. 3,600 a 47,556
1,204,835
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ----------------------------------------------------------------------------------------
Telecommunications--1.3%
Atlantic Tele-Network, Inc. 1,250 42,287
Neutral Tandem, Inc. 2,000 a 36,020
Oplink Communications, Inc. 2,800 a 24,836
103,143
Utilities--1.3%
Central Vermont Public Service Corp. 1,200 28,680
Energysouth, Inc. 600 31,314
Laclede Group, Inc. 1,050 37,411
97,405
Total Equities (Cost $8,316,346) 7,829,168
INVESTMENT OF CASH COLLATERAL--6.9%
BlackRock Cash Strategies L.L.C. (Cost $543,425) 543,425 c 543,425
TOTAL UNAFFILIATED INVESTMENTS (Cost $8,859,771) 8,372,593
AFFILIATED INVESTMENTS--6.0%
Dreyfus Institutional Preferred Plus Money Market Fund 28,260 d 28,260
Dreyfus Institutional Cash Advantage Fund 439,050 d,e 439,050
---------
TOTAL AFFILIATED INVESTMENTS (Cost $467,310) 467,310
TOTAL INVESTMENTS--112.6% (Cost $9,327,081) 8,839,903
LIABILITIES IN EXCESS OF OTHER ASSETS--(12.6%) (990,542)
---------
NET ASSETS--100% 7,849,361
=========
Notes to Schedule of Investments:
REIT--Real Estate Investment Trust
a Non-income producing security.
b Security, or a portion of thereof, was on loan at March 31, 2008.
c Illiquid security. At the period end, the value of this security amounted
to $543,425 or 6.9% of net assets.
d Affiliated institutional money market fund.
e Investment of security lending cash collateral.
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Statement of Assets and Liabilities
March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investment in securities, at value (Note 1A) (including securities on loan,
valued at $920,664 (Note 6)):
Unaffiliated investments (cost $8,859,771) $8,372,593
Affiliated investments (Note 1F) (cost $467,310) 467,310
Receivable for investments sold 453,509
Interest and dividends receivable 9,931
Receivable from advisor (Note 2) 6,407
Prepaid expenses 3,362
----------
Total assets 9,313,112
Liabilities
Collateral for securities on loan (Note 6) $ 982,475
Payable for investments purchased 453,775
Accrued professional fees 12,424
Accrued accounting, custody, administration and transfer agent fees (Note 2) 12,257
Accrued shareholder reporting fee (Note 2) 1,220
Accrued trustees' fees (Note 2) 328
Accrued administrative services expense (Note 2) 7
Other accrued expenses and liabilities 1,265
-----------
Total liabilities 1,463,751
----------
Net Assets $7,849,361
==========
Net Assets consist of:
Paid-in capital $9,634,346
Accumulated net realized loss (1,311,172)
Undistributed net investment income 13,365
Net unrealized depreciation (487,178)
----------
Total Net Assets $7,849,361
==========
Shares of beneficial interest outstanding 496,346
==========
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 15.81
==========
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Statement of Operations
For the Six Months Ended March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Dividend income from unaffiliated investments $ 71,796
Dividend income from affiliated investments (Note 1F) 656
Securities lending income (Note 6) 8,826
-----------
Total investment income 81,278
Expenses
Investment advisory fee (Note 2) $ 42,729
Accounting, custody, administration and transfer agent fees (Note 2) 28,193
Professional fees 18,216
Registration fees 9,613
Trustees' fees and expenses (Note 2) 1,585
Insurance expense 55
Administrative service fees (Note 2) 7
Miscellaneous expenses 8,081
-----------
Total expenses 108,479
Deduct:
Waiver of invesment advisory fee (Note 2) (42,729)
Reimbursement of Fund operating expenses (8,003)
-----------
Total expense deduction (50,732)
-----------
Net Expenses 57,747
-----------
Net investment income 23,531
-----------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (1,297,806)
Change in unrealized appreciation (depreciation) on:
Investments (280,821)
-----------
Net realized and unrealized gain (loss) on investments (1,578,627)
-----------
Net Increase (Decrease) in Net Assets from Operations $(1,555,096)
===========
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
----------- ------------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income $ 23,531 $ 6,920
Net realized gain (loss) (1,297,806) 998,137
Change in net unrealized appreciation (depreciation) (280,821) (224,942)
------------ ------------
Net increase (decrease) in net assets from investment operations (1,555,096) 780,115
------------ ------------
Distributions to Shareholders (Note 1C)
From investment income (17,086) --
From net realized gains on investments (592,685) --
------------ ------------
(609,771) --
------------ ------------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares 27,500 82,502
Value of shares issued to shareholders in reinvestment of distributions 327,005 --
Cost of shares redeemed (23,370) --
------------ ------------
Net increase (decrease) in net assets from Fund share transactions 331,135 82,502
------------ ------------
Total Increase (Decrease) in Net Assets (1,833,732) 862,617
Net Assets
At beginning of period 9,683,093 8,820,476
------------ ------------
At end of period (including undistributed net investment
income of $13,365 and $6,920, respectively) $ 7,849,361 $ 9,683,093
============ ============
The accompanying notes are an integral part of the financial statements.
13
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Financial Highlights
- --------------------------------------------------------------------------------
For the period
For the May 1, 2006
Six Months Ended For the (commencement of
March 31, 2008 Year Ended operations) to
(Unaudited) September 30, 2007 September 30, 2006
Net Asset Value, Beginning of Period $ 20.29 $ 18.64 $ 20.00
------------- ------------- -------------
From Operations:
Net investment income (loss)* (a) 0.05 0.01 (0.01)
Net realized and unrealized gains (loss) on investments (3.25) 1.64 (1.35)
------------- ------------- -------------
Total from operations (3.20) 1.65 (1.36)
------------- ------------- -------------
Less Distributions to Shareholders:
From net investment income (0.04) -- --
From net realized gains on investments (1.24) -- --
------------- ------------- -------------
Total distributions to shareholders (1.28) -- --
------------- ------------- -------------
Net Asset Value, End of Period $ 15.81 $ 20.29 $ 18.64
============= ============= =============
Total Return (b) (16.27%)(c) 8.85% (6.80%)(c)
Ratios/Supplemental Data:
Expenses (to average daily net assets)* 1.35%(d) 1.35% 1.35%(d)
Net Investment Income (Loss) (to average daily net assets)* 0.55%(d) 0.07% (0.18%)(d)
Portfolio Turnover 97%(c) 167% 103%(c)
Net Assets, End of Period (000's omitted) $ 7,849 $ 9,683 $ 8,820
- ----------
* 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 waiver and reimbursement would have been:
Net investment income (loss) per share (a) $ (0.06) $ (0.19) $ (0.19)
Ratios (to average daily net assets):
Expenses 2.54%(d) 2.34% 3.72%(d)
Net investment income (loss) (0.64%)(d) (0.92%) (2.55%)(d)
(a) Calculated based on average shares outstanding.
(b) Total return would have been lower in the absence of expense waivers.
Returns for periods of less than one year have not been annualized.
(c) Not annualized.
(d) Calculated on an annualized basis.
The accompanying notes are an integral part of the financial statements.
14
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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. The
Mellon Capital Micro Cap Fund (the "Fund"), which commenced operations on
May 1, 2006, is a separate diversified investment series of the Trust.
Through December 31, 2007, Mellon Equity Associates LLP ("Mellon Equity")
had served as the investment adviser to the Fund. Effective on that date,
Mellon Equity and Mellon Capital Management Corporation ("Mellon Capital"),
each a wholly-owned subsidiary of The Bank of New York Mellon Corporation
("BNY Mellon"), merged into one surviving investment adviser, Mellon
Capital. After the merger, Mellon Capital remains an indirect wholly-owned
subsidiary of BNY Mellon. Effective January 1, 2008, Mellon Capital
replaced Mellon Equity as the investment adviser to the Fund and the Fund
changed its name from "Mellon Equity Micro Cap Fund." There have been no
changes to the terms of the investment advisory agreement or to the
portfolio manager line-up of the Fund.
The objective of the Fund is to achieve long-term growth of capital. The
Fund seeks to achieve its objective by investing, under normal
circumstances, at least 80% of net assets in equity securities of micro cap
U.S. companies with total market capitalizations equal to or less than $1
billion at the time of investment.
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
calculated mean price (average of last bid and last offer). Securities that
are fixed income securities, other than short-term instruments with less
than sixty days remaining to maturity, for which accurate 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, or if such quotations do not accurately reflect
fair value, 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 regulated 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 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.
B. Securities transactions and income
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of coupon interest accrued, adjusted for accretion
of discount or amortization of premium using the yield-to-maturity method
on debt securities with greater than sixty days remaining 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.
Dividends representing a return of capital are reflected as a reduction of
cost.
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 losses deferred
due to wash sales.
15
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
Permanent book and tax basis differences relating to shareholder
distributions result in reclassifications among undistributed net
investment income, 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 be distributed 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 Mellon Capital, a
wholly-owned subsidiary of BNY Mellon, or its affiliates.
G. New accounting requirements
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.
In March 2008, the FASB released Statement of Financial Accounting
Standards No. 161, Disclosures about Derivative Instruments and Hedging
Activities ("FAS 161"). FAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. The application of FAS 161 is required for fiscal years
beginning after November 15, 2008 and interim periods within those fiscal
years. At this time, management is evaluating the implications of FAS 161
and its impact on the financial statements and the accompanying notes has
not yet been determined.
(2) Investment Advisory Fee and Other Transactions With Affiliates:
The investment advisory fee paid to Mellon Capital for overall investment
advisory, administrative services and general office facilities is paid
monthly at the annual rate of 1.00% of the Fund's average daily net assets.
Mellon Capital voluntarily agreed to limit the Fund's total annual
operating expenses (excluding brokerage commissions, taxes and
extraordinary expenses) to 1.35% of the Fund's average daily net assets for
the six months ended March 31, 2008. Pursuant to this arrangement, for the
six months ended March 31, 2008, Mellon Capital voluntarily waived its
investment advisory fee in the amount of $42,729 and reimbursed the Fund
for $8,003 of its operating expenses. This arrangement is voluntary and
temporary and may be discontinued or revised by Mellon Capital 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 Mellon Capital, 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
$3,098, for the six months ended March 31, 2008.
The Trust entered into an agreement with Mellon Bank, N.A. ("Mellon Bank"),
a wholly-owned subsidiary of BNY Mellon and an affiliate of Mellon Capital,
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 $25,095 for the six months ended March
31, 2008.
16
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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, Mellon Bank earned $3,784 for the six
months ended March 31, 2008. See Note 6 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 $29
for the six months ended March 31, 2008, which is included in miscellaneous
expenses on the Statement of Operations. See Note 7 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 six months ended
March 31, 2008, the Fund was charged $2,130, which amount is included in
miscellaneous expenses in the statement of operations. No other director,
officer or employee of Mellon Capital 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 Mellon Capital 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 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
six months ended March 31, 2008, the Fund was not charged an administrative
service fee by an affiliate of BNY Mellon.
The Trust has contracted Mellon Investor Services LLC, a wholly owned
subsidiary of BNY Mellon and an affiliate of Mellon Capital, to provide
printing and fulfillment services for the Fund. Pursuant to this agreement,
the Fund was charged $1,220, which amount is included in miscellaneous
expenses in the Statement of Operations, for the six months ended March 31,
2008.
MBSC Securities Corporation ("MBSC"), a wholly-owned subsidiary of BNY
Mellon and affiliate of Mellon Capital, is the distributor of the Fund's
shares.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the six months ended March 31, 2008 were as follows:
Purchases Sales
----------- -----------
Non-U.S. Government Securities $ 8,383,134 $ 8,692,649
=========== ===========
(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
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
----------------- ------------------
Shares sold 1,470 4,090
Shares issued to shareholders in
reinvestment of distributions 19,134 --
Shares redeemed (1,454) --
--------- ---------
Net increase (decrease) 19,150 4,090
========= =========
17
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
At March 31, 2008, two shareholders of record (including MBC Investments
Corp., a wholly-owned subsidiary of BNY Mellon and an affiliate of Mellon
Capital which holds approximately 54%), in the aggregate held approximately
98.8% of the total outstanding shares of the Fund. Investment activities of
these shareholders could have a material impact on the Fund. For example, a
significant redemption by such shareholders could result in illiquid or
less liquid investments comprising a larger portion of the Fund's
Portfolio.
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 six months ended March 31, 2008, 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 Internal Revenue 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 cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 2008, as computed on a federal
income tax basis, were as follows:
Cost for federal income tax purposes $ 9,327,081
============
Gross unrealized appreciation $ 408,145
Gross unrealized depreciation (895,323)
------------
Net unrealized appreciation (depreciation) $ (487,178)
============
(6) 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.
18
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 affect 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 December 11, 2007 through March 31, 2008, the securities lending
agent effected such withdrawals and the cash proceeds from such withdrawals
by the Fund were reinvested in shares of the Dreyfus Fund. Repayments of
cash collateral during the period were made from the proceeds of
redemptions of shares of the Dreyfus Fund. See Schedule of Investments for
further detail on the Fund's investment of cash collateral in the BlackRock
Fund and the Dreyfus Fund as of March 31, 2008.
The Fund loaned securities during the six months ended March 31, 2008 and
earned interest on the invested collateral of $25,121 of which $16,295 was
rebated to borrowers or paid in fees. See Schedule of Investments for
further detail on the security positions on loan and collateral held.
(7) 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 six months ended March 31, 2008,
the Fund had average borrowings outstanding of $6,500 for a total of two
days and incurred $0 of interest expense. At March 31, 2008, the Fund did
not have a loan balance outstanding.
19
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (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, Mellon
Capital Corporation ("Mellon Capital" 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.
The Board considered the Fund's performance for the one-year period 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 return for the one-year period (9.52% vs. 14.46%).
The Board noted that the Fund recently commenced operations and had a very
short performance history and that the other funds in its peer group were
substantially larger than the Fund.
20
Mellon Institutional Funds Investment Trust
Mellon Capital Micro Cap Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (Unaudited)
- --------------------------------------------------------------------------------
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 1.00%, which was in the 1st (best)
quintile of its peer group of funds, the median fee of which was 1.212%.
The Fund's net management fee (after giving effect to expense limitations)
was 0.212% (which included administrative services fees under Lipper's
calculation methodology), well below the peer group median net management
fee of 1.158%. 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 1.35% (after giving effect to expense limitations) was
lower than the median net expense ratio of the peer group of 1.45%,
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 many of the investment companies in the Mellon Institutional
Funds family of funds. The Trustees observed that the Adviser had incurred
a loss in operating the Fund in 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 Fund and The Boston Company International Core Equity Fund, 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.
21
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their ages,
addresses and dates of birth; their positions 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 period ended March 31, 2008. 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) Position(s) Term of Office Occupation(s) Fund Complex Directorships (period ended
Address, and Held with and Length of During Past Overseen by Held by March 31,
Date of Birth Trust Time Served* 5 Years Trustee Trustee 2008)
- ------------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $520
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: $520
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 (73) Trustee Trustee since Trustee, Mertens 17 None Fund: $520
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: $529
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.
22
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 (51) 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
23
MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6915SA0308
MELLON INSTITUTIONAL FUNDS
The Boston Company
Semiannual Report International Core Equity Fund
- --------------------------------------------------------------------------------
March 31, 2008 (Unaudited)
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 Investment Trust
The Boston Company International Core Equity 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 (October 1, 2007 to March 31, 2008).
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 October 1, 2007
October 1, 2007 March 31, 2008 to March 31, 2008
- ------------------------------------------------------------------------------------------------------
Actual $1,000.00 $ 852.80 $4.08
Hypothetical (5% return
per year before expenses) $1,000.00 $1,020.60 $4.45
- --------
+ Expenses are equal to the Fund's annualized expense ratio of 0.88%,
multiplied by the average account value over the period, multiplied by
183/366 (to reflect the one-half year period).
3
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Portfolio Information as of March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
The fund is actively managed. Current holdings may be different than those
presented below:
Percentage of
Top Ten Holdings* Country Sector Investments
- --------------------------------------------------------------------------------------------------
Toyota Motor Corp. Japan Consumer Discretionary 2.3%
Nestle SA Switzerland Consumer Staples 2.2
BHP Billiton Ltd. Australia Materials 2.0
Vodafone Group PLC United Kingdom Telecommunication Services 1.9
Total SA France Energy 1.8
BP PLC United Kingdom Energy 1.7
ING Groep NV CVA Netherlands Financials 1.6
E. On AG Germany Utilities 1.6
Royal Dutch Shell PLC, Class B United Kingdom Energy 1.5
Zurich Financial Services AG Switzerland Financials 1.5
----
18.1%
* Excludes investment of cash collateral.
Percentage of
Geographic Region Allocation* Investments
- ------------------------------------------------------------------
Europe ex U.K. 53.5%
United Kingdom 22.1
Asia ex Japan 5.8
Japan 18.6
-----
100.0%
* Excludes investment of cash collateral.
4
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------
UNAFFILIATED INVESTMENTS--98.1%
Common Equities--97.2%
Australia--4.5%
ASX Ltd. 48,100 1,644,231
BHP Billiton Ltd. 192,833 6,311,490
Computershare Ltd. 205,488 1,643,390
Santos Ltd. 82,493 1,102,482
Sims Group Ltd. 33,700 914,813
Sonic Healthcare Ltd. 68,510 860,999
Telstra Corp., Ltd. 236,680 951,832
Westpac Banking Corp. 40,884 887,489
14,316,726
Austria--0.5%
OMV AG 26,100 1,724,584
Belgium--2.4%
Colruyt SA 9,220 2,372,265
InBev NV 32,700 2,877,129
KBC Groep NV 19,000 2,463,502
7,712,896
Denmark--1.6%
Carlsberg AS 22,105 2,827,074
Danske Bank AS 34,300 1,265,542
Sydbank AS 28,960 1,053,186
5,145,802
Finland--1.2%
Nokia Oyj 120,720 3,818,753
France--10.3%
Air France-KLM 30,600 861,709
AXA SA 71,750 2,603,787
BNP Paribas 37,420 3,773,821
Bouygues SA 19,540 a 1,241,158
Cap Gemini SA 40,618 2,312,647
CNP Assurances 7,880 971,204
France Telecom SA 90,266 3,034,928
Lafarge SA 8,120 1,411,967
Sanofi-Aventis SA 27,280 2,046,282
SCOR SE 82,151 1,960,691
Suez SA 47,203 3,097,378
Total SA 74,220 5,511,031
Unibail-Rodamco REIT 6,302 1,621,576
Vinci SA 26,800 1,937,091
32,385,270
The accompanying notes are an integral part of the financial statements.
5
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------
Germany--9.7%
BASF AG 20,505 2,761,241
Bayer AG 21,800 1,746,718
Bayerische Motoren Werke AG 35,450 1,957,964
Daimler AG 49,582 4,238,060
Deutsche Bank AG 16,970 1,920,638
E. On AG 27,230 a 5,040,134
Linde AG 13,525 1,910,541
MAN AG 13,500 1,793,002
Merck KGaA 11,081 1,365,550
Muenchener Rueckversicherungs-Gesellschaft AG 8,801 1,720,988
RWE AG 9,575 1,176,787
Salzgitter AG 5,830 1,014,041
Siemens AG 12,280 1,330,710
Thyssenkrupp AG 24,200 1,384,357
Wincor Nixdorf AG 19,600 1,568,587
30,929,318
Greece--2.2%
Alpha Bank AE 66,730 2,211,999
Coca-Cola Hellenic Bottling Co. S.A. 51,200 2,384,166
National Bank of Greece S.A. 47,030 2,480,996
7,077,161
Hong Kong--1.2%
Esprit Holdings Ltd. 90,400 1,083,391
Hang Seng Bank Ltd. 52,200 951,213
The Wharf(Holdings) Ltd. 384,200 1,826,486
3,861,090
Ireland--1.4%
Allied Irish Banks PLC (AIB) 103,700 2,209,821
Kerry Group PLC, Class A 76,035 2,382,422
4,592,243
Italy--2.6%
Banca Popolare di Milano Scarl (BPM) 61,100 670,784
Enel SPA 274,580 2,912,613
ENI SPA 72,800 2,482,160
Fondiaria-Sai SPA 35,800 1,482,830
Prysmian SPA 38,620 b 824,202
8,372,589
Japan--18.4%
Aisin Seiki Co., Ltd. 44,600 1,672,423
Canon, Inc. 44,700 2,071,831
FamilyMart Co., Ltd. 61,800 2,230,499
Hitachi Chemical Co., Ltd. 61,400 1,156,804
Hokuhoku Financial Group, Inc. 327,900 989,311
Kobe Steel Ltd. 307,300 891,673
The accompanying notes are an integral part of the financial statements.
6
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------
Japan (continued)
Konami Corp. 26,300 1,000,609
Marubeni Corp. 328,900 2,444,816
Mitsubishi Gas Chemical Co., Inc. 142,100 1,013,161
Mitsubishi UFJ Lease & Finance Co. 48,030 1,678,404
Mitsui & Co., Ltd. 148,400 3,072,950
Mitsui Chemicals, Inc. 166,000 1,103,751
Mitsui OSK Lines Ltd. 181,600 2,241,059
Nikon Corp. 103,000 2,756,023
Nintendo Co., Ltd. 8,520 4,414,557
NTT Corp. 311 1,353,129
Osaka Gas Co., Ltd. 235,000 944,048
Sony Corp. 64,900 2,596,641
Sumitomo Electric Industries Ltd. 195,200 2,477,172
Sumitomo Metal Mining Co., Ltd. 84,800 1,589,845
Takeda Pharmaceutical Co., Ltd. 65,200 3,297,653
Terumo Corp. 22,800 1,193,048
The Bank of Kyoto Ltd. 140,300 1,726,320
The Chiba Bank Ltd. 238,900 1,628,403
The Gunma Bank Ltd. 191,000 1,379,179
The Shizuoka Bank Ltd. 89,800 1,072,819
Toppan Printing Co., Ltd. 127,000 1,476,697
Toshiba Corp. 235,000 a 1,576,599
Toyota Motor Corp. 142,400 7,177,957
58,227,381
Netherlands--4.5%
European Aeronautic Defence and Space Co. 79,668 1,887,597
ING Groep NV CVA 136,700 5,118,324
Koninklijke BAM Groep NV 78,819 1,857,528
Koninklijke DSM NV 21,520 1,037,763
Koninklijke Philips Electronics NV 62,290 2,382,409
Royal KPN NV 126,689 2,139,771
14,423,392
Norway--1.0%
DnB NOR ASA 105,100 1,596,492
Statoil Hyrdo ASA 51,050 1,530,858
3,127,350
Spain--3.7%
Banco Santander SA 191,220 3,809,231
Mapfre SA 193,400 970,796
Repsol YPF SA 46,650 1,609,705
Telefonica SA 152,290 4,375,094
Union Fenosa SA 16,540 1,111,434
11,876,260
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------
Sweden--2.0%
Alfa Laval AB 21,525 1,308,411
NCC AB, Class B 94,500 2,752,783
Skanska AB, Class B 45,600 913,705
Svenska Cellulosa AB (SCA), Class B 83,400 1,520,155
6,495,054
Switzerland--8.3%
Baloise Holdings AG 18,208 1,809,980
Credit Suisse Group 29,270 1,490,179
Holcim Ltd. 15,704 1,649,640
Lonza Group AG 8,277 1,097,876
Nestle SA 13,813 6,903,718
Novartis AG 20,700 1,061,164
Roche Holding AG 21,420 4,032,025
Swiss Reinsurance 19,320 1,687,995
The Swatch Group AG 8,360 2,235,452
Zurich Financial Services AG 14,490 4,564,153
26,532,182
United Kingdom--21.7%
Amlin PLC 359,765 1,939,778
AstraZeneca PLC 21,030 786,111
Barclays PLC 189,540 1,703,580
BP PLC 518,400 5,266,214
British American Tobacco PLC 117,902 4,423,604
Charter PLC 81,260 1,370,438
Cookson Group PLC 121,514 1,600,877
Dairy Crest Group PLC 123,090 1,145,405
Dana Petroleum PLC 40,110 b 1,001,941
De La Rue PLC 118,653 2,086,993
Greene King PLC 123,600 1,385,576
HBOS PLC 221,480 2,460,855
Land Securities Group PLC REIT 50,470 1,511,075
National Grid PLC 143,040 1,962,516
Next PLC 60,454 1,366,194
Prudential PLC 76,081 1,004,588
Royal Bank of Scotland Group PLC 305,855 2,046,591
Royal Dutch Shell PLC, Class B 136,500 4,593,271
Schroders PLC 60,876 1,132,955
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ------------------------------------------------------------------------------------------
United Kingdom (continued)
Scottish and Southern Energy PLC 58,600 1,632,406
Shire PLC 72,170 1,393,979
SSL International PLC 125,300 1,127,436
Stagecoach Group PLC 468,580 2,249,897
Standard Chartered PLC 61,120 2,088,238
Thomas Cook Group PLC 442,030 2,543,392
Tullett Prebon PLC 100,540 950,030
Unilever PLC 84,460 2,847,135
Vedanta Resources PLC 32,445 1,349,282
Vodafone Group PLC 2,016,517 6,037,466
William Morrison Supermarkets PLC 263,463 1,433,606
WPP Group PLC 306,600 3,656,034
Xstrata PLC 40,930 2,864,249
68,961,712
Total Common Equities (Cost $325,738,342) 309,579,763
PREFERRED STOCKS--0.9%
Germany
Fresenius SE (Cost $2,628,502) 33,780 2,812,721
INVESTMENT OF CASH COLLATERAL--0.0%
BlackRock Cash Strategies L.L.C. (Cost $20,615) 20,615 c 20,615
TOTAL UNAFFILIATED INVESTMENTS (Cost $328,387,459) 312.413,099
AFFILIATED INVESTMENTS--0.2%
Dreyfus Institutional Cash Advantage Fund (Cost $689,677) 689,677 d,e 689,677
-----------
TOTAL INVESTMENTS--98.3% (Cost $329,077,136) 313,102,776
OTHER ASSETS, LESS LIABILITIES--1.7% 5,427,253
-----------
NET ASSETS--100% 318,530,029
===========
Notes to Schedule of Investments:
REIT -- Real Estate Investment Trust
a Security, or a portion of thereof, was on loan at March 31, 2008.
b Non-income producing security.
c Illiquid security. At the period end, the value of this security amounted to
$20,615 or 0% of net assets.
d Affiliated institutional money market fund.
e Investment of security lending cash collateral.
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
At March 31, 2008 the Fund held the following forward foreign currency exchange
contracts:
Local Unrealized
Principal Contract Value at USD Amount Appreciation
Contracts to Deliver Amount Value Date March 31, 2008 to Receive (Depreciation)
- -------------------------------------------------------------------------------------------------------------------
British Pound 126,293 4/1/2008 $250,578 $252,081 $ 1,503
Euro 122,577 4/1/2008 193,488 193,292 (196)
Swiss Franc 931,929 4/1/2008 938,593 932,862 (5,731)
-------
$(4,424)
=======
Local
Principal Contract Value at USD Amount Unrealized
Contracts to Receive Amount Value Date March 31, 2008 to Deliver (Depreciation)
- -------------------------------------------------------------------------------------------------------------------
Australian Dollar 1,023,592 4/1/2008 $935,564 $939,965 $(4,401)
=======
At March 31, 2008 the Fund held the following futures contracts:
Underlying Face Unrealized
Contract Position Expiration Date Amount at Value (Depreciation)
- ----------------------------------------------------------------------------------------------------------
MSCI Pan--Euro (244 Contracts) Long 6/20/2008 $7,818,626 $(114,920)
TOPIX (17 Contracts) Long 6/12/2008 2,073,400 (100,964)
---------
$(215,884)
=========
Percentage of Net
Economic Sector Allocation Assets
---------------------------------------------------------------------
Consumer Discretionary 10.2%
Consumer Staples 10.0
Energy 7.8
Financials 24.5
Health Care 7.2
Industrials 11.6
Materials 9.4
Information Technology 5.8
Telecommunication Services 6.0
Utilities 5.6
Short-term and Net other Assets 1.9
-----
100.0%
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Statement of Assets and Liabilities
March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investment in securities:(Note 1 A) (including securities on loan, valued at
$661,843) (Note 7)):
Unaffiliated issuers, at value (Note 1 A) (cost $328,387,459) $312,413,099
Affiliated issuers, at value (Note 1 H) (cost $689,677) 689,677
Cash 742
Cash Collateral at broker for futures contracts 2,802,000
Foreign Currency, at value (cost $1,337,445) 1,335,944
Receivable for investments sold 2,600,796
Interest and dividends receivable 3,497,920
Receivable for Fund shares sold 282,803
Unrealized appreciation on forward foreign currency exchange contracts (Note 6) 1,503
Prepaid expenses 78,739
-----------
Total assets 323,703,223
Liabilities
Payable for investments purchased $2,843,303
Payable for securities lending collateral investment (Note 7) 710,292
Bank loan payable (Note 8) 583,000
Accrued administrative service fees (Note 2) 375,994
Payable to investment advisor (Note 2) 234,358
Payable for Fund shares redeemed 106,744
Payable for variation margin on open futures contracts (Note 6) 62,850
Unrealized depreciation on forward foreign currency exchange contracts (Note 6) 10,328
Accrued accounting, administration, custody and transfer agent fees (Note 2) 105,846
Accrued registration fees 50,276
Accrued professional fees 38,473
Accrued trustees' fees (Note 2) 32,532
Accrued shareholder reporting fees (Note 2) 8,000
Other accrued expenses and liabilities 11,198
----------
Total liabilities 5,173,194
-----------
Net Assets $318,530,029
============
Net Assets consist of:
Paid-in capital $308,090,364
Accumulated net realized gain 25,540,984
Undistributed net investment income 736,301
Net unrealized depreciation (15,837,620)
-----------
Total Net Assets $318,530,029
============
Shares of beneficial interest outstanding 13,886,221
============
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 22.94
============
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
The Boston Company InternationalCore Equity Fund
Statement of Operations
For the Six Months Ended March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Dividend income from unaffiliated investments (net of foreign withholding taxes $231,687) $ 5,036,488
Dividend income from affiliated investments (Note 1H) 515,322
Interest income 159,763
Security lending income (Note 7) 268
-------------
Net investment income 5,711,841
Expenses
Investment advisory fee (Note 2) $ 2,498,629
Accounting, administration, custody and transfer agent fees (Note 2) 208,238
Administrative service fees (Note 2) 451,760
Registration fees 60,566
Professional fees 58,994
Trustees' fees (Note 2) 54,696
Insurance expense 29,766
Miscellaneous expenses 100,468
------------
Total expenses 3,463,117
Deduct:
Waiver of investment advisory fee (Note 2) (624,657)
------------
Net expenses 2,838,460
-------------
Net investment income 2,873,381
-------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 52,780,216
Financial futures transactions (5,968,736)
Foreign currency transactions and forward foreign currency exchange transactions 1,442,430
------------
Net realized gain (loss) 48,253,910
Change in unrealized appreciation (depreciation) on:
Investments (138,703,995)
Financial futures contracts (1,459,444)
Foreign currency translations and forward foreign currency exchange contracts (656,451)
------------
Net change in net unrealized appreciation (depreciation) (140,819,890)
-------------
Net realized and unrealized gain (loss) on investments (92,565,980)
-------------
Net Increase (Decrease) in Net Assets from Operations $ (89,692,599)
=============
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
The Boston Company InternationalCore Equity Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income (loss) $ 2,873,381 $ 45,344,358
Net realized gain (loss) 48,253,910 403,675,988
Change in net unrealized appreciation (depreciation) (140,819,890) (28,749,478)
-------------- --------------
Net increase (decrease) in net assets from investment operations (89,692,599) 420,270,868
Distributions to Shareholders (Note 1C)
From net investment income (2,638,049) (37,760,225)
From net realized gains on investments (251,708,803) (55,518,833)
-------------- --------------
Total distributions to shareholders (254,346,852) (93,279,058)
-------------- --------------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares 49,873,025 777,178,564
Value of shares issued in reinvestment of distributions 244,844,840 52,326,222
Cost of shares redeemed (net of redemption fees
of $41,319 and $75,412, respectively) (889,526,163) 1,914,206,731)
-------------- --------------
Net increase (decrease) in net assets from Fund share transactions (594,808,298) 1,084,701,945)
-------------- --------------
Total Increase (Decrease) in Net Assets (938,847,749) (757,710,135)
Net Assets
At beginning of period 1,257,377,778 2,015,087,913
-------------- --------------
At end of period (including undistributed net
investment income of $736,301 and $500,969, respectively) $ 318,530,029 $1,257,377,778
============== ==============
The accompanying notes are an integral part of the financial statements.
13
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Financial Highlights
- --------------------------------------------------------------------------------
For the
Six Months Ended Year Ended September 30,
March 31, 2008 ------------------------------------------------------------------
(Unaudited) 2007 2006 2005 2004 2003
----------- ---- ---- ---- ---- ----
Net Asset Value, Beginning of Period $ 46.03 $ 39.01 $ 34.34 $ 27.03 $ 21.62 $ 17.10
-------- ---------- ---------- -------- -------- -------
From Investment Operations:
Net investment income (loss)* (a) 0.15 0.78 0.71 0.50 0.31 0.23
Net realized and unrealized gain (loss)
on investments (5.07) 7.82 5.59 7.73 5.49 4.55
-------- ---------- ---------- -------- -------- -------
Total from operations (4.92) 8.60 6.30 8.23 5.80 4.78
-------- ---------- ---------- -------- -------- -------
Less Distributions to Shareholders:
From net investment income (0.19) (0.60) (0.40) (0.39) (0.39) (0.26)
From net realized gains on investments (17.98) (0.98) (1.23) (0.53) -- --
-------- ---------- ---------- -------- -------- -------
Total distributions to shareholders (18.17) (1.58) (1.63) (0.92) (0.39) (0.26)
-------- ---------- ---------- -------- -------- -------
Net Asset Value, End of Period $ 22.94 $ 46.03 $ 39.01 $ 34.34 $ 27.03 $ 21.62
======== ========== ========== ======== ======== =======
Total Return (14.72%)(b) (22.37%(b) 19.01% 31.06% 27.04% 28.23%(b)
Ratios/Supplemental Data:
Expenses (to average daily net assets)* 0.88%(d) 0.77%(e) 0.88%(e) 1.01%(e) 1.12%(e) 1.16%(e)
Net Investment Income (to average daily net
assets)* 0.93%(d) 1.78% 1.91% 1.59% 1.22% 1.21%
Portfolio Turnover 46%(c) 83%(f) 51%(f) 58%(f) 80%(f) 17%(f)
Net Assets, End of Period (000's omitted) $318,530 $1,257,378 $2,015,088 $287,065 $124,675 $77,727
- --------
* 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 reimbursement would have been:
Net investment income per share (a) $0.12 $0.78 N/A N/A N/A $0.19
Ratios (to average daily net assets):
Expenses 1.09%(d) 0.78%(e) N/A N/A N/A 1.34%(e)
Net investment income 0.72%(d) 1.77% N/A N/A N/A 1.03%
(a) Calculated based on average shares outstanding.
(b) Total return would have been lower in the absence of expense waivers.
(c) Not annualized.
(d) Calculated on an annualized basis.
(e) For the period October 1, 2006 to September 19, 2007 and for the fiscal
years ended September 30, 2003-2006, the ratio includes the Fund's share of
the TBC International Core Equity Portfolio's allocated expenses.
(f) On September 19, 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. Effective September 20, 2007, the Fund began investing directly
in the securities in which the Portfolio had invested. Portfolio turnover
represents investment activity of both the Fund and the Portfolio for the
year. The amounts shown for 2003-2006 are the ratios for the Portfolio.
The accompanying notes are an integral part of the financial statements.
14
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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. The
Boston Company International Core Equity Fund (the "Fund") is a separate
diversified investment series of the Trust.
The objective of the Fund is to achieve long-term growth of capital. The
Fund seeks to achieve its objective by investing, under normal
circumstances, at least 80% of net assets in equity securities of companies
that are represented in the MSCI Europe, Australia, Far East (EAFE) Index
and Canada. The Fund may invest up to 25% of assets in emerging market
countries. The Fund may also invest in equity index futures contracts based
primarily on the indices of countries included in the EAFE Index and
Canada.
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
calculated mean price (average of last bid and last offer). Securities that
are fixed income securities, other than short-term instruments with less
than sixty days remaining to maturity, for which accurate 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, or if such quotations do not accurately reflect
fair value, 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 regulated investment companies ("RICs"),
the Fund's net asset value ("NAV") is 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.
If market quotations are not readily available or do not accurately reflect
fair value, or the value of a security has been materially affected by
events occurring after the close of the exchange or market on which the
security is principally traded (for example, a foreign exchange or market),
the Fund may value its assets by a method the Trustees believe accurately
reflects the fair value. The Trustees have adopted fair value pricing
procedures, which, among other things, require the Fund to fair value such
securities if there has been a movement in the U.S. market that exceeds a
specified threshold. Although the threshold may be revised by the Trustees
from time to time and the number of days on which fair value prices will be
used will depend on market activity, it is possible that fair value prices
for foreign securities will be used by the Fund to a significant extent.
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.
B. Securities transactions and income
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of coupon interest accrued, adjusted for accretion
of discount or amortization of premium using the yield-to-maturity method
on debt securities with greater than sixty days remaining 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.
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.
15
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 differing
treatments for foreign currency transactions, losses deferred due to wash
sales, passive foreign investment companies (PFIC) and equalization.
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 be distributed 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 (the "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. 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. 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.
F. 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.
G. 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.
H. Affiliated issuers
Affiliated issuers are investment companies advised by The Boston Company
Asset Management LLC ("TBCAM"), 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.
In March 2008, the FASB released Statement of Financial Accounting
Standards No. 161, Disclosures about Derivative Instruments and Hedging
Activities ("FAS 161"). FAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. The
16
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
application of FAS 161 is required for fiscal years beginning after
November 15, 2008 and interim periods within those fiscal years. At this
time, management is evaluating the implications of FAS 161 and its impact
on the financial statements and the accompanying notes has not yet been
determined.
(2) Investment Advisory Fee and Other Transactions With Affiliates:
The investment advisory fee paid to TBCAM for overall investment advisory,
and administrative services, and general office facilities, is paid monthly
at the annual rate of 0.80% of the first $500 million of the Fund's average
daily net assets, 0.75% of the next $500 million, and 0.70% of the next
$500 million, 0.60% of the next $500 million, and 0.50% on assets over $2
billion.
For the period of October 1, 2007 through August 31, 2008, TBCAM has agreed
to rebate 25% of its management fee to the Fund. This rebate will end on
September 1, 2008, and on such date the Fund's contractual advisory fee
will again be in effect. This rebate will not change any existing voluntary
total expense limitation arrangements that are in effect, as TBCAM will
continue its commitment to maintain such total expense limitations during
this rebate period. For the six months ended March 31, 2008 TBCAM rebated
$624,657 of its investment advisory fees charged to the Fund.
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 TBCAM, 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
$49,520, for the six months ended March 31, 2008.
The Trust entered into an agreement with Mellon Bank, N.A. ("Mellon Bank"),
a wholly-owned subsidiary of BNY Mellon and an affiliate of TBCAM, 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 $158,718 for the six months ended March 31,
2008.
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, Mellon Bank earned $140 for the six
months ended March 31, 2008. See Note 7 for further details.
The Trust entered into two separate agreements with The Bank of New York
that enable 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
$43,991 for the six months ended March 31, 2008, which is included in
miscellaneous expenses on the statement of operations. See Note 8 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 six months ended
March 31, 2008, the Fund was charged $2,123, which amount is included in
miscellaneous expenses in the statement of operations. No other director,
officer or employee of TBCAM 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 TBCAM 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 TBCAM, to provide printing and
fulfillment services for the Fund. Pursuant to this agreement, the Fund was
charged $8,000, which amount is included in miscellaneous expenses in the
statement of operations, for the six months ended March 31, 2008.
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
six months ended March 31, 2008, the Fund was charged $60,549 for fees
payable to BNY Mellon Wealth Management.
MBSC Securities Corporation ("MBSC"), a wholly-owned subsidiary of BNY
Mellon and affiliate of TBCAM, is the distributor of the Fund's shares.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the six months ended March 31, 2008 were as follows:
Purchases Sales
--------- -----
Non-U.S. Government Securities $283,074,691 $1,031,151,368
============ ==============
17
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
----------------- ------------------
Shares sold 1,770,498 18,088,840
Shares issued to shareholders
in reinvested distributions 9,582,968 1,212,198
Shares redeemed (24,781,456) (43,638,985)
----------- -----------
Net increase (decrease) (13,427,990) (24,337,947)
=========== ===========
At March 31, 2008, two shareholders of record, in the aggregate, held
approximately 26.1% of the total outstanding shares of the Fund. Investment
activities of these shareholders could have a material impact on the Fund.
For example, a significant redemption by such shareholders could result in
illiquid or less liquid investments comprising a larger portion of the
Fund's Portfolio.
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 six months ended March 31, 2008, the Fund received
$41,319 in redemption fees and is reflected in the cost of shares redeemed.
(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 cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 2008, as computed on a federal
income tax basis, were as follows:
Cost for federal income tax purposes $329,077,136
------------
Gross unrealized appreciation 13,990,524
Gross unrealized depreciation (30,189,593)
------------
Net unrealized appreciation
(depreciation) $(16,199,069)
============
(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:
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
18
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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.
For the six months ended March 31, 2008, the Fund held open financial
futures contracts. 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 foreign 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 foreign currency exchange contracts is included in
the Statement of Assets and Liabilities.
For the six months ended March 31, 2008, the Fund held forward foreign
currency exchange contracts. See 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.
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 affect 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 December 11, 2007 through March 31, 2008, the securities lending
agent effected such withdrawals and the cash proceeds from such withdrawals
by the Fund were reinvested in shares of the Dreyfus Fund. Repayments of
cash collateral during the period were made from the proceeds of
redemptions of shares of the Dreyfus Fund. See Schedule of Investments for
further detail on the Fund's investment of cash collateral in the BlackRock
Fund and the Dreyfus Fund as of March 31, 2008.
The Fund loaned securities during the six months ended March 31, 2008 and
earned interest on the invested collateral of $1,661 of which $1,393 was
rebated to borrowers or paid in fees. See Schedule of Investments for
further detail on the security positions on loan and collateral held.
(8) 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. For the six months ended March 31, 2008, the
Fund had average borrowings outstanding of $12,436,000 for a total of 18
days and incurred interest expense of $30,911. At March 31, 2008, the Fund
did not have a loan balance outstanding.
19
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (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, The
Boston Company Asset Management LLC ("TBCAM" 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 portfolio
manager 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.
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 (24.11% vs. 23.60%), three-year period (25.25% vs. 22.59%) and
five-year period (22.73% vs. 18.50%).
20
Mellon Institutional Funds Investment Trust
The Boston Company International Core Equity Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (Unaudited)
- --------------------------------------------------------------------------------
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 effective contractual advisory fee was 0.725% (based on the
following breakpoints: 0.80% of the first $500 million; 0.75% of the next
$500 million; and 0.70% of the next $500 million; 0.60% of the next $500
million and 0.50% of over $2 billion), which was in the 3rd (1st being the
best) quintile of its peer group of funds, the median fee of which was
0.803%. The Fund's net management fee was 0.75% (which included
administrative services fees under Lipper's calculation methodology), above
the peer group median net management fee of 0.668%. 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 0.879% was lower than the median net expense ratio of the
peer group of 1.003%, notwithstanding the fact that many 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 many of the investment companies in the Mellon Institutional
Funds family of funds. The Trustees observed that the Adviser had incurred
gains 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 Fund and the Standish
Mellon Fixed Income Fund, 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.
21
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their ages,
addresses and dates of birth; their positions 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 period ended March 31, 2008. 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) Position(s) Term of Office Occupation(s) Fund Complex Directorships (period ended
Address, and Held with and Length of During Past Overseen by Held by March 31,
Date of Birth Trust Time Served* 5 Years Trustee Trustee 2008)
- ------------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $6,597
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: $6,597
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 (73) Trustee Trustee since Trustee, Mertens 17 None Fund: $6,597
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: $8,541
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.
22
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 (51) 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
23
MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6924SA0308
MELLON INSTITUTIONAL FUNDS
Semiannual Report The Boston Company
Small/Mid Cap Growth Fund
- --------------------------------------------------------------------------------
March 31, 2008 (Unaudited)
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 Investment Trust
The Boston Company Small/Mid Cap Growth 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 (October 1, 2007 to March 31, 2008).
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 October 1, 2007
October 1, 2007 March 31, 2008 to March 31, 2008
- ----------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $ 921.20 $4.80
Hypothetical (5% return
per year before expenses) $1,000.00 $1,020.00 $5.05
- -------------------
+ Expenses are equal to the Fund's annualized expense ratio of 1.00%,
multiplied by the average account value over the period, multiplied by
183/366 (to reflect the one-half year period).
3
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Portfolio Information as of March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
The Fund is actively managed. Current holdings may be different than those
presented below:
Percentage of
Top Ten Holdings* Sector Investments
- -------------------------------------------------------------------------------------------------------
Energen Corp. Utilities 2.1%
NeuStar, Inc., Class A Telecommunication Services 2.0
Penn Virginia Corp. Energy 2.0
Superior Energy Services, Inc. Energy 1.8
Bare Escentuals, Inc. Consumer Staples 1.7
PerkinElmer, Inc. Health Care 1.7
Hewitt Associates, Inc., Class A Information Technology 1.6
Pediatrix Medical Group, Inc. Health Care 1.6
Dollar Tree, Inc. Consumer Discretionary 1.6
Tidewater, Inc. Energy 1.6
----
17.7%
* Excludes short-term securities and investment of cash collateral.
Percentage of
Economic Sector Allocation Net Assets
- ----------------------------------------------------------
Consumer Discretionary 12.6%
Consumer Staples 9.2
Energy 8.1
Financials 7.0
Health Care 17.1
Industrials 7.5
Information Technology 27.5
Materials 2.9
Telecommunications Services 1.9
Utilities 2.0
Short-term and Other Assets 4.2
-----
100.0%
4
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------
UNAFFILIATED INVESTMENTS--97.9%
Equities--95.8%
Consumer Discretionary--12.6%
Bright Horizons Family Solutions, Inc. 3,520 a 151,501
Dollar Tree, Inc. 17,310 a 477,583
Gentex Corp. 21,350 366,152
Interactive Data Corp. 10,580 301,213
Interface, Inc., Class A 21,740 305,447
J.Crew Group, Inc. 7,160 a 316,257
Lions Gate Entertainment Corp. 39,468 a 384,813
Panera Bread Co., Class A 3,450 a,b 144,520
Polaris Industries, Inc. 9,660 b 396,157
THQ, Inc. 13,040 a 284,272
Tiffany & Co. 4,280 b 179,075
Tractor Supply Co. 3,300 a 130,416
Warnaco Group, Inc. 9,040 a 356,538
WMS Industries, Inc. 6,140 a 220,856
4,014,800
Consumer Staples--9.2%
Alberto-Culver Co. 13,420 367,842
Bare Escentuals, Inc. 22,520 a 527,418
Church & Dwight Co., Inc. 5,640 305,914
Hansen Natural Corp. 11,640 a,b 410,892
Herbalife Ltd. 7,380 350,550
Longs Drug Stores Corp. 7,830 332,462
Ruddick Corp. 8,850 326,211
Whole Foods Market, Inc. 8,920 b 294,092
2,915,381
Energy--8.1%
Denbury Resources, Inc. 7,130 a 203,561
Dril-Quip, Inc. 9,730 a 452,153
Penn Virginia Corp. 13,840 610,206
Range Resources Corp. 4,850 307,732
Superior Energy Services, Inc. 13,540 a 536,455
Tidewater, Inc. 8,580 472,844
2,582,951
The accompanying notes are an integral part of the financial statements.
5
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------
Financials--7.0%
Arch Capital Group Ltd. 5,580 a 383,178
Assured Guaranty Ltd. 10,450 248,083
Discover Financial Services 14,130 231,308
Federated Investors, Inc., Class B 6,030 236,135
Investment Technology Group, Inc. 9,410 a 434,554
People's United Financial, Inc. 8,910 154,232
Plum Creek Timber Co., Inc. REIT 7,730 314,611
RLI Corp. 4,100 203,237
2,205,338
Health Care--17.1%
Alnylam Pharmaceuticals, Inc. 4,460 a,b 108,824
Bruker Corp. 15,510 a 238,699
Covance, Inc. 5,620 a 466,291
Exelixis, Inc. 4,160 a 28,912
Henry Schein, Inc. 7,690 a 441,406
Hologic, Inc. 8,439 a 469,208
Integra LifeSciences Holdings Corp. 5,820 a,b 252,995
Magellan Health Services, Inc. 5,530 a 219,486
Millennium Pharmaceuticals, Inc. 11,330 a 175,162
NuVasive, Inc. 6,300 a,b 217,413
Pediatrix Medical Group, Inc. 7,200 a 485,280
PerkinElmer, Inc. 21,740 527,195
PSS World Medical, Inc. 12,030 a 200,420
Psychiatric Solutions, Inc. 9,050 a,b 306,976
Thermo Fisher Scientific, Inc. 7,550 a 429,142
United Therapeutics Corp. 1,990 a 172,533
Waters Corp. 4,240 a 236,168
Wright Medical Group, Inc. 19,450 a 469,523
5,445,633
Industrials--7.5%
AAR Corp. 8,440 a 230,159
Actuant Corp., Class A 11,800 356,478
Bucyrus International, Inc., Class A 1,770 179,920
Clean Harbors, Inc. 3,260 a 211,900
Flowserve Corp. 1,800 187,884
Joy Global, Inc. 2,390 155,732
Landstar System, Inc. 4,660 243,066
MSC Industrial Direct Co. Inc., Class A 7,980 337,155
Quanta Services, Inc. 9,600 a 222,432
UTI Worldwide, Inc. 12,910 259,233
2,383,959
The accompanying notes are an integral part of the financial statements.
6
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------
Information Technology--27.5%
Akamai Technologies, Inc. 15,270 a,b 430,003
Alliance Data Systems Corp. 5,990 a 284,585
Amdocs Ltd. ADR 12,110 a 343,439
BMC Software, Inc. 13,240 a 430,565
Broadridge Financial Solutions, Inc. 26,230 461,648
Brocade Communications Systems, Inc. 21,550 a 157,315
CACI International, Inc., Class A 8,110 a 369,410
Cognizant Technology Solutions Corp., Class A 11,810 a 340,482
Emulex Corp. 20,490 a 332,758
FLIR Systems, Inc. 11,230 a 337,911
Foundry Networks, Inc. 10,640 a 123,211
Global Payments, Inc. 10,300 426,008
Harris Corp. 5,120 248,474
Hewitt Associates, Inc., Class A 12,330 a 490,364
Ingram Micro, Inc., Class A 10,290 a 162,891
Intersil Corp., Class A 6,570 168,652
Iron Mountain, Inc. 8,020 a 212,049
Jack Henry & Associates, Inc. 13,440 331,565
McAfee, Inc. 10,920 a 361,343
Metavante Technologies, Inc. 15,250 a 304,847
Microsemi Corp. 7,890 a,b 179,892
ON Semiconductor Corp. 56,910 a 323,249
PMC-Sierra, Inc. 43,330 a 246,981
Polycom, Inc. 6,840 a 154,174
SunPower Corp., Class A 2,290 a,b 170,628
Synopsys, Inc. 11,040 a 250,718
Teradyne, Inc. 12,480 a 155,002
TIBCO Software, Inc. 23,150 a 165,291
ValueClick, Inc. 16,900 a 291,525
Verisign, Inc. 7,580 a,b 251,959
Wright Express Corp. 8,090 a 248,606
8,755,545
Materials--2.9%
Airgas, Inc. 5,530 251,449
AptarGroup, Inc. 5,460 212,558
OM Group, Inc. 4,220 a 230,159
Silver Wheaton Corp. 14,130 a 219,439
913,605
Telecommunication Services--1.9%
NeuStar, Inc., Class A 23,110 a,b 611,953
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- --------------------------------------------------------------------------------------------
Utilities--2.0%
Energen Corp. 10,240 637,952
Total Equities (Cost $31,209,747) 30,467,117
INVESTMENT OF CASH COLLATERAL -- 2.1%
BlackRock Cash Strategies L.L.C (Cost $663,440) 663,440 c 663,440
TOTAL UNAFFILIATED INVESTMENTS (Cost $31,873,187) 31,130,557
AFFILIATED INVESTMENTS--16.8%
Dreyfus Institutional Preferred Plus Money Market Fund 2,834,693 d 2,834,693
Dreyfus Institutional Cash Advantage Fund 2,506,060 d,e 2,506,060
------------
TOTAL AFFILIATED INVESTMENTS (Cost $5,340,753) 5,340,753
TOTAL INVESTMENTS--114.7% (Cost $37,213,940) 36,471,310
LIABILITIES IN EXCESS OF OTHER ASSETS--(14.7%) (4,669,543)
------------
NET ASSETS--100.0% 31,801,767
============
Notes to Schedule of Investments:
ADR--American Depository Receipt
REIT--Real Estate Investment Trust
a Non-income producing security.
b Security, or a portion of thereof, was on loan at March 31, 2008.
c Illiquid security. At the period end, the value of this security amounted
to $663,440 or 2.1% of net assets.
d Affiliated institutional money market fund.
e Investment of security lending cash collateral.
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Statement of Assets and Liabilities
March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investment in securities, at value (Note 1A) (including securities on loan,
valued at $3,070,777 (Note 7)):
Unaffiliated investments (cost $31,873,187) $31,130,557
Affiliated investments (Note 1F) (cost $5,340,753) 5,340,753
Receivable for Fund shares sold 744,724
Receivable for investments sold 379,829
Cash collateral at broker for futures contracts 176,000
Interest and dividends receivable 14,718
Prepaid expenses 26,946
-----------
Total assets 37,813,527
Liabilities
Collateral for securities on loan (Note 7) $ 3,169,500
Payable for investments purchased 2,766,180
Payable to investment advisor (Note 2) 27,029
Payable for Fund shares redeemed 21,796
Accrued professional fees 17,254
Accrued accounting, administration, custody and transfer agent fees (Note 2) 9,648
Accrued trustees' fees and expenses (Note 2) 353
-----------
Total liabilities 6,011,760
-----------
Net Assets $31,801,767
===========
Net Assets consist of:
Paid-in capital $32,785,524
Accumulated net realized loss (223,164)
Accumulated net investment loss (17,963)
Net unrealized depreciation (742,630)
-----------
Total Net Assets $31,801,767
===========
Shares of beneficial interest outstanding 2,471,692
===========
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 12.87
===========
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Statement of Operations
For the Six Months Ended March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Dividend income from unaffiliated investments $ 56,807
Dividend income from affiliated investments (net foreign withholding taxes $120)
(Note 1F) 38,802
Securities lending income (Note 7) 11,636
Interest income 861
-----------
Total investment income 108,106
Expenses
Investment advisory fee (Note 2) $ 75,466
Accounting, administration, custody and transfer agent fees (Note 2) 37,097
Professional fees 19,228
Registration fees 8,380
Trustees' fees and expenses (Note 2) 1,830
Administrative service fees (Note 2) 1,361
Insurance expense 1,098
Miscellaneous expenses 7,274
----------
Total expenses 151,734
Deduct:
Waiver of invesment advisory fee (Note 2) (25,668)
----------
Net Expenses 126,066
-----------
Net investment loss (17,960)
-----------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 1,524,313
Financial futures transactions (75,623)
----------
Net realized gain (loss) 1,448,690
Change in unrealized appreciation (depreciation) on:
Investments (3,535,898)
Financial futures contracts 442
----------
Net change in unrealized appreciation (depreciation) (3,535,456)
-----------
Net realized and unrealized gain (loss) on investments (2,086,766)
-----------
Net Increase (Decrease) in Net Assets from Operations $(2,104,726)
===========
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
----------- ------------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income (loss) $ (17,960) $ 17,312
Net realized gain (loss) 1,448,690 3,683,755
Change in net unrealized appreciation (depreciation) (3,535,456) 1,760,841
------------ ------------
Net increase (decrease) in net assets from investment operations (2,104,726) 5,461,908
------------ ------------
Distributions to Shareholders (Note 1E)
From net investment income (17,315) --
From net realized gains on investments (5,326,461) (1,270,011)
------------ ------------
Total distributions to shareholders (5,343,776) (1,270,011)
------------ ------------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares 15,522,818 7,037,277
Value of shares issued in reinvestment of distibutions 5,250,865 1,270,011
Cost of shares redeemed (net of redemption
fees of $404 and $221, respectively) (3,955,718) (10,455,435)
------------ ------------
Net increase (decrease) in net assets from Fund share transactions 16,817,965 (2,148,147)
------------ ------------
Total Increase (Decrease) in Net Assets 9,369,463 2,043,750
Net Assets
At beginning of period 22,432,304 20,388,554
------------ ------------
At end of period [including undistributed net investment
income (loss) of ($17,963) and $17,312, respectively] $ 31,801,767 $ 22,432,304
============ ============
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Financial Highlights
- --------------------------------------------------------------------------------
For the
Six Months Ended Year Ended September 30,
March 31, 2008 ----------------------------------------------------------------
(Unaudited) 2007 2006 2005 2004 2003
-------- -------- -------- -------- -------- --------
Net Asset Value, Beginning of Period $ 17.66 $ 14.92 $ 13.84 $ 11.26 $ 9.48 $ 7.10
-------- -------- -------- -------- -------- --------
From Operations:
Net investment income (loss)* (a) (0.01) 0.01 (0.02) (0.04) (0.08) (0.01)
Net realized and unrealized gains (loss)
on investments (1.04)(b) 3.74(b) 1.10 2.62 1.86(b) 2.39(b)
Net increase from payments by affiliates -- -- 0.00(c) -- -- --
-------- -------- -------- -------- -------- --------
Total from operations (1.05) 3.75 1.08 2.58 1.78 2.38
-------- -------- -------- -------- -------- --------
Less Distributions to Shareholders:
From net investment income (0.01) -- -- -- -- (0.00)(c)
From net realized gains on investments (3.73) (1.01) -- -- -- --
-------- -------- -------- -------- -------- --------
Total distributions to shareholders (3.74) (1.01) -- -- -- (0.00)(c)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 12.87 $ 17.66 $ 14.92 $ 13.84 $ 11.26 $ 9.48
======== ======== ======== ======== ======== ========
Total Return(d) (7.88%)(e) 26.31% 7.80%(f) 22.91% 18.78% 33.54%
Ratios/Supplemental Data:
Expenses (to average daily net assets)* 1.00%(g) 1.00% 1.00% 1.00% 0.98% 0.74%
Net Investment Income (to average daily
net assets)* (0.14%)(g) 0.07% (0.16%) (0.32%) (0.69%) (0.17%)
Portfolio Turnover 128%(e) 180% 161% 167% 157% 252%(e)
Net Assets, End of Period (000's omitted) $ 31,802 $ 22,432 $ 20,389 $ 19,709 $ 19,222 $ 21,852
- ------------------
* 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 reimbusement, would have been:
Net investment income (loss) per share (a) $ (0.03) $ (0.03) $ (0.07) $ (0.09) $ (0.12) $ (0.07)
Ratios (to average daily net assets):
Expenses 1.20%(g) 1.23% 1.29% 1.38% 1.33% 1.40%
Net investment income (loss) (0.34%)(g) (0.16%) (0.45%) (0.70%) (1.04%) (0.83%)
(a) Calculated based on average shares outstanding.
(b) Amounts include litigation proceeds received by the Fund of $0.02 for the
six months ended March 31, 2008, $0.19 for the year ended September 30,
2007, $0.03 for the year ended September 30, 2004 and $0.01 for the year
ended September 30, 2003 relating to securities litigation.
(c) Calculates to less than $0.01 per share.
(d) Total return would have been lower in the absence of expense waivers.
(e) Not annualized.
(f) For the year ended September 30, 2006, 0.03% of the Fund's return consisted
of a payment by the advisor to compensate the Fund for a trading error.
Excluding this payment, total return 7.77%.
(g) Annualized.
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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. The
Boston Company Small/Mid Cap Growth Fund (the "Fund") is a separate
diversified investment series of the Trust.
The objective of the Fund is to achieve long-term growth of capital. The
Fund seeks to achieve its objective by investing, under normal
circumstances, at least 80% of net assets in equity securities of small cap
and mid cap U.S. companies. The Fund focuses on companies with total market
capitalizations equal to or less than the total market capitalization of
the largest company included in the Russell 2500 Growth Index. The Fund may
also invest in equity index futures based on the Russell 2000 and S&P
Midcap indices, and exchange traded funds based upon the Russell 2500
Growth Index.
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
calculated mean price (average of last bid and last offer). Securities that
are fixed income securities, other than short-term instruments with less
than sixty days remaining to maturity, for which accurate 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, or if such quotations do not accurately reflect
fair value, 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 regulated 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 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.
B. Securities transactions and income
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of coupon interest accrued, adjusted for accretion
of discount or amortization of premium using the yield-to-maturity method
on debt securities with greater than sixty days remaining 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.
Dividends representing a return of capital are reflected as a reduction of
cost.
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 losses deferred
due to wash sales 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 be distributed in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in the
following year.
13
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 The Boston Company
Asset Management LLC ("TBCAM"), a wholly-owned subsidiary of The Bank of
New York Mellon Corporation ("BNY Mellon"), or its affiliates.
G. New accounting requirements
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.
In March 2008, the FASB released Statement of Financial Accounting
Standards No. 161, Disclosures about Derivative Instruments and Hedging
Activities ("FAS 161"). FAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. The application of FAS 161 is required for fiscal years
beginning after November 15, 2008 and interim periods within those fiscal
years. At this time, management is evaluating the implications of FAS 161
and its impact on the financial statements and the accompanying notes has
not yet been determined.
(2) Investment Advisory Fee and Other Transactions With Affiliates:
The investment advisory fee paid to TBCAM for overall investment advisory,
administrative services, and general office facilities, is paid monthly at
the annual rate of 0.60% of the Fund's average daily net assets. TBCAM
voluntarily agreed to limit the Fund's total annual operating expenses
(excluding brokerage commissions, taxes and extraordinary expenses) to
1.00% of the Fund's average daily net assets for the six months ended March
31, 2008. Pursuant to this arrangement, for the six months ended March 31,
2008, TBCAM voluntarily waived a portion of its investment advisory fee in
the amount of $25,668. This arrangement is voluntary and temporary and may
be discontinued or revised by TBCAM 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 TBCAM, 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
$3,464, for the six months ended March 31, 2008.
The Trust entered into an agreement with Mellon Bank, N.A. ("Mellon Bank"),
a wholly-owned subsidiary of BNY Mellon and an affiliate of TBCAM, 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 $33,633 for the six months ended March 31,
2008.
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, Mellon Bank earned $5,023 for the six
months ended March 31, 2008. See Note 7 for further details.
14
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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
$452 for the six months ended March 31, 2008, which amount is included in
miscellaneous expenses on the Statement of Operations. See Note 8 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 six months ended
March 31, 2008, the Fund was charged $2,130, which amount is included in
miscellaneous expenses in the statement of operations. No other director,
officer or employee of TBCAM 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 TBCAM 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 TBCAM, to provide printing and
fulfillment services for the Fund. Pursuant to this agreement, the Fund was
charged $250, which amount is included in miscellaneous expenses in the
Statement of Operations, for the six months ended March 31, 2008.
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
six months ended March 31, 2008, the Fund was charged $747 for fees payable
to BNY Mellon Wealth Management.
MBSC Securities Corporation ("MBSC"), a wholly-owned subsidiary of BNY
Mellon and affiliate of TBCAM, is the distributor of the Fund's shares.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the six months ended March 31, 2008 were as follows:
Purchases
Purchases Sales
----------- -----------
Non-U.S. Government Securities $36,098,147 $32,898,818
=========== ===========
(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
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Shares sold 1,099,505 428,261
Shares issued to shareholders
in reinvestment of distributions 371,086 84,274
Shares redeemed (269,340) (608,335)
--------- ---------
Net increase (decrease) 1,201,251 (95,800)
========= =========
15
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
At March 31, 2008, two shareholders of record, in the aggregate held
approximately 72% of the total outstanding shares of the Fund. Investment
activities of these shareholders could have a material impact on the Fund.
For example, a significant redemption by such shareholders could result in
illiquid or less liquid investments comprising a larger portion of the
Fund's Portfolio.
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 six months ended March 31, 2008, the Fund charged
$404 in redemption fees which is reflected in the cost of shares redeemed.
(5) Federal Taxes:
Each year, the Fund intends to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue 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 cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 2008, as computed on a federal
income tax basis, were as follows:
Cost for federal income tax purposes $ 37,213,940
============
Gross unrealized appreciation $ 800,802
Gross unrealized depreciation (1,543,432)
----------
Net unrealized appreciation
(depreciation) $ (742,630)
============
(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:
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.
16
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
At March 31, 2008, the Fund did not hold open financial futures contracts.
(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.
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 affect 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 December 11, 2007 through March 31, 2008, the security lending agent
effected such withdrawals and the cash proceeds from such withdrawals by
the Fund were reinvested in shares of the Dreyfus Fund. Repayments of cash
collateral during the period were made from the proceeds of redemptions of
shares of the Dreyfus Fund. See Schedule of Investments for further detail
on the Fund's investment of cash collateral in the BlackRock Fund and the
Dreyfus Fund as of March 31, 2008.
The Fund loaned securities during the six months ended March 31, 2008 and
earned interest on the invested collateral of $47,361 of which $35,725 was
rebated to borrowers or paid in fees. See Schedule of Investments for
further detail on the security positions on loan and collateral held.
(8) 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 six months ended March 31, 2008,
the Fund had average borrowings outstanding of $3,062,000 for a total of
two days and incurred $2,656 of interest expense. The Fund did not have an
outstanding loan balance at March 31, 2008.
17
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (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, The
Boston Company Asset Management LLC ("TBCAM" 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.
18
Mellon Institutional Funds Investment Trust
The Boston Company Small/Mid Cap Growth Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (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 (23.02% vs. 21.00%), three-year period (17.14% vs. 15.64%) and
five-year period (18.76% vs. 15.56%)
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 0.60%, which was in the 1st (best)
quintile of its peer group of funds, the median fee of which was 0.701%.
The Fund's net management fee (after giving effect to expense
reimbursements) was 0.382% (which included administrative services fees
under Lipper's calculation methodology), below the peer group median net
management fee of 0.563%. 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 1.00% (after giving effect to expense reimbursements) was
slightly higher than the median net expense ratio of the peer group of
0.99%, largely due to the Fund's small asset size compared to its peer
group.
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 many 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 Fund and The Boston Company International Core Equity Fund, 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.
19
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their ages,
addresses and dates of birth; their positions 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 period ended March 31, 2008. 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) Position(s) Term of Office Occupation(s) Fund Complex Directorships (period ended
Address, and Held with and Length of During Past Overseen by Held by March 31,
Date of Birth Trust Time Served* 5 Years Trustee Trustee 2008)
- ------------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $559
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: $559
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 (73) Trustee Trustee since Trustee, Mertens 17 None Fund: $559
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: $585
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.
20
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 (51) 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
21
THIS PAGE INTENTIONALLY LEFT BLANK
THIS PAGE INTENTIONALLY LEFT BLANK
MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408 800.221.4795
www.melloninstitutionalfunds.com
6928SA0308
MELLON INSTITUTIONAL FUNDS
The Boston Company
Semiannual report Large Cap Core Fund
- --------------------------------------------------------------------------------
March 31, 2008 (Unaudited)
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 Investment Trust
The Boston Company Large Cap Core 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 (October 1, 2007 to March 31, 2008).
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 October 1, 2007
October 1, 2007 March 31, 2008 to March 31, 2008
- -------------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $ 879.90 $3.90
Hypothetical (5% return
per year before expenses) $1,000.00 $1,020.85 $4.19
- -------------
+ Expenses are equal to the Fund's annualized expense ratio of 0.83%,
multiplied by the average account value over the period, multiplied by
183/366 (to reflect the one-half year period).
3
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Portfolio Information as of March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
The Fund is actively managed. Current holdings may be different than those
presented below:
Percentage of
Top Ten Holdings* Sector Investments
- -------------------------------------------------------------------------------------------------------
ConocoPhillips Energy 3.4%
International Business Machines Corp. Technology 2.6
JPMorgan Chase & Co. Financials 2.6
AT&T, Inc. Telecommunications Services 2.5
Microsoft Corp. Technology 2.4
Chevron Corp. Energy 2.4
Wal-Mart Stores, Inc. Consumer Staples 2.4
General Electric Co. Industrials 2.3
Johnson & Johnson Health Care 2.2
Sempra Energy Utilities 2.0
----
24.8%
*Excludes short-term securities.
Percentage of
Economic Sector Allocation Net Assets
- -----------------------------------------------------------
Consumer Discretionary 9.2%
Consumer Staples 11.7
Energy 13.2
Financials 17.9
Health Care 11.6
Industrials 12.2
Materials 3.0
Technology 14.4
Telecommunications Services 3.6
Utilities 3.0
Short-term and Net other Liabilities 0.2
-----
100.0%
4
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- -------------------------------------------------------------------------------
UNAFFILIATED INVESTMENTS--99.8%
EQUITIES--99.8%
Consumer Discretionary--9.2%
Apollo Group, Inc., Class A 7,480 a 323,136
Autoliv, Inc. 9,870 495,474
Best Buy Co., Inc. 10,790 447,353
Discovery Holding Co., Class A 18,350 a 389,387
Gap, Inc. 42,260 831,677
Johnson Controls, Inc. 18,670 631,046
McDonald's Corp. 9,868 550,338
News Corp., Class A 24,050 450,938
Omnicom Group, Inc. 27,580 1,218,484
Ross Stores, Inc. 23,170 694,173
TJX Cos., Inc. 24,450 808,562
Viacom, Inc., Class B 15,390 a 609,752
Walt Disney Co. 21,180 664,628
8,114,948
Consumer Staples--11.7%
Altria Group, Inc. 27,330 606,726
Cadbury Schweppes PLC--ADR 14,410 637,210
Coca-Cola Enterprises, Inc. 17,460 422,532
ConAgra Foods, Inc. 32,590 780,530
CVS Caremark Corp. 38,080 1,542,621
Kroger Co. 34,630 879,602
Philip Morris International, Inc. 27,330 a 1,382,351
Supervalu, Inc. 34,100 1,022,318
Sysco Corp. 32,180 933,864
Wal-Mart Stores, Inc. 40,490 2,133,013
10,340,767
Energy--13.2%
Anadarko Petroleum Corp. 7,540 475,246
Chesapeake Energy Corp. 27,220 1,256,203
Chevron Corp. 25,302 2,159,779
ConocoPhillips 39,820 3,034,682
ENSCO International, Inc. 18,400 1,152,208
Marathon Oil Corp. 10,840 494,304
Nabors Industries Ltd. 22,650 a 764,890
National-Oilwell Varco, Inc. 10,210 a 596,060
Valero Energy Corp. 7,190 353,101
XTO Energy, Inc. 23,465 1,451,545
11,738,018
The accompanying notes are an integral part of the financial statements.
5
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ------------------------------------------------------------------------------
Financials--17.9%
American International Group, Inc. 24,539 1,061,312
Bank of America Corp. 47,030 1,782,907
Chubb Corp. 24,380 1,206,322
Citigroup, Inc. 25,436 544,839
CME Group, Inc. 1,935 907,709
Goldman Sachs Group, Inc. 7,900 1,306,581
JPMorgan Chase & Co. 53,800 2,310,710
Metlife, Inc. 25,190 1,517,949
Morgan Stanley 19,230 878,811
PNC Financial Services Group, Inc. 11,750 770,448
State Street Corp. 10,940 864,260
U.S. BanCorp. 27,900 902,844
Visa, Inc., Class A 9,265 a 577,765
Wells Fargo & Co. 42,860 1,247,226
15,879,683
Health Care--11.6%
Baxter International, Inc. 29,090 1,681,984
Becton Dickinson & Co. 6,650 570,903
Cigna Corp. 16,300 661,291
Covidien Ltd. 11,257 498,122
Hospira, Inc. 19,600 a 838,292
Johnson & Johnson 30,320 1,966,858
Merck & Co., Inc. 25,490 967,346
Pfizer, Inc. 53,720 1,124,360
Schering-Plough Corp. 25,670 369,905
St. Jude Medical, Inc. 12,990 a 561,038
Thermo Fisher Scientific, Inc. 18,960 a 1,077,686
10,317,785
Industrials--12.2%
Allied Waste Industries, Inc. 44,050 a 476,180
Dover Corp. 14,110 589,516
Eaton Corp. 12,430 990,298
Emerson Electric Co. 20,380 1,048,755
General Electric Co. 56,130 2,077,371
Goodrich Corp. 12,420 714,274
L-3 Communications Holdings, Inc. 6,980 763,193
Lockheed Martin Corp. 9,230 916,539
Raytheon Co. 8,140 525,925
Terex Corp. 9,260 a 578,750
Textron, Inc. 13,910 770,892
Tyco International Ltd. 27,187 1,197,587
US Airways Group, Inc. 22,102 a 196,929
10,846,209
The accompanying notes are an integral part of the financial statements.
6
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- --------------------------------------------------------------------------------------
Materials--3.0%
Air Products & Chemicals, Inc. 8,145 749,340
Allegheny Technologies, Inc. 9,520 679,347
Freeport-McMoRan Cooper and Gold, Inc. 5,080 488,798
Rohm & Haas Co. 13,460 727,917
2,645,402
Technology--14.4%
Accenture Ltd., Class A 13,380 470,575
Adobe Systems, Inc. 18,820 a 669,804
Akamai Technologies, Inc. 16,530 a 465,485
Amphenol Corp., Class A 11,620 432,845
Cisco Systems, Inc. 46,330 a 1,116,090
Hewlett-Packard Co. 29,850 1,362,951
Intel Corp. 57,390 1,215,520
International Business Machines Corp. 20,290 2,336,191
McAfee, Inc. 20,230 a 669,411
Microsoft Corp. 76,470 2,170,219
Oracle Corp. 47,770 a 934,381
Qualcomm, Inc. 23,810 976,210
12,819,682
Telecommunication Services--3.6%
AT&T, Inc. 57,040 2,184,632
Verizon Communications, Inc. 28,300 1,031,535
3,216,167
Utilities--3.0%
PG&E Corp. 24,470 900,985
Sempra Energy 33,560 1,788,077
2,689,062
TOTAL UNAFFILIATED INVESTMENTS (Cost $88,092,871) 88,607,723
AFFILIATED INVESTMENTS--0.3%
Dreyfus Institutional Preferred Plus Money Market Fund
(Cost $260,792) 260,792 b 260,792
----------
TOTAL INVESTMENTS--100.1% (Cost $88,353,663) 88,868,515
LIABILITIES IN EXCESS OF OTHER ASSETS--(0.1%) (95,302)
----------
NET ASSETS--100% 88,773,213
==========
Notes to Schedule of Investments:
ADR--American Depository Receipts
a Non-income producing security.
b Affiliated institutional money market fund.
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Statement of Assets and Liabilities
March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments in securities:
Unaffiliated issuers, at value (Note 1A) (cost $88,092,871) $88,607,723
Affiliated issuers, at value (Note 1A) (cost $260,792) 260,792
Receivable for Fund shares sold 6,117
Interest and dividend receivable 147,327
Prepaid expenses 5,104
-----------
Total assets 89,027,063
Liabilities
Payable for Fund shares redeemed $ 32,448
Payable to investment advisor (Note 2) 120,968
Accrued administrative service fee (Note 2) 35,054
Accrued accounting, administration, custody and transfer agent fees (Note 2) 21,922
Accrued professional fees 13,409
Accrued trustees' fees (Note 2) 1,998
Accrued shareholder reporting fees (Note 2) 1,500
Other accrued expenses and liabilities 26,551
--------
Total liabilities 253,850
-----------
Net Assets $88,773,213
===========
Net Assets consist of:
Paid-in capital $86,864,459
Accumulated net realized gain 1,128,050
Undistributed net investment income 265,852
Net unrealized appreciation 514,852
-----------
Total Net Assets $88,773,213
===========
Shares of beneficial interest outstanding 2,561,420
===========
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 34.66
===========
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Statement of Operations
For the Six Months Ended March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Dividend income from unaffiliated investments $ 1,078,209
Dividend income from affiliated investments (Note 1F) 16,777
------------
Total investment income 1,094,986
Expenses
Investment advisory fee (Note 2) $ 267,897
Administrative service fee (Note 2) 70,543
Accounting, administration, custody and transfer agent fees (Note 2) 54,680
Professional fees 21,488
Registration fees 8,561
Trustees' fees (Note 2) 7,746
Insurance expense 2,220
Miscellaneous expenses 10,107
----------
Total expenses 443,242
------------
Net investment income 651,744
------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 2,061,858
Financial futures transactions 168,573
----------
Net realized gain (loss) 2,230,431
Change in unrealized appreciation (depreciation) on:
Investments (16,320,896)
------------
Net realized and unrealized gain (loss) (14,090,465)
------------
Net Increase (Decrease) in Net Assets from Operations $(13,438,721)
============
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income $ 651,744 $ 1,232,267
Net realized gain (loss) 2,230,431 8,718,914
Change in net unrealized appreciation (depreciation) (16,320,896) 11,178,828
------------ ------------
Net increase (decrease) in net assets from investment operations (13,438,721) 21,130,009
------------ ------------
Distributions to Shareholders (Note 1C)
From net investment income (886,640) (945,029)
From net realized gains on investments (9,312,016) (4,041,460)
------------ ------------
Total distributions to shareholders (10,198,656) (4,986,489)
------------ ------------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares 2,860,831 33,886,547
Value of shares issued in reinvestment of distributions 9,311,299 4,223,879
Cost of shares redeemed (22,352,977) (25,407,412)
------------ ------------
Net increase (decrease) in net assets from Fund share transactions (10,180,847) 12,703,014
------------ ------------
Total Increase (Decrease) in Net Assets (33,818,224) 28,846,534
Net Assets
At beginning of period 122,591,437 93,744,903
------------ ------------
At end of period (including undistributed net
investment income of $265,852 and $500,748) $ 88,773,213 $122,591,437
============ ============
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Financial Highlights
- --------------------------------------------------------------------------------
For the
Six Months Ended Year Ended September 30,
March 31, 2008 ----------------------------------------------------------------
(Unaudited) 2007 2006 2005 2004 2003
----------- -------- ------- ------- ------- -------
Net Asset Value, Beginning of Period $ 43.28 $ 37.58 $ 39.57 $ 35.24 $ 31.43 $ 26.13
------- -------- ------- ------- ------- -------
From Investment Operations:
Net investment income* (a) 0.24 0.43 0.36 0.41 0.23 0.36
Net realized and unrealized gains (loss)
on investments (5.06)(b) 7.01(b) 3.22 4.28(b) 3.92(b) 5.30
------- -------- ------- ------- ------- -------
Total from operations (4.82) 7.44 3.58 4.69 4.15 5.66
------- -------- ------- ------- ------- -------
Less Distributions to Shareholders:
From net investment income (0.33) (0.33) (0.39) (0.36) (0.34) (0.36)
From net realized gains on investments (3.47) (1.41) (5.18) -- -- --
------- -------- ------- ------- ------- -------
Total distributions to shareholders (3.80) (1.74) (5.57) (0.36) (0.34) (0.36)
------- -------- ------- ------- ------- -------
Net Asset Value, End of Period $ 34.66 $ 43.28 $ 37.58 $ 39.57 $ 35.24 $ 31.43
======= ======== ======= ======= ======= =======
Total Return (12.01%)(c) 20.27% 9.84%(d) 13.34% 13.23%(d) 21.76%(d)
Ratios/Supplemental data:
Expenses (to average daily net assets)* 0.83%(e) 0.80%(f) 0.90%(f) 0.85%(f) 0.83%(f) 0.71%(f)
Net Investment Income (to average daily
net assets)* 1.22%(e) 1.05% 0.98% 1.10% 0.67% 1.23%
Portfolio Turnover 30%(c) 59%(g) 103%(g) 85%(g) 66%(g) 104%(g)
Net Assets, End of Period (000's omitted) $88,773 $122,591 $93,745 $46,036 $56,067 $64,150
- -----------
* 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) N/A N/A $ 0.33 N/A $ 0.23 $ 0.29
Ratios (to average daily net assets):
Expenses N/A N/A 0.99%(f) N/A 0.84%(f) 0.93%(f)
Net investment income N/A N/A 0.89% N/A 0.66% 1.01%
(a) Calculated based on average shares outstanding.
(b) Amounts includes litigation proceeds received by the Fund of $0.01 for the
six months ended March 31, 2008, $0.04 for the year ended September 30,
2007, $0.02 for the year ended September 30, 2005 and $0.02 for the year
ended September 30, 2004.
(c) Not annualized.
(d) Total return would have been lower in the absence of expense waivers.
(e) Calculated on an annualized basis.
(f) For the period October 1, 2006 to September 19, 2007 and for the fiscal
years ended September 30, 2003-2006, the ratio includes the Fund's share of
the TBC Large Cap Core Portfolio's (the Portfolio) allocated expenses.
(g) On September 19, 2007, the Fund, which had owned 100% of the Portfolio on
such date, withdrew entirely from the Portfolio and received the
Portfolio's securities and cash in exchange for its interest in the
Portfolio. Effective September 20, 2007, the Fund began investing directly
in securities. Portfolio turnover represents investment activity of both
the Fund and the Portfolio for the year. The amounts shown for 2003-2006
are the ratios for the Portfolio.
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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. The
Boston Company Large Cap Core Fund (the "Fund") is a separate diversified
investment series of the Trust.
The objective of the Fund is long-term growth of capital. The Fund seeks to
achieve its objective by investing, under normal circumstances, at least
80% of net assets in equity securities of companies that appear to be
undervalued relative to underlying business fundamentals. The Fund focuses
on companies with total market capitalizations which are greater than the
market capitalization of companies in the bottom 5% of the S&P 500 Index.
The Fund may invest without limit in securities of U.S. companies and of
foreign companies that are listed or traded in the U.S., but not more than
10% of it assets in other foreign securities.
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
calculated mean price (average of last bid and last offer). Securities that
are fixed income securities, other than short-term instruments with less
than sixty days remaining to maturity, for which accurate 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, or if such quotations do not accurately reflect
fair value, 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 regulated 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 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.
B. Securities transactions and income
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of coupon interest accrued, adjusted for accretion
of discount or amortization of premium using the yield-to-maturity method
on debt securities with greater than sixty days remaining 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.
Dividends representing a return of capital are reflected as a reduction of
cost.
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 losses deferred
due to wash sales.
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 be distributed in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in the
following year.
12
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Notes to Financial Statements (Unaudited)
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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 The Boston Company
Asset Management LLC ("TBCAM"), a wholly-owned subsidiary of The Bank of
New York Mellon Corporation ("BNY Mellon"), or its affiliates.
G. New accounting requirements
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.
In March 2008, the FASB released Statement of Financial Accounting
Standards No. 161, Disclosures about Derivative Instruments and Hedging
Activities ("FAS 161"). FAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. The application of FAS 161 is required for fiscal years
beginning after November 15, 2008 and interim periods within those fiscal
years. At this time, management is evaluating the implications of FAS 161
and its impact on the financial statements and the accompanying notes has
not yet been determined.
(2) Investment Advisory Fee and Other Transactions With Affiliates:
The investment advisory fee paid to TBCAM for overall investment advisory
and administrative services and general office facilities is paid monthly
at the annual rate of 0.50% 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 TBCAM, 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
$4,989, for the six months ended March 31, 2008.
The Trust entered into an agreement with Mellon Bank, N.A. ("Mellon Bank"),
a wholly-owned subsidiary of BNY Mellon and an affiliate of TBCAM, 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 $49,691 for the six months ended March 31,
2008.
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
$1,729 for the six months ended March 31, 2008, which amount is included in
miscellaneous expenses on the statement of operations. See Note 7 for
further details.
13
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Notes to Financial Statements (Unaudited)
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The Trust reimburses BNY Mellon Asset Management for a portion of the
salary of the Trust's Chief Compliance Officer. For the six months ended
March 31, 2008, the Fund was charged $2,130, which amount is included in
miscellaneous expenses in the statement of operations. No other director,
officer or employee of TBCAM 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 TBCAM 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 TBCAM, to provide printing and
fulfillment services for the Fund. Pursuant to this agreement, the Fund was
charged $1,357, which amount is included in miscellaneous expenses in the
statement of operations, for the six months ended March 31, 2008.
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
six months ended March 31, 2008, the Fund was charged $69,146 for fees
payable to BNY Mellon Wealth Management.
MBSC Securities Corporation ("MBSC"), a wholly-owned subsidiary of BNY
Mellon and affiliate of TBCAM, is the distributor of the Fund's shares.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the six months ended March 31, 2008 were as follows:
Purchases Sales
----------- -----------
Non-U.S. Government Securities $31,739,368 $50,231,590
=========== ===========
(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
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Shares sold 71,698 859,821
Shares issued to shareholders
in reinvestment of distributions 242,041 107,105
Shares redeemed (585,026) (628,855)
-------- --------
Net increase (decrease) (271,287) 338,071
======== ========
At March 31, 2008, two shareholders of record, in the aggregate held
approximately 68.5% of the total outstanding shares of the Fund. Investment
activities of these shareholders could have a material impact on the Fund.
For example, a significant redemption by such shareholders could result in
illiquid or less liquid investments comprising a larger portion of the
Fund's Portfolio.
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 six months ended March 31, 2008, the Fund did not
assess any redemption fees.
14
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Notes to Financial Statements (Unaudited)
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(5) Federal Taxes:
Each year, the Fund intends to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue 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 cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 2008, as computed on a federal
income tax basis, were as follows:
Cost for federal income tax purposes $88,353,663
-----------
Gross unrealized appreciation $ 7,985,154
Gross unrealized depreciation (7,470,302)
-----------
Net unrealized appreciation (depreciation) $ 514,852
===========
(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:
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 March 31, 2008, the Fund did not hold open financial futures contracts.
(7) 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 six months ended March 31, 2008,
the Fund had average borrowings outstanding of $632,643 for a total of
forty-two days and incurred $3,477 of interest expense. The Fund did not
have an outstanding loan balance at March 31, 2008.
15
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (Unaudited)
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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, The
Boston Company Asset Management LLC ("TBCAM" 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.
16
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (Unaudited)
- --------------------------------------------------------------------------------
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.
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 (17.88% vs. 15.53%), three-year period (12.78% vs. 12.13%) and
five-year period (11.82% vs. 11.43%).
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 0.50%, which was in the 1st (best)
quintile of its peer group of funds, the median fee of which was 0.65%. The
Fund's net management fee (after giving effect to expense reimbursements)
was 0.438% (which included administrative services fees under Lipper's
calculation methodology), below the peer group median net management fee of
0.510%. 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 0.896% (after giving effect to expense reimbursements) was
slightly higher than the median net expense ratio of the peer group of
0.895%, largely due to the Fund's small asset size compared to its peer
group.
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 many of the investment companies in the Mellon Institutional
Funds family of funds. The Trustees observed that the Adviser had incurred
gains 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 Fund and The Boston Company International Core Equity Fund, 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.
17
Mellon Institutional Funds Investment Trust
The Boston Company Large Cap Core Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (Unaudited)
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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.
18
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their ages,
addresses and dates of birth; their positions 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 period ended March 31, 2008. 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 March 31,
Date of Birth Held with Trust Time Served* 5 Years Trustee Trustee 2008)
- -----------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $1,872
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: $1,872
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 (73) Trustee Trustee since Trustee, Mertens 17 None Fund: $1,872
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: $1,985
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.
19
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 (51) 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
20
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MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6930SA0308
MELLON INSTITUTIONAL FUNDS
Standish Mellon
Semiannual Report Intermediate Tax Exempt Bond Fund
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March 31, 2008 (Unaudited)
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 Investment Trust
Standish Mellon Intermediate Tax Exempt Bond 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 (October 1, 2007 to March 31, 2008).
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 October 1, 2007
October 1, 2007 March 31, 2008 to March 31, 2008
--------------- -------------- -----------------
Actual $1,000.00 $1,021.10 $2.27
Hypothetical (5% return
per year before expenses) $1,000.00 $1,022.75 $2.28
- ----------
+ Expenses are equal to the Fund's annualized expense ratio of 0.45%,
multiplied by the average account value over the period, multiplied by
183/366 (to reflect the one-half year period).
3
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Portfolio Information as of March 31, 2008 (Unaudited)
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The Fund is actively managed. Current holdings may be different than those
presented below:
Percentage of
Top Ten Holdings* Rate Maturity Investments
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New York State Dormitory Authority Revenue 5.250% 11/15/2023 1.5%
Kenton County KY Airport Board Airport
Revenue AMT XLCA NCL 5.000 3/1/2013 1.4
Golden State Tobacco Securitization Corporation CA 4.500 6/1/2027 1.4
Puerto Rico Public Finance Corporation LOC: Government
Development Bank for Puerto Rico 5.750 8/1/2027 1.3
Puerto Rico Commonwealth Fuel Sales Tax Revenue 5.000 7/1/2018 1.3
Buckeye Tobacco Settlement Financing Authority OH 5.125 6/1/2024 1.3
Golden State Tobacco Securitization Corporation CA Prerefunded 6.750 6/1/2039 1.3
Tobacco Settlement Financing Corporation NJ Prerefunded 6.250 6/1/2043 1.3
Oklahoma DFA Revenue Hillcrest Healthcare System Prerefunded 5.625 8/15/2019 1.3
Tobacco Settlement Financing Corporation VA Prerefunded 5.625 6/1/2037 1.2
----
13.3%
* Excluding short-term investments.
Percentage of
Economic Sector Allocation Net Assets
- --------------------------------------------------------------
General Obligations 11.2%
Government Backed 17.2
Housing Revenue 4.4
Industrial Development 6.8
Insured Bonds 28.3
Lease Revenue 6.7
Revenue Bonds 16.5
Special Revenues 4.2
Short-term and Net Other Assets 4.7
-----
100.0%
Summary of Combined Ratings+
- --------------------------------------------------------------
Percentage of
Quality Breakdown Investments
- --------------------------------------------------------------
AAA 50.9%
AA 24.8
A 11.4
BBB 12.5
BB 0.4
-----
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.
4
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Schedule of Investments--March 31, 2008 (Unaudited)
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Par Value ($)
Security Rate Maturity Value (Note 1A)
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BONDS--95.3%
General Obligations--11.2%
ABAG CA Odd Fellows Homes 5.700% 8/15/2014 1,000,000 1,012,290
Austin TX Independent School District PSF-GTD NCL 5.000 8/1/2016 1,000,000 1,099,920
California State 5.000 10/1/2011 70,000 73,409
California State 5.000 6/1/2014 1,435,000 1,541,778
Cook County IL High School District FGIC NCL 7.875 12/1/2014 100,000 127,770
Cook County IL High School District FGIC NCL 7.875 12/1/2014 650,000 816,738
Cypress-Fairbanks TX Independent School District PSF-GTD NCL 5.000 2/15/2016 1,135,000 1,243,790
Magnolia TX Independent School District Refunding PSF-GTD 5.000 8/15/2018 1,000,000 1,078,250
Maricopa County AZ Unified School District NCL 5.000 7/1/2018 1,000,000 1,092,110
Nassau County NY FGIC 6.000 7/1/2010 25,000 26,806
New York NY NCL 5.000 8/1/2013 1,500,000 1,608,420
New York NY Series B NCL 5.000 8/1/2011 770,000 817,139
Pasadena TX Independent School District PSF-GTD NCL 5.000 2/15/2015 1,360,000 1,490,465
Puerto Rico Commonwealth NCL 5.250 7/1/2014 1,000,000 1,057,650
Puerto Rico Commonwealth Fuel Sales Tax Revenue (a)(b) 5.000 7/1/2018 2,325,000 2,335,369
Puerto Rico Public Building Authority Revenue (a) 5.000 7/1/2028 1,000,000 1,030,350
San Antonio TX 5.000 2/1/2015 1,000,000 1,094,800
San Antonio TX Apartment Systems Revenue AMT FSA 5.000 7/1/2013 1,000,000 1,051,170
Spring Branch TX Independent School District PSF-GTD 5.625 2/1/2014 1,000,000 1,125,120
Texas Refunding AMT NCL 5.000 8/1/2017 1,000,000 1,070,730
----------
20,794,074
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Government Backed--17.2%
Alpine UT School District Prerefunded 5.000 3/15/2011 25,000 25,368
Chicago IL Board of Education MBIA Prerefunded 5.500 12/1/2016 1,275,000 1,452,888
District of Columbia MBIA NCL Prerefunded 5.750 6/1/2010 10,000 10,714
Golden State Tobacco Securitization Corporation CA Prerefunded (b) 5.000 6/1/2021 155,000 155,725
Golden State Tobacco Securitization Corporation CA Prerefunded 6.750 6/1/2039 2,000,000 2,315,620
Goose Creek TX Independent School District PSF-GTD Escrowed to Maturity 7.000 8/15/2009 230,000 245,323
Goose Creek TX Independent School District PSF-GTD Prerefunded 7.000 8/15/2009 110,000 117,328
Goose Creek TX Independent School District PSF-GTD Unrefunded 7.000 8/15/2009 260,000 276,630
Massachusetts DFA Williston School Prerefunded 6.000 10/1/2013 160,000 166,382
Metropolitan Government Nashville & Davidson TN
Industrial Development Board Revenue Prerefunded 7.500 11/15/2010 1,000,000 1,104,820
Miami-Dade County FL Educational Facilities Authority AMBAC Prerefunded 5.000 4/1/2031 1,100,000 1,206,590
New Jersey Transportation Trust Fund Authority FSA 5.750 12/15/2014 770,000 892,053
Northern Tobacco Securitization Corporation Alaska Prerefunded 4.750 6/1/2015 425,000 429,471
Northern Tobacco Securitization Corporation Alaska Prerefunded 6.500 6/1/2031 1,000,000 1,080,520
Oklahoma DFA Revenue Hillcrest Healthcare System Prerefunded 5.625 8/15/2019 2,185,000 2,297,833
Oklahoma DFA Revenue Prerefunded 5.625 8/15/2029 1,000,000 1,051,640
Osceola County School Board FL COP AMBAC Prerefunded 5.250 6/1/2027 1,000,000 1,098,670
Palm Beach County FL Solid Waste AMBAC 6.000 10/1/2009 60,000 63,489
Pennsylvania Turnpike Commission Oil Franchise
Tax Revenue MBIA Prerefunded 5.250 12/1/2016 1,000,000 1,116,860
Puerto Rico Commonwealth Highway
& Transportation Authority Revenue Prerefunded 5.750 7/1/2041 1,500,000 1,670,130
Puerto Rico Electric Power Authority Power Revenue FSA Prerefunded 5.250 7/1/2029 1,000,000 1,073,860
Puerto Rico Public Buildings Authority NCL 5.750 7/1/2016 2,000,000 2,171,900
Texas Municipal Power Agency MBIA Prerefunded (c) 0.000 9/1/2016 10,000 7,202
The accompanying notes are an integral part of the financial statements.
5
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Schedule of Investments--March 31, 2008 (Unaudited)
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Par Value ($)
Security Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------
Government Backed (continued)
Tobacco Settlement Authority Iowa Prerefunded 5.600% 6/1/2035 2,000,000 2,189,720
Tobacco Settlement Financing Corporation NJ 5.000 6/1/2010 500,000 527,310
Tobacco Settlement Financing Corporation NJ Prerefunded 4.375 6/1/2019 215,000 215,862
Tobacco Settlement Financing Corporation NJ Prerefunded 6.000 6/1/2037 2,000,000 2,237,960
Tobacco Settlement Financing Corporation VA Prerefunded 5.625 6/1/2037 2,000,000 2,250,860
Tobacco Settlement Financing Corporation NJ Prerefunded 6.750 6/1/2039 1,855,000 2,176,509
Tobacco Settlement Financing Corporation NJ Prerefunded 6.250 6/1/2043 2,000,000 2,299,260
----------
31,928,497
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Housing Revenue--4.4%
California Housing Finance Agency AMT 4.600 2/1/2041 1,500,000 1,496,370
Colorado HFA Single Family Project AMT (a) (b) 6.800 2/1/2031 1,225,000 1,287,120
Colorado HFA Single Family Project AMT FHA (a) 6.600 8/1/2032 925,000 960,529
Florida Housing Finance Corporation FSA 5.750 1/1/2017 20,000 20,107
Massachusetts Housing Finance Agency AMT (a) 3.900 12/1/2017 1,000,000 1,015,260
Ohio HFA Mortgage Revenue AMT GNMA 5.350 9/1/2018 160,000 160,795
Rhode Island Housing and Mortgage Finance Corporation 4.950 10/1/2016 130,000 130,226
Utah HFA AMT SFM 5.400 7/1/2020 130,000 128,534
Virginia Housing Development Authority AMT NCL 4.250 7/1/2013 2,000,000 1,992,920
Wyoming Community Development Authority Housing Revenue AMT 5.500 12/1/2017 1,000,000 1,052,570
----------
8,244,431
----------
Industrial Development--6.8%
Buckeye Tobacco Settlement Financing Authority OH 5.125 6/1/2024 2,495,000 2,326,488
Dayton OH Special Facilities Revenue AMT NCL 6.200 10/1/2009 1,000,000 1,051,080
Gloucester NJ Resource Recovery (a) 6.850 12/1/2029 500,000 516,945
Golden State Tobacco Securitization Corporation CA 4.500 6/1/2027 2,830,000 2,504,210
Hendersonville TN Kroger 5.950 12/15/2008 65,000 65,432
Massachusetts DFA Waste Management Resource Recovery AMT (a) 6.900 12/1/2029 500,000 517,340
Mohegan Tribe Indians Gaming Authority CT 5.375 1/1/2011 700,000 706,825
Northern Tobacco Securitization Corporation Alaska 4.625 6/1/2023 975,000 890,497
San Manuel Entertainment Series 2004-C 4.500 12/1/2016 1,000,000 952,960
Tobacco Settlement Authority of Southern California 4.750 6/1/2025 975,000 899,652
Tobacco Settlement Authority WA 6.500 6/1/2026 930,000 957,007
Tobacco Settlement Financing Corporation NJ 4.500 6/1/2023 1,265,000 1,135,148
----------
12,523,584
----------
Insured Bonds--28.3%
Atlanta GA Airport Revenue AMT FSA NCL 5.250 1/1/2013 1,000,000 1,055,240
Bourbonnais IL Industrial Project Revenue NCL RADIAN 5.000 11/1/2015 1,000,000 1,050,770
California AMBAC 6.000 4/1/2016 1,000,000 1,151,200
Charleston SC COP MBIA 6.000 12/1/2008 1,000,000 1,028,120
Chicago O'Hare International Airport IL Revenue AMBAC AMT 5.500 1/1/2012 1,000,000 1,033,440
Chicago O'Hare International Airport IL Revenue MBIA NCL 5.250 1/1/2017 1,000,000 1,085,260
Citizens Property Insurance Corporation FL MBIA NCL 5.000 3/1/2014 1,000,000 1,064,050
Citizens Property Insurance Corporation FL MBIA NCL 5.000 3/1/2015 2,000,000 2,127,100
Clark County NV AMBAC 5.000 11/1/2013 1,000,000 1,090,190
Cleveland OH Waterworks Revenue MBIA 5.500 1/1/2013 1,500,000 1,595,160
Colorado State Department of Corrections Penitentiary II Project B AMBAC 5.000 3/1/2015 1,000,000 1,088,140
Cook County IL Community Consolidated School District FSA NCL 6.750 5/1/2010 1,200,000 1,306,428
Denver City and County CO Airport Revenue AMT FGIC 5.250 11/15/2013 1,000,000 1,034,690
Detroit MI City School District FSA NCL 5.000 5/1/2014 1,000,000 1,091,750
Detroit MI Sewer Disposal Revenue MBIA NCL 5.000 7/1/2013 1,000,000 1,086,220
The accompanying notes are an integral part of the financial statements.
6
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Schedule of Investments--March 31, 2008 (Unaudited)
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Par Value ($)
Security Rate Maturity Value (Note 1A)
- ------------------------------------------------------------------------------------------------------------------------------
Insured Bonds (continued)
Detroit MI Sewer Disposal Revenue FSA NCL 5.250% 7/1/2019 1,000,000 1,097,980
Douglas County CO School District MBIA 7.000 12/15/2012 625,000 732,300
Fairfax County VA EDA Residential Recovery AMBAC AMT NCL 6.100 2/1/2011 1,000,000 1,081,420
Fort Bend County TX MBIA NCL 5.000 3/1/2014 1,000,000 1,090,590
Golden State Tobacco Securitization Corporation CA AMBAC 5.000 6/1/2020 500,000 505,475
(4.60% beginning 6/1/2010) (d)
Golden State Tobacco Securitization Corporation CA AMBAC 0.000 6/1/2023 750,000 606,135
Harris County Health Facility Development Corporation TX MBIA 6.000 6/1/2013 1,000,000 1,124,590
Hawaii Harbor AMT FSA 5.000 1/1/2014 1,000,000 1,073,620
Honolulu City and County HI Board Water Supply AMT MBIA 5.000 7/1/2014 1,000,000 1,063,230
Indianapolis IN Airport Authority AMT AMBAC 5.000 1/1/2017 1,000,000 1,025,050
Intermountain Power Agency UT MBIA NCL 6.500 7/1/2010 1,000,000 1,089,020
Louisiana Citizens Property Insurance Corporation AMBAC NCL 5.250 6/1/2010 2,000,000 2,095,980
Louisville and Jefferson County KY Regional Airport Authority 5.500 7/1/2011 1,355,000 1,438,644
Revenue FSA AMT
Lubbock County TX FSA 4.500 2/15/2021 1,000,000 1,009,420
Metropolitan Washington DC Airports Authority
Airport System Revenue AMT MBIA 5.000 10/1/2012 1,000,000 1,051,260
Metropolitan Washington DC Airports Authority
Airport System Revenue AMT AMBAC NCL 5.000 10/1/2015 1,000,000 1,047,700
Miami Dade County FL Aviation Revenue AMT MBIA 5.250 10/1/2014 1,000,000 1,037,130
Midlothian TX Development Authority RADIAN 5.000 11/15/2013 530,000 564,355
New Jersey Health Care Facilities Financing Authority Revenue AMBAC 4.800 8/1/2021 280,000 281,406
New Jersey Transit Corporation COP AMBAC NCL 5.250 9/15/2014 1,000,000 1,083,430
New Jersey Transportation Trust Fund Authority FSA 5.750 12/15/2014 230,000 263,762
New Orleans LA Aviation Board Revenue AMT FSA NCL 5.000 1/1/2011 1,060,000 1,104,880
New York State Dormitory Authority State University
Educational Facilities MBIA Prerefunded 6.000 5/15/2015 1,000,000 1,087,910
North Carolina Medical Care Community Revenue AMBAC 5.000 10/1/2012 750,000 797,055
North Slope Boro Alaska MBIA 5.000 6/30/2016 1,000,000 1,092,310
Pasco County FL Solid Waste AMBAC AMT NCL 6.000 4/1/2010 1,000,000 1,065,870
Pennsylvania Economic DFA Resource Recovery
Revenue; Colver Project AMT AMBAC 5.000 12/1/2012 1,000,000 1,067,050
Platte River Power Authority CO Power Revenue FSA 5.000 6/1/2013 2,000,000 2,186,860
Port of Seattle WA Revenue AMBAC AMT 5.000 10/1/2014 2,000,000 2,150,080
Saint Louis MO Airport Revenue FSA NCL 5.000 7/1/2013 1,000,000 1,078,210
Saint Louis MO Airport Revenue FSA NCL 5.000 7/1/2014 1,250,000 1,355,750
Sweetwater County WY Improvement Project Powers Board MBIA 5.000 12/15/2009 1,120,000 1,164,374
----------
52,400,604
----------
Lease Revenue--6.7%
Broward County FL School Board COP FGIC 5.000 7/1/2013 1,000,000 1,056,030
Greenville County SC School District 5.000 12/1/2011 1,000,000 1,074,210
New Jersey B PPTYS Lease Revenue King County Washington Project 5.000 12/1/2014 1,000,000 1,100,870
New York State Dormitory Authority Revenue (a) 5.250 11/15/2023 2,500,000 2,682,150
New York State Thruway Authority Service Contract Revenue NCL 5.000 4/1/2011 1,000,000 1,062,180
Puerto Rico Public Buildings Authority NCL 5.250 7/1/2017 2,000,000 2,087,660
Puerto Rico Public Finance Corporation LOC:
Government Development Bank for Puerto Rico (a) 5.750 8/1/2027 2,250,000 2,367,112
Tobacco Settlement Funding Corporation NY 5.250 6/1/2013 1,000,000 1,003,000
----------
12,433,212
----------
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Schedule of Investments--March 31, 2008 (Unaudited)
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Par Value ($)
Security Rate Maturity Value (Note 1A)
- --------------------------------------------------------------------------------------------------------------------------------
Revenue Bonds--16.5%
Alaska Student Loan Corporation Revenue AMT NCL 5.250% 6/1/2014 1,000,000 1,070,990
Atlanta GA Airport Revenue AMT FSA NCL 5.250 1/1/2012 900,000 935,532
Chicago O'Hare International Airport IL Revenue FGIC NCL 5.250 1/1/2014 1,000,000 1,080,570
Clark County NV Airport Revenue AMT FGIC NCL 5.250 7/1/2012 1,000,000 1,054,280
Energy Northwest WA Electric Revenue NCL 5.000 7/1/2011 1,000,000 1,066,770
Energy Northwest WA Electric Revenue NCL 5.500 7/1/2015 1,000,000 1,120,150
Energy Northwest WA Electric Revenue NCL 5.000 7/1/2015 1,000,000 1,088,520
Franklin County OH Revenue Refunding Trinity Health Credit NCL 5.000 6/1/2014 1,340,000 1,407,241
Harris County TX Toll Revenue FGIC NCL 6.000 8/1/2012 1,000,000 1,116,990
Illinois HEFA Condell Medical Center 6.000 5/15/2010 270,000 272,722
Indiana Health Facility Financing Authority Revenue 5.000 11/1/2011 500,000 528,105
Kenton County KY Airport Board Airport Revenue AMT XLCA NCL 5.000 3/1/2013 2,500,000 2,536,825
Massachusetts HEFA Lahey Clinic Medical Center FGIC NCL 5.000 8/15/2014 1,000,000 1,071,340
Mesa AZ Utility System Revenue FGIC 5.000 7/1/2018 1,000,000 1,059,150
Metropolitan Washington DC Airports Authority
Airport System Revenue AMT FGIC NCL 5.500 10/1/2012 1,715,000 1,827,127
Metropolitan Transportation Authority NY Revenue NCL 5.250 11/15/2014 1,000,000 1,105,630
Michigan Hospital Finance Authority Revenue NCL 5.250 11/15/2010 1,000,000 1,052,060
Minneapolis and Saint Paul MN Metropolitan Airports
Commission Airports Revenue FGIC NCL 5.000 1/1/2016 1,000,000 1,068,030
New York City NY Industrial Development Agency Special Facility Revenue AMT 5.500 1/1/2014 1,000,000 1,066,720
Port Authority NY and NJ AMT FGIC NCL 5.000 10/1/2013 1,000,000 1,067,170
Puerto Rico Electric Power Authority Revenue XLCA NCL 5.500 7/1/2016 500,000 541,605
Puerto Rico Commonwealth Highway and Transportation Authority Revenue 5.000 7/1/2016 1,000,000 1,048,800
Raleigh Durham NC Airport Authority AMT FGIC NCL 5.000 5/1/2014 1,190,000 1,248,370
SA Energy Acquisition Public Facility Corporation TX Gas Supply Revenue 5.250 8/1/2014 1,000,000 1,014,430
Tennessee Energy Acquisition Corporation 5.250 9/1/2017 2,000,000 1,983,800
Texas Municipal Gas Acquisition and Supply Corporation I Gas Supply Revenue 5.000 12/15/2011 1,000,000 1,004,950
Texas Transportation Commission First Tier Revenue NCL 5.000 4/1/2016 1,000,000 1,097,230
-----------
30,535,107
-----------
Special Revenues--4.2%
Florida Hurricane Catastrophe Funding Financial Corporation (b) 5.250 7/1/2012 2,000,000 2,135,200
Hillsborough County FL Assessment Revenue FGIC 5.000 3/1/2013 1,000,000 1,067,580
Jicarilla NM Apache Nation Revenue 5.000 9/1/2013 500,000 533,615
Puerto Rico Commonwealth Government Development Bank 5.000 12/1/2015 1,000,000 1,049,880
Puerto Rico Commonwealth Government Development Bank AMT 5.250 1/1/2015 600,000 626,592
Scottsdale AZ Excise Tax Revenue 5.000 7/1/2015 1,550,000 1,712,176
Stafford TX Economic Development FGIC 6.000 9/1/2015 525,000 602,994
Wisconsin State Transportation Revenue 5.500 7/1/2010 15,000 15,993
-----------
7,744,030
-----------
TOTAL BONDS (Cost $175,000,558) 176,603,539
-----------
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Par Value ($)
Security Rate Maturity Value (Note 1A)
- -----------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--3.9%
Short-Term Bonds--2.9%
Grand Forks ND Hospital Facilities Revenue (a) 1.200% 12/1/2016 3,800,000 3,800,000
Kansas State Department of Transportation Highway Revenue (a) 1.000 9/1/2020 600,000 600,000
University NC Hospital at Chapel Hill (a) 1.200 2/15/2031 925,000 925,000
-----------
Total Short-Term Bonds (Cost $5,325,000) 5,325,000
-----------
Shares
Investment Companies--1.0% --------
Wells Fargo National Tax-Free Money Market Fund (Cost $1,865,224) 1,865,224 1,865,224
-----------
Total Short-Term Investments (Cost $7,190,224) 7,190,224
-----------
TOTAL INVESTMENTS--99.2% (Cost $182,190,782) 183,793,763
-----------
OTHER ASSETS, LESS LIABILITIES--0.8% 1,561,545
-----------
NET ASSETS--100% 185,355,308
===========
Notes to Schedule of Investments:
AMBAC--American Municipal Bond Assurance Corporation
AMT--Alternative Minimum Tax
COP--Certificate of Participation
DFA--Development Finance Authority
EDA--Economic Development Authority
FGIC--Financial Guaranty Insurance Company
FHA--Federal Housing Administration
FSA--Financial Security Assurance
GNMA--Government National Mortgage Association
GTD--Guaranteed
HEFA--Heatlth & Educational Facilities Authority
HFA--Housing Finance Authority
MBIA--Municipal Bond Investors Assurance Insurance Corporation
NCL--Non-callable
PSF--Permanet School Fund
RADIAN--Radian Group
SFM--Single Family Mortgage
XLCA--XL Capital Assurance Inc.
(a) Variable Rate Security; rate indicated is as of March 31, 2008. Variable
rate securities that reset monthly or more frequently are securities for
reporting purposes.
(b) Denotes all or part of security segregated as collateral,
(c) Zero coupon security.
(d) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specific rate and date.
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Statement of Assets and Liabilities March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Investment in securities, at value (Note 1A) (cost $182,190,782) $183,793,763
Receivable for investments sold 976,267
Interest receivable 2,526,736
Receivable for Fund shares sold 217,802
Prepaid expenses 30,940
------------
Total assets 187,545,503
Liabilities
Cash overdraft due to custodian $1,854,587
Payable for Fund shares redeemed 182,775
Distributions payable 68,728
Payable to investment advisor (Note 2) 48,208
Accrued accounting, administration, custody and transfer agent fees (Note 2) 18,574
Accrued professional fees 16,527
Accrued trustees' fees and expenses (Note 2) 801
----------
Total liabilities 2,190,200
------------
Net Assets $185,355,308
============
Net Assets consist of:
Paid-in capital $183,682,734
Accumulated net realized gain 51,474
Undistributed net investment income 18,119
Net unrealized appreciation 1,602,981
------------
Total Net Assets $185,355,308
============
Shares of beneficial interest outstanding 8,558,900
============
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 21.66
============
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Statement of Operations
For the Six Months Ended March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Interest income $4,259,833
Dividend income from affiliated investments (Note 1F) 91,011
----------
4,350,844
Expenses
Investment advisory fee (Note 2) $ 429,706
Accounting, administration, custody and transfer agent fees (Note 2) 65,565
Registration fees 30,988
Professional fees 18,274
Administrative service fees (Note 2) 13,474
Trustees' fees and expenses (Note 2) 8,134
Insurance expense 2,778
Miscellaneous expenses 11,988
----------
Total expenses 580,907
Deduct:
Waiver of invesment advisory fee (Note 2) (97,489)
----------
Net expenses 483,418
----------
Net investment income 3,867,426
----------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on
Investments 303,184
Change in unrealized appreciation (depreciation) on
Investments 773,034
----------
Net realized and unrealized gain (loss) on investments 1,076,218
----------
Net Increase in Net Assets from Operations $4,943,644
==========
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income $ 3,867,426 $ 5,754,463
Net realized gain (loss) 303,184 134,023
Change in net unrealized appreciation (depreciation) 773,034 (608,630)
------------ ------------
Net increase (decrease) in net assets from investment operations 4,943,644 5,279,856
------------ ------------
Distributions to Shareholders (Note 1C)
From net investment income (3,867,426) (5,754,463)
------------ ------------
Total distributions to shareholders (3,867,426) (5,754,463)
------------ ------------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares 51,488,121 108,485,320
Value of shares issued in reinvestment of distributions 3,473,620 5,083,310
Cost of shares redeemed (net of redemption fees of $2,453 and $1,133,
respectively) (72,162,403) (39,541,640)
------------ ------------
Net increase (decrease) in net assets from Fund share transactions (17,200,662) 74,026,990
------------ ------------
Total Increase (Decrease) in Net Assets (16,124,444) 73,552,383
Net Assets
At beginning of period 201,479,752 127,927,369
------------ ------------
At end of period (including undistributed net investment income of
$18,119 and $18,119) $185,355,308 $201,479,752
============ ============
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Financial Highlights
- --------------------------------------------------------------------------------
For the
Six Months Ended Year Ended September 30,
March 31, 2008 ------------------------------------------------------------
(Unaudited) 2007 2006 2005 2004 2003
----------- -------- -------- -------- -------- -------
Net Asset Value, Beginning of Period $ 21.60 $ 21.69 $ 21.71 $ 22.05 $ 22.78 $ 22.78
-------- -------- -------- -------- -------- -------
From Investment Operations:
Net investment income * (a) 0.39 0.78 0.78 0.77 0.69 0.81
Net realized and unrealized
gains (loss) on investments 0.06 (0.09) (0.02) (0.29) (0.08) 0.07
-------- -------- -------- -------- -------- -------
Total from operations 0.45 0.69 0.76 0.48 0.61 0.88
-------- -------- -------- -------- -------- -------
Less Distributions to Shareholders:
From net investment income (0.39) (0.78) (0.78) (0.77) (0.71) (0.81)
From net realized gains on investments -- -- -- (0.05) (0.63) (0.07)
-------- -------- -------- -------- -------- -------
Total distributions to shareholders (0.39) (0.78) (0.78) (0.82) (1.34) (0.88)
-------- -------- -------- -------- -------- -------
Net Asset Value, End of Period $ 21.66 $ 21.60 $ 21.69 $ 21.71 $ 22.05 $ 22.78
======== ======== ======== ======== ======== =======
Total Return (b) 2.11%(c) 3.26% 3.58% 2.18% 2.76% 3.88%
Ratios/Supplemental Data:
Expenses (to average daily net assets)* 0.45%(d) 0.45% 0.45% 0.45% 0.50% 0.65%
Net Investment Income (to average daily net 3.61%(d) 3.63% 3.61% 3.50% 3.16% 3.58%
assets)*
Portfolio Turnover 21%(c) 10% 29% 35% 72% 42%
Net Assets, End of Period (000's omitted) $185,355 $201,480 $127,927 $109,314 $111,887 $70,505
- ----------------
* 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) $ 0.38 $ 0.75 $ 0.74 $ 0.73 $ 0.65 $ 0.80
Ratios (to average daily net assets):
Expenses 0.54%(d) 0.59% 0.63% 0.62% 0.68% 0.68%
Net investment income 3.52%(d) 3.48% 3.43% 3.33% 2.97% 3.55%
(a) Calculated based on average shares outstanding.
(b) Total return would have been lower in the absence of expense waivers.
(c) Not annualized.
(d) Calculated on an annualized basis.
The accompanying notes are an integral part of the financial statements.
13
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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 Intermediate Tax Exempt Bond Fund (the "Fund") is a
separate diversified investment series of the Trust.
The objective of the Fund is to provide a high level of interest income
exempt from federal income taxes, while seeking preservation of
shareholders' capital. The Fund seeks to achieve its objective by
investing, under normal circumstances, at least 80% of net assets in tax
exempt municipal securities issued by states, territories, and possessions
of the United States, the District of Columbia and their political
subdivisions, agencies and instrumentalities.
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. Tax-exempt bonds and notes are priced at market on the basis of
valuations furnished by an independent pricing service or dealers, approved
by the Trustees. Such services or dealers determine valuations for normal
institutional-size trading units of such securities using methods based on
market transactions for comparable securities and various relationships,
generally recognized by institutional traders, between securities.
Securities (including illiquid securities) for which quotations are not
readily available, or if such quotations do not accurately reflect fair
value, 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 regulated 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.
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.
C. Distributions to shareholders
Distributions on shares of the Fund are declared daily from net investment
income and distributed monthly. Distributions from capital gains, if any,
are distributed annually by the Fund. Distributions from net investment
income and capital gains, if any, are automatically reinvested in
additional shares of the Fund unless the shareholder elects to receive them
in cash. Distributions are recorded on the ex-dividend date.
Income and capital gains 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 differing
treatments for capital loss carryovers.
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 be distributed in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in the
following year.
14
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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.
In March 2008, the FASB released Statement of Financial Accounting
Standards No. 161, Disclosures about Derivative Instruments and Hedging
Activities ("FAS 161"). FAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. The application of FAS 161 is required for fiscal years
beginning after November 15, 2008 and interim periods within those fiscal
years. At this time, management is evaluating the implications of FAS 161
and its impact on the financial statements and the accompanying notes 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
paid monthly at the annual rate of 0.40% of the Fund's average daily net
assets. Standish Mellon voluntarily agreed to limit the Fund's total annual
operating expenses (excluding brokerage commissions, taxes and other
extraordinary expenses) to 0.45% of the Fund's average daily net assets for
the six months ended March 31, 2008. Pursuant to this arrangement, for the
six months ended March 31, 2008, Standish Mellon voluntarily waived a
portion of its investment advisory fee in the amount of $97,489. This
arrangement 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 $4,826, for the
six months ended March 31, 2008.
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 $60,739 for the
six months ended March 31, 2008.
15
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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
$869 for the six months ended March 31, 2008, which amount is included in
miscellaneous expenses on the statement of operations. See Note 6 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 six months ended
March 31, 2008, the Fund was charged $2,130, 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 $3,800, which amount is included in miscellaneous
expenses in the Statement of Operations for the six months ended March 31,
2008.
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
six months ended March 31, 2008, the Fund was charged $9,193 for fees
payable to BNY Mellon Wealth Management.
MBSC Securities Corporation ("MBSC"), a wholly-owned subsidiary of BNY
Mellon and affiliate of Standish Mellon, is the distributor of the Fund's
shares.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the six months ended March 31, 2008 were as follows:
Purchases Sales
----------- -----------
Non-U.S. Government Securities $43,035,544 $61,346,776
=========== ===========
(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
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Shares sold 2,374,857 5,034,122
Shares issued to shareholders
in reinvestment of distributions 160,220 235,626
Shares redeemed (3,305,286) (1,838,195)
---------- ----------
Net increase (decrease) (770,209) 3,431,553
========== ==========
At March 31, 2008, two shareholders of record, in the aggregate, held
approximately 64.7% of the total outstanding shares of the Fund. Investment
activities of these shareholders could have a material impact on the Fund. For
example, a significant redemption by such shareholders could result in illiquid
or less liquid investments comprising a larger portion of the Fund's Portfolio.
16
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 six months ended March 31, 2008, the Fund was
charged $2,453 in redemption fees which is reflected in the cost of shares
redeemed.
(5) Federal Taxes:
Each year, the Fund intends to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue 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 March 31, 2008 were as follows:
Cost for federal income tax purposes $182,190,782
============
Gross unrealized appreciation $ 2,825,260
Gross unrealized depreciation (1,222,279)
------------
Net unrealized appreciation
(depreciation) $ 1,602,981
============
(6) 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 six months ended March 31,
2008, the Fund did not borrow from the line of credit.
17
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (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.
18
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (Unaudited)
- --------------------------------------------------------------------------------
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.
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 (3.73% vs. 3.64%), but slightly underperformed its peer group
average return for the three-year period (3.22% vs. 3.23%) and five-year
period (3.39% vs. 3.42%).
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 2nd (1st
being the best) quintile of its peer group of funds, the median fee of
which was 0.525%. The Fund's net management fee (after giving effect to
expense limitations) was 0.231% (which included administrative services
fees under Lipper's calculation methodology), well below the peer group
median net management fee of 0.399%. 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 0.45% (after giving effect to expense limitations) was
lower than the median net expense ratio of the peer group of 0.551%,
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 many 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 Fund and The Boston Company International Core Equity Fund, 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.
19
Mellon Institutional Funds Investment Trust
Standish Mellon Intermediate Tax Exempt Bond Fund
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (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 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.
20
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their ages,
addresses and dates of birth; their positions 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 period ended March 31, 2008. 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) Position(s) Term of Office Occupation(s) Fund Complex Directorships (period ended
Address, and Held with and Length of During Past Overseen by Held by March 31,
Date of Birth Trust Time Served* 5 Years Trustee Trustee 2008)
- ----------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $1,891
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: $1,891
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 (73) Trustee Trustee since Trustee, Mertens 17 None Fund: $1,891
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: $2,069
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.
21
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 (51) 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
22
THIS PAGE INTENTIONALLY LEFT BLANK
MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6933SA0308
MELLON INSTITUTIONAL FUNDS
The Boston Company
Semiannual Report Small Cap Tax-Sensitive Equity Fund
- --------------------------------------------------------------------------------
March 31, 2008 (Unaudited)
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 Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity 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 (October 1, 2007 to March 31, 2008).
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 October 1, 2007
October 1, 2007 March 31, 2008 to March 31, 2008
- -------------------------------------------------------------------------------------
Actual $1,000.00 $ 875.80 $4.31
Hypothetical (5% return
per year before expenses) $1,000.00 $1,020.40 $4.65
- ---------
+ Expenses are equal to the Fund's annualized expense ratio of 0.92%,
multiplied by the average account value over the period, multiplied by
183/366 (to reflect the one-half year period).
3
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Portfolio Information as of March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
The Fund is actively managed. Current holdings may be different than those
presented below:
Percentage of
Top Ten Holdings* Sector Investments
- -----------------------------------------------------------------------------------
Investment Technology Group, Inc. Financials 2.0%
W-H Energy Services, Inc. Energy 1.9
Bare Escentuals, Inc. Consumer Staples 1.9
PerkinElmer, Inc. Health Care 1.8
Wright Medical Group, Inc. Health Care 1.8
ManTech International Corp., Class A Technology 1.8
Penn Virginia Corp. Energy 1.8
NeuStar, Inc., Class A Telecommunication Services 1.7
Thermo Fisher Scientific, Inc. Health Care 1.7
Pediatrix Medical Group, Inc. Health Care 1.7
----
18.1%
* Excludes short-term securities and investment of cash collateral.
Percentage of
Economic Sector Allocation Net Assets
- -----------------------------------------------------------------------------------
Consumer Discretionary 13.4%
Consumer Staples 6.6
Energy 10.2
Financials 5.0
Health Care 22.2
Industrials 8.2
Materials 3.2
Technology 22.9
Telecommunications Services 1.6
Short-term and Other Assets 6.7
-----
100.0%
4
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- --------------------------------------------------------------------
UNAFFILIATED INVESTMENTS--105.6%
EQUITIES--93.3%
Consumer Discretionary--13.4%
Bright Horizons Family Solutions, Inc. 52,520a,b 2,260,461
Dollar Tree, Inc. 136,420a 3,763,828
Interactive Data Corp. 52,980a 1,508,341
Interface, Inc., Class A 259,710b 3,648,926
J.Crew Group, Inc. 38,730a,b 1,710,704
JOS A Bank Clothiers, Inc. 47,830a,b 980,515
Lions Gate Entertainment Corp. 437,500a 4,265,625
Panera Bread Co., Class A 34,290a,b 1,436,408
Papa John's International, Inc. 133,590a 3,234,214
Playboy Enterprises, Inc., Class B 120,420a 1,003,099
Polaris Industries, Inc. 91,940b 3,770,459
Texas Roadhouse, Inc., Class A 39,380a 385,924
THQ, Inc. 129,440a,b 2,821,792
Tractor Supply Co. 31,183a,b 1,232,352
True Religion Apparel, Inc. 126,390a,b 2,344,535
Ulta Salon, Cosmetics & Fragrance, Inc. 109,070a,b 1,531,343
Volcom, Inc. 78,420a 1,584,868
WMS Industries, Inc. 57,350a,b 2,062,880
39,546,274
Consumer Staples--6.6%
Alberto-Culver Co. 128,680 3,527,119
Bare Escentuals, Inc. 218,651a,b 5,120,806
Hansen Natural Corp. 72,940a,b 2,574,782
Longs Drug Stores Corp. 74,490b 3,162,845
Nu Skin Enterprises, Inc., Class A 75,270b 1,356,365
Ruddick Corp. 97,180b 3,582,055
19,323,972
Energy--10.2%
Berry Petroleum Co., Class A 64,750b 3,010,227
Cal Dive International, Inc. 155,900a 1,618,242
Complete Production Services, Inc. 150,130a 3,443,982
Comstock Resources, Inc. 111,330a 4,486,599
Dril-Quip, Inc. 92,450a 4,296,151
GMX Resources, Inc. 55,640a,b 1,943,505
Lufkin Industries, Inc. 18,621 1,188,392
Penn Virginia Corp. 109,137b 4,811,850
W-H Energy Services, Inc. 77,370a 5,326,925
30,125,873
The accompanying notes are an integral part of the financial statements.
5
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- --------------------------------------------------------------------
Financials--5.0%
Arch Capital Group Ltd. 27,270 a 1,872,631
Assured Guaranty Ltd. 97,570 2,316,312
Cardtronics, Inc. 101,680a 708,710
First Mercury Financial Corp. 53,838 a 937,320
Investment Technology Group, Inc. 121,530a 5,612,255
Max Capital Group Ltd. 41,920 1,097,885
RLI Corp. 42,221 2,092,895
14,638,008
Health Care--22.2%
ABIOMED, Inc. 52,570a,b 690,770
Allscripts Healthcare Solutions, Inc. 159,960a,b 1,650,787
Alnylam Pharmaceuticals, Inc. 40,480 a,b 987,712
Amedisys, Inc. 76,870 a,b 3,024,066
Applera Corp.-Celera Genomics Group 114,970a,b 1,690,059
Bruker Corp. 148,590a,b 2,286,800
CONMED Corp. 58,530a 1,500,709
Covance, Inc. 50,160a 4,161,775
Enzon Pharmaceuticals, Inc. 135,540a,b 1,248,323
Exelixis, Inc. 49,400a,b 343,330
Hologic, Inc. 59,509a,b 3,308,700
Indevus Pharmaceuticals, Inc. 162,160a,b 773,503
Integra LifeSciences Holdings Corp. 63,760a,b 2,771,647
Magellan Health Services, Inc. 36,320a 1,441,541
Natus Medical, Inc. 165,960a,b 3,012,174
NuVasive, Inc. 40,600a,b 1,401,106
Omnicell, Inc. 87,770a 1,764,177
Pediatrix Medical Group, Inc. 69,240a 4,666,776
PerkinElmer, Inc. 207,360 5,028,480
Phase Forward, Inc. 72,870a,b 1,244,620
PSS World Medical, Inc. 124,010a 2,066,007
Psychiatric Solutions, Inc. 98,110a,b 3,327,891
Regeneron Pharmaceuticals, Inc. 70,120a,b 1,345,603
Sangamo Biosciences, Inc. 81,130a,b 824,281
Sirtris Pharmaceuticals, Inc. 79,180a,b 1,028,548
Thermo Fisher Scientific, Inc. 84,110a,b 4,780,812
Thoratec Corp. 99,799a,b 1,426,128
United Therapeutics Corp. 18,680a,b 1,619,556
Volcano Corp. 81,650a 1,020,625
Wright Medical Group, Inc. 207,120a,b 4,999,877
65,436,383
Industrials--8.2%
AAR Corp. 90,250a,b 2,461,117
Actuant Corp., Class A 111,930 3,381,405
American Apparel, Inc. 132,810a,b 1,255,054
The accompanying notes are an integral part of the financial statements.
6
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- --------------------------------------------------------------------
Industrials (continued)
Bucyrus International, Inc., Class A 17,306b 1,759,155
Clean Harbors, Inc. 30,790a,b 2,001,350
Exponent, Inc. 34,430a 1,130,681
Hurco Companies, Inc. 20,040a 937,471
Landstar System, Inc. 29,480b 1,537,677
McGrath Rentcorp 38,130b 919,314
MSC Industrial Direct Co. Inc., Class A 69,560b 2,938,910
Quanta Services, Inc. 90,480a,b 2,096,422
Stanley, Inc. 43,200a,b 1,272,672
UTI Worldwide, Inc. 119,130 2,392,130
24,083,358
Materials--3.2%
American Vanguard Corp. 110,420b 1,837,389
H.B. Fuller Co. 112,780b 2,301,840
Horsehead Holding Corp. 88,410a 1,023,788
Minefinders Corp. Ltd. 98,500a,b 1,209,580
OM Group, Inc. 28,400a 1,548,936
Silver Wheaton Corp. 90,450a 1,404,689
9,326,222
Technology--22.9%
Acme Packet, Inc. 152,920a 1,221,831
Ariba, Inc. 96,630a 933,446
BigBand Networks, Inc. 280,340a,b 1,606,348
Broadridge Financial Solutions, Inc. 171,200 3,013,120
CACI International, Inc., Class A 65,610a,b 2,988,535
CMGI, Inc. 66,540a 882,320
Dice Holdings, Inc. 89,024a 793,204
Eagle Test Systems, Inc. 133,757a,b 1,404,448
Emulex Corp. 200,980a,b 3,263,915
FLIR Systems, Inc. 106,850a,b 3,215,117
Forrester Research, Inc. 89,300a,b 2,373,594
Foundry Networks, Inc. 101,680a,b 1,177,454
Informatica Corp. 82,540a,b 1,408,132
InterDigital, Inc. 65,170a,b 1,291,018
Intervoice, Inc. 74,622a 593,991
IPG Photonics Corp. 92,940a 1,458,229
Jack Henry & Associates, Inc. 73,280b 1,807,818
Limelight Networks, Inc. 229,915a,b 744,925
ManTech International Corp., Class A 109,220a 4,954,219
Mellanox Technologies Ltd. 112,850a 1,572,000
Metavante Technologies, Inc. 68,710a 1,373,513
Microsemi Corp. 105,110a,b 2,396,508
Netscout Systems, Inc. 333,700a 3,103,410
ON Semiconductor Corp. 537,010a 3,050,217
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- --------------------------------------------------------------------------------------
Technology (continued)
PMC-Sierra, Inc. 408,750a,b 2,329,875
Polycom, Inc. 87,720a,b 1,977,209
QAD, Inc. 158,220b 1,330,630
SkillSoft PLC ADR 298,620a 3,126,551
Standard Microsytems Corp. 51,210a 1,494,308
Teradyne, Inc. 118,820a,b 1,475,744
TIBCO Software, Inc. 223,690a 1,597,147
Ultimate Software Group, Inc. 58,130a,b 1,747,388
ValueClick, Inc. 167,860a,b 2,895,585
Virtusa Corp. 125,931a 1,229,087
Wright Express Corp. 52,520a 1,613,940
67,444,776
Telecommunication Services--1.6%
NeuStar, Inc., Class A 181,300a,b 4,800,824
Total Equities (Cost $268,207,533) 274,725,690
INVESTMENT OF CASH COLLATERAL--12.3%
BlackRock Cash Strategies L.L.C. (Cost $36,307,403) 36,307,403c 36,307,403
TOTAL UNAFFILIATED INVESTMENTS (Cost $304,514,936) 311,033,093
AFFILIATED INVESTMENTS--19.2%
Dreyfus Institutional Preferred Plus Money Market Fund 20,179,406d 20,179,406
Dreyfus Institutional Cash Advantage Fund 36,475,089d,e 36,475,089
-----------
TOTAL AFFILIATED INVESTMENTS (Cost $56,654,495) 56,654,495
TOTAL INVESTMENTS--124.8% (Cost $361,169,431) 367,687,588
LIABILITIES IN EXCESS OF OTHER ASSETS--(24.8%) (73,133,070)
-----------
NET ASSETS--100% 294,554,518
===========
Notes to Schedule of Investments:
ADR--American Depository Receipts
a Non-income producing security.
b Security, or a portion of thereof, was on loan at March 31, 2008.
c Illiquid security. At the period end, the value of these securities
amounted to $36,307,403 at 12.3% of net assets.
d Affiliated institutional money market fund.
e Investment of security lending cash collateral.
At March 31, 2008, the Fund held the following futures contracts:
Underlying Face Unrealized
Contract Position Expiration Date Amount at Value Appreciation
- ---------------------------------------------------------------------------------------------------
Russell 2000 Index (19 Contracts) Long 6/19/2008 $6,555,000 $100,545
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Statement of Assets and Liabilities
March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investment in securities, at value (Note 1A) (including securities on loan,
valued at $70,348,612 (Note 7)):
Unaffiliated investments (cost $304,514,936) $311,033,093
Affiliated investments (Note 1F) (cost $56,654,495) 56,654,495
Cash collateral at broker for futures contracts 1,017,000
Receivable for investments sold 8,708,549
Receivable for Fund shares sold 612,355
Interest and dividends receivable 155,382
Receivable for variation margin on open future contracts (Note 6) 56,050
Prepaid expenses 29,428
------------
Total assets 378,266,352
Liabilities
Collateral for securities on loan (Note 7) $72,782,492
Payable for investments purchased 10,055,409
Payable for Fund shares redeemed 232,871
Payable to investment advisor (Note 2) 580,470
Accrued accounting, administration, custody and transfer agent fees (Note 2) 24,118
Accrued professional fees 19,046
Accrued administrator service fees (Note 2) 16,905
Other accrued expenses and liabilities 523
-----------
Total liabilities 83,711,834
------------
Net Assets $294,554,518
============
Net Assets consist of:
Paid-in capital $300,637,575
Accumulated net realized loss (12,610,189)
Accumulated net investment loss (91,570)
Net unrealized appreciation 6,618,702
------------
Total Net Assets $294,554,518
============
Shares of beneficial interest outstanding 8,415,750
============
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 35.00
============
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Statement of Operations
For the Six Months Ended March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Dividend income from unaffiliated investments (net of foreign withholding taxes of $ 458,161
$1,224)
Dividend income from affiliated investments (Note 1F) 485,531
Securities lending income (Note 7) 351,164
Interest income 11,381
------------
Total investment income 1,306,237
Expenses
Investment advisory fee (Note 2) $ 1,217,705
Accounting, administration, custody and transfer agent fees (Note 2) 91,214
Administrative service fees (Note 2) 30,182
Professional fees 21,806
Registration fees 10,292
Trustees' fees and expenses (Note 2) 9,225
Insurance expense 3,308
Miscellaneous expenses 14,075
-----------
Net expenses 1,397,807
------------
Net investment loss (91,570)
------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (7,607,174)
Financial futures transactions 229,791
-----------
Net realized gain (loss) (7,377,383)
Change in unrealized appreciation (depreciation) on:
Investments (32,618,021)
Financial futures contracts 103,188
-----------
Change in net unrealized appreciation (depreciation) (32,514,833)
------------
Net realized and unrealized gain (loss) (39,892,216)
------------
Net Increase (Decrease) in Net Assets from Operations $(39,983,786)
============
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income (loss) $ (91,570) $ (377,226)
Net realized gain (loss) (7,377,383) 19,141,162
Change in net unrealized appreciation (depreciation) (32,514,833) 20,921,812
------------ ------------
Net increase (decrease) in net assets from investment operations (39,983,786) 39,685,748
------------ ------------
Distributions to Shareholders (Note 1C)
From net realized gains on investments (22,815,052) (27,215,421)
------------ ------------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares 50,343,126 149,130,264
Value of shares issued to shareholders in reinvestment of distributions 17,523,678 25,616,045
Cost of shares redeemed (26,992,527) (31,289,631)
------------ ------------
Net increase (decrease) in net assets from Fund share transactions 40,874,277 143,456,678
------------ ------------
Total Increase (Decrease) in Net Assets (21,924,561) 155,927,005
Net Assets
At beginning of period 316,479,079 160,552,074
------------ ------------
At end of period [including accumulated net investment (loss) of
$294,554,518 $316,479,079
$(91,570) and $0] ============ ============
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Financial Highlights
- --------------------------------------------------------------------------------
For the
Six Months Ended Year Ended September 30,
March 31, 2008 ------------------------------------------------------------
(Unaudited) 2007 2006 2005 2004 2003
---------- ---- ---- ---- ---- ----
Net Asset Value, Beginning of Period $ 43.15 $ 42.27 $ 42.35 $ 34.71 $ 29.58 $ 22.53
-------- -------- -------- -------- -------- --------
From Operations:
Net investment income (loss)* (a) (0.01) (0.07) (0.08) (0.10) (0.24) (0.11)
Net realized and unrealized gains (loss)
on investments (5.07)(b) 8.07(b) 3.08 7.74 5.37(b) 7.16(b)
-------- -------- -------- -------- -------- --------
Total from operations (5.08) 8.00 3.00 7.64 5.13 7.05
-------- -------- -------- -------- -------- --------
Less Distributions to Shareholders:
From net realized gains on investments (3.07) (7.12) (3.08) - - -
-------- -------- -------- -------- -------- --------
Total distributions to shareholders (3.07) (7.12) (3.08) - - -
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 35.00 $ 43.15 $ 42.27 $ 42.35 $ 34.71 $ 29.58
======== ======== ======== ======== ======== ========
Total Return (12.42%)(c) 20.79% 7.49% 22.01% 17.34% 31.29%(d)
Ratios/Supplemental Data:
Expenses (to average daily net assets)* 0.92%(e) 0.96% 0.99% 0.99% 1.03% 1.00%
Net Investment Income (Loss)
(to average daily net assets)* (0.06%)(e) (0.17%) (0.18%) (0.26%) (0.71%) (0.43%)
Portfolio Turnover 106%(c) 170% 169% 137% 150% 252%
Net Assets, End of Period (000's omitted) $294,555 $316,479 $160,552 $160,035 $120,372 $106,718
- -------
* 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
excluding waivers and reimbursements would have been:
Net investment income per share (a) N/A N/A N/A N/A N/A $ (0.13)
Ratios (to average daily net assets):
Expenses N/A N/A N/A N/A N/A 1.07%
Net investment income (loss) N/A N/A N/A N/A N/A (0.50%)
(a) Calculated based on average shares outstanding.
(b) Amounts include litigation proceeds received by the Fund of $0.01 for the
six months ended March 31, 2008, $0.04 for the year ended September 30,
2007, $0.03 for the year ended September 30, 2004 and $0.01 for the year
ended September 30, 2003.
(c) Not annualized.
(d) Total return would have been lower in the absence of expense waivers.
(e) Calculated on an annualized basis.
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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. The
Boston Company Small Cap Tax-Sensitive Equity Fund (the "Fund") is a
separate diversified investment series of the Trust.
The objective of the Fund is to maximize after-tax total return, consisting
of long-term growth of capital. The Fund seeks to achieve its objective by
investing, under normal circumstances, at least 80% of net assets in equity
securities of small capitalization U.S. companies. The Fund considers small
cap companies to have total market capitalizations equal to or less than
the total market capitalization of the largest company included in the
Russell 2000 Growth Index. The Fund may also invest in equity index futures
contracts based primarily upon the Russell 2000 Index.
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
calculated mean price (average of last bid and last offer). Securities that
are fixed income securities, other than short-term instruments with less
than sixty days remaining to maturity, for which accurate 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, or if such quotations do not accurately reflect
fair value, 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 regulated 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 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.
B. Securities transactions and income
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of coupon interest accrued, adjusted for accretion
of discount or amortization of premium using the yield-to-maturity method
on debt securities with greater than sixty days remaining 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.
Dividends representing a return of capital are reflected as a reduction of
cost.
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 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 result in reclassifications among undistributed net
investment income, 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 be distributed in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in the
following year.
13
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 The Boston Company
Asset Management LLC ("TBCAM"), a wholly-owned subsidiary of The Bank of
New York Mellon Corporation ("BNY Mellon"), or its affiliates.
G. New accounting requirements
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.
In March 2008, the FASB released Statement of Financial Accounting
Standards No. 161, Disclosures about Derivative Instruments and Hedging
Activities ("FAS 161"). FAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. The application of FAS 161 is required for fiscal years
beginning after November 15, 2008 and interim periods within those fiscal
years. At this time, management is evaluating the implications of FAS 161
and its impact on the financial statements and the accompanying notes has
not yet been determined.
(2) Investment Advisory Fee and Other Transactions With Affiliates:
The investment advisory fee paid to TBCAM for overall investment advisory
and administrative services, and general office facilities, is paid monthly
at the annual rate of 0.80% 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 TBCAM, 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
$5,739, for the six months ended March 31, 2008.
The Trust entered into an agreement with Mellon Bank, N.A. ("Mellon Bank"),
a wholly-owned subsidiary of BNY Mellon and an affiliate of TBCAM, 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 $85,475 for the six months ended March 31,
2008.
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, Mellon Bank earned $150,462 for the
six months ended March 31, 2008. 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
$426 for the six months ended March 31, 2008, which amount is included in
miscellaneous expenses on the Statement of Operations. See Note 8 for
further details.
14
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
The Trust reimburses BNY Mellon Asset Management for a portion of the
salary of the Trust's Chief Compliance Officer. For the six months ended
March 31, 2008, the Fund was charged $2,117, which amount is included in
miscellaneous expenses in the statement of operations. No other director,
officer or employee of TBCAM 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 TBCAM 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 TBCAM, to provide printing and
fulfillment services for the Fund. Pursuant to this agreement, the Fund was
charged $2,885, which amount is included in miscellaneous expenses in the
Statement of Operations, for the six months ended March 31, 2008.
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
six months ended March 31, 2008, the Fund was charged $22,751 for fees
payable to BNY Mellon Private Wealth Management.
MBSC Securities Corporation ("MBSC"), a wholly-owned subsidiary of BNY
Mellon and affiliate of TBCAM, is the distributor of the Fund's shares.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the six months ended March 31, 2008 were as follows:
Purchases Sales
------------ ------------
Non-U.S. Government Securities $317,849,959 $304,810,206
============ ============
(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
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Shares sold 1,315,040 3,640,582
Shares issued to shareholders
in reinvestment of distributions 452,107 659,528
Shares redeemed (685,718) (764,326)
--------- ---------
Net increase (decrease) 1,081,429 3,535,784
========= =========
At March 31, 2008, four shareholders of record, in the aggregate held
approximately 79.8% of the total outstanding shares of the Fund. Investment
activities of these shareholders could have a material impact on the Fund.
For example, a significant redemption by such shareholders could result in
illiquid or less liquid investments comprising a larger portion of the
Fund's Portfolio.
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 six months ended March 31, 2008, the Fund did not
assess any redemption fees.
15
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(5) Federal Taxes:
Each year, the Fund intends to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue 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 cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 2008, as computed on a federal
income tax basis, were as follows:
Cost for federal income tax purposes $361,169,431
============
Gross unrealized appreciation $ 21,712,741
Gross unrealized depreciation (15,094,039)
------------
Net unrealized appreciation (depreciation) $ 6,618,702
============
(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:
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 March 31, 2008, the Fund held open financial futures contracts. See the
Schedule of Investments for further details.
16
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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.
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 affect 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 December 11, 2007 through March 31, 2008, the securities lending
agent effected such withdrawals and the cash proceeds from such withdrawals
by the Fund were reinvested in shares of the Dreyfus Fund. Repayments of
cash collateral during the period were made from the proceeds of
redemptions of shares of the Dreyfus Fund. See Schedule of Investments for
further detail on the Fund's investment of cash collateral in the BlackRock
Fund and the Dreyfus Fund as of March 31, 2008.
The Fund loaned securities during the six months ended March 31, 2008 and
earned interest on the invested collateral of $1,622,024 of which
$1,270,860 was rebated to borrowers or paid in fees. At March 31, 2008, the
Fund had securities valued at $70,348,612 on loan of which $72,782,492 was
collateralized with cash and $178,810 was collateralized with highly liquid
securities. See Schedule of Investments for further detail on the security
positions on loan and collateral held.
(8) 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 six months ended March 31, 2008,
the Fund did not have any borrowings outstanding.
17
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Factors Considered by the Trustees in Approving the Investment Advisory
Agreement (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, The Boston Company Asset Management LLC ("TBCAM" 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.
18
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Factors Considered by the Trustees in Approving the Investment Advisory
Agreement (Unaudited)
- --------------------------------------------------------------------------------
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.
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 return for the one-year period (18.50% vs. 18.60%) and
three-year period (14.77% vs. 14.81%), and outperformed its peer group average
return for the five-year period (16.99% vs. 16.89%).
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 0.80%, which was in the 2nd (1st being
the best) quintile of its peer group of funds, the median fee of which was
0.85%. The Fund's net management fee was 0.808% (which included administrative
services fees under Lipper's calculation methodology), below the peer group
median net management fee of 0.850%. 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 0.992% was lower than the median net expense ratio of the peer group of
1.105%, 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 many
of the investment companies in the Mellon Institutional Funds family of funds.
The Trustees observed that the Adviser had incurred gains 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
Fund and The Boston Company International Core Equity Fund, 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.
19
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Tax-Sensitive Equity Fund
Factors Considered by the Trustees in Approving the Investment Advisory
Agreement (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 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.
20
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their ages,
addresses and dates of birth; their positions 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 period ended March 31, 2008. 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 March 31,
Date of Birth Held with Trust Time Served* 5 Years Trustee Trustee 2008)
- ----------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $2,120
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: $2,120
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 (73) Trustee Trustee since Trustee, Mertens 17 None Fund: $2,120
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: $2,403
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
200 Park Ave., 55th Fl. President and Officer of The Dreyfus
New York, NY 10166 Chief Executive Corporation; Executive
8/24/48 Officer Vice President 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.
21
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 (51) 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
22
THIS PAGE INTENTIONALLY LEFT BLANK
MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6938SA0308
MELLON INSTITUTIONAL FUNDS
The Boston Company
Semiannual Report International Small Cap Fund
- --------------------------------------------------------------------------------
March 31, 2008 (Unaudited)
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 Investment Trust
The Boston Company International Small Cap 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 (October 1, 2007 to March 31, 2008).
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 October 1, 2007
October 1, 2007 March 31, 2008 to March 31, 2008
- -----------------------------------------------------------------------------------
Actual $1,000.00 $ 828.90 $5.53
Hypothetical (5% return
per year before expenses) $1,000.00 $1,018.90 $6.11
- -------
+ Expenses are equal to the Fund's annualized expense ratio of 1.21%,
multiplied by the average account value over the period, multiplied by
183/366 (to reflect the one-half year period).
3
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Portfolio Information as of March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
The Fund is actively managed. Current holdings may be different than those
presented below:
Percentage of
Top Ten Holdings* Country Sector Investments
- --------------------------------------------------------------------------------------
Union Fenosa SA Spain Utilites 1.2%
Holcim Ltd. Switzerland Materials 1.1
Koninklijke BAM Groep NV Netherlands Industrials 1.0
Nippon Synthetic Chemical
Industry Co., Ltd. Japan Materials 0.9
Teleperformance France Consumer Discretionery 0.9
Fresenius SE Germany Health Care 0.9
Incitec Pivot Ltd. Australia Materials 0.9
Unibail-Rodamco REIT France Financials 0.9
Wing Lung Bank Ltd. Hong Kong Financials 0.9
Ashmore Group PLC United Kingdom Financials 0.8
---
9.5%
* Excludes short-term securities.
Percentage of
Geographic Region Allocation* Investments
- ------------------------------------------------------------
America ex U.S. 7.7%
Asia ex Japan 10.8
Europe ex U.K. 47.7
Japan 15.7
United Kingdom 18.1
----
100%
* Excludes short-term securities.
4
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------
UNAFFILIATED INVESTMENTS--96.2%
COMMON EQUITIES--95.0%
Australia--4.7%
Ansell Ltd. 23,900 254,053
Australian Worldwide Exploration Ltd. 127,939 a 412,785
Beach Petroleum Ltd. 336,761 389,366
Computershare Ltd. 83,808 670,254
Flight Centre Ltd. 21,008 406,684
Incitec Pivot Ltd. 6,692 863,342
Just Group Ltd. 158,940 575,274
Pan Australian Resources Ltd. 448,004 a 427,902
Sims Group Ltd. 24,260 658,557
4,658,217
Belgium--1.5%
Colruyt SA 1,909 491,177
EVS Broadcast Equipment SA 5,177 556,097
Tessenderlo Chemie NV 10,588 481,172
1,528,446
Canada--7.4%
Astral Media, Inc. 15,500 588,858
Canadian Western Bank 13,800 346,378
Cogeco Cable, Inc. 15,340 537,939
Crescent Point Energy Trust 20,902 582,885
Emera, Inc. 26,000 533,022
Gerdau Ameristeel Corp. 29,400 415,716
Industrial Alliance Insurance and Financial Services, Inc. 7,900 291,583
Laurentain Bank of Canada 14,400 597,018
Major Drilling Group International, Inc. 8,500 a 443,097
Northbridge Financial Corp. 8,900 284,439
Oilexco, Inc. 29,100 a 380,798
Petrobank Energy and Resources Ltd. 5,600 a 254,818
Rothmans, Inc. 17,240 438,937
Sherritt International Corp. 51,836 733,371
Thompson Creek Metals Co., Inc. 20,423 a 372,919
WestJet Airlines Ltd. 30,400 a 536,140
7,337,918
Denmark--0.9%
D/S Norden A/S 3,600 400,195
Sydbank A/S 13,800 501,863
902,058
Finland--1.9%
Elisa Oyj 10,003 249,794
KCI Konecranes Oyj 12,100 466,036
Nokian Renkaat Oyj 9,000 383,575
The accompanying notes are an integral part of the financial statements.
5
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------
Finland (continued)
Pohjola Bank PLC 18,360 345,746
Wartsila Oyj, Class B 6,300 425,129
1,870,280
France--7.5%
Arkema 5,560 a 310,862
Cap Gemini SA 9,520 542,035
CNP Assurances 6,190 762,913
Eramet 631 509,202
IMS International Metal Service 9,704 385,089
Ipsen SA 10,181 577,903
IPSOS 9,800 304,281
Publicis Groupe 13,140 501,944
Rallye SA 9,391 594,282
SCOR SE 13,790 329,125
SEB SA 2,360 431,273
Teleperformance 23,760 883,622
Unibail-Rodamco REIT 3,350 861,993
Wendel 3,370 423,010
7,417,534
Germany--7.5%
Continental AG 4,747 483,982
Demag Cranes AG 15,592 711,778
Deutsche Boerse AG 3,690 594,291
Deutsche Euroshop AG 11,190 469,494
Deutsche Lufthansa AG 13,955 377,339
Hannover Rueckversicherung AG 7,100 370,067
KUKA AG 19,258 661,477
Lanxess AG 16,000 642,260
MAN AG 4,240 563,136
Morphosys AG 4,374 a 270,996
Salzgitter AG 2,918 507,542
Stada Arzneimittel AG 7,860 570,847
Tognum AG 26,013 a 570,345
Wincor Nixdorf AG 7,290 583,418
7,376,972
Greece--2.5%
Alapis Holding Industrial and Commercial SA 108,076 370,198
Folli-Follie SA 19,460 650,599
Hellenic Exchanges SA 17,500 415,461
Intralot SA 29,700 531,636
Sarantis SA 24,868 467,124
2,435,018
The accompanying notes are an integral part of the financial statements.
6
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- -----------------------------------------------------------------------------------
Hong Kong--2.3%
Neo-China Group Ltd. 645,500 c 422,188
Vtech Holdings Ltd. 70,000 339,248
Wing Hang Bank Ltd. 44,400 674,389
Wing Lung Bank Ltd. 49,400 861,247
2,297,072
Ireland--2.4%
DCC PLC 15,320 361,530
Greencore Group PLC 67,210 396,780
IAWS Group PLC 22,990 537,088
Kerry Group PLC, Class A 20,470 641,391
Paddy Power PLC 10,604 385,151
2,321,940
Italy--4.3%
A2A SPA 90,480 332,420
Banca Popolare di Milano Scarl (BPM) 21,390 234,829
Benetton Group SPA 23,571 334,861
Brembo SPA 35,300 510,405
Buzzi Unicem SPA 14,160 352,261
Fondiaria-Sai SPA 10,240 424,139
Milano Assicurazioni SPA 60,150 403,761
Prysmian SPA 29,570 a 631,063
Recordati SPA 45,940 343,546
Terna Rete Elettrica Nazionale SPA 161,442 688,695
4,255,980
Japan--15.1%
Air Water, Inc. 45,800 443,618
Chugoku Marine Paints Ltd. 33,700 236,477
Don Quijote Co., Ltd. 30,500 558,086
Foster Electric Co., Ltd. 20,800 b 432,229
Hisamitsu Pharmaceutical Co., Ltd. 17,400 634,263
Hitachi Capital Corp. 27,100 326,873
Hitachi Kokusai Electric, Inc. 27,343 283,289
Hogy Medical Co., Ltd. 5,700 294,888
Hudson Soft Co., Ltd. 18,900 a 321,985
Juki Corp. 73,000 271,175
K's Holdings Corp. 17,000 344,289
Keihin Corp. 18,300 265,537
Kintetsu World Express, Inc. 10,900 254,598
Koito Manufacturing Co., Ltd. 34,000 468,137
Kuroda Electric Co., Ltd. 23,600 312,268
Micronics Japan Co., Ltd. 8,200 b 263,463
Mitsubishi UFJ Lease & Finance Co., Ltd. 11,440 399,770
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ------------------------------------------------------------------------------------
Japan (continued)
Mitsumi Electric Co., Ltd. 8,200 265,408
Nihon Kohden Corp. 21,000 481,603
Nippon Denko Co., Ltd. 37,300 357,429
Nippon Sheet Glass Co., Ltd. 54,000 243,825
Nippon Synthetic Chemical Industry Co., Ltd. 122,600 901,058
Nissan Chemical Industries Ltd. 27,200 290,812
Nissin Kogyo Co., Ltd. 28,200 499,884
NS Solutions Corp. 12,200 303,025
NSD Co., Ltd. 34,400 503,043
O-M Ltd. 31,000 239,909
Shima Seiki Mfg., Ltd. 16,100 766,978
Tadano Ltd. 47,000 480,232
TIS, Inc. 22,400 c 454,024
Toho Pharmaceutical Co., Ltd. 25,700 659,963
Tokai Rika Co., Ltd. 22,900 600,728
Toyo Engineering Corp. 68,000 263,529
TS Tech Co., Ltd. 15,600 287,024
UBE Industries Ltd. 88,000 286,344
Yamaguchi Financial Group, Inc. 58,000 658,900
Zappallas, Inc. 96 295,730
14,950,393
Luxembourg--0.3%
Millicom International Cellular S.A 2,660 a 251,503
Netherlands--3.9%
AerCap Holdings NV 15,600 a 274,248
ARCADIS NV 5,400 325,613
Core Laboratories NV 3,360 a 400,848
Fugro NV 8,630 670,089
Koninklijke BAM Groep NV 39,285 925,830
Nutreco Holding NV 7,680 590,384
OPG Groep NV 9,500 268,574
SNS Reaal 18,391 373,038
3,828,624
Singapore--0.8%
Singapore Petroleum Co., Ltd. 104,700 516,460
Wing Tai Holdings Ltd. 199,800 320,414
836,874
South Korea--2.4%
CJ Internet Corp. 17,900 321,515
Dongbu Insurance Co., Ltd. 9,170 352,744
Forhuman Co., Ltd. 463 a 9,146
Honam Petrochemical Corp. 3,610 294,898
Hyundai Marine & Fire Insurance Co., Ltd. 14,800 313,256
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ------------------------------------------------------------------------------------
South Korea (continued)
Korea Zinc Co., Ltd. 2,144 259,606
Pusan Bank 36,560 458,554
SFA Engineering Corp. 5,993 393,854
2,403,573
Spain--3.4%
Laboratorios Almirall SA 26,143 a 533,166
Mapfre SA 134,500 675,140
Solaria Energia y Medio Ambiente SA 24,128 a 452,843
Tubacex SA 48,930 541,424
Union Fenosa SA 16,840 1,131,593
3,334,166
Sweden--2.8%
Castellum AB 36,000 439,475
NCC AB, Class B 24,200 704,945
Peab AB 63,600 677,348
Saab AB 26,400 666,790
Trelleborg AB, Class B 11,900 237,443
2,726,001
Switzerland--6.0%
Galenica AG 809 268,268
Holcim Ltd. 10,270 1,078,821
Kaba Holding AG 1,994 673,269
Kuoni Reisen Holding AG 1,175 652,646
Lonza Group AG 3,127 414,771
PSP Swiss Property AG 8,560 a 578,052
Sika AG 354 695,236
Syngenta AG 2,630 770,803
The Swatch Group AG 2,930 783,478
5,915,344
United Kingdom--17.4%
Aggreko PLC 40,410 517,546
Amlin PLC 70,611 380,720
Ashmore Group PLC 144,202 802,542
Aveva Group PLC 29,126 658,216
Balfour Beatty PLC 78,600 734,526
Beazley Group PLC 166,377 526,523
Cable & Wireless PLC 140,410 414,817
Cattles PLC 60,200 276,510
Charter PLC 33,580 566,322
Cookson Group PLC 45,300 596,801
Croda International PLC 32,800 431,470
Dairy Crest Group PLC 60,400 562,048
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ----------------------------------------------------------------------------------------------------
United Kingdom (continued)
Dana Petroleum PLC 25,368 a 633,688
De La Rue PLC 26,800 471,386
DS Smith PLC 97,270 302,035
Greene King PLC 38,030 426,323
Hays PLC 184,630 418,526
Inchcape PLC 64,200 512,064
Informa PLC 60,000 372,912
Interserve PLC 82,828 793,347
Jardine Lloyd Thompson Group PLC 45,655 335,388
John Wood Group PLC 54,261 436,558
McBride PLC 146,960 306,162
N Brown Group PLC 93,451 451,490
Next PLC 20,852 471,232
Petrofac Ltd. 33,970 378,113
Premier Oil PLC 10,020 a 275,944
QinetiQ Group PLC 149,155 571,161
Southern Cross Healthcare Ltd. 28,310 210,637
Speedy Hire PLC 15,830 239,017
Spirent Communications PLC 385,590 a 485,806
Stagecoach Group PLC 87,726 421,218
Thomas Cook Group PLC 124,400 715,784
Tullett Prebon PLC 43,522 411,251
United Business Media PLC 37,911 405,432
Vedanta Resources PLC 7,956 330,864
WSP Group PLC 31,000 372,118
17,216,497
TOTAL COMMON EQUITIES (Cost $93,106,873) 93,864,410
PREFERRED STOCKS--1.2%
Germany--1.2%
Fresenius SE 10,500 874,292
Jungheinrich AG 8,983 326,132
TOTAL PREFERRED STOCKS (Cost $1,027,405) 1,200,424
TOTAL UNAFFILIATED INVESTMENTS (Cost $94,134,278) 95,064,834
AFFILIATED INVESTMENTS--3.2%
Dreyfus Institutional Preferred Plus Money Market Fund (Cost $3,157,489) 3,157,489 d 3,157,489
----------
TOTAL INVESTMENTS--99.4% (Cost $97,291,767) 98,222,323
OTHER ASSETS, LESS LIABILITIES--0.6% 540,249
----------
NET ASSETS--100% 98,762,572
==========
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Notes to Schedule of Investments:
REIT--Real Estate Investment Trust
a Non-income producing security.
b Purchased on delayed delivery basis.
c Illiquid security. At the period end, the value of this security amounted
to $876,212 or 0.9% of net assets.
d Affiliated institutional money market fund.
At March 31, 2008 the Fund held the following forward foreign currency exchange
contracts:
Local
Principal Contract Value at USD Amount Unrealized
Contracts to Deliver Amount Value Date March 31, 2008 to Receive (Depreciation)
- ------------------------------------------------------------------------------------------------------------------
Euro 43,873 4/1/2008 $69,253 $69,183 $(70)
====
Local
Principal Contract Value at USD Amount Unrealized
Contracts to Receive Amount Value Date March 31, 2008 to Deliver Appreciation
- ------------------------------------------------------------------------------------------------------------------
Japanese Yen 25,616,671 4/1/2008 $257,040 $256,064 $976
====
At March 31, 2008 the Fund held the following futures contracts:
Underlying Face Unrealized
Contract Position Expiration Date Amount at Value Appreciation
- ------------------------------------------------------------------------------------------------------------------
MSCI Pan Euro (65 Contracts) Long 6/20/2008 2,082,831 $48,814
TOPIX (3 Contracts) Long 6/12/2008 365,894 24,205
-------
$73,019
=======
Percentage of
Economic Sector Allocation Net Assets
-------------------------------------------------------
Consumer Discretionary 16.6%
Consumer Staples 5.5
Energy 5.4
Financials 17.0
Health Care 6.7
Industrials 20.7
Materials 13.7
Information Technology 7.0
Telecommunications Services 0.9
Utilities 2.7
Short-term and Other Assets 3.8
-----
100.0%
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Statement of Assets and Liabilities
March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments in securities:
Unaffiliated issuers, at value (Note 1A) (cost $94,134,278) $ 95,064,834
Afffiliated issuers, at value (Note 1A) (cost $3,157,489) (Note 1H) 3,157,489
Cash collateral at broker for futures contracts 233,000
Interest and dividends receivable 709,705
Foreign Currency (cost $594,167) 595,579
Receivable for investments sold 90,759
Receivable for Fund shares sold 82,919
Unrealized appreciation on forward foreign currency exchange contracts (Note 6) 976
Prepaid expenses 72,656
------------
Total assets 100,007,917
Liabilities
Payable for investments purchased $589,359
Payable for Fund shares redeemed 233,360
Payable to investment advisor (Note 2) 187,811
Payable for variation margin on open futures contracts (Note 6) 16,048
Unrealized depreciation on forward foreign currency exchange contracts (Note 6) 70
Accrued accounting, administration, custody fee and transfer agent fees (Note 2) 85,656
Accrued administrative service fees (Note 2) 61,428
Accrued professional fees 26,962
Accrued trustees' fees and expenses (Note 2) 14,501
Accrued shareholder reporting fees (Note 2) 12,732
Other accrued expenses and liabilities 17,418
--------
Total liabilities 1,245,345
------------
Net Assets $ 98,762,572
============
Net Assets consist of:
Paid-in capital $ 63,590,134
Accumulated net realized gain 35,614,893
Distributions in excess of net investment income (1,517,248)
Net unrealized appreciation 1,074,793
------------
Total Net Assets $98,762,572
============
Shares of beneficial interest outstanding 8,783,421
============
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 11.24
============
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Statement of Operations
For the Six Months Ended March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Dividend income from unaffiliated investments (net foreign withholding taxes $76,703) $ 1,130,836
Dividend income from affiliated investments (Note 1H) 102,922
Interest income 44,878
------------
Total investment income 1,278,636
Expenses
Investment advisory fee (Note 2) $ 1,081,071
Accounting, administration, custody and transfer agent fees (Note 2) 258,631
Administrative service fees (Note 2) 48,833
Trustees' fees and expenses (Note 2) 24,448
Registration fees 18,785
Insurance expense 12,348
Professional fees 38,201
Miscellaneous expenses 82,883
-----------
Total expenses 1,565,200
Deduct:
Waiver of investment advisory fee (Note 2) (270,268)
-----------
Net expenses 1,294,932
------------
Net investment income (16,296)
------------
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investments 25,464,302
Financial futures transactions (1,611,196)
Foreign currency transactions and forward foreign currency exchange transactions 738,816
-----------
Net realized gain (loss) 24,591,922
Change in unrealized appreciation (depreciation) on:
Investments (85,779,084)
Financial futures contracts (657,897)
Foreign currency translations and forward foreign currency exchange contracts (346,572)
-----------
Net change in net unrealized appreciation (depreciation) (86,783,553)
------------
Net realized and unrealized gain (loss) on investments (62,191,631)
------------
Net Increase (Decrease) in Net Assets from Operations $(62,207,927)
============
The accompanying notes are an integral part of the financial statements.
13
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income (loss) $ (16,296) $ 5,608,670
Net realized gain (loss) 24,591,922 236,201,740
Change in net unrealized appreciation (depreciation) (86,783,553) (74,581,612)
------------ ------------
Net increase (decrease) in net assets from investment operations (62,207,927) 167,228,798
------------ ------------
Distributions to Shareholders (Note 1 C)
From net investment income (458,489) (6,095,758)
From net realized gains on investments (196,526,625) (85,487,253)
------------ ------------
Total distributions to shareholders (196,985,114) (91,583,011)
------------ ------------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares 29,964,911 82,897,738
Value of shares issued in reinvestment of distributions 167,435,024 59,663,488
Cost of shares redeemed (net of redemption fees of $4,825 and $7,754,
respectively) (404,135,289) (412,206,585)
------------ ------------
Net increase (decrease) in net assets from Fund share transactions (206,735,354) (269,645,359)
------------ ------------
Total Increase (Decrease) in Net Assets (465,928,395) (193,999,572)
Net Assets
At beginning of period 564,690,967 758,690,539
------------ ------------
At end of period [including distributions in excess of net
investment income of ($1,517,248) and ($1,042,463), respectively] $ 98,762,572 $564,690,967
============ ============
The accompanying notes are an integral part of the financial statements.
14
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Financial Highlights
- --------------------------------------------------------------------------------
For the
Six Months Ended Year Ended September 30,
March 31, 2008 ----------------------------------------------------------------
(Unaudited) 2007(a) 2006(a) 2005(a) 2004(a) 2003(a)
---------- ------ -------- ------ ------ -------
Net Asset Value, Beginning of Period $267.30 $ 240.30 $ 208.40 $ 159.30 $ 120.50 $ 89.10
------- -------- -------- -------- -------- -------
From Investment Operations:
Net investment income* (b) (0.00)(c) 1.30 1.80 2.30 1.40 1.00
Net realized and unrealized
gains (loss) on investments (25.90) 54.80 45.20 58.60 38.60 31.30
------- -------- -------- -------- -------- -------
Total from operations (25.90) 56.10 47.00 60.90 40.00 32.30
------- -------- -------- -------- -------- -------
Less Distributions to Shareholders:
From net investment income (0.54) (1.90) (1.90) (1.70) (1.20) (0.90)
From net realized gains on investments (229.62) (27.20) (13.20) (10.10) - -
------- -------- -------- -------- -------- -------
Total distributions to shareholders (230.16) (29.10) (15.10) (11.80) (1.20) (0.90)
------- -------- -------- -------- -------- -------
Net Asset Value, End of Period $ 11.24 $ 267.30 $ 240.30 $ 208.40 $ 159.30 $120.50
======= ======== ======== ======== ======== =======
Total Return (17.11%)(d)(c) 24.50%(d) 23.72% 40.20% 33.35% 36.47%(d)
Ratios/Supplemental Data:
Expenses (to average daily net assets)* 1.21%(f) 1.10%(g) 1.11%(g) 1.16%(g) 1.27%(g) 1.39%(g)
Net Investment Income (to average daily net 0.02%(f) 0.68% 0.79% 1.26% 0.99% 1.01%
assets)*
Portfolio Turnover (d) 68%(e) 88%(h) 65%(h) 50%(h) 72%(h) 15%(h)(i)
Net Assets, End of Period (000's omitted) $98,763 $564,691 $758,691 $524,910 $212,032 $89,570
- ------
* 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 reimbursement would have been:
Net investment income (loss) per share (b) $(0.01) $1.30 N/A N/A N/A $0.80
Ratios (to average daily net assets):
Expenses 1.46%(f) 1.12%(g) N/A N/A N/A 1.65%(g)
Net investment income (loss) (0.27%)(f) 0.66% N/A N/A N/A 0.75%
(a) Amounts were adjusted to reflect a 1:10 reverse share split effective
January 24, 2008.
(b) Calculated based on average shares outstanding.
(c) Amount represents less than $.01 per share.
(d) Total return would have been lower in the absence of expense waivers.
(e) Not annualized.
(f) Calculated on an annualized basis.
(g) For the period October 1, 2006 to September 19, 2007 and for the fiscal
years ended September 30, 2003--2006, the ratio includes the Fund's share
of the TBC International Small Cap Portfolio's allocated expenses.
(h) On September 19, 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 interest in the
Portfolio. Effective September 20, 2007, the Fund began investing directly
in the securities in which the Portfolio had invested. Portfolio turnover
represents investment activity of both the Fund and the Portfolio for the
year. The amounts shown for 2004--2006 are the ratios for the Portfolio.
(i) Portfolio turnover represents activity while the Fund was investing
directly in securities until January 23, 2003. The portfolio turnover for
the period January 24, 2003 to September 30, 2003 was 46%.
The accompanying notes are an integral part of the financial statements.
15
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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. The
Boston Company International Small Cap Fund (the "Fund") is a separate
diversified investment series of the Trust.
The objective of the Fund is to achieve long-term growth of capital. The
Fund seeks to achieve its objective by investing, under normal
circumstances, at least 80% of net assets in equity securities of companies
that are located in foreign countries represented in the S&P Citigroup
World Extended Market Ex.-U.S. (EMI Ex-U.S.) Index. The EMI Ex-U.S. Index
is made up of those companies representing the lowest 20% of each country's
total available market capitalization. The Fund may invest up to 25% of
assets in emerging market countries.
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
calculated mean price (average of last bid and last offer). Securities that
are fixed income securities, other than short-term instruments with less
than sixty days remaining to maturity, for which accurate 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, or if such quotations do not accurately reflect
fair value, 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 regulated investment companies ("RICs"),
the Fund's net asset value ("NAV") is 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.
If market quotations are not readily available or do not accurately reflect
fair value, or the value of a security has been materially affected by
events occurring after the close of the exchange or market on which the
security is principally traded (for example, a foreign exchange or market),
the Fund may value its assets by a method the Trustees believe accurately
reflects the fair value. The Trustees have adopted fair value pricing
procedures, which, among other things, require the Fund to fair value such
securities if there has been a movement in the U.S. market that exceeds a
specified threshold. Although the threshold may be revised by the Trustees
from time to time and the number of days on which fair value prices will be
used will depend on market activity, it is possible that fair value prices
for foreign securities will be used by the Fund to a significant extent.
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.
B. Securities transactions and income
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of coupon interest accrued, adjusted for accretion
of discount or amortization of premium using the yield-to-maturity method
on debt securities with greater than sixty days remaining 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.
Dividends representing a return of capital are reflected as a reduction of
cost.
16
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 differing
treatments for foreign currency transactions, losses deferred due to wash
sales, passive foreign investment companies (PFIC) and equalization.
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 be distributed 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 (the "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. 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. 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.
F. 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.
G. 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.
17
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
H. Affiliated issuers
Affiliated issuers are investment companies advised by The Boston Company
Asset Management LLC ("TBCAM"), a wholly-owned subsidiary of The Bank of
New York Mellon Corporation ("BNY Mellon"), or its affiliates.
I. New accounting requirements
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.
In March 2008, the FASB released Statement of Financial Accounting
Standards No. 161, Disclosures about Derivative Instruments and Hedging
Activities ("FAS 161"). FAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. The application of FAS 161 is required for fiscal years
beginning after November 15, 2008 and interim periods within those fiscal
years. At this time, management is evaluating the implications of FAS 161
and its impact on the financial statements and the accompanying notes has
not yet been determined.
(2) Investment Advisory Fee and Other Transactions With Affiliates:
The investment advisory fee paid to TBCAM for overall investment advisory,
administrative services and general office facilities, is paid monthly at
the annual rate of 1.00% of the Fund's average daily net assets.
For the period of October 1, 2007 through August 31, 2008, TBCAM has agreed
to rebate 25% of its management fee to the Fund. This rebate will end on
September 1, 2008, and on such date the Fund's contractual advisory fee
will again be in effect. This rebate will not change any existing voluntary
total expense limitation arrangements that are in effect, as TBCAM will
continue its commitment to maintain such total expense limitations during
this rebate period. For the six months ended March 31, 2008, TBCAM rebated
$270,268 of its investment advisory fees charged to the Fund.
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 TBCAM, 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
$10,725, for the six months ended March 31, 2008.
The Trust entered into an agreement with Mellon Bank, N.A. ("Mellon Bank"),
a wholly-owned subsidiary of BNY Mellon and an affiliate of TBCAM, 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 $247,906 for the six months ended March 31,
2008.
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, Mellon Bank earned $0 for the six
months ended March 31, 2008. See Note 7 for further details.
The Trust entered into two separate agreements with The Bank of New York
that enable 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
$65,153 for the six months ended March 31, 2008, which is included in
miscellaneous expenses in 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 six months ended
March 31, 2008, the Fund was charged $2,144, which amount is included in
miscellaneous expenses in the Statement of Operations. No other director,
officer or employee of TBCAM 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 TBCAM 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 TBCAM, to provide printing and
fulfillment services for the Fund. Pursuant to this agreement, the Fund was
charged $12,732, which amount is included in miscellaneous expenses in the
Statement of Operations, for the six months ended March 31, 2008.
18
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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
six months ended March 31, 2008, the Fund was charged $32,350 for fees
payable to BNY Mellon Wealth Management.
MBSC Securities Corporation ("MBSC"), a wholly-owned subsidiary of BNY
Mellon and affiliate of TBCAM, is the distributor of the Fund's shares.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the six months ended March 31, 2008 were as follows:
Purchases Sales
----------- ------------
Non-U.S. Government Securities $157,537,275 $553,217,865
============ ============
(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
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Shares sold (77,950,129) 3,243,701
Shares issued to shareholders in
reinvested distributions 136,126,035 2,442,525
Shares redeemed (70,521,881) (16,126,541)
----------- -----------
Net increase (decrease) (12,345,975) (10,440,315)
=========== ===========
At March 31, 2008, two shareholders of record, in the aggregate held
approximately 43.1% of the total outstanding shares of the Fund. Investment
activities of these shareholders could have a material impact on the Fund.
For example, a significant redemption by such shareholders could result in
illiquid or less liquid investments comprising a larger portion of the
Fund's Portfolio.
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 six months ended March 31, 2008, the Fund received
$4,825 in redemption fees and is reflected in the cost of shares redeemed.
(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.
19
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 2008, as computed on a federal
income tax basis, were as follows:
Cost for federal income tax purposes $97,291,767
===========
Gross unrealized appreciation $ 7,875,460
Gross unrealized depreciation (6,871,885)
-----------
Net unrealized appreciation (depreciation) $ 1,003,575
===========
(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:
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.
For the six months ended March 31, 2008, the Fund held open financial
futures contracts. 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 foreign 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 foreign currency exchange contracts is included in
the Statement of Assets and Liabilities.
For the six months ended March 31, 2008, the Fund held forward foreign
currency exchange contracts. 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 did not loan securities during the six months ended March 31,
2008.
20
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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.
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 March 31, 2008, 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, 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. For the six months ended March 31, 2008, the
Fund had average borrowings outstanding of $8,331,365 for a total of 52
days and incurred interest expense of $58,632. At March 31, 2008, the Fund
did not have a loan balance outstanding.
(10) Reverse Share Split:
On December 20, 2007, the Trustees of the Fund approved a 1:10 reverse
share split for the Fund which was effective as of January 24, 2008. The
purpose of the reverse share split was to increase the Fund's net asset
value per share back in line with similarly managed funds. The Fund's net
asset value per share had been reduced on December 17, 2007 as a result of
a large capital gain distribution paid to those Fund shareholders of record
as of December 13, 2007. Each shareholder may determine the number of
shares it owns as a result of the reverse share split by dividing the
number of shares owned immediately prior to the reverse share split by ten.
The reverse share split has not resulted in a change to shareholder account
balances.
The Financial Highlights have been restated to reflect the reverse share
split.
21
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Factors Considered by the Trustees in Approving the Investment Advisory
Agreement (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, The Boston Company Asset Management LLC ("TBCAM" 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 portfolio
manager 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.
22
Mellon Institutional Funds Investment Trust
The Boston Company International Small Cap Fund
Factors Considered by the Trustees in Approving the Investment Advisory
Agreement (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 underperformed
its peer group average return for the one-year period (28.92% vs. 34.35%), and
outperformed its peer group average return for the three-year period (31.71% vs.
29.69%) and five-year period (29.69% vs. 27.15%).
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 1.00%, which was in the 3rd (1st being
the best) quintile of its peer group of funds, the median fee of which was
0.978%. The Fund's net management fee (after giving effect to expense
limitations) was 0.999% (which included no administrative services fees under
Lipper's calculation methodology), above the peer group median net management
fee of 0.931%. 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 1.114% was lower than the median net expense ratio of the peer group of
1.23%, notwithstanding the fact that all 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 many
of the investment companies in the Mellon Institutional Funds family of funds.
The Trustees observed that the Adviser had incurred gains 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
Fund and The Boston Company International Core Equity Fund, 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.
23
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their ages,
addresses and dates of birth; their positions 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 period ended March 31, 2008. 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 March 31,
Date of Birth Held with Trust Time Served* 5 Years Trustee Trustee 2008)
- -----------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $3,713
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: $3,713
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 (73) Trustee Trustee since Trustee, Mertens 17 None Fund: $3,713
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: $4,485
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
200 Park Ave., 55th Fl. President and Officer of The Dreyfus
New York, NY 10166 Chief Executive Corporation; Executive
8/24/48 Officer Vice President 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.
24
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 (51) 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
25
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MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6939SA0308
MELLON INSTITUTIONAL FUNDS
Semiannual Report The Boston Company
Small Cap Growth Fund
- --------------------------------------------------------------------------------
March 31, 2008 (Unaudited)
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 Investment Trust
The Boston Company Small Cap Growth 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 (October 1, 2007 to March 31, 2008).
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 October 1, 2007
October 1, 2007 March 31, 2008 to March 31, 2008
- ----------------------------------------------------------------------------------------
Actual $1,000.00 $ 875.60 $4.55
Hypothetical (5% return
per year before expenses) $1,000.00 $1,020.15 $4.90
- ----------
+ Expenses are equal to the Fund's annualized expense ratio of 0.97%,
multiplied by the average account value over the period, multiplied by
183/366 (to reflect the one-half year period).
3
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Portfolio Information as of March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
The Fund is actively managed. Current holdings may be different than those
presented below:
Percentage of
Top Ten Holdings* Sector Investments
- -------------------------------------------------------------------------------------
Investment Technology Group, Inc. Financials 2.1%
W-H Energy Services, Inc. Energy 2.0
Bare Escentuals, Inc. Consumer Staples 1.8
NeuStar, Inc., Class A Telecommunication Services 1.8
Wright Medical Group, Inc. Health Care 1.8
ManTech International Corp., Class A Technology 1.8
PerkinElmer, Inc. Health Care 1.8
Penn Virginia Corp. Energy 1.8
Pediatrix Medical Group, Inc. Health Care 1.7
Thermo Fisher Scientific, Inc. Health Care 1.7
----
18.3%
* Excludes short-term securities and investment of cash collateral.
Percentage of
Economic Sector Allocation Net Assets
- ----------------------------------------------------
Consumer Discretionary 13.3%
Consumer Staples 6.4
Energy 10.2
Financials 5.0
Health Care 22.1
Industrials 8.1
Materials 3.2
Technology 22.8
Telecommunications Services 1.7
Short-term and Other Assets 7.2
-----
100.0%
4
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ----------------------------------------------------------------------------------------------------------
UNAFFILIATED INVESTMENTS--104.7%
Equities--92.8%
Consumer Discretionary--13.3%
Bright Horizons Family Solutions, Inc. 31,950 a 1,375,128
Dollar Tree, Inc. 77,520 a 2,138,777
Interactive Data Corp. 31,030 883,424
Interface, Inc., Class A 153,430 2,155,692
J.Crew Group, Inc. 22,650 a 1,000,451
JOS A Bank Clothiers, Inc. 27,450 a,b 562,725
Lions Gate Entertainment Corp. 255,700 a 2,493,075
Panera Bread Co., Class A 19,890 a,b 833,192
Papa John's International, Inc. 76,400 a 1,849,644
Playboy Enterprises, Inc., Class B 69,460 a,b 578,602
Polaris Industries, Inc. 52,240 b 2,142,362
Texas Roadhouse, Inc., Class A 21,020 a 205,996
THQ, Inc. 76,540 a,b 1,668,572
Tractor Supply Co. 18,060 a 713,731
True Religion Apparel, Inc. 74,010 a,b 1,372,886
Ulta Salon, Cosmetics & Fragrance, Inc. 62,420 a,b 876,377
Volcom, Inc. 44,560 a 884,516
WMS Industries, Inc. 32,760 a,b 1,178,377
22,913,527
Consumer Staples--6.4%
Alberto-Culver Co. 73,160 2,005,316
Bare Escentuals, Inc. 124,380 a,b 2,912,980
Hansen Natural Corp. 42,350 a,b 1,494,955
Longs Drug Stores Corp. 42,890 1,821,109
Nu Skin Enterprises, Inc., Class A 42,770 b 770,715
Ruddick Corp. 55,590 2,049,047
11,054,122
Energy--10.2%
Berry Petroleum Co., Class A 36,790 b 1,710,367
Cal Dive International, Inc. 91,120 a,b 945,826
Complete Production Services, Inc. 86,450 a 1,983,163
Comstock Resources, Inc. 64,480 a 2,598,544
Dril-Quip, Inc. 53,870 a 2,503,339
GMX Resources, Inc. 32,520 a 1,135,924
Lufkin Industries, Inc. 10,670 680,959
Penn Virginia Corp. 63,780 2,812,060
W-H Energy Services, Inc. 45,210 a 3,112,709
17,482,891
The accompanying notes are an integral part of the financial statements.
5
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ----------------------------------------------------------------------------------------------------------
Financials--5.0%
Arch Capital Group Ltd. 15,750 a 1,081,552
Assured Guaranty Ltd. 55,630 1,320,656
Cardtronics, Inc. 58,460 a 407,466
First Mercury Financial Corp. 31,230 a 543,714
Investment Technology Group, Inc. 71,440 a 3,299,099
Max Capital Group Ltd. 24,420 639,560
RLI Corp. 24,780 1,228,345
8,520,392
Health Care--22.1%
ABIOMED, Inc. 29,870 a 392,492
Allscripts Healthcare Solutions, Inc. 90,850 a 937,572
Alnylam Pharmaceuticals, Inc. 23,490 a,b 573,156
Amedisys, Inc. 46,190 a 1,817,115
Applera Corp.-Celera Genomics Group 67,840 a,b 997,248
Bruker Corp. 86,070 a 1,324,617
CONMED Corp. 34,300 a 879,452
Covance, Inc. 27,880 a 2,313,204
Enzon Pharmaceuticals, Inc. 78,250 a,b 720,682
Exelixis, Inc. 29,120 a,b 202,384
Hologic, Inc. 34,326 a,b 1,908,526
Indevus Pharmaceuticals, Inc. 93,450 a 445,756
Integra LifeSciences Holdings Corp. 37,620 a,b 1,635,341
Magellan Health Services, Inc. 21,270 a 844,206
Natus Medical, Inc. 97,130 a,b 1,762,909
NuVasive, Inc. 23,880 a,b 824,099
Omnicell, Inc. 51,190 a 1,028,919
Pediatrix Medical Group, Inc. 40,580 a 2,735,092
PerkinElmer, Inc. 118,340 2,869,745
Phase Forward, Inc. 42,620 a 727,950
PSS World Medical, Inc. 71,220 a 1,186,525
Psychiatric Solutions, Inc. 58,170 a,b 1,973,126
Regeneron Pharmaceuticals, Inc. 40,480 a 776,811
Sangamo Biosciences, Inc. 47,530 a,b 482,905
Sirtris Pharmaceuticals, Inc. 46,380 a,b 602,476
Thermo Fisher Scientific, Inc. 47,120 a 2,678,301
Thoratec Corp. 58,420 a,b 834,822
United Therapeutics Corp. 10,770 a 933,759
Volcano Corp. 47,720 a 596,500
Wright Medical Group, Inc. 119,450 a 2,883,523
37,889,213
Industrials--8.1%
AAR Corp. 52,870 a,b 1,441,765
Actuant Corp., Class A 63,570 1,920,450
American Apparel, Inc. 76,730 a 725,098
The accompanying notes are an integral part of the financial statements.
6
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ----------------------------------------------------------------------------------------------------------
Industrials (continued)
Bucyrus International, Inc., Class A 10,040 b 1,020,566
Clean Harbors, Inc. 17,790 a 1,156,350
Exponent, Inc. 19,700 a,b 646,948
Hurco Companies, Inc. 11,630 a 544,051
Landstar System, Inc. 16,740 873,158
McGrath Rentcorp 22,130 b 533,554
MSC Industrial Direct Co. Inc., Class A 40,920 1,728,870
Quanta Services, Inc. 53,170 a,b 1,231,949
Stanley, Inc. 24,610 a,b 725,011
UTI Worldwide, Inc. 67,830 1,362,026
13,909,796
Materials--3.2%
American Vanguard Corp. 65,270 b 1,086,093
H.B. Fuller Co. 66,170 b 1,350,530
Horsehead Holding Corp. 51,820 a 600,076
Minefinders Corp. Ltd. 57,310 a,b 703,767
OM Group, Inc. 16,340 a 891,184
Silver Wheaton Corp. 52,640 a 817,499
5,449,149
Technology--22.8%
Acme Packet, Inc. 89,290 a 713,427
Ariba, Inc. 55,570 a 536,806
BigBand Networks, Inc. 163,920 a 939,262
Broadridge Financial Solutions, Inc. 99,450 1,750,320
CACI International, Inc., Class A 38,600 a,b 1,758,230
CMGI, Inc. 37,840 a 501,758
Dice Holdings, Inc. 50,350 a 448,618
Eagle Test Systems, Inc. 77,990 a, 818,895
Emulex Corp. 117,460 a 1,907,550
FLIR Systems, Inc. 60,720 a,b 1,827,065
Forrester Research, Inc. 52,060 a,b 1,383,755
Foundry Networks, Inc. 58,900 a,b 682,062
Informatica Corp. 47,860 a 816,492
InterDigital, Inc. 38,080 a,b 754,365
Intervoice, Inc. 43,190 a,b 343,792
IPG Photonics Corp. 54,330 a 852,438
Jack Henry & Associates, Inc. 42,930 1,059,083
Limelight Networks, Inc. 132,440 a,b 429,106
ManTech International Corp., Class A 63,350 a 2,873,556
Mellanox Technologies Ltd. 64,180 a 894,027
Metavante Technologies, Inc. 40,270 a 804,997
Microsemi Corp. 59,980 a,b 1,367,544
Netscout Systems, Inc. 194,920 a 1,812,756
ON Semiconductor Corp. 305,290 a 1,734,047
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ----------------------------------------------------------------------------------------------------------
Technology (continued)
PMC-Sierra, Inc. 232,460 a 1,325,022
Polycom, Inc. 49,950 a,b 1,125,873
QAD, Inc. 88,330 b 742,855
SkillSoft PLC ADR 176,050 a 1,843,244
Standard Microsytems Corp. 29,210 a 852,348
Teradyne, Inc. 67,510 a 838,474
TIBCO Software, Inc. 130,130 a 929,128
Ultimate Software Group, Inc. 33,980 a,b 1,021,439
ValueClick, Inc. 98,830 a 1,704,818
Virtusa Corp. 73,570 a 718,043
Wright Express Corp. 30,750 a 944,948
39,056,143
Telecommunication Services--1.7%
NeuStar, Inc., Class A 109,550 b 2,900,884
Total Equities (Cost $164,757,318) 159,176,117
INVESTMENT OF CASH COLLATERAL-- 11.9%
BlackRock Cash Strategies L.L.C. (Cost $20,336,233) 20,336,233 c 20,336,233
TOTAL UNAFFILIATED INVESTMENTS (Cost $185,093,551) 179,512,350
AFFILIATED INVESTMENTS--13.8%
Dreyfus Institutional Preferred Plus Money Market Fund 9,342,512 d 9,342,512
Dreyfus Institutional Cash Advantage Fund 14,447,047 d,e 14,447,047
TOTAL AFFILIATED INVESTMENTS (Cost $23,789,559) 23,789,559
TOTAL INVESTMENTS--118.5% (Cost $208,883,110) 203,301,909
LIABILITIES IN EXCESS OF OTHER ASSETS--(18.5%) (31,791,290)
-----------
NET ASSETS--100% 171,510,619
===========
Notes to Schedule of Investments:
ADR--American Depository Receipt
a Non-income producing security.
b Security, or a portion of thereof, was on loan at March 31, 2008.
c Illiquid securities. At the period end, the value of these securities
amounted to $20,336,233 or 11.9% of net assets.
d Affiliated institutional money market fund.
e Investment of security lending collateral.
At March 31, 2008, the Fund held the following futures contracts:
Underlying Face Unrealized
Contract Position Expiration Date Amount at Value Appreciation
- -------------------------------------------------------------------------------------------------------
Russell 2000 Index (15 Contracts) Long 6/19/2008 5,175,000 $217,798
========
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Statement of Assets and Liabilities
March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments in securities (Note 1A)(including securities on loan, valued at $33,094,328 (Note 7))
Unaffiliated issuers, at value (cost $185,093,551) $179,512,350
Affiliated issuers, at value (Note 1F) (cost $23,789,559) 23,789,559
Cash collateral at broker for futures contracts 420,000
Receivable for investments sold 4,995,569
Receivable for Fund shares sold 486,716
Interest and dividends receivable 90,143
Receivable for futures variation margin (Note 6) 44,250
Prepaid expenses 13,411
-----------
Total assets 209,351,998
Liabilities
Due to Custodian $ 106,500
Collateral for securities on loan (Note 7) 34,695,820
Payable for investments purchased 2,492,828
Payable to investment advisor (Note 2) 344,313
Payable for Fund shares redeemed 156,912
Accrued accounting, administration and custody fees (Note 2) 26,400
Accrued professional fees 13,254
Accrued administrative service fees (Note 2) 5,260
Accrued trustees' fees and expenses (Note 2) 92
-----------
Total liabilities 37,841,379
------------
Net Assets $171,510,619
============
Net Assets consist of:
Paid-in capital $186,170,868
Accumulated net realized loss (9,282,231)
Accumulated net investment loss (14,615)
Net unrealized depreciation (5,363,403)
------------
Total Net Assets $171,510,619
============
Shares of beneficial interest outstanding 3,296,716
============
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 52.02
============
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Statement of Operations
For the Six Months Ended March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Dividend income from unaffiliated investments (net of foreign withholding taxes of $726) $ 273,718
Dividend income from affiliated investments (Note 1F) 275,204
Securitiy lending income (Note 7) 308,867
Interest income 6,919
------------
Total investment Income 864,708
Expenses
Investment advisory fee (Note 2) $ 724,052
Accounting, administration, custody and transfer agent fees (Note 2) 73,151
Administrative service fees (Note 2) 36,225
Professional fees 19,771
Registration fees 8,925
Trustees' fees and expenses (Note 2) 5,346
Insurance expense 1,762
Miscellaneous expenses 10,091
------------
Total Expenses 879,323
------------
Net investment loss (14,615)
------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (6,504,588)
Financial futures transactions 233,979
------------
Net realized gain (loss) (6,270,609)
Change in unrealized appreciation (depreciation) on:
Investments (17,931,386)
Financial futures contracts 208,797
------------
Change in net unrealized appreciation (depreciation) (17,722,589)
------------
Net realized and unrealized gain (loss) (23,993,198)
------------
Net Increase (Decrease) in Net Assets from Operations $(24,007,813)
============
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income (loss) $ (14,615) $ (214,877)
Net realized gain (loss) (6,270,609) 6,297,362
Change in net unrealized appreciation (depreciation) (17,722,589) 9,864,303
------------ ------------
Net increase (decrease) in net assets from investment operations (24,007,813) 15,946,788
------------ ------------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares 29,636,991 146,946,424
Cost of shares redeemed (net of redemption fees of $8,219 and $9,445, respectively) (21,109,100) (18,005,464)
------------ ------------
Net increase (decrease) in net assets from Fund share transactions 8,527,891 128,940,960
------------ ------------
Total Increase (Decrease) in Net Assets (15,479,922) 144,887,748
Net Assets
At beginning of period 186,990,541 42,102,793
------------ ------------
At end of period [including accumulated net
investment loss of ($14,615) and $0, respectively] $171,510,619 $186,990,541
============ ============
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Financial Highlights
- --------------------------------------------------------------------------------
For the
Six Months Ended Year Ended September 30,
March 31, 2008 ----------------------------------------------------------------
(Unaudited) 2007 2006 2005 2004(a) 2003(a)
--------- ---- ---- ---- ------- -------
Net Asset Value, Beginning of Period $ 59.41 $ 49.67 $ 46.30 $ 37.95 $ 32.41 $ 24.78
-------- -------- ------- ------- ------- -------
From Investment Operations:
Net investment income (loss)* (b) (0.00)(c) (0.11) (0.14) (0.20) (0.33) (0.11)
Net realized and unrealized gains (loss)
on investments (7.39) 9.85 3.51 8.55 5.87(d) 7.74(d)
-------- -------- ------- ------- ------- -------
Total from operations (7.39) 9.74 3.37 8.35 5.54 7.63
-------- -------- ------- ------- ------- -------
Net Asset Value, End of Period $ 52.02 $ 59.41 $ 49.67 $ 46.30 $ 37.95 $32.41
======== ======== ======= ======= ======= =======
Total Return (12.44%)(g) 19.61% 7.28%(e) 22.00%(e) 17.09%(e) 30.79%(e)
Ratios/Supplemental Data:
Expenses (to average daily net assets)* (f) 0.97%(h) 1.09% 1.10% 1.17% 1.18% 1.00%
Net Investment Income (Loss)
(to average daily net assets)* (0.02)%(h) (0.20)% (0.30)% (0.48)% (0.87)% (0.42)%
Portfolio Turnover (i) 106%(g) 175% 166% 135% 153% 261%
Net Assets, End of Period (000's omitted) $171,511 $186,991 $42,103 $36,323 $18,274 $21,168
- ----------
* 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 reimbursement would have been:
Net investment income (loss) per share (b) N/A N/A $ (0.28) $ (0.31) $ (0.40) $ (0.30)
Ratios (to average daily net assets):
Expenses (f) N/A N/A 1.38% 1.41% 1.37% 1.66%
Net investment income (loss) N/A N/A (0.58)% (0.72)% (1.06)% (1.08)%
(a) Prior to August 31, 2005, the Fund offered two classes of shares:
Institutional Class and Service Class. The financial highlights for periods
prior to the year ended September 30, 2005, represent those of the
Institutional Class.
(b) Calculated based on average shares outstanding.
(c) Amount represents less than $.01 per share.
(d) Amounts include litigation proceeds received by the Fund of $0.01 for the
year ended September 30, 2007, $0.06 for the year ended September 30, 2004
and less than $0.01 for the year ended September 30, 2003.
(e) Total return would have been lower in the absence of expense waivers.
(f) For the period October 1, 2006 to September 19, 2007 and for the fiscal
year ended September 30, 2003-2006, the ratio includes the Fund's share of
the TBC Small Cap Growth Portfolio's (the "Portfolio") allocated expenses.
(g) Not annualized.
(h) Calculated on an annualized basis.
(i) On September 19, 2007, the Fund, which had owned 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. Effective September 20, 2007, the Fund began investing directly
in the securities in which the Portfolio had invested. Portfolio turnover
represents investment activity of both the fund and the Portfolio for the
year. The amounts shown for 2003-2006 are the ratios for the Portfolio.
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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. The
Boston Company Small Cap Growth Fund (the "Fund") is a separate diversified
investment series of the Trust.
The objective of the Fund is to achieve long-term growth of capital. The
Fund seeks to achieve its objective by investing, under normal
circumstances, at least 80% of net assets in equity securities of small cap
U.S. companies. The Fund focuses on companies with total market
capitalizations equal to or less than the total market capitalization of
the largest company included in the Russell 2000 Index.
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
calculated mean price (average of last bid and last offer). Securities that
are fixed income securities, other than short-term instruments with less
than sixty days remaining to maturity, for which accurate 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, or if such quotations do not accurately reflect
fair value, 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 regulated 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 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.
B. Securities transactions and income
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of coupon interest accrued, adjusted for accretion
of discount or amortization of premium using the yield-to-maturity method
on debt securities with greater than sixty days remaining 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.
Dividends representing a return of capital are reflected as a reduction of
cost.
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 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 result in reclassifications among undistributed net
investment income, 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 be distributed in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in the
following year.
13
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 The Boston Company
Asset Management LLC ("TBCAM"), a wholly-owned subsidiary of The Bank of
New York Mellon Corporation ("BNY Mellon"), or its affiliates.
G. New accounting requirements
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.
In March 2008, the FASB released Statement of Financial Accounting
Standards No. 161, Disclosures about Derivative Instruments and Hedging
Activities ("FAS 161"). FAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. The application of FAS 161 is required for fiscal years
beginning after November 15, 2008 and interim periods within those fiscal
years. At this time, management is evaluating the implications of FAS 161
and its impact on the financial statements and the accompanying notes has
not yet been determined.
(2) Investment Advisory Fee and Other Transactions With Affiliates:
The investment advisory fee paid to TBCAM for overall investment advisory,
administrative services and general office facilities is paid monthly at
the annual rate of 0.80% 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 TBCAM, 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
$4,767, for the six months ended March 31, 2008.
The Trust entered into an agreement with Mellon Bank, N.A. ("Mellon Bank"),
a wholly-owned subsidiary of BNY Mellon and an affiliate of TBCAM, 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 $68,384 for the six months ended March 31,
2008.
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, Mellon Bank earned $94,810 for the
six months ended March 31, 2008. 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
$130 for the six months ended March 31, 2008, which amount is included in
miscellaneous expenses on the Statement of Operations. See Note 8 for
further details.
14
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
The Trust reimburses BNY Mellon Asset Management for a portion of the
salary of the Trust's Chief Compliance Officer. For the six months ended
March 31, 2008, the Fund was charged $2,130, which amount is included in
miscellaneous expenses in the statement of operations. No other director,
officer or employee of TBCAM 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 TBCAM 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 TBCAM, to provide printing and
fulfillment services for the Fund. Pursuant to this agreement, the Fund was
charged $1,223, which amount is included in miscellaneous expenses in the
Statement of Operations, for the six months ended March 31, 2008.
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
six months ended March 31, 2008, the Fund was charged $6,336 for fees
payable to BNY Mellon Private Wealth Management.
MBSC Securities Corporation ("MBSC"), a wholly-owned subsidiary of BNY
Mellon and affiliate of TBCAM, is the distributor of the Fund's shares.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the six months ended March 31, 2008 were as follows:
Purchases Sales
------------ ------------
Non-U.S. Government Securities $187,041,446 $181,848,396
============ ============
(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
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Shares sold 534,097 2,620,743
Shares redeemed (384,748) (321,030)
-------- ---------
Net increase (decrease) 149,349 2,299,713
======== =========
At March 31, 2008, five shareholders of record, in the aggregate held
approximately 67% of the total outstanding shares of the Fund. Investment
activities of these shareholders could have a material impact on the Fund.
For example, a significant redemption by such shareholders could result in
illiquid or less liquid investments comprising a larger portion of the
Fund's Portfolio.
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 six months ended March 31, 2008, the Fund received
$8,219 in redemption fees which are reflected in the cost of shares
redeemed.
(5) Federal Taxes:
Each year, the Fund intends to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue 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.
15
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 208, as computed on a federal
income tax basis, were as follows:
Cost for federal income tax purposes $208,883,110
============
Gross unrealized appreciation $ 6,644,356
Gross unrealized depreciation (12,007,759)
------------
Net unrealized appreciation (depreciation) $ (5,363,403)
============
(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:
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 March 31, 2008, the Fund held open financial futures contracts. 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.
16
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 affect 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 December 11, 2007 through March 31, 2008, the securities lending
agent effected such withdrawals and the cash proceeds from such withdrawals
by the Fund were reinvested in shares of the Dreyfus Fund. Repayments of
cash collateral during the period were made from the proceeds of
redemptions of shares of the Dreyfus Fund. See Schedule of Investments for
further detail on the Fund's investment of cash collateral in the BlackRock
Fund and the Dreyfus Fund as of March 31, 2008.
The Fund loaned securities during the six months ended March 31, 2008 and
earned interest on the invested collateral of $913,154 of which $604,287
was rebated to borrowers or paid in fees. See Schedule of Investments for
further detail on the security positions on loan and collateral held.
(8) 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. For the six months ended March 31, 2008, the
Fund did not borrow from the line of credit.
17
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Factors Considered by the Trustees in Approving
the Investment Advisory Agreement (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, The
Boston Company Asset Management LLC ("TBCAM" 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.
18
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Factors Considered by the Trustees in Approving
the Investment Advisory Agreement (Unaudited)
- --------------------------------------------------------------------------------
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.
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 return for the one-year
period (17.26% vs. 19.11%), three-year period (14.31% vs. 14.73%) and
five-year period (16.40% vs. 16.86%).
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 0.80%, which was in the 2nd (1st
being the best) quintile of its peer group of funds, the median fee of
which was 0.90%. The Fund's net management fee (after giving effect to
expense reimbursements) was 0.557% (which included administrative services
fees under Lipper's calculation methodology), well below the peer group
median net management fee of 0.85%. 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 1.10% (after giving effect to expense reimbursements) was
the same as the median net expense ratio of the peer group of 1.10%,
notwithstanding the fact that all 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 many 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 Fund and The Boston Company International Core Equity Fund, 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.
19
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Growth Fund
Factors Considered by the Trustees in Approving
the Investment Advisory Agreement (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 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.
20
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their ages,
addresses and dates of birth; their positions 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 period ended March 31, 2008. 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 March 31,
Date of Birth Held with Trust Time Served* 5 Years Trustee Trustee 2008)
- ---------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $1,280
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: $1,280
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 (73) Trustee Trustee since Trustee, Mertens 17 None Fund: $1,280
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: $1,359
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.
21
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 (51) 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
22
THIS PAGE INTENTIONALLY LEFT BLANK
MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6941SA0308
MELLON INSTITUTIONAL FUNDS
The Boston Company
Semiannual Report Small Cap Value Fund II
- --------------------------------------------------------------------------------
March 31, 2008 (Unaudited)
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 Investment Trust
The Boston Company Small Cap Value Fund II
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 (October 1, 2007 to March 31, 2008).
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 October 1, 2007
October 1, 2007 March 31, 2008 to March 31, 2008
- --------------------------------------------------------------------------------------
Actual $1,000.00 $ 877.00 $4.69
Hypothetical (5% return
per year before expenses) $1,000.00 $1,020.00 $5.05
- ----------
+ Expenses are equal to the Fund's annualized expense ratio of 1.00%,
multiplied by the average account value over the period, multiplied by
183/366 (to reflect the one-half year period).
3
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Portfolio Information as of March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
The Fund is actively managed. Current holdings may be different than those
presented below:
Percentage of
Top Ten Holdings* Sector Investments
- --------------------------------------------------------------------------------
Penn Virginia Corp. Energy 2.1%
Longs Drug Stores Corp. Consumer Staples 2.0
Ralcorp Holdings, Inc. Consumer Staples 2.0
Pediatrix Medical Group, Inc. Health Care 1.9
Wilmington Trust Corp. Financials 1.7
Charles River Laboratories International, Inc. Health Care 1.7
Unit Corp. Energy 1.5
Redwood Trust, Inc. REIT Financials 1.4
Sybase, Inc. Information 1.4
Brink's Co. Industrials 1.4
----
17.1%
* Excludes short-term securities and investment of cash collateral.
Percentage of
Economic Sector Allocation Net Assets
- --------------------------------------------------------------------------------
Consumer Discretionary 17.4%
Consumer Staples 6.1
Energy 6.9
Financials 22.0
Health Care 11.5
Industrials 13.9
Information Technology 10.0
Materials 3.7
Telecommunications Services 1.6
Utilities 6.4
Short-term and Other Assets 0.5
-----
100.0%
4
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ------------------------------------------------------------------
UNAFFILIATED INVESTMENTS--101.7%
Equities--99.5%
Consumer Discretionary--17.4%
AnnTaylor Stores Corp. 2,680 a 64,802
Belo Corp., Class A 3,660 38,686
Champion Enterprises, Inc. 3,900 a,b 39,117
Foot Locker, Inc. 3,980 46,845
Gentex Corp. 3,210 55,051
Harman International Industries, Inc. 740 32,220
Hearst-Argyle Television, Inc. 2,910 60,033
Jos A Bank Clothiers, Inc. 1,590 a,b 32,595
M.D.C. Holdings, Inc. 1,700 74,443
Meredith Corp. 1,050 40,162
New York Times Co., Class A 3,440 b 64,947
NVR, Inc. 110 a 65,725
OfficeMax, Inc. 2,790 53,401
Panera Bread Co., Class A 1,730 a,b 72,470
Regis Corp. 1,890 51,956
Scholastic Corp. 870 a 26,335
Tenneco, Inc. 2,500 a 69,850
Timberland Co., Class A 2,050 a 28,147
Tractor Supply Co. 400 a 15,808
Williams-Sonoma, Inc. 2,600 b 63,024
Zale Corp. 2,730 a,b 53,945
1,049,562
Consumer Staples--6.1%
BJ'S Wholesale Club, Inc. 1,990 a 71,023
J.M. Smucker Co. 1,220 61,744
Longs Drug Stores Corp. 2,820 119,737
Ralcorp Holdings, Inc. 2,030 a 118,045
370,549
Energy--6.9%
CARBO Ceramics, Inc. 1,320 b 52,932
Dril-Quip, Inc. 600 a 27,882
Key Energy Services, Inc. 1,800 a 24,049
Oil States International, Inc. 1,120 a 50,187
Patterson-UTI Energy, Inc. 1,890 49,480
Penn Virginia Corp. 2,800 123,452
Unit Corp. 1,620 a 91,773
419,755
The accompanying notes are an integral part of the financial statements.
5
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- -----------------------------------------------------------------------
Financials--22.0%
Alexandria Real Estate Equities, Inc. REIT 590 54,705
Aspen Insurance Holdings Ltd. 1,770 46,693
Associated Banc-Corp. 1,050 27,961
Assured Guaranty Ltd. 1,400 33,236
BancorpSouth, Inc. 1,310 30,340
City National Corp. 1,430 70,728
Colonial BancGroup, Inc. 1,600 15,408
Conseco, Inc. 5,060 a 51,612
Cullen/Frost Bankers, Inc. 1,500 79,560
Fidelity National Financial, Inc., Class A 2,080 38,126
First American Corp. 1,120 38,013
Firstmerit Corp. 2,860 59,088
Fulton Financial Corp. 4,860 59,729
Hanover Insurance Group, Inc. 1,700 69,938
Health Care REIT, Inc. 1,570 70,854
Jones Lang Lasalle, Inc. 410 31,709
Lasalle Hotel Properties REIT 980 28,155
Lexington Realty Trust REIT 2,850 b 41,068
Philadelphia Consolidated Holding Corp. 1,830 a 58,926
Piper Jaffray Cos. 1,730 a 58,751
Protective Life Corp. 1,550 62,868
Raymond James Financial, Inc. 1,830 b 42,053
Redwood Trust, Inc. REIT 2,380 b 86,513
Washington Federal, Inc. 2,820 64,409
Wilmington Trust Corp. 3,380 105,118
1,325,561
Health Care--11.5%
Amedisys, Inc. 1,300 a 51,142
Charles River Laboratories International, Inc. 1,710 a 100,787
Healthsouth Corp. 2,230 a,b 39,672
Hill-Rom Holdings, Inc. 1,250 a 59,750
Invitrogen Corp. 930 a 79,487
Magellan Health Services, Inc. 1,260 a 50,009
MDS, Inc. 2,350 a 45,778
Medicines Co. 1,710 a 34,542
Medicis Pharmaceutical Corp., Class A 740 14,571
Pediatrix Medical Group, Inc. 1,670 a 112,558
PerkinElmer, Inc. 2,370 57,472
Universal Health Services, Inc., Class B 880 47,247
693,015
The accompanying notes are an integral part of the financial statements.
6
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- -----------------------------------------------------------------------
Industrials--13.9%
Alliant Techsystems, Inc. 610 a 63,153
Brink's Co. 1,220 81,960
Ceradyne, Inc. 700 a 22,372
Clean Harbors, Inc. 1,180 a 76,700
Corrections Corp. of America 2,630 a 72,378
Curtiss-Wright Corp. 1,500 62,220
Esterline Technologies Corp. 990 a 49,866
Granite Construction, Inc. 1,760 57,570
Heartland Express, Inc. 4,160 59,322
Landstar System, Inc. 950 49,552
MSC Industrial Direct Co. Inc., Class A 1,570 66,332
Steelcase Inc., Class A 4,210 46,563
Thomas & Betts Corp. 780 a 28,369
URS Corp. 700 a 22,883
Waste Connections, Inc. 2,630 a 80,846
840,086
Information--10.0%
Aspen Technology, Inc. 2,270 a 28,942
Avid Technology, Inc. 1,590 a,b 38,701
Comtech Telecommunications Corp. 820 a 31,980
Cymer, Inc. 1,210 a 31,508
Electronics for Imaging, Inc. 4,610 a 68,781
FEI Co. 1,710 a 37,329
Hewitt Associates, Inc., Class A 1,540 a 61,246
MKS Instruments, Inc. 1,740 a 37,236
Net Gear, Inc. 2,000 a 39,900
Parametric Technology Corp. 1,990 a 31,800
SRA International, Inc., Class A 2,160 a 52,510
Sybase, Inc. 3,240 a 85,212
Teradyne, Inc. 4,930 a 61,231
606,376
Materials--3.7%
AMCOL International Corp. 400 12,442
FMC Corp. 1,030 57,155
International Flavors and Fragrances, Inc. 640 28,192
Packaging Corp. of America 1,650 36,844
Reliance Steel & Aluminum Co. 930 55,670
Schnitzer Steel Industries, Inc., Class A 230 16,335
Temple-Inland, Inc. 1,400 17,808
224,446
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
Telecommunication Services--1.6%
Cincinnati Bell, Inc. 15,720 a 66,967
NeuStar, Inc., Class A 1,130 a 29,922
96,889
Utilities--6.4%
AGL Resources, Inc. 1,940 66,581
Atmos Energy Corp. 2,240 57,120
Black Hills Corp. 1,260 45,083
Hawaiian Electric Industries, Inc. 2,120 b 50,604
IDACORP, Inc. 1,360 b 43,670
Portland General Electric Co. 2,310 52,091
UGI Corp. 2,980 74,262
389,411
Total Equities (Cost $6,646,635) 6,015,650
INVESTMENT OF CASH COLLATERAL -- 2.2%
BlackRock Cash Strategies L.L.C (Cost $133,338) 133,338 c 133,338
TOTAL UNAFFILIATED INVESTMENTS (Cost $6,779,973) 6,148,988
AFFILIATED INVESTMENTS--10.7%
Dreyfus Institutional Preferred Plus Money Market Fund 124,606 d 124,606
Dreyfus Institutional Cash Advantage Fund 519,262 d,e 519,262
---------
TOTAL AFFILIATED INVESTMENTS (Cost $643,868) 643,868
TOTAL INVESTMENTS--112.4% (Cost $7,423,841) 6,792,856
LIABILITIES IN EXCESS OF OTHER ASSETS--(12.4%) (749,359)
---------
NET ASSETS--100% 6,043,497
=========
Notes to Schedule of Investments:
REIT--Real Estate Investment Trust
a Non-income producing security.
b Security, or a portion of thereof, was on loan at March 31, 2008.
c Illiquid security. At the period end, the value of this security amounted
to $133,338 or 2.2% of net assets.
d Affiliated institutional money market fund.
e Investment of security lending cash collateral.
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Statement of Assets and Liabilities
March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investment in securities, at value (Note 1A) (including securities on
loan, valued at $631,336 (Note 7)):
Unaffiliated investments (cost $6,779,973) $6,148,988
Affiliated investments (Note 1F) (cost $643,868) 643,868
Cash collateral at broker for futures contracts 25,000
Receivable for investments sold 40,646
Interest and dividends receivable 8,973
Prepaid expenses 6,024
----------
Total assets 6,873,499
Liabilities
Payable for securities lending collateral investments (Note 7) $652,600
Payable for investments purchased 108,328
Payable to investment advisor (Note 2) 38,270
Accrued professional fees 15,232
Accrued accounting, administration, custody and transfer agent fees (Note 2) 13,710
Accrued trustees' fees and expenses (Note 2) 1,043
Accrued shareholder reporting fees (Note 2) 500
Other accrued expenses and liabilities 319
--------
Total liabilities 830,002
----------
Net Assets $6,043,497
==========
Net Assets consist of:
Paid-in capital $7,056,926
Accumulated net realized loss (407,521)
Undistributed net investment income 25,077
Net unrealized depreciation (630,985)
----------
Total Net Assets $6,043,497
==========
Shares of beneficial interest outstanding 361,317
==========
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 16.73
==========
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Statement of Operations
For the Six Months Ended March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Dividend income from unaffiliated investments $ 53,821
Dividend income from affiliated investments (Note 1F) 4,872
Securities lending income (Note 7) 4,258
---------
Total investment income 62,951
Expenses
Accounting, administration, custody and transfer agent fees (Note 2) $ 29,691
Investment advisory fee (Note 2) 21,240
Professional fees 17,499
Registration fees 7,574
Insurance expense 2,076
Trustees' fees and expenses (Note 2) 1,098
Miscellaneous expenses 1,783
--------
Total expenses 80,961
Deduct:
Waiver of investments advisory fee (Note 2) (21,240)
Reimbursement of Fund operating expenses (Note 2) (31,378)
--------
Total expense deduction (52,618)
Net expenses 28,343
---------
Net investment income 34,608
---------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (338,880)
Financial futures transactions 2,056
--------
Net realized gain (loss) (336,824)
Change in unrealized appreciation (depreciation) on:
Investments (439,998)
---------
Net realized and unrealized gain (loss) on investments (776,822)
---------
Net Increase (Decrease) in Net Assets from Operations $(742,214)
=========
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the period
For the July 23, 2007
Six Months Ended (commencement of
March 31, 2008 operations) to
(Unaudited) September 30, 2007
---------------- ------------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income (loss) $ 34,608 $ 6,129
Net realized gain (loss) (336,824) (71,899)
Change in net unrealized appreciation (depreciation) (439,998) (190,987)
---------- ----------
Net increase (decrease) in net assets from investment operations (742,214) (256,757)
---------- ----------
Distributions to Shareholders (Note 1C)
From net investment income (14,458) -
---------- ----------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares 1,225,500 5,816,968
Value of shares issued in reinvestment of distributions 14,458 -
---------- ----------
Net increase (decrease) in net assets from Fund shares transactions 1,239,958 5,816,968
---------- ----------
Total Increase (Decrease) in Net Assets 483,286 5,560,211
Net Assets
At beginning of period 5,560,211 -
---------- ----------
At end of period [including undistributed net
investment income of $25,077 and $4,927, respectively] $6,043,497 $5,560,211
========== ==========
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Financial Highlights
- --------------------------------------------------------------------------------
For the period
For the July 23, 2007
Six Months Ended (commencement of
March 31, 2008 operations) to
(Unaudited) September 30, 2007
----------- ------------------
Net Asset Value, Beginning of Period $19.12 $20.00
------ ------
From Operations:
Net investment income* (a) 0.11 0.02
Net realized and unrealized gains (loss) on investments (2.45) (0.90)
------ ------
Total from operations (2.34) (0.88)
------ ------
Less Distributions to Shareholders:
From net investment income (0.05) -
------ ------
Net Asset Value, End of Period $16.73 $19.12
====== ======
Total Return (b) (12.30)%(c) (4.40)%(d)
Ratios/Supplemental Data:
Expenses (to average daily net assets)* (e) 1.00% 1.00%
Net Investment Income (to average daily net assets)*(e) 1.22% 0.59%
Portfolio Turnover 28%(c) 18%(c)
Net Assets, End of Period (000's omitted) $6,043 $5,560
- ------
* 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
excluding waivers and reimbursements would have been:
Net investment income (loss) per share (a) $(0.06) $(0.19)
Ratios (to average daily net assets):
Expenses (e) 2.86% 6.85%
Net investment income (loss) (c) (0.64)% (5.27)%
(a) Calculated based on average shares outstanding.
(b) Total return would have been lower in the absence of expense waivers.
(c) Not annualized.
(d) Returns for periods of less than one year have not been annualized.
(e) Computed on an annualized basis.
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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. The
Boston Company Small Cap Value Fund II (the "Fund"), which commenced
operation on July 23, 2007, is a separate diversified investment series of
the Trust.
The objective of the Fund is to achieve long-term growth of capital. The
Fund seeks to achieve its objective by investing, under normal
circumstances, at least 80% of net assets in equity securities of small cap
U.S. companies. The Fund focuses on companies with total market
capitalizations within the range of companies included in the Russell 2500
Value Index. The Fund intends to maintain an average weighted market
capitalization that approximates that of the Russell 2500 Value Index.
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
calculated mean price (average of last bid and last offer). Securities that
are fixed income securities, other than short-term instruments with less
than sixty days remaining to maturity, for which accurate 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, or if such quotations do not accurately reflect
fair value, 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 regulated 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 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.
B. Securities transactions and income
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of coupon interest accrued, adjusted for accretion
of discount or amortization of premium using the yield-to-maturity method
on debt securities with greater than sixty days remaining 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.
Dividends representing a return of capital are reflected as a reduction of
cost.
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 losses deferred
due to wash sales.
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 be distributed in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in the
following year.
13
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 The Boston Company
Asset Management LLC ("TBCAM"), a wholly-owned subsidiary of The Bank of
New York Mellon Corporation ("BNY Mellon"), or its affiliates.
G. New accounting requirements
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.
In March 2008, the FASB released Statement of Financial Accounting
Standards No. 161, Disclosures about Derivative Instruments and Hedging
Activities ("FAS 161"). FAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. The application of FAS 161 is required for fiscal years
beginning after November 15, 2008 and interim periods within those fiscal
years. At this time, management is evaluating the implications of FAS 161
and its impact on the financial statements and the accompanying notes has
not yet been determined.
(2) Investment Advisory Fee and Other Transactions With Affiliates:
The investment advisory fee paid to TBCAM for overall investment advisory
and administrative services, and general office facilities, is paid monthly
at the annual rate of 0.75% of the Fund's average daily net assets. TBCAM
voluntarily agreed to limit the Fund's total annual operating expenses
(excluding brokerage commissions, taxes and extraordinary expenses) to
1.00% of the Fund's average daily net assets for the six months ended March
31, 2008, TBCAM voluntarily waived its investment advisory fee in the
amount of $21,240 and reimbursed the Fund for $31,378 of its operating
expenses. This arrangement is voluntary and temporary and may be
discontinued or revised by TBCAM 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 TBCAM, 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
$2,747, for the six months ended March 31, 2008.
The Trust entered into an agreement with Mellon Bank, N.A. ("Mellon Bank"),
a wholly-owned subsidiary of BNY Mellon and an affiliate of TBCAM, to
provide custody, administration and 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 $26,944 for the six months ended March 31,
2008.
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, Mellon Bank earned $1,916 for the six
months ended March 31, 2008. See Note 7 for further details.
14
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 $8
for the six months ended March 31, 2008, which amount is included in
miscellaneous expenses on the Statement of Operations. See Note 8 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 six months ended
March 31, 2008, the Fund was charged $2,247, which amount is included in
miscellaneous expenses in the statement of operations. No other director,
officer or employee of TBCAM 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 TBCAM 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 TBCAM, to provide printing and
fulfillment services for the Fund. Pursuant to this agreement, the Fund was
charged $500, which amount is included in miscellaneous expenses in the
Statement of Operations, for the six months ended March 31, 2008.
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
six months ended March 31, 2008, the Fund was not charged an administrative
service fee by an affiliate of BNY Mellon.
MBSC Securities Corporation ("MBSC"), a wholly-owned subsidiary of BNY
Mellon and affiliate of TBCAM, is the distributor of the Fund's shares.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the six months ended March 31, 2008 were as follows:
Purchases Sales
--------- -----
Non-U.S. Government Securities $2,825,627 $1,571,954
========== ==========
(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 period
For the July 23, 2007
Six Months Ended (commencement of
March 31, 2008 operations) to
(Unaudited) September 30, 2007
---------------- ------------------
Shares sold 69,652 290,848
Shares issued to shareholders
in reinvestment of distributions 817 -
------ -------
Net increase (decrease) 70,469 290,848
====== =======
At March 31, 2008, three shareholders of record, in the aggregate held
approximately 75.9% of the total outstanding shares of the Fund. Investment
activities of these shareholders could have a material impact on the Fund.
For example, a significant redemption by such shareholders could result in
illiquid or less liquid investments comprising a large portion of the
Fund's Portfolio.
15
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 six months ended March 31, 2008, 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 Internal Revenue 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 cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 2008, as computed on a federal
income tax basis, were as follows:
Cost for federal income tax purposes $7,423,841
==========
Gross unrealized appreciation $ 160,454
Gross unrealized depreciation (791,439)
----------
Net unrealized appreciation (depreciation) $ (630,985)
==========
(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:
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.
16
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 March 31, 2008, the Fund did not have any open financial futures
contracts.
(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.
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 affect 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 December 11, 2007 through March 31, 2008, the securities lending
agent effected such withdrawals and the cash proceeds from such withdrawals
by the Fund were reinvested in shares of the Dreyfus Fund. Repayments of
cash collateral during the period were made from the proceeds of
redemptions of shares of the Dreyfus Fund. See Schedule of Investments for
further detail on the Fund's investment of cash collateral in the BlackRock
Fund and the Dreyfus Fund as of March 31, 2008.
The Fund loaned securities during the six months ended March 31, 2008 and
earned interest on the invested collateral of $9,645 of which $5,387 was
rebated to borrowers or paid in fees. See Schedule of Investments for
further detail on the security positions on loan and collateral held.
(8) 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 six months ended March 31, 2008,
the Fund did not borrow from the line of credit.
17
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (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 related fees initially and, after a two year initial
term, on an annual basis. At a meeting held on June 22, 2007, the Board of
Trustees, including all of the Independent Trustees voting separately in person,
determined that the terms of the Fund's proposed investment advisory agreement
were fair and reasonable and that the agreement is in the best interest of the
Fund.
The Independent Trustees considered the initial approval of the advisory
agreement of the Fund in connection with their broader consideration of the
annual renewal of the advisory agreements of the other funds of the Trust, in
two separate meetings held on September 28 and October 17, 2006. On each date,
the Independent Trustees held executive sessions in which they met privately
without representatives of The Boston Company Asset Management LLC ("TBCAM" or
the "Adviser"), the Fund's investment adviser, or Mellon Financial Corporation
("Mellon") present and were advised throughout the process by their own legal
counsel.
In conducting this review and in making their determinations, the Independent
Trustees received from TBCAM a broad range of information compiled using an
information request list prepared on their behalf by their own legal counsel in
connection with their annual approval of advisory arrangements with respect to
the funds comprising the Trust generally.
This information included information about TBCAM, its personnel, operations and
financial results and information about the Mellon organization. The Trustees
also discussed in person with representatives of TBCAM the adviser's investment
strategy and process, and the Fund's proposed operations under TBCAM's
management. The information requested by the Independent Trustees and reviewed
by the entire Board included:
(i) Financial and Economic Data: TBCAM's balance sheet and income statement, as
well as a profitability analysis of the Adviser, including a separate
presentation of the TBCAM's profitability relative to that of several publicly
traded investment advisers;
(ii) Management Teams and Operations: TBCAM's Form ADV, as well as information
concerning its executive management and portfolio management personnel and
overall organizational structure, brokerage and soft dollar policies and
practices; and
(iii) Comparative Performance and Fees: Analyses regarding the historical
performance of similarly managed accounts of TBCAM, as well as the Fund's
proposed management fee and estimated expense ratio compared to those of
comparable funds and TBCAM's separate account advisory fee schedules for
comparable TBCAM accounts.
The Independent Trustees had previously been supplied with materials in
connection with the annual approval of the advisory agreements of other funds
within the Trust concerning the benefits flowing to Mellon and its affiliates in
the form of fees for transfer agency, custody, administration and securities
lending services provided to the funds within the Trust by affiliates of Mellon.
In considering the approval 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 Fund's advisory agreement and the
compensation to TBCAM provided therein were fair and reasonable, and they
approved the advisory agreement for an initial two-year period. 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 to be
provided to the Fund by the Adviser. In their deliberations as to the approval
of the Fund's advisory agreement, the Trustees were also mindful of the fact
that, by choosing to invest in the Fund, the Fund's shareholders would be
choosing to entrust TBCAM, under the supervision of the Trustees, to manage the
portion of their assets invested in the Fund.
The Trustees reviewed the background and experience of the Fund's portfolio
managers and received an overview of its organization, personnel, resources and
strategic plans. Among other things, the Trustees considered the size, education
and experience of TBCAM's investment staff.
In connection with the proposed advisory agreement with TBCAM with respect to
the Fund, the Trustees considered the fact that TBCAM had been in operation
since 1970 and had approximately $74 billion in assets under management as of
March 31, 2007, including approximately $3.7 billion in the small cap equity
strategy proposed to be utilized by the Fund. The Trustees received a
presentation by TBCAM concerning its management and investment personnel, its
investment philosophy and investment strategy.
The Trustees determined that the services proposed by TBCAM to be provided to
the Fund were of high quality and at least commensurate with industry standards.
The Board determined that TBCAM had the expertise and resources to manage the
Fund effectively.
Investment Performance
The Board reviewed investment results of certain investment company peer group
averages consisting of no load institutional funds without Rule 12b-1 plans
having an investment strategy substantially similar to the Fund selected by
TBCAM from a larger corresponding Morningstar universe of funds in the
investment category.
18
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund II
Factors Considered by the Trustees in Approving the
Investment Advisory Agreement (Unaudited)
- --------------------------------------------------------------------------------
Advisory Fee and Other Expenses
The Board considered the advisory fee rate proposed to be paid by the Fund to
TBCAM as well as its estimated total expense ratio (after giving effect to
proposed expense limitation arrangement) and compared each to that of its peer
group, a selection of no-load institutional funds without Rule 12b-1 plans
selected by TBCAM from a larger corresponding Morningstar universe of funds.
With regard to the proposed advisory fee to be payable by the Fund to TBCAM, the
Trustees noted that the proposed management fee of 0.75% was slightly below the
0.78% average management fee of a peer group of institutional funds using a
similar strategy.
They also noted that the Fund's proposed total expense ratio of 1.00% (after
giving effect to the proposed expense limitation arrangement) was above the
0.99% average total expense ratio of the peer group, although most other funds
in the peer group were significantly larger than the Fund at projected asset
levels during its first year.
The Board also compared the fees proposed to be payable by the Fund relative to
those payable by separate account clients of TBCAM.
Based on the comparative peer group data provided, as well as the additional
scope and complexity of the services to be provided and responsibilities to be
assumed by the Adviser with respect to the Fund relative to its separate account
clients, the Board concluded that the fees proposed to be payable by the Fund
under the advisory agreement were reasonable.
The Adviser's Profitability
The Board considered the Adviser's projected profitability in managing the Fund,
as well as the methodology used to compute such profitability, and the various
direct and indirect expenses incurred by TBCAM in managing the Fund. The Board
noted that the information provided indicated that, after giving effect to the
proposed fee waivers and expense subsidies, TBCAM was projected to experience a
net operating profit in the initial year of the Fund's operations, based on the
Fund's projected asset levels during such period. TBCAM's projected
profitability was determined to be reasonable. The Trustees intend to monitor
annually the profitability of TBCAM.
Economies of Scale
The Board also considered that TBCAM may experience economies of scale as the
Fund grows and the extent to which the proposed fees reflected such economies.
They noted that projected asset levels indicated that significant economies of
scale would not be realized for some time. The Trustees concluded that,
considering initial and projected asset size over the initial term of the
advisory agreement, the implementation of breakpoints or further fee reductions
was not necessary at this time. The Trustees intend to review the need for
breakpoints in connection with further advisory agreement approval
deliberations.
Other Benefits
As part of its broader review of the advisory agreements of all of the funds in
the Trust, the Board also considered the additional benefits flowing to Mellon
as a result of its relationship with the funds. The Board relied upon its
previous review of these benefits in considering the similar benefits that may
flow to Mellon from the operation of the Fund. Mellon affiliates provide
custodial, administrative, transfer agency and securities lending services to
the funds. In each case, such affiliates were selected on the basis of a
comparative analysis of their capabilities and fees relative to those of
unaffiliated competitors.
The Board considered the fact that 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 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 TBCAM provided therein are fair and reasonable and, thus, in
approving the agreement for an initial two-year period.
19
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their ages,
addresses and dates of birth; their positions 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 period ended March 31, 2008. 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 March 31,
Date of Birth Held with Trust Time Served* 5 Years Trustee Trustee 2008)
- ------------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $258
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: $258
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 (73) Trustee Trustee since Trustee, Mertens 17 None Fund: $258
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: $261
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
200 Park Ave., 55th Fl. President and Officer of The Dreyfus
New York, NY 10166 Chief Executive Corporation; Executive
8/24/48 Officer Vice President 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.
20
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 (51) 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
21
THIS PAGE INTENTIONALLY LEFT BLANK
THIS PAGE INTENTIONALLY LEFT BLANK
MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6943SA0308
MELLON INSTITUTIONAL FUNDS
The Boston Company
Semiannual Report Small Cap Value Fund
- --------------------------------------------------------------------------------
March 31, 2008 (Unaudited)
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 Investment Trust
The Boston Company Small Cap Value 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 (October 1, 2007 to March 31, 2008).
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 October 1, 2007
October 1, 2007 March 31, 2008 to March 31, 2008
- -------------------------------------------------------------------------------------
Actual $1,000.00 $ 859.80 $4.32
Hypothetical (5% return
per year before expenses) $1,000.00 $1,020.35 $4.70
- ------
+ Expenses are equal to the Fund's annualized expense ratio of 0.93%,
multiplied by the average account value over the period, multiplied by
183/366 (to reflect the one-half year period).
3
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Portfolio Information as of March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
The Fund is actively managed. Current holdings may be different than those
presented below:
Percentage of
Top Ten Holdings* Sector Investments
- --------------------------------------------------------------------------------
Longs Drug Stores Corp. Consumer Staples 2.0%
Clean Harbors, Inc. Industrials 1.7
Redwood Trust, Inc. REIT Financials 1.3
Sybase, Inc. Technology 1.3
M.D.C. Holdings, Inc. Consumer Discretionary 1.3
Pediatrix Medical Group, Inc. Health Care 1.3
Unit Corp. Energy 1.2
Panera Bread Co., Class A Consumer Discretionary 1.2
Tenneco, Inc. Consumer Discretionary 1.2
Casey's General Stores, Inc. Consumer Staples 1.2
----
13.7%
* Excludes short-term securities and investment of cash collateral .
Percentage of
Economic Sector Allocation Net Assets
- --------------------------------------------------------------------------------
Consumer Discretionary 19.4%
Consumer Staples 6.7
Energy 6.6
Financials 19.7
Health Care 9.8
Industrials 14.0
Materials 2.8
Information Technology 13.3
Telecommunications Services 1.6
Utilities 3.7
Short-term and other Assets 2.4
-----
100.0%
4
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------
UNAFFILIATED INVESTMENTS--113.5%
EQUITIES--97.6%
Consumer Discretionary--19.4%
AH Belo Corp., Class A 166,846 1,907,050
AnnTaylor Stores Corp. 248,850 a,b 6,017,193
Asbury Automotive Group, Inc. 107,190 b 1,474,934
Bebe Stores, Inc. 186,350 b 2,003,262
Belo Corp., Class A 369,930 b 3,910,160
Bright Horizons Family Solutions, Inc. 85,410 a,b 3,676,046
Cache, Inc. 215,210 a 2,429,721
Cavco Industries, Inc. 69,982 a,b 2,452,169
Champion Enterprises, Inc. 394,810 a,b 3,959,944
Courier Corp. 103,560 b 2,583,822
Cox Radio, Inc., Class A 299,120 a,b 3,553,546
Drew Industries, Inc. 138,980 a,b 3,399,451
Ethan Allen Interiors, Inc. 152,290 b 4,329,605
Foot Locker, Inc. 191,010 2,248,188
Gentex Corp. 266,840 b 4,576,306
Hibbett Sports, Inc. 85,240 a,b 1,316,106
Jack in the Box, Inc. 56,120 a 1,507,944
Jos A Bank Clothiers, Inc. 160,080 a,b 3,281,640
Kenneth Cole Productions, Inc., Class A 209,320 b 3,545,881
M.D.C. Holdings, Inc. 172,680 b 7,561,657
Meredith Corp. 89,480 3,422,610
Modine Manufacturing Co. 144,530 b 2,094,240
New York Times Co., Class A 280,070 b 5,287,722
OfficeMax, Inc. 64,220 1,229,171
Panera Bread Co., Class A 169,050 a,b 7,081,504
Regis Corp. 197,260 5,422,677
Scholastic Corp. 83,110 a,b 2,515,740
Sonic Automotive, Inc., Class A 122,240 b 2,512,032
Tenneco, Inc. 252,643 a,b 7,058,845
The Children's Place Retail Stores, Inc. 223,680 a,b 5,493,581
Timberland Co., Class A 209,200 a,b 2,872,316
Tractor Supply Co. 31,540 a 1,246,461
Zale Corp. 277,690 a,b 5,487,154
117,458,678
Consumer Staples--6.7%
BJ'S Wholesale Club, Inc. 188,610 a,b 6,731,491
Casey's General Stores, Inc. 301,570 b 6,815,482
Lancaster Colony Corp. 41,851 b 1,672,366
Lance, Inc. 238,376 b 4,672,170
Longs Drug Stores Corp. 278,000 b 11,803,880
The accompanying notes are an integral part of the financial statements.
5
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- --------------------------------------------------------------------
Consumer Staples (continued)
Ralcorp Holdings, Inc. 103,450 a,b 6,015,618
Winn-Dixie Stores, Inc. 174,240 a 3,129,350
40,840,357
Energy--6.6%
CARBO Ceramics, Inc. 141,290 b 5,665,729
Dril-Quip, Inc. 84,393 a 3,921,743
Oil States International, Inc. 111,480 a,b 4,995,419
Penn Virginia Corp. 153,850 b 6,783,246
Pioneer Drilling Co. 251,340 a,b 4,003,846
Tetra Technologies, Inc. 246,040 a,b 3,897,274
Unit Corp. 130,280 a 7,380,362
W-H Energy Services, Inc. 51,460 a 3,543,021
40,190,640
Financials--19.7%
Aspen Insurance Holdings Ltd. 124,240 3,277,451
Assured Guaranty Ltd. 145,927 3,464,307
BancorpSouth, Inc. 128,550 b 2,977,218
BankAtlantic Bancorp, Inc., Class A 582,753 b 2,278,564
BioMed Realty Trust, Inc. REIT 90,520 b 2,162,523
Care Investment Trust, Inc. REIT 248,320 2,619,776
Citizens Republic Bancorp Corp. 222,250 b 2,762,567
Cohen & Steers, Inc. 45,920 1,216,421
Colonial BancGroup, Inc. 160,950 1,549,948
Education Realty Trust, Inc. REIT 340,646 b 4,281,920
Financial Federal Corp. 261,810 b 5,710,076
Firstmerit Corp. 285,720 b 5,902,975
Flushing Financial Corp. 169,750 b 2,984,205
Hancock Holding Co. 58,700 2,466,574
Hanover Insurance Group, Inc. 74,120 3,049,297
Horace Mann Educators Corp. 202,420 b 3,538,302
Intervest Bancshares Corp., Class A 115,918 1,111,654
KKR Financial Holdings LLC 201,340 2,548,964
LandAmerica Financial Group, Inc. 100,200 b 3,954,894
Lasalle Hotel Properties REIT 115,200 b 3,309,696
Lexington Realty Trust REIT 308,640 b 4,447,502
Mission West Properties REIT 196,760 b 1,859,382
Old National Bancorp 286,300 b 5,153,400
Pacific Capital Bancorp 300,199 b 6,454,278
Philadelphia Consolidated Holding Corp. 165,730 a 5,336,506
Piper Jaffray Cos. 175,700 a,b 5,966,772
Redwood Trust, Inc. REIT 219,080 b 7,963,558
Southwest Bancorp, Inc. 162,965 2,853,517
Texas Capital Bancshares, Inc. 121,093 a,b 2,044,050
The accompanying notes are an integral part of the financial statements.
6
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
Financials (continued)
Washington Federal, Inc. 278,143 b 6,352,786
Washington Trust Bancorp, Inc. 51,740 b 1,284,187
Whitney Holding Corp. 95,400 2,364,966
Wilmington Trust Corp. 193,300 b 6,011,630
119,259,866
Health Care--9.8%
Air Methods Corp. 112,880 a,b 5,460,006
Amedisys, Inc. 107,500 a,b 4,229,050
Healthsouth Corp. 224,100 a,b 3,986,739
K-V Pharmaceutical Co., Class A 170,244 a,b 4,249,290
Kensey Nash Corp. 146,214 a,b 4,232,895
Magellan Health Services, Inc. 137,520 a 5,458,169
Medical Action Industries, Inc. 96,802 a,b 1,590,457
Medicines Co. 155,160 a,b 3,134,232
Medicis Pharmaceutical Corp., Class A 73,760 b 1,452,334
Odyssey HealthCare, Inc. 376,180 a,b 3,385,620
Pediatrix Medical Group, Inc. 112,120 a,b 7,556,888
Phase Forward, Inc. 249,740 a,b 4,265,559
Providence Service Corp. 203,680 a,b 6,110,400
Res-Care, Inc. 261,684 a,b 4,487,881
59,599,520
Industrials--14.0%
American Ecology Corp. 188,530 b 4,775,465
Casella Waste Systems, Inc., Class A 398,480 a,b 4,355,386
Ceradyne, Inc. 51,360 a 1,641,466
Clean Harbors, Inc. 158,630 a 10,310,950
Comfort Systems USA, Inc. 151,650 b 1,972,966
Curtiss-Wright Corp. 126,760 b 5,258,005
Esterline Technologies Corp. 105,151 a,b 5,296,456
First Advantage Corp., Class A 59,057 a 1,251,418
Granite Construction, Inc. 172,460 b 5,641,167
Heartland Express, Inc. 405,810 b 5,786,851
II-VI, Inc. 119,540 a,b 4,540,129
Landstar System, Inc. 92,230 4,810,717
LECG Corp. 130,840 a,b 1,224,662
McGrath Rentcorp 203,180 b 4,898,670
Moog, Inc., Class A 148,820 a,b 6,281,692
Pike Electric Corp. 147,120 a 2,049,382
Tetra Tech, Inc. 216,203 a,b 4,218,121
Triumph Group, Inc. 42,290 b 2,407,570
United Stationers, Inc. 59,250 a 2,826,225
Waste Connections, Inc. 162,499 a,b 4,995,219
84,542,517
The accompanying notes are an integral part of the financial statements.
7
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ----------------------------------------------------------------------
Materials--2.8%
AMCOL International Corp. 115,600 b 3,610,188
Compass Minerals International, Inc. 29,740 b 1,754,065
Glatfelter 213,040 3,219,034
Neenah Paper, Inc. 111,920 b 2,885,298
Packaging Corp. of America 102,040 2,278,553
Temple-Inland, Inc. 96,490 1,227,353
Wausau Paper Corp. 205,500 1,697,430
16,671,921
Technology--13.3%
Aspen Technology, Inc. 335,010 a,b 4,271,377
Avid Technology, Inc. 153,910 a,b 3,746,169
Cirrus Logic, Inc. 597,630 a,b 4,016,074
Comtech Telecommunications Corp. 99,450 a 3,878,550
Cray, Inc. 506,840 a,b 3,020,766
Cymer, Inc. 121,780 a,b 3,171,151
Electronics for Imaging, Inc. 398,190 a,b 5,940,995
EPIQ Systems, Inc. 214,491 a,b 3,328,900
FEI Co. 170,690 a,b 3,726,163
Harris Stratex Networks, Inc., Class A 224,970 a 2,256,449
Interwoven, Inc. 257,400 a 2,749,032
Mercury Computer Systems, Inc. 112,660 a,b 633,149
MKS Instruments, Inc. 173,600 a,b 3,715,040
MTS Systems Corp. 132,940 b 4,288,644
Net Gear, Inc. 200,460 a,b 3,999,177
NIC, Inc. 343,510 b 2,442,356
Parametric Technology Corp. 193,530 a,b 3,092,609
Rogers Corp. 36,690 a,b 1,225,813
Rudolph Technologies, Inc. 201,480 a,b 1,968,460
SRA International, Inc., Class A 226,460 a,b 5,505,243
Sybase, Inc. 296,480 a,b 7,797,424
Teradyne, Inc. 280,580 a 3,484,804
Ultra Clean Holdings, Inc. 218,080 a 2,137,184
80,395,529
Telecommunication Services--1.6%
Cincinnati Bell, Inc. 1,564,970 a,b 6,666,772
NeuStar, Inc., Class A 113,930 a 3,016,866
9,683,638
The accompanying notes are an integral part of the financial statements.
8
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Schedule of Investments--March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Value ($)
Security Shares (Note 1A)
- ---------------------------------------------------------------------------------------
Utilities--3.7%
Black Hills Corp. 133,320 b 4,770,190
El Paso Electric Co. 183,880 a,b 3,929,516
Hawaiian Electric Industries, Inc. 198,730 b 4,743,685
IDACORP, Inc. 140,960 b 4,526,226
Portland General Electric Co. 147,990 3,337,175
SJW Corp. 38,790 b 1,109,006
22,415,798
Total Equities (Cost $620,382,830) 591,058,464
INVESTMENT OF CASH COLLATERAL--15.9%
BlackRock Cash Strategies L.L.C. (Cost $96,198,762) 96,198,762 c 96,198,762
TOTAL UNAFFILIATED INVESTMENTS (Cost $716,581,592) 687,257,226
AFFILIATED INVESTMENTS--7.0%
Dreyfus Institutional Preferred Plus Money Market Fund 4,967,367 c 4,967,367
Dreyfus Institutional Cash Advantage Fund 37,159,686 d,e 37,159,686
-----------
TOTAL AFFILIATED INVESTMENTS (Cost $42,127,053) 42,127,053
TOTAL INVESTMENTS--120.5% (Cost $758,708,645) 729,384,279
LIABILITIES IN EXCESS OF OTHER ASSETS--(20.5%) (123,921,543)
-----------
NET ASSETS--100% 605,462,736
===========
Notes to Schedule of Investments:
REIT--Real Estate Investment Trust
a Non-income producing security.
b Security, or a portion of thereof, was on loan at March 31, 2008.
c Illiquid security. At the period end, the value of this security amounted
to $96,198,762 or 15.9% of net assets.
d Affiliated institutional money market fund.
e Investment of security lending cash collateral.
At March 31, 2008, the fund held the following futures contracts:
Underlying Face Unrealized
Contract Position Expiration Date Amount at Value Appreciation
- ---------------------------------------------------------------------------------------------------
Russell 2000 Index (55 Contracts) Long 6/20/2008 $3,795,000 $68,068
=======
The accompanying notes are an integral part of the financial statements.
9
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Statement of Assets and Liabilities
March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investment in securities (Note 1A) (including securities on loan, valued
at $129,748,695 (Note 7))
Unaffiliated issuers, at value (cost $716,581,592) $687,257,226
Affiliated issuers, at value (Note 1F) (cost $42,127,053) 42,127,053
Cash collateral at broker for futures contracts 435,000
Receivable for investments sold 7,314,589
Receivable for Fund shares sold 2,733,481
Interest and dividends receivable 798,701
Receivable for variation margin on open future contracts (Note 6) 32,450
Prepaid expenses 8,601
------------
Total assets 740,707,101
Liabilities
Collateral for securities on loan (Note 7) $133,358,448
Payable for investments purchased 653,814
Payable for Fund shares redeemed 613,182
Payable to investment advisor (Note 2) 402,751
Accrued administrative service fees (Note 2) 114,511
Accrued accounting, administration, custody and transfer agent fees (Note 2) 48,126
Accrued professional fees 24,369
Accrued shareholder reporting fees (Note 2) 9,600
Accrued trustees' fees and expenses (Note 2) 6,649
Other accrued expenses and liabilities 12,915
------------
Total liabilities 135,244,365
------------
Net Assets $605,462,736
============
Net Assets consist of:
Paid-in capital $670,526,724
Accumulated net realized loss (37,851,600)
Undistributed net investment income 2,043,910
Net unrealized depreciation (29,256,298)
------------
Total Net Assets $605,462,736
============
Shares of beneficial interest outstanding 29,863,310
============
Net Asset Value, offering and redemption price per share
(Net Assets/Shares outstanding) $ 20.27
============
The accompanying notes are an integral part of the financial statements.
10
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Statement of Operations
For the Six Months Ended March 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income (Note 1B)
Dividend income from unaffiliated investments $ 5,756,737
Dividend income from affiliated investments (Note 1F) 418,187
Securities lending income (Note 7) 623,462
Interest income 9,618
-------------
Total investment income 6,808,004
Expenses
Investment advisory fee (Note 2) $ 2,803,301
Administrative service fees (Note 2) 197,749
Accounting, administration, custody and transfer agent fees (Note 2) 114,779
Professional fees 30,651
Registration fees 19,642
Trustees' fees and expenses (Note 2) 28,107
Insurance expense 7,573
Miscellaneous expenses 58,520
-----------
Total expenses 3,260,322
-------------
Net investment income 3,547,682
-------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (34,282,387)
Financial futures transactions (1,204,297)
-----------
Net realized gain (loss) (35,486,684)
Change in unrealized appreciation (depreciation) on:
Investments (76,253,683)
Financial futures contracts (602,737)
-----------
Change in net unrealized appreciation (depreciation) (76,856,420)
-------------
Net realized and unrealized gain (loss) (112,343,104)
-------------
Net Increase (Decrease) in Net Assets from Operations $(108,795,422)
=============
The accompanying notes are an integral part of the financial statements.
11
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Increase (Decrease) in Net Assets:
From Operations
Net investment income $ 3,547,682 $ 4,586,048
Net realized gain (loss) (35,486,684) 44,081,180
Change in net unrealized appreciation (depreciation) (76,856,420) 13,596,512
------------ ------------
Net increase (decrease) in net assets from investment operations (108,795,422) 62,263,740
------------ ------------
Distributions to Shareholders (Note 1C)
From net investment income (2,839,520) (2,720,774)
From net realized gains on investments (44,868,181) (25,544,571)
------------ ------------
Total distributions to shareholders (47,707,701) (28,265,345)
------------ ------------
Fund Share Transactions (Note 4)
Net proceeds from sale of shares 65,879,160 389,073,666
Value of shares issued in reinvestment of distributions 33,645,794 21,086,392
Cost of shares redeemed (net of redemption
fees of $17,429 and $28,716, respectively) (167,515,724) (153,762,234)
------------ ------------
Net increase (decrease) in net assets from Fund share transactions (67,990,770) 256,397,824
------------ ------------
Total Increase (Decrease) in Net Assets (224,493,893) 290,396,219
Net Assets
At beginning of period 829,956,629 539,560,410
------------ ------------
At end of period (including undistributed net
investment income of $2,043,910 and $1,335,748, respectively) $605,462,736 $829,956,629
============ ============
The accompanying notes are an integral part of the financial statements.
12
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Financial Highlights
- --------------------------------------------------------------------------------
For the
Six Months Ended Year Ended September 30,
March 31, 2008 --------------------------------------------------------------
(Unaudited) 2007 2006 2005 2004 2003
---------- -------- -------- -------- ------- -------
Net Asset Value, Beginning of Period $ 25.26 $ 23.70 $ 22.55 $ 21.91 $ 18.49 $ 14.30
-------- -------- -------- -------- ------- -------
From Investment Operations:
Net investment income (loss)* (a) 0.11 0.16 0.09 0.02 (0.05) (0.01)
Net realized and unrealized gains (loss)
on investments (3.56) 2.48 2.58 4.29 5.27 4.24
-------- -------- -------- -------- ------- -------
Total from operations (3.45) 2.64 2.67 4.31 5.22 4.23
-------- -------- -------- -------- ------- -------
Less Distributions to Shareholders:
From net investment income (0.09) (0.09) (0.03) - - (0.02)
From net realized gains on investments (1.45) (0.99) (1.49) (3.67) (1.80) (0.02)
-------- -------- -------- -------- ------- -------
Total distributions to shareholders (1.54) (1.08) (1.52) (3.67) (1.80) (0.04)
-------- -------- -------- -------- ------- -------
Net Asset Value, End of Period $ 20.27 $ 25.26 $ 23.70 $ 22.55 $ 21.91 $ 18.49
======== ======== ======== ======== ======= =======
Total Return (14.02%)(c) 11.18% 12.42% 21.34% 29.92% 29.64%(b)
Ratios/Supplemental Data:
Expenses (to average daily net assets)* (c) 0.93%(d) 0.90%(e) 0.94%(e) 1.05%(e) 1.18%(e) 1.15%(e)
Net Investment Income (Loss)
(to average daily net assets)* 1.01%(d) 0.61% 0.40% 0.08% (0.24%) (0.05%)
Portfolio Turnover (d) 34%(c) 67%(f) 60%(f) 70%(f) 123%(f) 51%(g)
Net Assets, End of Period (000's omitted) $605,463 $829,957 $539,560 $189,647 $61,182 $45,305
- -------
* The investment advisor voluntarily agreed not to impose a portion of its
investment advisory fee and/or reimbursed the (loss) 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
reimbursement would have been:
Net investment income (loss) per share (a) N/A N/A N/A N/A N/A $(0.03)
Ratios (to average daily net assets):
Expenses (c) N/A N/A N/A N/A N/A 1.28%
Net investment income (loss) N/A N/A N/A N/A N/A (0.18%)
(a) Calculated based on average shares outstanding.
(b) Total return would have been lower in the absence of expense waivers.
(c) Not annualized.
(d) Calculated on an annualized basis.
(e) For the period October 1, 2006 to September 19, 2007 and for the fiscal
years ended September 30, 2003-2006, the ratio includes the Fund's share of
the TBC Small Cap Value Portfolio's allocated expenses.
(f) On September 19, 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. Effective September 20, 2007, the Fund began investing directly
in the securities in which the Portfolio had invested. Portfolio turnover
represents investment activity of both the Fund and the Portfolio for the
year. The amounts shown for 2003-2006 are the ratios for the Portfolio.
(g) Portfolio turnover represents activity while the Fund was investing
directly in securities until January 27, 2003. The portfolio turnover ratio
for the period January 24, 2003 to September 30, 2003 was 51%.
The accompanying notes are an integral part of the financial statements.
13
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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. The
Boston Company Small Cap Value Fund (the "Fund") is a separate diversified
investment series of the Trust.
The objective of the Fund is to achieve long-term growth of capital. The
Fund seeks to achieve its objective by investing, under normal
circumstances, at least 80% of net assets in equity securities of small cap
U.S. companies. The Fund focuses on companies with total market
capitalizations equal to or less than the total market capitalization of
the largest company included in the Russell 2000 Index.
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
calculated mean price (average of last bid and last offer). Securities that
are fixed income securities, other than short-term instruments with less
than sixty days remaining to maturity, for which accurate 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, or if such quotations do not accurately reflect
fair value, 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 regulated 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 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.
B. Securities transactions and income
Securities transactions are recorded as of trade date. Interest income is
determined on the basis of coupon interest accrued, adjusted for accretion
of discount or amortization of premium using the yield-to-maturity method
on debt securities with greater than sixty days remaining 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.
Dividends representing a return of capital are reflected as a reduction of
cost.
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 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 result in reclassifications among undistributed net
investment income, 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 be distributed in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in the
following year.
14
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 The Boston Company
Asset Management LLC ("TBCAM"), a wholly-owned subsidiary of The Bank of
New York Mellon Corporation ("BNY Mellon"), or its affiliates.
G. New accounting requirements
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.
In March 2008, the FASB released Statement of Financial Accounting
Standards No. 161, Disclosures about Derivative Instruments and Hedging
Activities ("FAS 161"). FAS 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. The application of FAS 161 is required for fiscal years
beginning after November 15, 2008 and interim periods within those fiscal
years. At this time, management is evaluating the implications of FAS 161
and its impact on the financial statements and the accompanying notes has
not yet been determined.
(2) Investment Advisory Fee and Other Transactions With Affiliates:
The investment advisory fee paid to TBCAM for overall investment advisory,
administrative services, and general office facilities, is paid monthly at
the annual rate of 0.80% of the Fund's.
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 TBCAM, 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
$12,914, for the six months ended March 31, 2008.
The Trust entered into an agreement with Mellon Bank, N.A. ("Mellon Bank"),
a wholly-owned subsidiary of BNY Mellon and an affiliate of TBCAM, 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 $101,865 for the six months ended March 31,
2008.
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, Mellon Bank earned $266,227 for the
six months ended March 31, 2008. See Note 7 for further details.
15
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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
$2,151 for the six months ended March 31, 2008, which amount is included in
miscellaneous expenses on the Statement of Operations. See Note 8 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 six months ended
March 31, 2008, the Fund was charged $2,251, which amount is included in
miscellaneous expenses in the statement of operations. No other director,
officer or employee of TBCAM 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 TBCAM 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 TBCAM, to provide printing and
fulfillment services for the Fund. Pursuant to this agreement, the Fund was
charged $9,600, which amount is included in miscellaneous expenses in the
statement of operations, for the six months ended March 31, 2008.
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
six months ended March 31, 2008, the Fund was charged $38,066 for fees
payable to BNY Mellon Private Wealth Management.
MBSC Securities Corporation ("MBSC"), a wholly-owned subsidiary of BNY
Mellon and affiliate of TBCAM, is the distributor of the Fund's shares.
(3) Purchases and Sales of Investments:
Purchases and proceeds from sales of investments, other than short-term
obligations, for the six months ended March 31, 2008 were as follows:
Purchases Sales
------------ ------------
Non-U.S. Government Securities $235,835,926 $335,448,527
============ ============
(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
Six Months Ended For the
March 31, 2008 Year Ended
(Unaudited) September 30, 2007
---------------- ------------------
Shares sold 3,013,460 15,293,689
Shares issued to shareholders in
reinvestment of distributions 1,554,078 841,925
Shares redeemed (7,554,967) (6,052,936)
---------- ----------
Net increase (decrease) (2,987,429) 10,082,678
========== ==========
At March 31, 2008, two shareholders of record, in the aggregate held
approximately 29.6% of the total outstanding shares of the Fund. Investment
activities of these shareholders could have a material impact on the Fund.
For example, a significant redemption by such shareholders could result in
illiquid or less liquid investments comprising a larger portion of the
Fund's Portfolio.
16
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
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 six months ended March 31, 2008, the Fund received
$17,429 in redemption fees and is reflected in the cost of shares redeemed.
(5) Federal Taxes:
Each year, the Fund intends to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue 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 cost and unrealized appreciation (depreciation) in value of the
investment securities owned at March 31, 2008, as computed on a federal
income tax basis, were as follows:
Cost for federal income tax purposes $759,248,146
============
Gross unrealized appreciation $ 39,972,739
Gross unrealized depreciation (69,229,037)
------------
Net unrealized appreciation (depreciation) $(29,256,298)
============
(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:
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 March 31, 2008, the Fund held open financial futures contracts. See the
Schedule of Investments for further details.
17
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
(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.
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 affect 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 December 11, 2007 through March 31, 2008, the securities lending
agent effected such withdrawals and the cash proceeds from such withdrawals
by the Fund were reinvested in shares of the Dreyfus Fund. Repayments of
cash collateral during the period were made from the proceeds of
redemptions of shares of the Dreyfus Fund. See Schedule of Investments for
further detail on the Fund's investment of cash collateral in the BlackRock
Fund and the Dreyfus Fund as of March 31, 2008.
The Fund loaned securities during the six months ended March 31, 2008 and
earned interest on the invested collateral of $3,800,881 of which
$3,177,419 was rebated to borrowers or paid in fees. At March 31, 2008, the
Fund had securities valued at $129,748,695 on loan of which $133,358,448
was collateralized with cash and $539,501 was collateralized with highly
liquid securities. See Schedule of Investments for further detail on the
security positions on loan and collateral held.
(8) 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 six months ended March 31, 2008,
the Fund had average borrowings outstanding of $1,079,500 for a total of
two days and incurred $290 of interest expense. The Fund did not have an
outstanding loan balance at March 31, 2008.
18
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Factors Considered by the Trustees in Approving the Investment Advisory
Agreement (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, The Boston Company Asset Management LLC ("TBCAM" 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.
19
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Factors Considered by the Trustees in Approving the Investment Advisory
Agreement (Unaudited)
- --------------------------------------------------------------------------------
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.
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 (14.03% vs. 13.34%),
three-year period (16.34% vs. 14.34%) and five-year period (18.24% vs. 16.93%).
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 0.80%, which was in the 4th (1st being
the best) quintile of its peer group of funds, the median fee of which was
0.77%. The Fund's net management fee, after giving effect to expense
limitations, was 0.799%, above the peer group median net management fee of
0.756%. 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 0.942% was lower than the median net expense ratio of the peer group of
1.021%, 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 many
of the investment companies in the Mellon Institutional Funds family of funds.
The Trustees observed that the Adviser had incurred gains 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
Fund and The Boston Company International Core Equity Fund, 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.
20
Mellon Institutional Funds Investment Trust
The Boston Company Small Cap Value Fund
Factors Considered by the Trustees in Approving the Investment Advisory
Agreement (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 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.
21
Trustees and Officers (Unaudited)
The following table lists the Trust's trustees and officers; their ages,
addresses and dates of birth; their positions 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 period ended March 31, 2008. 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 March 31,
Date of Birth Held with Trust Time Served* 5 Years Trustee Trustee 2008)
- ------------------------------------------------------------------------------------------------------------------------------------
Samuel C. Fleming (67) Trustee Trustee since Chairman Emeritus, 17 None Fund: $3,361
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: $3,361
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 (73) Trustee Trustee since Trustee, Mertens 17 None Fund: $3,361
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: $4,164
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
200 Park Ave., 55th Fl. President and Officer of The Dreyfus
New York, NY 10166 Chief Executive Corporation; Executive
8/24/48 Officer Vice President 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.
22
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 (51) 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
23
MELLON INSTITUTIONAL FUNDS
One Boston Place
Boston, MA 02108-4408
800.221.4795
www.melloninstitutionalfunds.com
6944SA0308
Item 2. Code of Ethics.
Not applicable to this semi-annual filing.
Item 3. Audit Committee Financial Expert.
Not applicable to this semi-annual filing.
Item 4. Principal Accountant Fees and Services.
Not applicable to this semi-annual filing.
Item 5. Audit Committee of Listed Registrants.
Not applicable to the Registrant.
Item 6. Investments
(a) Schedule of Investments in securities of unaffiliated issuers is
included as part of the Semi-Annual Report to Shareholders filed
under Item 1 of this Form N-CSR.
(b) Not applicable to this semi-annual filing.
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 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 Registrant's Principal Executive Officer and Principal
Financial Officer concluded that the Registrant's disclosure
controls and procedures are effective based on their evaluation
of the Registrant's disclosure controls and procedures as of a
date within 90 days prior to the filing date of this report (the
"Evaluation Date" as defined in Rule 30a-3(c) under the
Investment Company Act of 1940).
(b) There was no change in the Registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the
Investment Company Act of 1940) during Registrant's last fiscal
quarter that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over
financial reporting. However, as reported previously on Form
N-CSR (as filed on March 31, 2008) and Forms N-Q (as filed on
April 22, 2008 and May 30, 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. During the fiscal quarter ended March
31, 2008, 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.
Item 12. Exhibits.
(a)(1) Not applicable to this semi-annual filing.
(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
(a)(3) Not applicable to the Registrant.
(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, Vice President and Secretary
Date: June 6, 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: June 6, 2008
By (Signature and Title): /s/ STEVEN M. ANDERSON
----------------------
Steven M. Anderson, Vice President,
Treasurer and Chief Financial Officer
Date: June 6, 2008