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NOTES TO FINANCIAL STATEMENTS (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 nature, risks and objectives of these instruments are set forth more fully in the Fund's Prospectus and Statement of Additional Information. The Fund may trade the following 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 securities 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 options is shown in the Schedule of Investments. This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contract or if the counterparty does not perform under the contract's terms. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or are closed are added to or offset against the proceeds or amount paid on the transaction to determine the realized gain or loss. Realized gains and losses on purchased options are included in realized gains and losses on investment securities, except purchased options on foreign currency which are included in realized gains and losses on foreign currency transactions. If a put option written by the Fund is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as 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. The Fund had entered into option transactions during the year ended December 31, 2004. The detail of those option transactions were as follows NUMBER OF WRITTEN PUT OPTION TRANSACTIONS CONTRACTS PREMIUMS __________ __________ Outstanding, beginning of year 1 4,688 Options written 1 4,219 Options expired (2) (8,907) __________ __________ Outstanding, end of year 0 0 __________ __________ __________ __________ NUMBER OF WRITTEN CALL OPTION TRANSACTIONS CONTRACTS PREMIUMS __________ __________ Outstanding, beginning of year 1 3,500 Options written 1 4,219 Options closed (2) (7,719) __________ __________ Outstanding, end of year 0 0 __________ __________ FORWARD 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 gains or losses are recorded for financial statement purposes as unrealized until the contract settlement date or upon the closing of the contract. Forward currency exchange contracts are used by the Fund primarily to protect the value of the Fund's foreign securities from adverse currency movements. Unrealized appreciation and depreciation of forward currency exchange contracts is included in the Statement of Assets and Liabilities. 18 __________ __________ MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON OPPORTUNISTIC EMERGING MARKETS DEBT FUND NOTES TO FINANCIAL STATEMENTS The Fund held these contracts at December 31, 2004. See Schedule of Investments for further details. FUTURES CONTRACTS The Fund may enter into financial futures contracts for the delayed sale or delivery of securities or contracts based on financial indices at a fixed price on a future date. Pursuant to the 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 gains or losses 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 Fund 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 arise if there is an illiquid secondary market or if the counterparties do not perform under the contract's terms. The Fund enters into financial futures transactions primarily 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. The Fund held these contracts at December 31, 2004. See Schedule of Investments for further details. SWAP AGREEMENTS The Fund may enter into swap agreements. A swap is an agreement to exchange the return generated by one instrument for the return generated by another instrument. The Fund may enter into interest rate and credit default swap agreements to manage its exposure to interest rates and credit risk. Interest rate swap agreements involve the exchange by the Fund with another party of their respective commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments with respect to a notional amount of principal. In a credit default swap, one party makes a stream of payments to another party in exchange for the right to receive a specified return in the event of a default by a third party on its obligation. The Fund may use credit default swaps to provide a measure of protection against defaults of issuers (i.e., to reduce risk where the Fund owns or has exposure to the corporate or sovereign issuer) or to take an active long or short position with respect to the likelihood of a particular corporate or sovereign issuer's default. In connection with these agreements, cash or securities may be set aside as collateral in accordance with the terms of the swap agreement. The Fund earns interest on cash set aside as collateral. Swaps are marked to market daily based upon quotations from market makers and change in value, if any, is recorded as unrealized gain or loss in the Statement of Operations. These financial instruments are not actively traded on financial markets. The values assigned to these instruments are based upon the best available information and because of the uncertainty of the valuation, these values may differ significantly from the values that would have been realized had a ready market for these instruments existed, and differences could be material. Payments received or made from credit default swaps at the end of the measurement period are recorded as realized gain or loss in the Statement of Operations. Net payments of interest on interest rate swap agreements, if any, are included as part of realized gain or loss. Entering into these agreements involves, to varying degrees, elements of credit, market, and documentation risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of contractual terms in the agreements, and that there may be unfavorable changes in interest rates. The Fund held swap contracts at December 31, 2004. 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. The Fund loaned securities during the year ended December 31, 2004 resulting in security lending income of $6,591. At December 31, 2004, the Fund had securities valued at $371,647 on loan. See Schedule of Investments for further detail on the security positions on loan and collateral held. 19 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON OPPORTUNISTIC EMERGING MARKETS DEBT FUND NOTES TO FINANCIAL STATEMENTS (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 portfolio 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. Unsettled TBA sale commitments are valued at the current market value of the underlying securities, generally according to the procedures described under "Investment security valuations" above. The contract is 'marked-to- market' daily and the change in market value is recorded by the Fund as an unrealized gain or loss. If the TBA sale commitment is closed through the acquisition of an offsetting purchase commitment, the Fund realizes a gain or loss from the sale of the securities based upon the unit price established at the date the commitment was entered into. The Fund held delayed delivery securities during the year ended December 31, 2004. See Schedule of Investments for further details. (8) LINE OF CREDIT: The Fund, and other funds in the Trust and subtrusts in the Mellon Institutional Funds Master Portfolio Trust (the "Portfolio Trust") are parties to a committed line of credit facility, which enables each portfolio/fund to borrow, in the aggregate, up to $35 million. Interest is charged to each participating portfolio/fund based on its borrowings at a rate equal to the Federal Funds effective rate plus 1/2 of 1%. In addition, a facility fee, computed at an annual rate of .060 of 1% committed amount, is allocated ratably among the participating portfolios/funds at the end of each quarter. For the year ended December 31, 2004, a facility fee of $140 was allocated to the Fund. During the year ended December 31, 2004, the Fund had average borrowings outstanding of $45,400 on a total of fifteen days and incurred $50 of interest expense. 20 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON OPPORTUNISTIC EMERGING MARKETS DEBT FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Trustees of Mellon Institutional Funds Investment Trust and the Shareholders of Standish Mellon Opportunistic Emerging Markets Debt Fund: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Standish Mellon Opportunistic Emerging Markets Debt Fund (the "Fund") at December 31, 2004, and the results of its operations, the changes in its net assets, and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion PricewaterhouseCoopers LLP New York, NY February 25, 2005 21 TRUSTEES AND OFFICERS The following table lists the Trust's trustees and officers; their address and date of birth; their position with the Trust; the length of time holding that position with the Trust; their principal occupation(s) during the past five years; the number of portfolios in the fund complex they oversee; other directorships they hold in companies subject to registration or reporting requirements of the Securities Exchange Act of 1934 (generally called "public companies") or in registered investment companies; and total annual remuneration paid as of December 31, 2004. The Trust's Statement of Additional Information includes additional information about the Trust's trustees and is available, without charge, upon request by writing The Mellon Institutional Funds at P.O. Box 8585, Boston, MA 02266-8585 or calling toll free 1-800-221-4795. INDEPENDENT TRUSTEES 22 NUMBER OF PRINCIPAL PORTFOLIOS IN NAME TERM OF OFFICE OCCUPATION(S) FUND COMPLEX DIR ADDRESS, AND POSITION(S) AND LENGTH OF DURING PAST OVERSEEN BY DATE OF BIRTH HELD WITH TRUST TIME SERVED 5 YEARS TRUSTEE --------------------------------------------------------------------------------------------------------- Samuel C. Fleming Trustee Trustee since Chairman of the Board 30 c/o Decision Resources, Inc. 11/3/1986 and Chief Executive 260 Charles Street Officer, Decision Waltham, MA 02453 Resources, Inc. 9/30/40 Caleb Loring III Trustee Trustee since Trustee, Essex Street 30 c/o Essex Street Associates 11/3/1986 Associates (family P.O. Box 181 investment trust office) Beverly, MA 01915 11/14/43 Benjamin M. Friedman Trustee Trustee since William Joseph Maier, 30 c/o Harvard University 9/13/1986 Professor of Political Cambridge, MA 02138 Economy, Harvard 8/5/44 University John H. Hewitt Trustee Trustee since Trustee, Mertens 30 P.O. Box 2333 11/3/1986 House, Inc. (hospice) New London, NH 03257 4/11/35 INTERESTED TRUSTEES Patrick J. Sheppard Trustee, President Since 2003 Senior Vice President 30 Mellon Institutional and Chief and Chief Operating Officer, Asset Management Executive Officer Mellon Institutional One Boston Place Asset Management; Boston, MA 02108 formerly Vice President 7/24/65 and Chief Financial Officer, Mellon Institutional Asset Management PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES 23 NAME 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 --------------------------------------------------------------------------------------------------------- Barbara A. McCann Vice President Since 2003 Senior Vice President and Head of Operati Mellon Institutional and Secretary Mellon Institutional Asset Management, fo Asset Management First Vice President, Mellon Institutiona One Boston Place Management and Mellon Global Investments Boston, MA 02108 2/20/61 Steven M. Anderson Vice President Vice President Vice President and Mutual Funds Controlle Mellon Institutional and Treasurer since 1999; Mellon Institutional Asset Management Asset Management Treasurer Institutional Asset One Boston Place since 2002 Boston, MA 02108 7/14/65 Denise B. Kneeland Assistant Vice Since 1996 Vice President and Manager, Mutual Funds Mellon Institutional President Mellon Institutional Asset Management Asset Management One Boston Place Boston, MA 02108 8/19/51 Cara E. Hultgren Assistant Vice Since 2001 Assistant Vice President and Manager, Mellon Institutional President Shareholder Services, Mellon Institutiona Asset Management Asset Management since 2001; One Boston Place Shareholder Representative, Boston, MA 02108 Standish Mellon Asset Management 1/19/71 Jan F. Jumet Chief Since 2004 Senior Vice President and Chief Complianc Standish Mellon Assest Compliance for Standish Mellon Asset Management Comp Management Company LLC Officer formerly Director of Compliance and Admin One Boston Place and Chief Administration Officer for Stan Boston, MA 02108 Asset Management Company LLC, Senior 8/9/66 Vice President and Chief Administration O for Mellon Bond Associates, LLP, and First Vice President and Senior Sales Ass for Mellon Institutional Asset Management THIS PAGE INTENTIONALLY LEFT BLANK THIS PAGE INTENTIONALLY LEFT BLANK One Boston Place Boston, MA 02108-4408 800.221.4795 www.melloninstitutionalfunds.com Annual Report STANDISH MELLON INVESTMENT GRADE BOND FUND YEAR ENDED DECEMBER 31, 2004 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. Commencing with the fiscal quarter ending September 30, 2004, 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. To view the Fund' s proxy voting guidelines and proxy voting record for the 12-month period ended June 30, 2004, visit 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. February 28, 2005 Dear Mellon Institutional Fund Shareholder: Enclosed you will find your Fund's annual report for the fiscal year ended December 31, 2004. The year was largely positive for the financial markets, as the economic expansion continued. However, as the year progressed, anticipated GDP growth diminished in line with typical expectations at this point in the economic cycle. The S&P 500 entered 2004 with a sharp climb, fueled to a large degree by above-trend GDP growth: 4.4% in the fourth quarter of 2003 and 5.0% in the first quarter of the year, driven by a potent mix of tax cuts, monetary policy and government spending. But the momentum stalled, as the market dealt with the prospect of inflation and a new tightening cycle by the Federal Reserve, the uncertainties of a tight presidential campaign, and the ever- present threats posed by terrorism. The equity markets greeted the reelection of President Bush with optimism, as the S&P 500 surged past 1200 in the closing weeks of the year to its 2004 peak. In the bond market, the year started with much speculation about when and how the Fed would end one of the longest stretches of easy monetary policy on record, which had driven rates to historical lows. In the fall of 2003, the prospect of deflation was still a factor in the Fed's deliberations and was its stated rationale for maintaining an accommodative stance. In the first quarter, however, the Fed began to refer to a "measured pace" of tightening. The market reacted by switching gears dramatically, sending the 10-year U.S. Treasury note from 3.7% on March 16 to 4.9% on June 14. Since then, as the economic outlook softened, with relatively tame inflation, yields have settled back to about 4%, roughly the same as a year ago. Looking ahead, it is clear that there are some causes for concern. Consumers are weighted with debt and potentially vulnerable in a rising rate environment. Companies are hoarding cash and are being deliberate in boosting employment and spending on plant and equipment. The stimulus of monetary policy, tax cuts and government spending is waning. Nevertheless, business activity has some significant momentum, which should carry over into 2005, with reasonable profit growth and modest inflation. Finally, the president's ambitious plans to privatize Social Security, reform health care, and revise the tax code could potentially have major fiscal implications that the market will be watching carefully. Thank you for your business and confidence in Mellon Institutional Funds. Please feel free to contact us with questions or comments. Sincerely, Patrick J. Sheppard One Boston Place * Boston, MA 02108-4402 A MELLON ASSET MANAGEMENT COMPANY 1 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND MANAGEMENT DISCUSSION AND ANALYSIS Economic activity maintained a healthy pace in 2004. The employment picture improved with monthly job gains averaging approximately 185,000. Investment spending and capacity utilization picked up, and despite higher interest rates, the housing market and consumer spending kept pace. For the year ending December 31, 2004, the Standish Mellon Investment Grade Bond Fund returned 4.53% while the Lehman Brothers Aggregate Index returned 4.34% for the same period. Amid rising oil prices and a weaker dollar, the Federal Reserve maintained a tame inflation outlook. Bond market volatility was low as the Fed hiked interest rates in a predictable and steady fashion from 1% to 2.25% by the end of the year. The unusual aspect of this tightening cycle has been the decline in 10- and 30-year yields as short rates have risen. So while the yield curve has flattened similarly to previous cycles, long-term interest rates have moved to lower levels than expected. To a large degree, the massive foreign purchases of U.S. Treasuries have kept long-term interest rates lower than anticipated during a period of tighter monetary policy. Over the past year, broad sectors outperformed Treasuries with particularly strong excess returns from investment grade corporate bonds. Spread sectors, especially mortgages, benefited from declining interest rate volatility. The credit sector fared well amid steady economic activity. Treasury inflation-protected securities (TIPS) outperformed nominal Treasuries as both actual and expected levels of inflation rose. Over the course of the year, the primary sources of outperformance were the overweight positions in corporate bonds and TIPS, as well as the defensive yield curve strategy. As the curve flattened, the Fund's underweight position in intermediate bonds (bullet strategy) relative to cash and longer maturities (barbell strategy) benefited returns. Portfolio positioning also capitalized on the lower volatility environment with an increased allocation to mortgages. Toward year-end, with much narrower corporate bond spreads, we selectively reduced the Fund's investment grade credit exposure. We believe prospects for economic growth in 2005 are good. We expect reasonably strong economic data will support continued rate hikes by the Fed. Under tighter monetary conditions, we anticipate upward pressure on interest rates and a flatter yield curve. With today's low volatility environment and narrow yield spreads, many sectors appear overvalued. Given the vulnerability to a correction in spread sectors, we have positioned the Fund defensively, particularly with a reduced corporate bond position. We have increased our allocation to Treasury inflation-protected securities as seasonal inflation patterns and breakeven inflation rates in the area of 2.5% make TIPS attractive relative to nominal Treasuries. Ultimately, if as we expect, the Fed maintains their tightening stance, the Fund's shorter than benchmark duration and barbell curve position will continue to contribute positively to performance. As always, we look forward to serving you in the coming year. Catherine Powers Marc Seidner 2 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND COMPARISON OF CHANGE IN VALUE OF $100,000 INVESTMENT IN STANDISH MELLON INVESTMENT GRADE BOND FUND AND THE LEHMAN AGGREGATE INDEX AVERAGE ANNUAL TOTAL RETURNS (FOR PERIOD ENDED 12/31/2004) AVERAGE ANNUAL TOTAL RETURNS REFLECT THE CHANGE IN THE VALUE OF AN INVESTMENT, ASSUMING REINVESTMENT OF THE FUND'S DIVIDEND INCOME AND CAPITAL GAINS. THE $100,000 LINE GRAPH AND THE FUND'S RETURNS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. DURING PERIODS OF REIMBURSEMENT BY THE FUND'S INVESTMENT ADVISER (IF APPLICABLE), THE FUND'S TOTAL RETURN WILL BE GREATER THAN IT WOULD BE HAD THE REIMBURSEMENT NOT OCCURRED. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. 3 S Inc 1 Year 3 Year 06/0 --------------------------------------------------------------------------------------------------------- 4.53% 5.57% 7 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND SHAREHOLDER EXPENSE EXAMPLE As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2004 to December 31, 2004). 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 ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO OF 0.40%, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 184/366 (TO REFLECT THE ONE-HALF YEAR PERIOD). 4 BEGINNING ENDING ACCOUNT VALUE ACCOUNT VALUE JULY 1, 2004 DECEMBER 31, 2004 --------------------------------------------------------------------------------------------------------- Actual $1,000.00 $1,043.50 Hypothetical (5% return per year before expenses) $1,000.00 $1,023.13 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND FUND INFORMATION AS OF DECEMBER 31, 2004 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 higer rating category. * Excluding short-term investments and investment of cash collateral. The Fund is actively managed. Current holdings may be different than those presented above. 5 SUMMARY OF COMBINED RATINGS ---------------------------------------------------------------- PERCENTAGE OF QUALITY BREAKDOWN INVESTMENTS ---------------------------------------------------------------- Treasury/Agency 50.1% AAA 9.1 AA 3.7 A 13.4 BBB 23.7 _____ TOTAL 100.0% PERCENTAGE O TOP TEN HOLDINGS(*) RATE MATURITY NET ASSETS --------------------------------------------------------------------------------------------------------- FNMA TBA 6.000% 1/1/2035 7.3% FNMA TBA 5.500 1/1/2020 5.4 FNMA TBA 5.500 1/1/2035 3.8 FNMA TBA 6.000 1/1/2020 3.4 U.S. Treasury Inflation Index Bonds (TIPS) 3.000 7/15/2012 3.1 FNMA TBA 5.000 1/1/2020 2.9 US Treasury Bonds 6.250 5/15/2030 2.8 Chase Manhattan Auto Owner Trust 1.520 5/15/2007 1.8 FNMA 5.500 2/1/2033 1.5 FNMA 5.500 10/1/2033 1.4 _____ 33.4% PERCENTAGE OF ECONOMIC SECTOR ALLOCATION INVESTMENTS -------------------------------------------- Treasury/Agency 14.5% Mortgage pass thru 35.1 Credit 34.2 ABS/CMO/CMBS 15.7 Cash & equivalents 0.5 _____ 100.0% MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND SCHEDULE OF INVESTMENTS - DECEMBER 31, 2004 The accompanying notes are an integral part of the financial statements. 6 SECURITY DESCRIPTION RATE MATURITY --------------------------------------------------------------------------------------------------------- BONDS AND NOTES--118.9% ASSET BACKED--21.7% American Express Credit Account Master Trust 2000-2 B (a) 2.753% 9/17/2007 $ American Express Credit Account Master Trust 2004-C (a) 2.903 2/15/2012 American Express Master Trust 2002-1 A(a) 2.473 12/15/2005 Ameriquest Mortgage Securities Inc. 2003-8 AF3 4.370 10/25/2033 Capital One Multi-Asset Execution Trust 2002-B1 B1 (a) 3.083 7/15/2008 Capital One Multi-Asset Execution Trust 2004-C1 C1 3.400 11/16/2009 Capital One Prime Auto Receivables Trust 2004-1 A3 2.020 11/15/2007 Centex Home Equity 2004-B AF2 2.375 12/25/2021 Chase Credit Card Master Trust 2000-3 A (a) 2.533 1/15/2008 Chase Credit Card Master Trust 2002-6 B (a) 2.753 1/15/2008 Chase Credit Card Master Trust 2002-8 A (a) 2.463 3/17/2008 Chase Funding Loan Acquisition Trust 2.598 9/25/2013 Chase Manhattan Auto Owner Trust 1.520 5/15/2007 Chase Manhattan Auto Owner Trust 2003-C CTFS 2.780 6/15/2010 Centex Home Equity Co. LLC 2004-2 A1 (a) 2.588 1/25/2025 Chase Credit Card Master Trust 2002-2 C (a) 3.303 7/16/2007 Citibank Credit Card Issuance Trust 2001-C3 C3 6.650 5/15/2008 Citibank Credit Card Issuance Trust 2002-A2 A2 (a) 2.320 2/15/2007 Countrywide Asset-Backed Certificates 2004-10 2AV1 (a) 2.578 9/25/2023 Countrywide Asset-Backed Certificates 2004-14 A1 (a) 2.560 12/25/2022 Ford Credit Auto Owner Trust 2002-B A4 4.750 8/15/2006 Household Credit Card Master Note Trust I 2001 Cl A (a) 2.543 8/15/2008 Hyundai Auto Receivables Trust 2004-A B 3.460 8/15/2011 John Deere Owner Trust 2004-A A1 1.140 5/13/2005 MBNA Credit Card Master Note Trust 2001-C3 C3 6.550 12/15/2008 Morgan Stanley Auto Loan Trust 2004-HB1 A1 1.330 5/15/2006 Option One Mortgage Loan Trust 2004-3 A2 (a) 2.568 11/25/2034 Residential Asset Mortgage Products, Inc. 2003-RS11 AI2 3.047 3/25/2025 Residential Asset Mortgage Products, Inc. 2004-RS12 AII1 (a) 2.547 5/25/2027 Residential Asset Mortgage Products, Inc., 2004-RS8 AI2 3.810 1/25/2026 Residential Asset Securities Corp. 2004-KS10 AI1 (a) 2.588 3/25/2025 Residential Asset Securties Corp. 2003-KS11 AI1 (a) 2.588 9/25/2021 Specialty Underwriting & Residential Finance (a) 2.570 10/25/2035 USA Auto Owner Trust 2004-1 A3 2.060 4/15/2008 USA Auto Owner Trust 2004-3 A1 2.337 11/15/2005 WFS Financial Owner Trust 2004-3 B 3.510 2/17/2012 WFS Financial Owner Trust 2004-1 D 3.170 8/22/2011 WFS Financial Owner Trust 2004-4 C 3.210 5/17/2012 Whole Auto Loan Trust 2003-1 C 3.130 3/15/2010 Whole Auto Loan Trust 2004-1 A1 2.150 10/15/2005 Total Asset Backed (Cost $11,205,369) COLLATERALIZED MORTGAGE OBLIGATIONS--8.9% GNMA 3.402 3/16/2020 GNMA 3.084 1/16/2022 GNMA 1.698 11/16/2006 GNMA 3.648 9/16/2017 GNMA 2.946 3/16/2019 GNMA 3.360 8/16/2022 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND SCHEDULE OF INVESTMENTS - DECEMBER 31, 2004 The accompanying notes are an integral part of the financial statements. 7 SECURITY DESCRIPTION RATE MATURITY --------------------------------------------------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED) GNMA 4.145% 2/16/2018 $ GNMA 3.022 1/16/2019 GNMA 2.822 12/16/2019 GNMA 3.110 1/16/2019 GNMA 3.377 1/16/2023 GNMA 2003-48 AC 2.712 2/16/2020 GNMA 2003-72 A 3.206 4/16/2018 GNMA 2003-88 AC 2.914 6/16/2018 GNMA 2003-96 B 3.607 8/16/2018 Housing Securties, Inc. 1994-2 A1 6.500 7/25/2009 Structured Asset Mortgage Investments, Inc. 1998-2 B 6.750 4/30/2030 Washington Mutual 2003-AR10 A5 4.078 10/25/2033 Washington Mutual 2004-AR7 A6 (a) 3.950 7/25/2034 Washington Mutual 2004-AR9 A7 (a) 4.232 8/25/2034 Total Collateralized Mortgage Obligations (Cost $4,625,227) CORPORATE--28.6% BANKING--6.4% Amsouth Bank NA 4.850 4/1/2013 Bank of America Corp. 7.400 1/15/2011 Branch Banking & Trust Co. Wilson North Carolina 5.200 12/23/2015 CBA Capital Trust I 144A 5.805 6/30/2015 City National Corp. 5.125 2/15/2013 JP Morgan Chase & Co. 5.125 9/15/2014 National City Corp. 6.875 5/15/2019 Rabobank Cap Fd Trust III 144A 5.254 10/15/2049 Regions Financial Corp. 6.375 5/15/2012 Southtrust Corp. 5.800 6/15/2014 Suntrust Bank 5.450 12/1/2017 US Bank National Association 6.375 8/1/2011 Wachovia Corp. 4.875 2/15/2014 Washingtion Mutual, Inc. 4.625 4/1/2014 Wells Fargo & Co. 6.375 8/1/2011 Zions Bancorporation 2.700 5/1/2006 Zions Bancorporation 6.000 9/15/2015 BASIC MATERIALS--1.0% Cabot Corp. 144A 5.250 9/1/2013 ICI Wilmington, Inc. 4.375 12/1/2008 International Paper Co. 5.300 4/1/2015 Meadwestvaco Corp. 6.800 11/15/2032 COMMUNICATIONS--2.6% AT&T Wireless Services, Inc. 8.750 3/1/2031 Clear Channel Communication 4.250 5/15/2009 Comcast Corp.(*) 5.500 3/15/2011 News America Inc. 144A(*) 5.300 12/15/2014 SBC Communications 5.625 6/15/2016 Sprint Capital Corp. 8.750 3/15/2032 Time Warner, Inc. 6.750 4/15/2011 Verizon Global Funding Corp. 6.875 6/15/2012 Verizon Global Funding Corp.(*) 7.750 6/15/2032 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND SCHEDULE OF INVESTMENTS - DECEMBER 31, 2004 The accompanying notes are an integral part of the financial statements. 8 SECURITY DESCRIPTION RATE MATURITY --------------------------------------------------------------------------------------------------------- CONSUMER CYCLICAL--0.4% DaimlerChrysler NA Holding Corp. 4.750% 1/15/2008 $ Heinz (H.J.) Co. (a) 6.189 12/1/2005 CONSUMER NONCYCLICAL--1.8% Aramark Services, Inc. 7.000 7/15/2006 Aramark Services, Inc. 6.375 2/15/2008 Kroger Co. 8.050 2/1/2010 Laboratory Corp. of America Holdings 5.500 2/1/2013 RR Donnelley & Sons Co. 4.950 4/1/2014 Safeway, Inc. 4.125 11/1/2008 Safeway, Inc.(*) 5.800 8/15/2012 Wyeth 5.500 2/1/2014 ENERGY--1.4% Amoco Co. 6.500 8/1/2007 Chevron Phillips 7.000 3/15/2011 Enbridge Energy Partners 6.300 12/15/2034 Halliburton Co. 5.500 10/15/2010 XTO Energy, Inc. 7.500 4/15/2012 FINANCIAL--9.6% Archstone-Smith 5.625 8/15/2014 Archstone-Smith Operating Trust 5.000 8/15/2007 Bear Stearns Cos., Inc.(*) 4.500 10/28/2010 Boeing Capital Corp. 4.750 8/25/2008 Boeing Capital Corp. 7.375 9/27/2010 Boston Properties Inc. 6.250 1/15/2013 Caterpillar Financial Service Corp. 3.100 5/15/2007 Countrywide Home Loan Inc. 4.000 3/22/2011 Duke Realty LP 3.500 11/1/2007 Duke Realty LP 7.750 11/15/2009 EOP Operating LP 7.000 7/15/2011 Erac USA Finance Co. 144A 7.950 12/15/2009 ERP Operating LP 4.750 6/15/2009 ERP Operating LP 6.625 3/15/2012 Ford Motor Credit Co. 6.500 1/25/2007 Ford Motor Credit Co.(*) 5.625 10/1/2008 Ford Motor Credit Co. 7.875 6/15/2010 Ford Motor Credit Co. 7.250 10/25/2011 General Electric Capital Corp. 6.750 3/15/2032 General Motors Acceptance Corp.(*) 6.875 8/28/2012 Glencore Funding LLC 144A 6.000 4/15/2014 Goldman Sachs Group, Inc. 6.875 1/15/2011 Healthcare Realty Trust, Inc. 8.125 5/1/2011 Household Finance Corp. 6.375 10/15/2011 Jefferies Group, Inc. 7.500 8/15/2007 Jefferies Group, Inc. 5.500 3/15/2016 MassMutual Global Funding II 144A 3.800 4/15/2009 Merrill Lynch & Co. 4.125 9/10/2009 Morgan Stanley 4.750 4/1/2014 Nationwide Mutual Insurance Co. 144A 8.250 12/1/2031 Nationwide Mutual Insurance Co. 144A 6.600 4/15/2034 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND SCHEDULE OF INVESTMENTS - DECEMBER 31, 2004 The accompanying notes are an integral part of the financial statements. SECURITY DESCRIPTION RATE MATURITY --------------------------------------------------------------------------------------------------------- FINANCIAL (CONTINUED) Principal Life Income Funding Trusts (a) 2.080% 10/14/2005 $ Prudential Financial, Inc. 5.100 9/20/2014 Prudential Financial, Inc. 4.104 11/15/2006 Simon Property Group LP 144A 4.875 8/15/2010 SLM Corp. 5.000 4/15/2015 INDUSTRIAL--1.0% ICI Wilmington 5.625 12/1/2013 Raytheon Co. 5.500 11/15/2012 Republic Services, Inc. 6.750 8/15/2011 Sealed Air Corp. 144A 5.625 7/15/2013 Waste Management, Inc. 6.875 5/15/2009 Waste Management, Inc. 7.375 8/1/2010 Waste Management, Inc. 7.000 7/15/2028 SERVICES--0.4% CVS Corp. 4.000 9/15/2009 May Dept Stores 6.650 7/15/2024 TRANSPORTATION--0.6% Fedex Corp. 2.650 4/1/2007 Norfolk Southern Corp.(*) 6.750 2/15/2011 Union Pacific Corp. 3.875 2/15/2009 UTILITIES--3.4% CenterPoint Energy Houston Electric LLC 5.750 1/15/2014 Appalachain Power Co.(*) 5.950 5/15/2033 Arizona Public Service 6.500 3/1/2012 Dominion Resources, Inc. 5.250 8/1/2033 KeySpan Corp.(*) 4.650 4/1/2013 Niagara Mohawk Power Corp. 7.750 10/1/2008 Nisource Finance Corp. 7.875 11/15/2010 Pacific Gas & Electric Co. 3.600 3/1/2009 Pepco Holdings, Inc. 5.500 8/15/2007 Public Service Co. of Colorado 4.375 10/1/2008 Southern California Edison Co. (a) 2.353 1/13/2006 Southern California Edison Co. 8.000 2/15/2007 Wisconsin Electric Power 5.625 5/15/2033 Total Corporate (Cost $14,520,341) MUNICIPAL BONDS--0.5% Sacramento County California Pension Funding (b) (Cost $233,702) 0.000 7/10/2030 SOVEREIGN BONDS--1.6% Province of Quebec(*) 5.000 7/17/2009 Republic of South Africa 6.500 6/2/2014 United Mexican States 6.375 1/16/2013 United Mexican States 6.750 9/27/2034 Total Sovereign Bonds (Cost $804,280) 9 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND SCHEDULE OF INVESTMENTS - DECEMBER 31, 2004 The accompanying notes are an integral part of the financial statements. 10 PAR VALUE SECURITY DESCRIPTION RATE MATURITY VALUE NOTE (1A) --------------------------------------------------------------------------------------------------------- YANKEE BONDS--4.5% Amvescap PLC 5.375% 2/27/2013 $ 155,000 $ 156,383 British Sky Broadcasting PLC 6.875 2/23/2009 125,000 137,126 Deutsche Telekom International Finance BV 8.500 6/15/2010 135,000 160,835 Deutsche Telekom International Finance BV 8.750 6/15/2030 180,000 237,682 Domtar, Inc.(*) 5.375 12/1/2013 85,000 84,155 Exxon Capital Corp. 6.125 9/8/2008 140,000 150,784 France Telecom 8.500 3/1/2011 125,000 149,113 HBOS PLC 144A 5.375 11/1/2013 250,000 256,327 National Westminster Bank PLC 7.750 10/16/2007 345,000 377,506 Northern Rock PLC 144A 5.600 4/30/2014 90,000 92,924 Pearson Dollar Finance PLC 144A 4.700 6/1/2009 90,000 91,728 Petro-Canada 5.000 11/15/2014 130,000 129,522 Potash Corp. of Saskatchewan 4.875 3/1/2013 165,000 165,850 St. George Bank Ltd. 144A 5.300 10/15/2015 140,000 142,545 ___________ Total Yankee Bonds (Cost $2,273,118) 2,332,480 ___________ PASS THRU SECURITIES--47.0% AGENCY PASS THRU--36.8% FHLMC Gold 4.500 10/1/2009 271,152 274,504 FNMA 4.000 5/1/2010 325,211 323,520 FNMA 5.500 11/1/2024 518,787 530,566 FNMA 5.500 12/1/2024 124,355 127,178 FNMA 5.500 1/1/2025 375,000 383,515 Fannie Mae Grantor Trust 2001-T6 B 6.088 5/25/2011 340,000 372,933 FNMA Grantor Trust 2002-T11 A 4.769 4/25/2012 162,731 167,459 GNMA 8.000 8/15/2025 16,730 18,231 GNMA 8.000 11/15/2025 26,415 28,784 GNMA 8.000 5/15/2026 6,530 7,105 GNMA 8.000 11/15/2026 31,593 34,376 GNMA 6.500 7/15/2032 22,321 23,517 FNMA 3.530 7/1/2010 170,735 165,040 FNMA 5.000 10/1/2011 436,955 444,679 FNMA 4.060 6/1/2013 125,000 118,530 FNMA 6.500 12/1/2015 73,988 78,529 FNMA 6.000 4/1/2017 524,038 549,440 FNMA 6.000 6/1/2017 146,921 154,051 FNMA 6.000 7/1/2017 53,985 56,602 FNMA 5.000 7/1/2018 137,613 139,947 FNMA 7.500 2/1/2029 20,047 21,612 FNMA 7.500 9/1/2029 1,729 1,853 FNMA 7.000 11/1/2031 5,670 6,019 FNMA 7.000 5/1/2032 157,205 166,649 FNMA 7.000 6/1/2032 274,376 290,859 FNMA 5.500 2/1/2033 745,912 758,396 FNMA 5.500 10/1/2033 727,626 739,327 FNMA 5.500 10/1/2033 508,215 516,388 FNMA 5.500 1/1/2034 154,779 157,268 FNMA 5.500 1/1/2034 241,730 245,617 FNMA (TBA)(#) 5.000 1/1/2020 1,450,000 1,472,656 FNMA (TBA)(#) 6.000 1/1/2035 3,665,000 3,788,694 FNMA(TBA)(#) 5.500 1/1/2020 2,675,000 2,763,609 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND SCHEDULE OF INVESTMENTS - DECEMBER 31, 2004 The accompanying notes are an integral part of the financial statements. Page 11 PAR SECURITY DESCRIPTION RATE MATURITY VALUE --------------------------------------------------------------------------------------------------------- AGENCY PASS THRU (CONTINUED) FNMA(TBA)(#) 6.000% 1/1/2020 $ 1,675,000 $ FNMA(TBA)(#) 5.500 1/1/2035 1,925,000 Freddie Mac Gold 6.000 5/1/2017 344,742 NON-AGENCY PASS THRU--10.2% Bear Stearns Commercial Mortgage Securities 2003-T12 A3 4.240 8/13/2039 190,000 Calwest Industrial Trust 2002-CALW A 6.127 2/15/2017 135,000 Capco America Securitization Corp. 1998-D7 A1B 6.260 10/15/2030 130,000 Chase Commercial Mortgage Securities Corp. 1997-1 D 7.370 6/19/2029 175,000 Chase Commercial Mortgage Securities Corp. 1997-1 E 7.370 6/19/2029 300,000 Chase Commercial Mortgage Securities Corp. 1997-2 C 6.600 12/19/2029 75,000 DLJ Commercial Mortgage Corp. 6.240 11/12/2031 180,000 DLJ Commercial Mortgage Corp. 1998-CF2 B1 7.050 11/12/2031 215,000 DLJ Commercial Mortgage Corp. 1999-CG1 A1A 6.080 3/10/2032 291,967 JP Morgan Commercial Mortgage Finance Corp. 1997-C5 A3 7.088 9/15/2029 114,985 LB Commercial Conduit Mortgage Trust 1999-C1 B 6.930 6/15/2031 120,000 Lehman Brothers 2004-LLFA A1 144A (a) 2.533 10/15/2017 599,443 Mach One Trust 2004-1A A1 144A 3.890 5/28/2040 181,331 Morgan Stanley Capital 1998-HF1 E 7.560 3/15/2030 330,000 Morgan Stanley Capital I 1998-HF1 C 6.750 3/15/2030 180,000 Morgan Stanley Capital I 1999-CAM1 A4 7.020 3/15/2032 165,000 Morgan Stanley Capital I 1999-RM1 A2 6.710 12/15/2031 145,000 Morgan Stanley Dean Witter Capital I 2001-PPM A2 6.400 2/15/2031 217,554 Morgan Stanley Dean Witter Capital I 2001-PPM A3 6.540 2/15/2031 150,000 Mortgage Capital Funding, Inc. 1996-MC1 C 7.800 6/15/2028 410,000 Mortgage Capital Funding, Inc. 1997-MC2 C 6.881 11/20/2027 310,000 Mortgage Capital Funding, Inc. 1997-MC2 D 7.117 11/20/2027 350,000 Total Pass Thru Securities (Cost $24,189,342) US TREASURY OBLIGATIONS--6.1% U.S. Treasury Inflation Index Bonds (TIPS) 3.000 7/15/2012 1,438,414 U.S. Treasury Note (!) 6.750 5/15/2005 100,000 U.S. Treasury Bond(*) 6.250 5/15/2030 1,202,000 Total US Treasury Obligations (Cost $3,109,325) TOTAL BONDS AND NOTES (Cost $60,960,704) CONVERTIBLE PREFERRED STOCKS--0.1% SHARES _______ Fannie Mae 7.00% CVT Pfd (Cost $45,000) 900 PURCHASED OPTIONS--0.0% CONTRACT SIZE _____________ U.S. Treasury Note 4.25% Put, Strike Price 98.007, 3/2/05 5,350 U.S. Treasury Note 3.00% Call, Strike Price 101.109, 2/18/05 24,750 U.S. Treasury Note 4.25% Call, Strike Price 99.875, 3/2/05 5,250 TOTAL PURCHASED OPTIONS (Cost $25,718) _ MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND SCHEDULE OF INVESTMENTS - DECEMBER 31, 2004 NOTES TO SCHEDULE OF INVESTMENTS: \ 144A-Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified buyers. FHLMC-Federal Home Loan Mortgage Company FNMA-Federal National Mortgage Association GNMA- Government National Mortgage Association TBA-To Be Announced (a) Variable Rate Security, rate indicated is as of 12/31/04. (b) Zero coupon security. (+)(+) Rate noted is yield to maturity * Security, or a portion thereof, was on loan at December 31, 2004. ** Money market fund exempt from registration under the Investment Company Act of 1940 offered only to eligible investors. # Delayed Delivery contract. ! Denotes all or part of security pledged as collateral. The Fund held the following open swap contracts at December 31, 2004: The accompanying notes are an integral part of the financial statements. PAR VALUE SECURITY DESCRIPTION RATE MATURITY VALUE NOTE (1A) --------------------------------------------------------------------------------------------------------- SHORT TERM INVESTMENTS--9.3% U.S. GOVERNMENT AGENCY--3.9% FNMA Discount Note((+)(+)) 2.170% 1/13/2005 $ 760,000 $ 759,433 FNMA Discount Note((+)(+)) 2.096 1/19/2005 1,230,000 1,228,803 ___________ 1,988,236 ___________ INVESTMENT OF CASH COLLATERAL--5.4% SHARES _______ BlackRock Cash Strategies L.L.C.(**) 2,801,798 2,801,798 ___________ TOTAL SHORT TERM INVESTMENTS--(Cost $4,789,902) 4,790,034 ___________ TOTAL INVESTMENTS--128.3% (Cost$65,821,324) 66,199,465 ___________ LIABILITIES IN EXCESS OF OTHER ASSETS--(28.3%) (14,598,566) ___________ NET ASSETS--100.0% $ 51,600,899 ___________ ___________ NOTIONAL AMOUNT EXPIRATION DATE DESCRIPTION VALUE --------------------------------------------------------------------------------------------------------- 125,000 USD 12/17/08 Agreement with Lehman Brothers, dated 12/15/04 $ (659) to receive the notional amount multiplied by 3.68375% and to pay the notional amount multiplied by the 1 month LIBOR. 125,000 USD 12/20/08 Agreement with Bear Stearns, dated 12/15/04 446 to receive 1.96% per year times the notional amount. The Fund makes payment only upon a credit event by General Motors Acceptance Corp., an amount equal to the notional amount times the difference between the par value and the then-market of General Motors Acceptance Corp., 6.875% due 8/28/12. _______ Total swap contracts $ (213) _______ _______ 12 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND SCHEDULE OF INVESTMENTS - DECEMBER 31, 2004 The Fund held the following futures contracts at December 31, 2004: The accompanying notes are an integral part of the financial statements. 13 UNDERLYING FACE CONTRACT POSITION EXPIRATION DATE AMOUNT AT VALUE --------------------------------------------------------------------------------------------------------- U.S. 10 Year Note (7 Contracts) Short 3/21/2005 $ 775,414 U.S. 5 Year Note (16 Contracts) Short 3/21/2005 1,739,875 U.S. Long Bond-CBT (14 Contracts) Long 3/21/2005 1,547,328 The Fund held the following written option contracts at December 31, 2004: WRITTEN CALL OPTION TRANSACTIONS NUMBER OF CONTRAC --------------------------------------------------------------------------------------------------------- Outstanding, beginning of year 5 Options written 10 Options expired (6) Options closed (8) ______ Outstanding, end of year 1 ______ ______ SECURITY CONTRACT --------------------------------------------------------------------------------------------------------- UST 4.25% Call, Strike Price 101.406, 3/2/05 (premiums received $3,609) 1 ______ ______ WRITTEN PUT OPTION TRANSACTIONS NUMBER OF CONTRAC --------------------------------------------------------------------------------------------------------- Outstanding, beginning of year 5 $ Options written 11 Options expired (12) Options closed (3) ______ Outstanding, end of year 1 ______ ______ SECURITY CONTRACT --------------------------------------------------------------------------------------------------------- UST 4.25% Put, Strike Price 96.195, 3/2/05 (premiums received $7,607) 1 ______ ______ MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2004 The accompanying notes are an integral part of the financial statements. 14 ASSETS Investments in securities (including securities on loan, valued at $2,750,554(Note 7)) at value (Note 1A)(cost $65,821,324) $66,199,465 Cash 5,847 Receivable for securities sold 51,969 Interest receivable 392,688 Variation margin receivable 6,391 Prepaid expenses 3,948 ___________ Total assets 66,660,308 LIABILITIES Payable for investments purchased $11,725,742 Collateral for securities on loan (Note 7) 2,801,798 Distributions payable 458,772 Bank loan payable (Note 9) 12,524 Options written, at value (premium received $11,216) (Note 6) 6,862 Open swap contracts, at value (Note 6) 213 Accrued professional fees 26,695 Accrued accounting, custody, administration and transfer agent fees (Note 2) 18,194 Accrued trustees' fees and expenses (Note 2) 3,334 Accrued expenses and other liabilities 5,275 ___________ Total liabilities 15,059,409 ___________ NET ASSETS $51,600,899 ___________ ___________ NET ASSETS CONSIST OF: Paid-in capital $51,128,540 Accumulated net realized gain 56,942 Net investment income 26,421 Net unrealized appreciation 388,996 ___________ TOTAL NET ASSETS $51,600,899 ___________ ___________ SHARES OF BENEFICIAL INTEREST OUTSTANDING 2,578,366 ___________ ___________ NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE (Net Assets/Shares outstanding) $ 20.01 ___________ ___________ MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 The accompanying notes are an integral part of the financial statements. 15 INVESTMENT INCOME (NOTE 1B) Interest income (including securities lending income of $5,738 (Note 7)) $2,417,426 Interest income from affiliated investment (Note 1F) 13,665 ___________ Total investment income 2,431,091 EXPENSES Investment advisory fee (Note 2) $ 244,758 Accounting, custody, administration and transfer agent fees (Note 2) 108,069 Professional fees 45,923 Registration fees 22,100 Trustees' fees and expenses (Note 2) 13,468 Insurance expense 10,450 Miscellaneous 10,513 __________ Total Expenses 455,281 Deduct: Waiver of investment advisory fee (Note 2) (210,523) __________ Net expenses 244,758 ___________ Net investment income 2,186,333 ___________ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain on: Investment security transactions 1,051,847 Financial futures contracts 10,369 Written options transactions 117,791 Swap transactions 96,341 __________ Net realized gain 1,276,348 Change in unrealized appreciation (depreciation) on: Investment securities (686,741) Financial futures contracts 8,300 Written Options (20,253) Swaps (10,360) __________ Change in unrealized appreciation (depreciation) (709,054) __________ Net realized gains and unrealized (loss) on investments 567,294 __________ NET INCREASE IN NET ASSETS FROM OPERATIONS $2,753,627 __________ __________ MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND STATEMENTS OF CHANGES IN NET ASSETS The accompanying notes are an integral part of the financial statements. 16 FOR THE YEAR ENDED DECEMBER 31, 2004 DE __________________ __ INCREASE (DECREASE) IN NET ASSETS: FROM INVESTMENT OPERATIONS Net investment income $ 2,186,333 Net realized gains 1,276,348 Change in net unrealized appreciation (depreciation) (709,054) _____________ Net increase in net assets from investment operations 2,753,627 _____________ DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1C) From net investment income (2,343,659) From net realized gains on investments (1,026,990) _____________ Total distributions to shareholders (3,370,649) _____________ FUND SHARE TRANSACTIONS (NOTE 4) Net proceeds from sale of shares 2,823,448 Value of shares issued to shareholders in reinvestment of distributions 1,632,872 Cost of shares redeemed (14,862,788) _____________ Net decrease in net assets from Fund share transactions (10,406,468) _____________ TOTAL INCREASE (DECREASE) IN NET ASSETS (11,023,490) NET ASSETS At beginning of year 62,624,389 _____________ At end of year (including net investment income of $26,421 and distribution in excess of net investment income of $11,275) $ 51,600,899 $ _____________ _____________ MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND FINANCIAL HIGHLIGHTS (a) The Fund has adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies effective January 1, 2001 and began amortizing premium and discount on all debt securities on an effective yield basis. The effect of this change for the year ended December 31, 2001 was to decrease net investment income per share by $0.004, increase net realized and unrealized gains and losses per share by $0.004 and decrease the ratio of net investment income to average net assets from 6.02% to 6.00%. Per share data and ratios/supplemental data for the periods prior to January 1, 2001 have not been restated to reflect this change in presentation. (+) Total return would have been lower in the absence of expense waivers (+)(+) Computed on an annualized basis. (+)(+)(+) Not annualized. The accompanying notes are an integral part of the financial statements. 17 FOR T JUNE (COM YEAR ENDED DECEMBER 31, OF OPE ______________________________________________ 2004 2003 2002 2001(A) DECEMB _______ _______ _______ _______ _______ NET ASSET VALUE, BEGINNING OF THE YEAR $ 20.31 $ 20.80 $ 20.41 $ 20.65 $ _______ _______ _______ _______ FROM INVESTMENT OPERATIONS: Net investment income(1) 0.74 0.69 0.89 1.27 Net realized and unrealized gain (loss) on investments 0.17 0.09 0.79 0.59 _______ _______ _______ _______ Total from investment operations 0.91 0.78 1.68 1.86 _______ _______ _______ _______ _ LESS DISTRIBUTIONS TO SHAREHOLDERS: From net investment income (0.80) (0.78) (0.91) (1.30) From net realized gain on investments (0.41) (0.49) (0.38) (0.80) _______ _______ _______ _______ Total distributions to shareholders (1.21) (1.27) (1.29) (2.10) _______ _______ _______ _______ NET ASSET VALUE, END OF YEAR $ 20.01 $ 20.31 $ 20.80 $ 20.41 $ _______ _______ _______ _______ _______ _______ _______ _______ TOTAL RETURN ((+)) 4.53% 3.81% 8.44% 9.21% RATIOS/SUPPLEMENTAL DATA: Expenses (to average daily net assets) 0.40% 0.40% 0.40% 0.21% Net Investment Income (to average daily net assets) 3.59% 3.30% 4.30% 6.00% Portfolio Turnover 127% 457% 391% 357% Net Assets, End of Year (000's omitted) $51,601 $62,624 $84,101 $63,564 ------- * For the periods indicated, the investment adviser voluntarily agreed not to impose all or a portion of its investment advisory fee and/ or reimbursed the Fund for a portion of its operating expenses. If this voluntary action had not been taken, the investment income per share and the ratios would have been: Net investment income (1) $ 0.67 $ 0.63 $ 0.83 $ 1.17 Ratios (to average daily net assets): Expenses 0.75% 0.70% 0.69% 0.68% Net investment income 3.24% 3.00% 4.01% 5.53% (1) Calculated based on average shares outstanding. MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND NOTES TO FINANCIAL STATEMENTS (1) 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 Investment Grade Bond Fund (the "Fund") is a separate diversified investment series of the Trust. The objective of the Fund is to maximize total return, consistent with preserving principal and liquidity, primarily through the generation of current income and, to a lesser extent, capital appreciation. The Fund seeks to achieve its objective by investing, under normal circumstances, at least 80% of net assets in investment grade fixed income securities including, but not limited to, government, agency, corporate and mortgage and asset-backed issues. 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 Securities for which quotations are readily available are valued at the last sale price, or if no sale price, at the closing bid price in the principal market in which such securities are primarily traded. Market quotations are not considered to be readily available for certain debt obligations; such investments are stated at value on the basis of valuations furnished by a pricing service or dealers, approved by the Trustees, which determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and variable relationships between securities that are generally recognized by institutional traders. Securities (including illiquid securities) for which quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Trustees. Short-term instruments with less than sixty-one 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 value based upon the value on such date unless the Trustees determine during such sixty-day period that amortized value 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 accrued, adjusted for accretion of discount or amortization of premium using the yield-to-maturity method on long-term debt securities and short-term securities with greater than sixty days to maturity. Dividend income is recorded on the ex-dividend date. Realized gains and losses from securities sold are recorded on the identified cost basis C. DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders are recorded on the ex-dividend date. 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 generally accepted accounting principles. These differences, which may result in distribution reclassifications, are primarily due to differing treatments for losses deferred due to wash sales, amortization and/or accretion of premiums and discounts on certain securities and the timing of recognition of gains and losses on futures contracts. Permanent book and tax basis differences will result in reclassifications among undistributed net investment income, accumulated net realized gain (loss) and paid in capital. Undistributed net investment income and accumulated net realized gain (loss) on investments may include temporary book and tax basis differences which will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. D. EXPENSES The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds. 18 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND NOTES TO FINANCIAL STATEMENTS 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 represent investments of the Fund in other investment companies advised by Standish Mellon Asset Management Company LLC ("Standish Mellon"), a wholly-owned subsidiary Mellon Financial Corporation, or its affiliates. (2) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES: The investment advisory fee paid to Standish Mellon for overall investment advisory, administrative services, and general office facilities, is paid monthly at the annual rate of 0.40% of the Fund's average daily net assets. Standish Mellon voluntarily agreed to limit total Fund operating expenses (excluding brokerage commissions, taxes and extraordinary expenses) to 0.40% of the Fund's average daily net assets for the year ended December 31, 2004. Pursuant to this agreement, for the year ended December 31, 2004, Standish Mellon collectively and voluntarily waived a portion of its investment advisory fee in the amount of $210,523. This agreement is voluntary and temporary and may be discontinued or revised by Standish Mellon at any time. Effective February 23, 2004, the Fund entered into an agreement with Dreyfus Transfer, Inc., a wholly owned subsidiary of The Dreyfus Corporation, a wholly owned subsidiary of Mellon Financial Corporation 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 paid $4,269 during the period ended December 31, 2004. The Fund has contracted Mellon Bank, N.A. ("Mellon Bank"), a wholly owned subsidiary of Mellon Financial Corporation and an affiliate of Standish Mellon, to provide custody, fund 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 paid $80,875 during the year ended December 31, 2004. The Fund entered into an agreement with Mellon Bank to perform certain securities lending activities and to act as the Fund's lending agent. Pursuant to this agreement Mellon Bank receives an agreed upon percentage of the net lending revenues. This compensation is a standard form of compensation received by securities lending agents with respect to non-affiliated entities. See Note 7 for further details. No 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 Trust 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. (3) PURCHASES AND SALES OF INVESTMENTS: Purchases and proceeds from sales of investments, excluding short-term securities, for the year ended December 31, 2004 were as follows: 19 PURCHASES SALES ___________ ___________ U.S. Government Securities $50,928,168 $55,782,399 ___________ ___________ ___________ ___________ Investments (non-U.S. Government Securities) $32,881,028 $31,783,662 ___________ ___________ ___________ ___________ MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND NOTES TO FINANCIAL STATEMENTS (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: At December 31, 2004, three shareholders of record held approximately 90% of the total outstanding shares of the Fund. Investment activity of these shareholders could have a material impact on the Fund. A significant portion of the Fund's shares represent investments by fiduciary accounts over which Standish Mellon and its affiliates have either sole or joint investment discretion. (5) FEDERAL TAXES: As a regulated investment company qualified under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the extent that it distributes all of its taxable income for its fiscal year. The tax basis components of distributable earnings and the federal tax cost as of December 31, 2004, was as follows: (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 nature, risks and objectives of these instruments are set forth more fully in the Fund's Prospectus and FOR THE FOR THE YEAR ENDED YEAR ENDED DECEMBER 31, 2004 DECEMBER 31, 2003 __________________ __________________ Shares sold 137,236 201,404 Shares issued to shareholders in reinvestment of distributions 81,343 110,742 Shares redeemed (723,366) (1,271,678) _________ ___________ Net increase (decrease) (504,787) (959,532) _________ ___________ _________ ___________ Unrealized appreciation $ 619,116 Unrealized depreciation (243,816) ____________ Net unrealized appreciation/depreciation 375,300 Undistributed ordinary income 79,661 Undistributed long term capital gain 13,260 Cost for federal income tax purposes $65,824,165 Tax character of distributions paid during the fiscal years ended December 31, 2004 and December 31, 2003, were as follows: 2004 2003 Distributions paid from: AMOUNT AMOUNT __________ __________ Ordinary income $2,934,513 $3,867,494 Capital gains 436,136 279,033 Statement of Additional Information. The Fund may trade the following 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 20 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND NOTES TO FINANCIAL STATEMENTS specified price. The Fund may use options to seek to hedge against risks of market exposure and changes in securities 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 options is shown in the Schedule of Investments. This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contract or if the counterparty does not perform under the contract's terms. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or are closed are added to or offset against the proceeds or amount paid on the transaction to determine the realized gain or loss. Realized gains and losses on purchased options are included in realized gains and losses on investment securities, except purchased options on foreign currency which are included in realized gains and losses on foreign currency transactions. If a put option written by the Fund is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as 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. The Fund entered into option transactions at December 31, 2004. See Schedule of Investments for further details INTEREST RATE FLOORS Interest rate floors purchased by the Fund entitle the Fund to receive payments on a notional principal amount from the party selling such floor to the extent that a specified index falls below a predetermined interest rate amount. Credit and market risk exist with respect to these instruments. If forecasts of interest rates and other market factors are incorrect, investment performance will diminish compared to what performance would have been if these investment techniques were not used. Even if the forecasts are correct, there are risks that the positions may correlate imperfectly with the asset or liability being hedged, a liquid secondary market may not always exist, or counterparty to a transaction may not perform. The Fund expects to enter these transactions primarily for hedging purposes including, but not limited to, preserving a return or spread on a particular investment or portion of its portfolio, protecting against interest rate fluctuations, as a duration management technique or protecting against an increase in the price of securities the Fund anticipates purchasing at a later date. Interest rate floors are marked-to-market daily based on quotations from market makers and the change, if any, is recorded as unrealized appreciation or depreciation in the Statement of Operations. Realized gains or losses from these agreements are disclosed in the Statement of Operations. The Fund did not enter into any interest rate floor transactions during the year ended December 31, 2004. FUTURES CONTRACTS The Fund may enter into financial futures contracts for the delayed sale or delivery of securities or contracts based on financial indices at a fixed price on a future date. Pursuant to the 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 gains or losses 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 Fund 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 arise if there is an illiquid secondary market or if the counterparties do not perform under the contract's terms. The Fund enters into financial futures transactions primarily 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. The Fund held futures at December 31, 2004. At December 31, 2004 the Fund had segregated cash and /or securities to cover margin requirements on open future contracts. See Schedule of Investments for further details. 21 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND NOTES TO FINANCIAL STATEMENTS SWAP AGREEMENTS The Fund may invest in swap agreements. A swap is an agreement to exchange the return generated by one instrument for the return generated by another instrument. The Fund may enter into interest rate and credit default swap agreements to manage its exposure to interest rates and credit risk. Interest rate swap agreements involve the exchange by the Fund with another party of their respective commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments with respect to a notional amount of principal. In a credit default swap, one party makes a stream of payments to another party in exchange for the right to receive a specified return in the event of a default by a third party on its obligation. The Fund may use credit default swaps to provide a measure of protection against defaults of issuers (i.e., to reduce risk where the Fund owns or has exposure to the corporate or sovereign issuer) or to take an active long or short position with respect to the likelihood of a particular corporate or sovereign issuer's default. In connection with these agreements, cash or securities may be set aside as collateral in accordance with the terms of the swap agreement. The Fund earns interest on cash set aside as collateral. Swaps are marked to market daily based upon quotations from market makers and change in value, if any, is recorded as unrealized gain or loss in the Statement of Operations. These financial instruments are not actively traded on financial markets. The values assigned to these instruments are based upon the best available information and because of the uncertainty of the valuation, these values may differ significantly from the values that would have been realized had a ready market for these instruments existed, and differences could be material. Payments received or made from credit default swaps at the end of the measurement period are recorded as realized gain or loss in the Statement of Operations. Net payments of interest on interest rate swap agreements are included as part of realized gain loss. Entering into these agreements, if any, involves, to varying degrees, elements of credit, market, and documentation risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of contractual terms in the agreements, and that there may be unfavorable changes in interest rates. The Fund entered into swap agreements at December 31, 2004. 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. The Fund loaned securities during the year ended December 31, 2004 resulting in security lending income of $5,738. At December 31, 2004, the Fund had securities valued at $2,750,554 on loan. See Schedule of Investments for further detail on the security positions on loan and collateral held. (8) DELAYED DELIVERY TRANSACTIONS: The Fund may purchase or sell securities on a when-issued, delayed delivery or forward commitment basis. This Fund segregates securities having a 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 22 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND NOTES TO FINANCIAL STATEMENTS themselves, and involve a risk of loss if the value of the security to be purchased declines prior to the settlement date, which risk is in addition to the risk of the decline in the value of the Fund's other assets. 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 portfolio 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. Unsettled TBA sale commitments are valued at the current market value of the underlying securities, generally according to the procedures described under "Investment security valuations" above. The contract is 'marked-to- market' daily and the change in market value is recorded by the Fund as an unrealized gain or loss. If the TBA sale commitment is closed through the acquisition of an offsetting purchase commitment, the Fund realizes a gain or loss from the sale of the securities based upon the unit price established at the date the commitment was entered into. See the Schedule of Investments for outstanding delayed delivery contracts (9) LINE OF CREDIT: The Fund, and other funds in the Trust and subtrusts in the Mellon Institutional Funds Master Portfolio Trust (the "Portfolio Trust") are parties to a committed line of credit facility, which enables each portfolio/fund to borrow, in the aggregate, up to $35 million. Interest is charged to each participating portfolio/fund based on its borrowings at a rate equal to the Federal Funds effective rate plus 1/2 of 1%. In addition, a facility fee, computed at an annual rate of .060 of 1% committed amount, is allocated ratably among the participating portfolios/funds at the end of each quarter. For the year ended December 31, 2004, a facility fee of $623 was allocated to the Fund. During the year ended December 31, 2004, the Fund had average borrowings outstanding of $387,881 on a total of four days and incurred $102 of interest expense. 23 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INVESTMENT GRADE BOND FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Trustees of Mellon Institutional Funds Investment Trust and the Shareholders of Standish Mellon Investment Grade Bond Fund: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Standish Mellon Investment Grade Bond Fund (the "Fund") at December 31, 2004, and the results of its operations, the changes in its net assets, and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion PricewaterhouseCoopers LLP New York, NY February 25, 2005 24 TRUSTEES AND OFFICERS The following table lists the Trust's trustees and officers; their address and date of birth; their position with the Trust; the length of time holding that position with the Trust; their principal occupation(s) during the past five years; the number of portfolios in the fund complex they oversee; other directorships they hold in companies subject to registration or reporting requirements of the Securities Exchange Act of 1934 (generally called "public companies") or in registered investment companies; and total annual remuneration paid as of December 31, 2004. The Trust's Statement of Additional Information includes additional information about the Trust's trustees and is available, without charge, upon request by writing The Mellon Institutional Funds at P.O. Box 8585, Boston, MA 02266-8585 or calling toll free 1-800-221-4795. INDEPENDENT TRUSTEES 25 NUMBER OF PRINCIPAL PORTFOLIOS IN NAME TERM OF OFFICE OCCUPATION(S) FUND COMPLEX DIR ADDRESS, AND POSITION(S) AND LENGTH OF DURING PAST OVERSEEN BY DATE OF BIRTH HELD WITH TRUST TIME SERVED 5 YEARS TRUSTEE --------------------------------------------------------------------------------------------------------- Samuel C. Fleming Trustee Trustee since Chairman of the Board 30 c/o Decision Resources, Inc. 11/3/1986 and Chief Executive 260 Charles Street Officer, Decision Waltham, MA 02453 Resources, Inc. 9/30/40 Caleb Loring III Trustee Trustee since Trustee, Essex Street 30 c/o Essex Street Associates 11/3/1986 Associates (family P.O. Box 181 investment trust office) Beverly, MA 01915 11/14/43 Benjamin M. Friedman Trustee Trustee since William Joseph Maier, 30 c/o Harvard University 9/13/1986 Professor of Political Cambridge, MA 02138 Economy, Harvard 8/5/44 University John H. Hewitt Trustee Trustee since Trustee, Mertens 30 P.O. Box 2333 11/3/1986 House, Inc. (hospice) New London, NH 03257 4/11/35 INTERESTED TRUSTEES Patrick J. Sheppard Trustee, President Since 2003 Senior Vice President 30 Mellon Institutional and Chief and Chief Operating Officer, Asset Management Executive Officer Mellon Institutional One Boston Place Asset Management; Boston, MA 02108 formerly Vice President 7/24/65 and Chief Financial Officer, Mellon Institutional Asset Management PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES 26 NAME 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 --------------------------------------------------------------------------------------------------------- Barbara A. McCann Vice President Since 2003 Senior Vice President and Head of Operati Mellon Institutional and Secretary Mellon Institutional Asset Management, fo Asset Management First Vice President, Mellon Institutiona One Boston Place Management and Mellon Global Investments Boston, MA 02108 2/20/61 Steven M. Anderson Vice President Vice President Vice President and Mutual Funds Controlle Mellon Institutional and Treasurer since 1999; Mellon Institutional Asset Management Asset Management Treasurer Institutional Asset One Boston Place since 2002 Boston, MA 02108 7/14/65 Denise B. Kneeland Assistant Vice Since 1996 Vice President and Manager, Mutual Funds Mellon Institutional President Mellon Institutional Asset Management Asset Management One Boston Place Boston, MA 02108 8/19/51 Cara E. Hultgren Assistant Vice Since 2001 Assistant Vice President and Manager, Mellon Institutional President Shareholder Services, Mellon Institutiona Asset Management Asset Management since 2001; One Boston Place Shareholder Representative, Boston, MA 02108 Standish Mellon Asset Management 1/19/71 Jan F. Jumet Chief Since 2004 Senior Vice President and Chief Complianc Standish Mellon Assest Compliance for Standish Mellon Asset Management Comp Management Company LLC Officer formerly Director of Compliance and Admin One Boston Place and Chief Administration Officer for Stan Boston, MA 02108 Asset Management Company LLC, Senior 8/9/66 Vice President and Chief Administration O for Mellon Bond Associates, LLP, and First Vice President and Senior Sales Ass for Mellon Institutional Asset Management THIS PAGE INTENTIONALLY LEFT BLANK THIS PAGE INTENTIONALLY LEFT BLANK THIS PAGE INTENTIONALLY LEFT BLANK One Boston Place Boston, MA 02108-4408 800.221.4795 www.melloninstitutionalfunds.com 0946AR1204 Annual Report STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II YEAR ENDED DECEMBER 31, 2004 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. Commencing with the fiscal quarter ending September 30, 2004, 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. To view the Fund' s proxy voting guidelines and proxy voting record for the 12-month period ended June 30, 2004, visit 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. February 28, 2005 Dear Mellon Institutional Fund Shareholder: Enclosed you will find your Fund's annual report for the fiscal year ended December 31, 2004. The year was largely positive for the financial markets, as the economic expansion continued. However, as the year progressed, anticipated GDP growth diminished in line with typical expectations at this point in the economic cycle. The S&P 500 entered 2004 with a sharp climb, fueled to a large degree by above-trend GDP growth: 4.4% in the fourth quarter of 2003 and 5.0% in the first quarter of the year, driven by a potent mix of tax cuts, monetary policy and government spending. But the momentum stalled, as the market dealt with the prospect of inflation and a new tightening cycle by the Federal Reserve, the uncertainties of a tight presidential campaign, and the ever- present threats posed by terrorism. The equity markets greeted the reelection of President Bush with optimism, as the S&P 500 surged past 1200 in the closing weeks of the year to its' 2004 peak. In the bond market, the year started with much speculation about when and how the Fed would end one of the longest stretches of easy monetary policy on record, which had driven rates to historical lows. In the fall of 2003, the prospect of deflation was still a factor in the Fed's deliberations and was its stated rationale for maintaining an accommodative stance. In the first quarter, however, the Fed began to refer to a "measured pace" of tightening. The market reacted by switching gears dramatically, sending the 10-year U.S. Treasury note from 3.7% on March 16 to 4.9% on June 14. Since then, as the economic outlook softened, with relatively tame inflation, yields have settled back to about 4%, roughly the same as a year ago. Looking ahead, it is clear that there are some causes for concern. Consumers are weighted with debt and potentially vulnerable in a rising rate environment. Companies are hoarding cash and are being deliberate in boosting employment and spending on plant and equipment. The stimulus of monetary policy, tax cuts and government spending is waning. Nevertheless, business activity has some significant momentum, which should carry over into 2005, with reasonable profit growth and modest inflation. Finally, the president's ambitious plans to privatize Social Security, reform health care, and revise the tax code could potentially have major fiscal implications that the market will be watching carefully. Thank you for your business and confidence in Mellon Institutional Funds. Please feel free to contact us with questions or comments. Sincerely, A MELLON ASSET MANAGEMENT COMPANY 1 /s/Patrick J. Sheppard Patrick J. Sheppard One Boston Place * Boston, MA 02108-4402 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II MANAGEMENT DISCUSSION AND ANALYSIS International bond markets produced double-digit returns in 2004 from a combination of positive local market returns and currency gains related to the decline of the U.S. dollar. The Standish Mellon International Fixed Income Fund II returned 10.73% for the year, after all expenses, compared to a return of 12.04% for the J.P. Morgan Non-U.S. Government Bond Index. A return of more than 10% for international bonds is perhaps surprising considering that at the beginning of the year, the consensus expectation was that bond yields would rise as central banks raised interest rates. Indeed, bond yields did rise early in the year and this rise was lead by the U.S. bond market, which experienced a vicious sell-off in the first half. However, as the year progressed, it became apparent that core inflation was well contained in the U.S., the job market strengthened but not as much as anticipated, and growth in large economies overseas was anemic. Bond yields in the U.S. and overseas fell during the second half of the year, and in the end, despite the volatility, bond investors managed to earn a bit more than their coupon. The positive return from international bond markets combined with the gains related to the decline of the US. Dollar, resulted in another year of strong returns from the asset class. The non-government sectors of the international bond markets were a pleasant surprise producing returns well above government bonds for the second year in a row. The star performers were corporate bonds, particularly the high-yield sector, and emerging markets. A number of factors contributed to the outperformance of the corporate and emerging sectors particularly global growth, low inflation, low interest rates and in the case of the commodity laden emerging markets, high commodity prices. The high yield corporate and emerging market indices both had returns of over 10% for the year. Other non-government sectors also performed well including mortgages, agencies and asset-backed securities. The range of returns in hedged terms for government bond markets as measured by the JP Morgan Government Bond Indices was modest for the year with only 534 basis points, separating the best market Italy (+8.00%) from the worst, Japan (+2.66%). The U.S. component of the index returned 3.75% while European markets returned 6.77% on average. The U.S. dollar had traded in a modest range for most of the year however it fell sharply in the final quarter. The decline of the dollar was the sharpest relative to the European currencies against which it declined by more than 7%. The U.S. dollar has been under pressure since 2002 as the mix of loose fiscal and monetary policy and the large current account deficit made the currency unattractive to global investors. The Fund underperformed its benchmark during the year. Our position in investment grade and high yield corporate bonds and emerging market securities was the largest positive contributor relative to our benchmark. The results of our country weightings were mixed. We were overweight European markets, which produced the best returns however we had a zero weight in the Japanese bond market which weighed on our performance. Although Japan was the worst performing market in the index, our zero weighting in the market was a drag on performance as Japan did produce a positive return. In currencies, our small primarily, option-based positions detracted a modest amount from our performance. 2 Our outlook for 2005 is favorable for international bonds. We believe that the performance of global economies will be close to trend, yet the behavior of central banks around the world could be quite different. The Fed will continue to raise interest rates at least in the first half of the year and this will flatten the yield curve but we expect longer dated bonds to be fairly stable. Opportunities for value-added can be found in Europe and in some of the smaller index components such as Australia, New Zealand and the U.K. In the latter three markets, the central banks have been raising interest rates for some time and those increases now appear to be having an effect. These economies have housing markets that are vulnerable to price declines and if the economies soften, we believe bonds in these markets will perform well. Non-government sectors such as corporate and emerging market bonds have richened quite a bit over the past two years and we believe that these sectors will not perform as well as in the past but that the sector still offers opportunities to add-value through security selection. We appreciate your continued support and look forward to working on your behalf over the next year. 3 /s/ W. Charles Cook W. Charles Cook MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II COMPARISON OF CHANGE IN VALUE OF $100,000 INVESTMENT IN STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II AND J.P. MORGAN NON-U.S. GOVERNMENT BOND INDEX AVERAGE ANNUAL TOTAL RETURNS (FOR PERIOD ENDED 12/31/2004) AVERAGE ANNUAL TOTAL RETURNS REFLECT THE CHANGE IN THE VALUE OF AN INVESTMENT, ASSUMING REINVESTMENT OF THE FUND'S DIVIDEND INCOME AND CAPITAL GAINS AND ASSUMING A CONSTANT RATE OF PERFORMANCE EACH YEAR. THE $100,000 LINE GRAPH AND THE FUND'S RETURNS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. DURING PERIODS OF REIMBURSEMENT BY THE FUND'S INVESTMENT ADVISER (IF APPLICABLE), THE FUND'S TOTAL RETURN WILL BE GREATER THAN IT WOULD BE HAD THE REIMBURSEMENT NOT OCCURRED. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. 4 S Inc 1 Year 3 Year 5 Year 06/3 --------------------------------------------------------------------------------------------------------- 10.73% 17.78% 8.52% 8 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II SHAREHOLDER EXPENSE EXAMPLE As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2004 to December 31, 2004). 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 ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO OF 0.75%, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 184/366 (TO REFLECT THE ONE-HALF YEAR PERIOD). 5 EXPENSES PAID BEGINNING ENDING DURING PERIOD((+)) ACCOUNT VALUE ACCOUNT VALUE JULY 1, 2004 TO JULY 1, 2004 DECEMBER 31, 2004 DECEMBER 31, 2004 --------------------------------------------------------------------------------------------------------- Actual $1,000.00 $1,122.90 $4.00 Hypothetical (5% return per year before expenses) $1,000.00 $1,021.37 $3.81 ( ------- MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II FUND INFORMATION AS OF DECEMBER 31, 2004 (UNAUDITED) * Excluding short-term investments and investment of cash collateral. The Fund is actively managed. Current holdings may be different than those presented above. 6 PERCENTAGE O TOP TEN HOLDINGS* RATE MATURITY NET ASSETS --------------------------------------------------------------------------------------------------------- UK Gilt 4.000 3/7/2009 9.2% Netherlands Government Bond 5.500 7/15/2010 4.0 Bundesobligation 4.500 8/17/2007 3.9 Belgium Government Bond 4.250 9/28/2013 3.7 Deutsche Republic 4.750 7/4/2034 3.6 Deutsche Bundesrepublik 4.000 1/4/2028 3.5 Italy Buoni Poliennali Del Tesoro 4.500 3/1/2007 3.4 Australian Government Bond 7.500 9/15/2009 3.3 Bundesobligation 5.000 5/20/2005 2.9 New Zealand Government Bond 6.500 4/15/2013 2.9 ______ 40.4% PERCENTAGE OF TOP TEN COUNTRIES NET ASSETS -------------------------------------------- Germany 21.1% United States 15.2 United Kingdom 13.7 France 7.2 New Zealand 5.4 Australia 4.8 Netherlands 4.4 Italy 3.9 Belgium 3.9 Austria 3.4 _____ 83.0% PERCENTAGE OF ECONOMIC SECTOR ALLOCATION INVESTMENTS -------------------------------------------- Government 68.7% Corporate 22.9 Mortgage 0.8 Emerging markets 4.1 Cash & equivalents 3.5 _____ 100.0% MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II SCHEDULE OF INVESTMENTS - DECEMBER 31, 2004 PAR SECURITY DESCRIPTION RATE MATURITY VALUE --------------------------------------------------------------------------------------------------------- BONDS AND NOTES--85.1% CORPORATE--1.1% BASIC MATERIALS--0.1% International Steel Group(*) 6.500% 4/15/2014 USD 50,000 _ COMMUNICATIONS--0.2% CSC Holdings, Inc. 7.875 12/15/2007 20,000 RH Donnelley Finance Corp. 8.875 12/15/2010 5,000 RH Donnelley Finance Corp. 10.875 12/15/2012 10,000 Salem Communications Corp. 7.750 12/15/2010 15,000 Sprint Capital Corp. 8.375 3/15/2012 55,000 _ _ CONSUMER CYCLICAL--0.1% Mohegan Tribal Gaming Authority 8.000 4/1/2012 25,000 Yum! Brands, Inc. 8.875 4/15/2011 25,000 _ _ ENERGY--0.2% Chesapeake Energy Corp. 8.125 4/1/2011 30,000 Pemex Project Funding Master Trust (a) 3.790 6/15/2010 45,000 _ _ FINANCIAL--0.4% Amvescap PLC 5.375 2/27/2013 25,000 Chevy Chase Bank FSB 6.875 12/1/2013 45,000 Glencore Funding LLC 6.000 4/15/2014 105,000 Salomon Brothers AF for OAO Siberian Oil Co. 10.750 1/15/2009 30,000 _ _ UTILITIES--0.1% AES Corp. 8.750 5/15/2013 25,000 _ Total Corporate Bonds (Cost $525,823) _ SOVEREIGN BONDS--2.0% Banco Nacional de Desenvolvimento Economic (a) 5.832 6/16/2008 30,000 Republic of Brazil (a) 3.125 4/15/2012 75,001 Republic of Brazil (a) 3.063 4/15/2024 85,000 Republic of Colombia 10.000 1/23/2012 30,000 Republic of El Salvador 8.500 7/25/2011 25,000 Republic of El Salvador 8.250 4/10/2032 25,000 Republic of Panama 9.625 2/8/2011 15,000 Republic of Panama 7.250 3/15/2015 20,000 Republic of Panama 8.875 9/30/2027 40,000 Republic of Peru (a) 4.500 3/7/2017 25,000 Republic of South Africa 9.125 5/19/2009 35,000 Republic of South Africa 7.375 4/25/2012 50,000 Republic of Turkey 9.000 6/30/2011 120,000 Republic of Turkey 11.500 1/23/2012 25,000 Russian Federation 11.000 7/24/2018 20,000 Russian Federation 12.750 6/24/2028 10,000 Russian Federation 5.000 3/31/2030 110,000 Serbian Government (#) 3.750 11/15/2024 100,000 Ukraine Government Senior Notes 11.000 3/15/2007 46,668 United Mexican States 8.300 8/15/2031 50,000 _ Total Sovereign Bonds (Cost $959,590) __ The accompanying notes are an integral part of the financial statements. 7 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II SCHEDULE OF INVESTMENTS - DECEMBER 31, 2004 The accompanying notes are an integral part of the financial statements. 8 SECURITY DESCRIPTION RATE MATURITY --------------------------------------------------------------------------------------------------------- YANKEE BONDS--1.6% Amvescap PLC 5.900% 1/15/2007 USD Aramark Services, Inc. 7.000 7/15/2006 British Sky Broadcasting PLC 7.300 10/15/2006 HBOS PLC 5.375 11/1/2013 Ispat Inland 9.750 4/1/2014 Rogers Wireless Inc. 144A 7.250 12/15/2012 Rogers Wireless Inc. 144A 7.500 3/15/2015 Royal Caribbean Cruises Ltd. 8.250 4/1/2005 Southern Natural Gas Co. 8.875 3/15/2010 Total Yankee Bonds (Cost $768,818) FOREIGN DENOMINTED--80.4% AUSTRALIA--4.8% Australian Government Bond 7.500 9/15/2009 AUD Australian Government Bond (*) 6.250 4/15/2015 CANADA--0.2% Canadian Pacific Railway Ltd. 4.900 6/15/2010 CAD SWISS FRANC--0.6% Philip Morris Capital Corp. 4.000 5/31/2006 CHF DENMARK--0.3% Realkredit Danmark A/S 4.000 1/1/2006 DKK EURO--53.1% Allied Domecq Financial Services PLC 5.875 6/12/2009 EUR Austria Government Bond 5.750 4/11/2007 Autostrade SpA (a) 2.621 6/9/2011 Bank of America Corp (a) 4.750 5/6/2019 Barclays BAnk PLC 7.500 12/15/2010 Belgium Government Bond 4.250 9/28/2013 Bundesobligation 5.000 5/20/2005 Bundesobligation 5.000 8/19/2005 Bundesobligation 4.500 8/17/2007 Bundesobligation(*) 3.000 4/11/2008 Bundesschatzanweisungen 2.750 6/23/2006 Citigroup, Inc. (a) 2.324 6/3/2011 Depfa ACS Bank 3.875 7/15/2013 Deutsche Bundesrepublik 4.000 1/4/2028 Deutsche Cap Trust IV (a) 5.330 9/29/2049 Deutsche Republic 4.500 1/4/2013 Deutsche Republic 4.750 7/4/2034 Deutsche Telekom International Finance BV 8.125 5/29/2012 Dexia Municipal Agency 5.375 4/26/2007 Eurohypo AG 4.500 1/21/2013 FBG Treasury Europe 5.750 3/17/2005 FCE Bank PLC (a) 2.578 6/28/2006 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II SCHEDULE OF INVESTMENTS - DECEMBER 31, 2004 The accompanying notes are an integral part of the financial statements. 9 SECURITY DESCRIPTION RATE MATURITY --------------------------------------------------------------------------------------------------------- EURO (CONTINUED) France Telecom 7.250% 1/28/2013 EUR France Telecom 8.125 1/28/2033 French Treasury Note 4.500 7/12/2006 French Treasury Note BTAN 5.000 1/12/2006 GE Capital Euro Funding (a) 2.278 5/4/2011 General Motors Acceptance Corp. 4.375 9/26/2006 General Motors Acceptance Corp. (a) 3.898 7/5/2005 Glencore Finance Europe SA/Luxembourg 5.375 9/30/2011 HBOS PLC 6.050 11/23/2049 Hilton Group Finance PLC 6.500 7/17/2009 HJ Heinz BV 5.125 4/10/2006 Household Finance Corp. 6.500 5/5/2009 International Paper Co. 5.375 8/11/2006 Italy Buoni Poliennali Del Tesoro 4.500 3/1/2007 Kappa Beheer BV 10.625 7/15/2009 KFW Group 3.500 4/17/2009 Lear Corp. 8.125 4/1/2008 Morgan Stanley 5.750 4/1/2009 MPS Capital Trust 7.990 2/7/2011 Nalco Co. 7.750 11/15/2011 Natexis Banque 4.375 6/20/2013 National Westminster Bank PLC 6.625 10/5/2009 Netherlands Government Bond 5.500 7/15/2010 Owens-Brockway Glass Containers 6.750 12/1/2014 Parker Hannifin Corp. 6.250 11/21/2005 Pemex Project Funding Master Trust 6.625 4/4/2010 Republic of Austria 5.625 7/15/2007 Sara Lee Corp. 6.125 7/27/2007 Spain Government Bond 4.250 10/31/2007 Telecom Italia Finance SA 7.250 4/20/2011 Telefonica Europe BV 5.125 2/14/2013 Telenet Communications NV 9.000 12/15/2013 Telenor ASA 5.875 12/5/2012 ThyssenKrupp Finance Nederland BV 7.000 3/19/2009 Tyco International Group SA 5.500 11/19/2008 Veolia Environnement 4.875 5/28/2013 NEW ZEALAND--5.4% New Zealand Government Bond 6.500 4/15/2013 NZD New Zealand Government Bond 7.000 7/15/2009 SINGAPORE--2.4% Singapore Government Bond 3.500 7/1/2012 SGD MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II SCHEDULE OF INVESTMENTS - DECEMBER 31, 2004 NOTES TO SCHEDULE OF INVESTMENTS: 144A--Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified buyers. AUD--Australian Dollar CAD--Canadian Dollar CHF--Swiss Franc DKK--Danish Krone EUR--Euro GBP--British Pound NZD--New Zealand Dollar SGD--Singapore Dollar SECURITY DESCRIPTION RATE MATURITY --------------------------------------------------------------------------------------------------------- UNITED KINGDOM--13.6% Inco 15.750% 7/15/2006 GBP UK Gilt 4.000 3/7/2009 UK Gilt 8.000 9/27/2013 UK Gilt 4.250 6/7/2032 Total Foreign Denominated (Cost $36,184,689) TOTAL BONDS AND NOTES (Cost $38,438,920) PREFERRED STOCK--0.2% Fannie Mae 7.00% CVT Pfd (Cost $77,500) PURCHASED OPTIONS--0.0% EUR Put/USD Call Strike, Price 1.30, 2/9/2005 AUD Put/USD Call Strike, Price .705, 3/10/2005 EUR Put/USD Call Strike, Price 1.29, 2/10/2005 GBP Put/USD Call Strike, Price 1.875, 2/10/2005 CHF Put/USD Call Strike, Price 1.21, 3/10/2005 TOTAL PURCHASED OPTIONS (Cost $13,154) SHORT-TERM INVESTMENTS--11.3% U.S. GOVERNMENT--6.9% Treasury Bill ((+)) 2.215 3/17/2005 USD INVESTMENT COMPANIES--2.4% Dreyfus Institutional Preferred Plus Money Market Fund((+)(+)) INVESTMENT OF CASH COLLATERAL--2.0% BlackRock Cash Strategies L.L.C.(**) 1,002,860 1,002,860 ___________ TOTAL SHORT TERM INVESTMENTS (Cost $5,646,137) 5,646,735 ___________ TOTAL INVESTMENTS--96.6 (Cost $44,175,709) 48,030,848 OTHER ASSETS, LESS LIABILITIES--3.4% 1,683,562 ___________ NET ASSETS--100% $49,714,410 ___________ ___________ (a) Variable Rate Security, rate indicated is as if 12/31/2004. * Security, or a portion of thereof, was on loan at December 31, 2004. ** Money market fund exempt from registration under the Investment Company Act of 1940 offered only to eligible investors. (+) Denotes all or part of security segregated as collateral. (+)(+) Affiliated institutional money market. # Delayed delivery security. The accompanying notes are an integral part of the financial statements. 10 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II SCHEDULE OF INVESTMENTS--DECEMBER 31, 2004 The Fund held the following futures contracts at December 31, 2004: At December 31, 2004 the Fund held the following forward foreign currency exchange contracts: The accompanying notes are an integral part of the financial statements. 11 UNDERLYING FACE CONTRACT POSITION EXPIRATION DATE AMOUNT AT VALUE --------------------------------------------------------------------------------------------------------- U.S. 5 Year Note (11 Contracts) Short 3/21/2005 $1,204,844 U.S. 10 Year Note (3 Contracts) Short 3/21/2005 335,813 LOCAL PRINCIPAL CONTRACT VALUE AT USD AM CONTRACTS TO RECEIVE AMOUNT VALUE DATE DECEMBER 31, 2004 TO D --------------------------------------------------------------------------------------------------------- Canadian Dollar 1,215,000 3/16/2005 $ 1,012,703 $ 99 Danish Krone 3,670,000 3/16/2005 670,369 65 Euro 2,990,000 3/16/2005 4,059,406 4,03 Japanese Yen 1,804,650,000 3/16/2005 17,714,877 17,34 __________ ______ TOTAL $23,457,355 $23,02 __________ ______ __________ ______ LOCAL PRINCIPAL CONTRACT VALUE AT USD AM CONTRACTS TO DELIVER AMOUNT VALUE DATE DECEMBER 31, 2004 TO RE --------------------------------------------------------------------------------------------------------- Australian Dollar 2,610,000 3/16/2005 $ 2,029,529 $ 1,99 Swiss Franc 340,000 3/16/2005 299,596 29 Euro 1,228,778 1/3/2005 1,666,961 1,67 Euro 4,995,000 3/16/2005 6,781,517 6,64 New Zealand Dollar 10,579 1/25/2005 7,569 New Zealand Dollar 3,820,000 3/16/2005 2,718,254 2,70 British Pound Sterling 2,015,000 3/16/2005 3,846,363 3,85 Singapore Dollar 2,000,000 3/16/2005 1,228,633 1,21 ___________ _____ TOTAL $18,578,422 $18,39 ___________ ______ ___________ ______ At December 31, 2004 the Fund held the following cross currency exchange contracts: VALUE AT IN VALUE AT CONT CONTRACTS TO DELIVER DECEMBER 31, 2004 EXCHANGE FOR DECEMBER 31, 2004 VALU --------------------------------------------------------------------------------------------------------- New Zealand Dollar $ 591,984 Australian Dollar $ 604,852 1/25 Australian Dollar 604,852 New Zealand Dollar 599,552 1/25 __________ __________ $1,196,836 $1,204,404 __________ __________ __________ __________ MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II SCHEDULE OF INVESTMENTS--DECEMBER 31, 2004 At December 31, 2004, the Fund held the following open swap contracts: The accompanying notes are an integral part of the financial statements. 12 NOTIONAL AMOUNT PORTFOLIO/COUNTERPARTY EXPIRATION DATE DESCRIPTION --------------------------------------------------------------------------------------------------------- 90,000 USD 12/20/07 Agreement with Bear Stearns, dated 12/08/04 to receive 2.05% per year times the notional The Fund makes payment only upon a credit ev by Republic of Turkey, the notional amount t difference between the par value and the the of Republic of Turkey, 11.875% due 1/15/30. 80,000 USD 12/20/09 Agreement with Bear Stearns, dated 11/17/04 2.84% per year times the notional amount. Th makes payment only upon a credit event by Uk Government, the notional amount times the di between the par value and the then-market of Government, 7.65% due 6/11/13. 90,000 USD 12/20/05 Agreement with Bear Stearns, dated 12/08/04 1.05% per year times the notional amount. Th receives payment only upon a credit event by Turkey, the notional amount times the differ the par value and the then-market of Republi 11.875% due 1/15/30. 80,000 USD 11/19/09 Agreement with Bear Stearns, dated 11/17/04 the notional amount multiplied by 3.90700% a the notional amount multiplied by the 3 mont Total Swap Value MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2004 The accompanying notes are an integral part of the financial statements. 13 ASSETS Investments in securities (including securities on loan, valued at $956,684) (Note 7) Unaffiliated issuers, at value (Note 1A) (cost $42,967,192) $46,822,331 Affiliated issuers, at value (Note 1A) (cost $1,208,517) (Note 1H) 1,208,517 Foreign Currency (cost $116,413) 118,121 Receivable for Fund shares sold 16,956 Receivable for securities sold 2,383,807 Swap contracts, at value (Note 6) 1,880 Unrealized appreciation on forward currency exchange contracts (Note 6) 459,169 Interest and dividends receivable 888,653 Prepaid expenses 17,390 ___________ Total assets 51,916,824 LIABILITIES Payable for Fund shares redeemed $2,616 Payable for investments purchased 920,316 Collateral for securities on loan (Note 7) 1,002,860 Unrealized depreciation on forward currency exchange contracts (Note 6) 208,991 Distributions payable 13,650 Payable for variation margin 2,344 Accrued accounting, custody and transfer agent fees (Note 2) 17,851 Accrued trustees' fees and expenses (Note 2) 2,091 Accrued expenses and other liabilities 31,695 ___________ Total liabilities 2,202,414 ___________ NET ASSETS $49,714,410 ___________ ___________ NET ASSETS CONSIST OF: Paid-in capital $45,465,310 Accumulated net realized loss (277,940) Undistributed net investment income 304,457 Net unrealized appreciation 4,222,583 ___________ TOTAL NET ASSETS $49,714,410 ___________ ___________ SHARES OF BENEFICIAL INTEREST OUTSTANDING 2,052,137 ___________ ___________ NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE (Net Assets/Shares outstanding) 24.23 ___________ ___________ MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 The accompanying notes are an integral part of the financial statements. 14 INVESTMENT INCOME (NOTE 1B) Interest income (net of foreign withholding tax of $456 and including securities lending income of $1,209 (Note 7)) $1,559,039 Interest income from affiliated investments (Note 1H) 32,736 __________ Total investment income 1,591,775 EXPENSES Investment advisory fee (Note 2) $136,010 Accounting, custody, and transfer agent fees (Note 2) 98,809 Professional fees 39,987 Registration fees 11,300 Trustees' fees and expenses (Note 2) 7,016 Insurance expense 6,345 Miscellaneous 11,762 _________ Total expenses 311,229 Deduct: Waiver of investment advisory fee (Note 2) (57,150) _________ Net expenses 254,079 __________ Net investment income 1,337,696 __________ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) Investment security transactions 2,059,177 Financial futures contracts (5,935) Foreign currency transactions and forward currency exchange contracts (541,342) Written options transactions (3,646) __________ Net realized gain 1,508,254 Change in unrealized appreciation (depreciation) Investment securities 1,264,421 Written option transactions 17,952 Swap contracts 1,880 Financial futures contracts (8,736) Foreign currency transactions and forward currency exchange contracts 499,764 __________ Change in net unrealized appreciation (depreciation) 1,775,281 __________ Net realized and unrealized gains on investments 3,283,535 __________ NET INCREASE IN NET ASSETS FROM OPERATIONS $4,621,231 __________ __________ MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II STATEMENTS OF CHANGES IN NET ASSETS The accompanying notes are an integral part of the financial statements. 15 FOR THE YEAR ENDED DECEMBER 31, 2004 DECEM __________________ ___ INCREASE (DECREASE) IN NET ASSETS: FROM INVESTMENT OPERATIONS Net investment income $ 1,337,696 Net realized gain 1,508,254 Change in net unrealized appreciation (depreciation) 1,775,281 ____________ Net increase in net assets from investment operations 4,621,231 ____________ DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1E) From net investment income (1,965,761) ____________ Total distributions to shareholders (1,965,761) ____________ FUND SHARE TRANSACTIONS (NOTE 4) Net proceeds from sale of shares 28,789,234 Value of shares issued to shareholders in reinvestment of distributions 1,946,429 Cost of shares redeemed (7,660,029) ____________ Net increase in net assets from Fund share transactions 23,075,634 ____________ TOTAL INCREASE (DECREASE) IN NET ASSETS 25,731,104 NET ASSETS At beginning of year 23,983,306 ____________ At end of year (including undistributed net investment income of $304,457 and $105,920) $49,714,410 ____________ ____________ MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II FINANCIAL HIGHLIGHTS (a) The Fund has adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies effective January 1, 2001 and began amortizing premium and discount on all debt securities on an effective yield basis. The effect of this change for the year ended December 31, 2001 was to decrease net investment income per share by $0.002, increase net realized and unrealized gains and losses per share by $0.002 and decrease the ratio of net investment income to average net assets from 4.00% to 3.99%. Per share data and ratios/supplemental data for the periods prior to January 1, 2001 have not been restated to reflect this change in presentation. (1) Calculated based on average shares outstanding. (+) Total return would have been lower in the absence of fee waivers and expense limitations. The accompanying notes are an integral part of the financial statements. 13 YEAR ENDED DECE ____________________________________ 2004 2003 2002 _______ ________ _______ NET ASSET VALUE, BEGINNING OF YEAR $ 22.97 $ 21.66 $ 17.83 FROM INVESTMENT OPERATIONS: Net investment income (1)* 0.88 0.77 0.73 Net realized and unrealized gain (loss) on investments 1.52 3.81 3.10 _______ ________ _______ Total from investment operations 2.40 4.58 3.83 _______ ________ _______ LESS DISTRIBUTIONS TO SHAREHOLDERS: From net investment income (1.14) (3.27) -- _______ ________ _______ Total distributions to shareholders (1.14) (3.27) -- _______ ________ _______ NET ASSET VALUE, END OF YEAR $ 24.23 $ 22.97 $ 21.66 _______ ________ _______ _______ ________ _______ TOTAL RETURN((+)) 10.73% 21.51% 21.48% RATIOS/SUPPLEMENTAL DATA: Expenses (to average daily net assets)(*) 0.75% 0.55% 0.55% Net Investment Income (to average daily net assets)(*) 3.93% 3.34% 3.87% Portfolio Turnover 132% 192% 178% Net Assets, End of Year (000's omitted) $49,714 $23,983 $21,202 ------- * For the periods indicated, the investment adviser voluntarily agreed not to impose all or a portion of its investment advisory fee and/or reimbursed the Fund for a portion of its operating expenses. If this voluntary action had not been taken, the investment income per share and the ratios would have been: Net investment income per share(1) $ 0.84 $ 0.60 $ 0.60 Ratios (to average daily net assets): Expenses 0.91% 1.30% 1.23% Net investment income 3.77% 2.59% 3.19% MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II NOTES TO FINANCIAL STATEMENTS (1) SIGNIFICANT ACCOUNTING POLICIES: Mellon Institutional Funds Investment Trust (the "Trust") is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end, management investment company. Standish Mellon International Fixed Income II Fund (the "Fund") is a separate diversified investment series of the Trust. The objective of the Fund is to maximize total return while realizing a market level of income consistent with preserving principal and liquidity. The Fund seeks to achieve its objective by investing, under normal circumstances, at least 80% of net assets in fixed income securities, and at least 65% of net assets in non-U.S. dollar denominated fixed income securities of foreign government and companies located in various countries, including emerging markets. 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 Securities for which quotations are readily available are valued at the last sale price, or if no sale price, at the closing bid price in the principal market in which such securities are primarily traded. Market quotations are not considered to be readily available for certain debt obligations; such investments are stated at fair value on the basis of valuations furnished by a pricing service or dealers, approved by the Trustees, which determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and variable relationships between securities that are generally recognized by institutional traders. Securities (including illiquid securities) for which quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Trustees. Short-term instruments with less than sixty-one 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 value based upon the value on such date unless the Trustees determine during such sixty-day period that amortized value 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 accrued, adjusted for accretion of discount or amortization of premium using the yield-to-maturity method on long-term debt securities and short-term securities with greater than sixty days to maturity. Dividend income is recorded on the ex-dividend date. Realized gains and losses from securities sold are recorded on the identified cost basis. 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. FOREIGN CURRENCY TRANSACTIONS Investment security valuations, other assets, and liabilities initially expressed in foreign currencies are converted into U.S. dollars based upon current currency exchange rates. Purchases and sales of foreign investment securities and income and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions. Section 988 of the Internal Revenue 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. 17 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II NOTES TO FINANCIAL STATEMENTS D. 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. E. DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income will be declared and distributed quarterly. The Fund's dividends from short-term and long-term 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 distribution reclassifications, are primarily due to differing treatments for losses deferred due to wash sales, foreign currency gains and losses, post-October losses, amortization and/or accretion of premiums and discounts on certain securities and the timing of recognition of gains and losses on futures contracts. Permanent book and tax basis differences will result in reclassifications among undistributed net investment income, accumulated net realized gain (loss) and paid in capital. Undistributed net investment income and accumulated net realized gain (loss) on investments and foreign currency transactions may include temporary book and tax basis differences which will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year. F. 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 taking into consideration, among other things, the nature and type of expense and the relative size of the funds. 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 represent issuers in which the Fund held investments in other investment companies advised by Standish Mellon Asset Management Company LLC ("Standish Mellon"), a wholly-owned subsidiary Mellon Financial Corporation, or its affiliates. (2) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES: The investment advisory fee paid to Standish Mellon overall investment advisory, administrative services, and general office facilities, is paid monthly at the annual rate of 0.40% of the Fund's average daily net assets. Standish Mellon voluntarily agreed to limit total Fund operating expenses (excluding brokerage commissions, taxes and extraordinary expenses) to 0.75% effective January 1, 2004, from 0.55% prior to that date, of the Fund's average daily net assets for the year ended December 31, 2004. Pursuant to this agreement, for the year ended December 31, 2004, Standish Mellon voluntarily waived a portion of its investment advisory fee in the amount of $57,150 This agreement is voluntary and temporary and may be discontinued or revised by Standish Mellon at any time. 18 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II NOTES TO FINANCIAL STATEMENTS Effective February 23, 2004, the Fund entered into an agreement with Dreyfus Transfer, Inc., a wholly owned subsidiary of The Dreyfus Corporation, a wholly owned subsidiary of Mellon Financial Corporation 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 paid $3,233 during the year ended December 31, 2004. The Fund has contracted Mellon Bank, N.A. ("Mellon Bank"), a wholly owned subsidiary of Mellon Financial Corporation and an affiliate of Standish Mellon, to provide custody, fund 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 paid $75,946 during the year ended December 31, 2004. The Fund entered into an agreement with Mellon Bank to perform certain securities lending activities and to act as the Fund's lending agent. Pursuant to this agreement Mellon Bank receives an agreed upon percentage of the net lending revenues. This compensation is a standard form of compensation received by securities lending agents with respect to non-affiliated entities. See Note 7 for further details. No 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 Trust pays each Trustee who is not a director, officer or employee of Standish Mellon. (3) PURCHASES AND SALES OF INVESTMENTS: Purchases and proceeds from sales of investments, other than short-term obligations, for the year ended December 31, 2004 were as follows: (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: PURCHASES SALES __________ __________ U.S. Government Securities $ 2,282,163 $ 2,321,551 ___________ ___________ Investments (non-U.S. Government Securities) $54,611,331 $38,021,972 ___________ ___________ ___________ ___________ FOR THE FOR THE YEAR ENDED YEAR ENDED DECEMBER 31, 2004 DECEMBER 31, 2003 __________________ _________________ Shares sold 1,262,514 425,279 Shares issued to shareholders in reinvestment of distributions 83,344 132,785 Shares redeemed (337,694) (495,664) __________ __________ Net increase 1,008,164 62,400 __________ __________ __________ __________ At December 31, 2004, two shareholders of record held approximately 83% of the total outstanding shares of the Fund. Investment activity of these shareholders could have a material impact on the Fund. A significant portion of the Fund's shares represent investments by fiduciary accounts over which Standish Mellon and its affiliates have either sole or joint investment discretion. 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 90 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 are acquired through reinvestment of distributions. For the year ended December 31, 2004, the Fund did not collect any redemption fees. 19 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II NOTES TO FINANCIAL STATEMENTS (5) FEDERAL TAXES: As a regulated investment company qualified under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the extent that it distributes all of its taxable income for its fiscal year. The tax basis components of distributable earnings and the federal tax cost as of December 31, 2004, was as follows: At December 31, 2004, the Fund, for federal income tax purposes, has capital loss carryovers which will reduce the Fund's taxable income arising from net realized gain on investments, if any, to the extent permitted by the Internal Revenue Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Such capital loss carryovers are as follows: Tax character of distributions paid during the fiscal years ended December 31, 2004, and December 31, 2003 were as follows: (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 nature, risks and objectives of these instruments are set forth more fully in the Fund's Prospectus and Statement of Additional Information. The Fund may trade the following 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 2004 AMOUNT ____________ Unrealized appreciation $ 3,863,312 Unrealized depreciation (15,006) ___________ Net unrealized appreciation/depreciation 3,848,306 Undistributed ordinary income 555,312 Capital loss carry over 283,844 Cost for federal income tax purposes $44,182,540 CAPITAL LOSS CARRY OVER EXPIRATION DATE ____________ ________________ $283,844 12/31/2010 2004 2003 __________ __________ Ordinary income $ 1,965,761 $ 3,060,410 market exposure and changes in securities 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 options is shown in the Schedule of Investments. This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contract or if the counterparty does not perform under the contract's terms. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or are closed are added to or offset against the proceeds or amount paid on the transaction to determine the realized gain or loss. Realized gains and losses on purchased options are included in realized gains and losses on investment securities, except purchased options on foreign currency which are included in realized gains and losses on foreign currency transactions. If a put option written by the Fund is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as 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. 20 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II NOTES TO FINANCIAL STATEMENTS 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. The Portfolio had entered into options transactions during the year ended December 31, 2004. The option transactions were as follows: FORWARD 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 gains or losses are recorded for financial statement purposes as unrealized until the contract settlement date or upon the closing of the contract. Forward currency exchange contracts are used by the Fund primarily to protect the value of the Fund's foreign securities from adverse currency movements. Unrealized appreciation and depreciation of forward currency exchange contracts is included in the Statement of Assets and Liabilities. The Fund held foreign currency exchange contracts at December 31, 2004. See Schedule of Investments for further details. FUTURES CONTRACTS The Fund may enter into financial futures contracts for the delayed sale or delivery of securities or contracts based on financial indices at a fixed price on a future date. Pursuant to the 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 gains or losses by the Fund. There are several risks in connection with the use of futures contracts as a hedging device. The change in value of NUMBER OF WRITTEN CALL OPTION TRANSACTIONS CONTRACTS PREMIUMS __________ __________ Outstanding, beginning of period 0 0 Options written 1 2,519 Options expired (1) (2,519) __________ __________ Outstanding, end of period 0 0 __________ __________ __________ __________ NUMBER OF WRITTEN PUT OPTION TRANSACTIONS CONTRACTS PREMIUMS __________ __________ Outstanding, beginning of period 3 10,814 Options written 13 51,043 Options expired (7) (24,407) Options closed (9) (37,450) __________ __________ Outstanding, end of period 0 0 __________ __________ __________ __________ 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 Fund 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 arise if there is an illiquid secondary market or if the counterparties do not perform under the contract's terms. The Fund enters into financial futures transactions primarily 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. The Fund held futures at December 31, 2004. See Schedule of Investments for further details. 21 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II NOTES TO FINANCIAL STATEMENTS SWAP AGREEMENTS The Fund may enter into swap agreements. A swap is an agreement to exchange the return generated by one instrument for the return generated by another instrument. The Fund may enter into interest rate and credit default swap agreements to manage its exposure to interest rates and credit risk. Interest rate swap agreements involve the exchange by the Fund with another party of their respective commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments with respect to a notional amount of principal. In a credit default swap, one party makes a stream of payments to another party in exchange for the right to receive a specified return in the event of a default by a third party on its obligation. The Fund may use credit default swaps to provide a measure of protection against defaults of issuers (i.e., to reduce risk where the Fund owns or has exposure to the corporate or sovereign issuer) or to take an active long or short position with respect to the likelihood of a particular corporate or sovereign issuer's default. In connection with these agreements, cash or securities may be set aside as collateral in accordance with the terms of the swap agreement. The Fund earns interest on cash set aside as collateral. Swaps are marked to market daily based upon quotations from market makers and change in value, if any, is recorded as unrealized gain or loss in the Statement of Operations. These financial instruments are not actively traded on financial markets. The values assigned to these instruments are based upon the best available information and because of the uncertainty of the valuation, these values may differ significantly from the values that would have been realized had a ready market for these instruments existed, and differences could be material. Payments received or made from credit default swaps at the end of the measurement period are recorded as realized gain or loss in the Statement of Operations. Net payments of interest on interest rate swap agreements, if any, are included as part of realized gain or loss. Entering into these agreements involves, to varying degrees, elements of credit, market, and documentation risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of contractual terms in the agreements, and that there may be unfavorable changes in interest rates. At December 31, 2004 the Fund held swap 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. The Fund loaned securities during the year ended December 31, 2004 resulting in security lending income of $1,209. At December 31, 2004, the Fund had securities valued at $956,684 on loan. See Schedule of Investments for further detail on the security positions on loan and collateral held. (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. 22 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II NOTES TO FINANCIAL STATEMENTS The Fund may enter into TBA sale commitments to hedge its portfolio 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. Unsettled TBA sale commitments are valued at the current market value of the underlying securities, generally according to the procedures described under "Investment security valuations" above. The contract is 'marked-to- market' daily and the change in market value is recorded by the Fund as an unrealized gain or loss. If the TBA sale commitment is closed through the acquisition of an offsetting purchase commitment, the Fund realizes a gain or loss from the sale of the securities based upon the unit price established at the date the commitment was entered into. The Fund did not hold any delayed delivery securities at December 31, 2004 (8) LINE OF CREDIT: The Fund, and other funds in the Trust and subtrusts in the Mellon Institutional Funds Master Portfolio Trust (the "Portfolio Trust") are parties to a committed line of credit facility, which enables each portfolio/fund to borrow, in the aggregate, up to $35 million. Interest is charged to each participating portfolio/fund based on its borrowings at a rate equal to the Federal Funds effective rate plus 1/2 of 1%. In addition, a facility fee, computed at an annual rate of .060 of 1% committed amount, is allocated ratably among the participating portfolios/funds at the end of each quarter. For the year ended December 31, 2004, a facility fee of $387 was allocated to the Fund. During the year ended December 31, 2004, the Fund had average borrowings outstanding of $26,063 on a total of four days and incurred $4 of interest expense. 23 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST STANDISH MELLON INTERNATIONAL FIXED INCOME FUND II REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Trustees of Mellon Institutional Funds Investment Trust and the Shareholders of Standish Mellon International Fixed Income Fund II Fund: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Standish Mellon International Fixed Income II Fund (the "Fund") at December 31, 2004, and the results of its operations, the changes in its net assets, and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion PricewaterhouseCoopers LLP New York, NY February 25, 2005 24 TRUSTEES AND OFFICERS The following table lists the Trust's trustees and officers; their address and date of birth; their position with the Trust; the length of time holding that position with the Trust; their principal occupation(s) during the past five years; the number of portfolios in the fund complex they oversee; other directorships they hold in companies subject to registration or reporting requirements of the Securities Exchange Act of 1934 (generally called "public companies") or in registered investment companies; and total annual remuneration paid as of December 31, 2004. The Trust's Statement of Additional Information includes additional information about the Trust's trustees and is available, without charge, upon request by writing The Mellon Institutional Funds at P.O. Box 8585, Boston, MA 02266-8585 or calling toll free 1-800-221-4795. INDEPENDENT TRUSTEES 25 NUMBER OF PRINCIPAL PORTFOLIOS IN NAME TERM OF OFFICE OCCUPATION(S) FUND COMPLEX DIR ADDRESS, AND POSITION(S) AND LENGTH OF DURING PAST OVERSEEN BY DATE OF BIRTH HELD WITH TRUST TIME SERVED 5 YEARS TRUSTEE --------------------------------------------------------------------------------------------------------- Samuel C. Fleming Trustee Trustee since Chairman of the Board 30 c/o Decision Resources, Inc. 11/3/1986 and Chief Executive 260 Charles Street Officer, Decision Waltham, MA 02453 Resources, Inc. 9/30/40 Caleb Loring III Trustee Trustee since Trustee, Essex Street 30 c/o Essex Street Associates 11/3/1986 Associates (family P.O. Box 181 investment trust office) Beverly, MA 01915 11/14/43 Benjamin M. Friedman Trustee Trustee since William Joseph Maier, 30 c/o Harvard University 9/13/1986 Professor of Political Cambridge, MA 02138 Economy, Harvard 8/5/44 University John H. Hewitt Trustee Trustee since Trustee, Mertens 30 P.O. Box 2333 11/3/1986 House, Inc. (hospice) New London, NH 03257 4/11/35 INTERESTED TRUSTEES Patrick J. Sheppard Trustee, President Since 2003 Senior Vice President 30 Mellon Institutional and Chief and Chief Operating Officer, Asset Management Executive Officer Mellon Institutional One Boston Place Asset Management; Boston, MA 02108 formerly Vice President 7/24/65 and Chief Financial Officer, Mellon Institutional Asset Management PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES 26 NAME 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 --------------------------------------------------------------------------------------------------------- Barbara A. McCann Vice President Since 2003 Senior Vice President and Head of Operati Mellon Institutional and Secretary Mellon Institutional Asset Management, fo Asset Management First Vice President, Mellon Institutiona One Boston Place Management and Mellon Global Investments Boston, MA 02108 2/20/61 Steven M. Anderson Vice President Vice President Vice President and Mutual Funds Controlle Mellon Institutional and Treasurer since 1999; Mellon Institutional Asset Management Asset Management Treasurer Institutional Asset One Boston Place since 2002 Boston, MA 02108 7/14/65 Denise B. Kneeland Assistant Vice Since 1996 Vice President and Manager, Mutual Funds Mellon Institutional President Mellon Institutional Asset Management Asset Management One Boston Place Boston, MA 02108 8/19/51 Cara E. Hultgren Assistant Vice Since 2001 Assistant Vice President and Manager, Mellon Institutional President Shareholder Services, Mellon Institutiona Asset Management Asset Management since 2001; One Boston Place Shareholder Representative, Boston, MA 02108 Standish Mellon Asset Management 1/19/71 Jan F. Jumet Chief Since 2004 Senior Vice President and Chief Complianc tandish Mellon Assest Compliance for Standish Mellon Asset Management Compa Management Company LLC Officer formerly Director of Compliance and Admin One Boston Place and Chief Administration Officer for Stan Boston, MA 02108 Asset Management Company LLC, Senior 8/9/66 Vice President and Chief Administration O for Mellon Bond Associates, LLP, and First Vice President and Senior Sales Ass for Mellon Institutional Asset Management THIS PAGE INTENTIONALLY LEFT BLANK THIS PAGE INTENTIONALLY LEFT BLANK THIS PAGE INTENTIONALLY LEFT BLANK One Boston Place Boston, MA 02108-4408 800.221.4795 www.melloninstitutionalfunds.com ITEM 2. CODE OF ETHICS. As of December 31, 2004, the Registrant has adopted a Code of Ethics, as defined in Item 2(b) of Form N- CSR, that applies to the Principal Executive Officer and Principal Financial Officer. For the fiscal year ended December 31, 2004, there were no amendments to a provision of the Code of Ethics nor were there any waivers granted from a provision of the Code of Ethics. A copy of the Registrant's Code of Ethics that applies to the Principal Executive Officer and Principal Financial Officer is filed as an exhibit to this Form N-CSR under Item 11(a)(1). ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The Registrant's Board of Trustees has determined that the Registrant has more than one audit committee financial expert, as defined in Item 3 of Form N-CSR, serving on its audit committee. The audit committee financial experts serving on the Registrant's audit committee are John H. Hewitt and Caleb Loring III, both of whom are "independent" pursuant to paragraph (a)(2) of Item 3 of Form N-CSR. Mr. Hewitt served at Morgan Stanley as a securities analyst and also in a supervisory role regarding analysis. He has held a chartered financial analyst designation, as well as a master's degree in business administration from Harvard University. He has been a member of the Registrant's audit committee since its inception. Mr. Loring served as an executive in the commercial lending division of the Bank of Boston, N.A., performing and supervising credit analyses and reviewing financial statements of potential and existing borrowers. Also, Mr. Loring has served as a private trustee in the Ayer Family Office, where his duties involve financial statement analysis. He has been a member of the Registrant's audit committee since its inception, and has served on the audit committees of several privately held companies. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) AUDIT FEES: The aggregate fees billed for professional services rendered by the principal accountant, PricewaterhouseCoopers LLP, for the audit of the Registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings for 2004 and 2003 were $130,555 and $127,776, respectively. (b) AUDIT RELATED FEES: The aggregate fees billed for audit-related professional services rendered by PricewaterhouseCoopers LLP for 2004 and 2003 were $40,356 and $39,290, respectively. Such services and related fees for 2004 and 2003 included the preparation of fiscal year end tax provisions and distribution requirements necessary to prepare annual financial statements. (c) TAX FEES: The aggregate fees billed for professional services rendered by PricewaterhouseCoopers LLP for tax compliance, tax advice, and tax planning for 2004 and 2003 were $96,205 and $92,214, respectively. Services rendered in both years 2003 included asset diversification testing, the preparation of tax returns and extensions, the review of periodic distributions and, in 2003, tax advice related to the proper tax treatment of investments in total return swaps. (d) ALL OTHER FEES: No such fees were billed to the Registrant by PricewaterhouseCoopers LLP for 2004 or 2003. (e) (1) AUDIT COMMITTEE PRE-APPROVAL POLICY: The Registrant's audit committee pre-approves all audit and non-audit services to be performed by the Registrant's accountant before the accountant is engaged by the Registrant to perform such services. (e) (2) 100% of the services described in each of paragraphs (b) through (d) of this Item 4 were pre-approved by the Registrant's audit committee before the accountant was engaged by the Registrant to perform such services. (f) Not applicable. (g) The aggregate non-audit fees billed by the Registrant's accountant for services rendered to the Registrant's investment adviser by PricewaterhouseCoopers LLP for 2004 and 2003 were $31,000 and $50,925, respectively. Services provided in 2004 included the review and documentation of the Registrant's change in custodian and fund accounting agent and the review and issuance of consent related to the registration and filing of a new fund on Form N-1A. Services provided in 2003 included consultation and discussions regarding the tax implications resulting from the Registrant's change of custodian and fund administrator, including change in partnership allocation methodology for funds in a master feeder structure and state tax issues concerning domicile of master portfolios. The aggregate non-audit fees billed by the Registrant's accountant for services rendered to the Registrant's transfer agent by PricewaterhouseCoopers LLP for 2004 were $43,708. Services provided in 2004 included a review of the transfer agency function and to issue a report under Rule 17Ad-13(a)(3) of the Securities and Exchange Act of 1934. In 2003, the Registrant's transfer agent was not an entity controlling, controlled by, or under common control with the Registrant's investment adviser. (h) Because all of the non-audit services rendered to the Registrant's investment adviser or any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant were pre-approved by the Registrant's Audit Committee of the Board of Directors and no such non- audit services were not pre-approved, the Audit Committee was not asked to consider whether the provision of non-audit services rendered to the Registrant's investment adviser or any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant which were not pre-approved by the Registrant's Audit Committee is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the Registrant. ITEM 6. SCHEDULE OF INVESTMENTS Included as part of the report to shareholders filed under Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED- END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the Registrant. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to the Registrant. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes. ITEM 10. 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) Not applicable to the Registrant. ITEM 11. EXHIBITS. (a)(1) Code of Ethics required by Item 2 is attached hereto as an exhibit. (a)(2) Certifications of the Principal Executive Officer and Principal Financial Officer of the Registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 are attached hereto as Exhibit 99CERT.302 (b) Certifications as required by Rule 30a-2(b) under the Investment Company Act of 1940 and pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as Exhibit 99CERT.906. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 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. (Registrant) Mellon Institutional Funds Investment Trust By (Signature and Title): /s/ BARBARA A. MCCANN --------------------------------------------------- Barbara A. McCann, Vice President and Secretary Date: March 10, 2004 By (Signature and Title): /s/ PATRICK J. SHEPPARD --------------------------------------------------- Patrick J. Sheppard, President and Chief Executive Officer Date: March 10, 2004 By (Signature and Title): /s/ STEVEN M. ANDERSON --------------------------------------------------- Steven M. Anderson, Vice President and Treasurer Date: March 10, 2004 MELLON INSTITUTIONAL FUNDS INVESTMENT TRUST AND MELLON INSTITUTIONAL FUNDS MASTER PORTFOLIO (MELLON INSTITUTIONAL FUNDS ("MIF") COMPLIANCE POLICIES AND PROCEDURES CODE OF BUSINESS CONDUCT AND ETHICS Effective Date November 26, 2003 TABLE OF CONTENTS 1 PAGE NUMBER I. Overview............................................................... 2 II. Purposes of the Code................................................... 2 III. Responsibilities of Covered Officers................................... 3 A. Honest and Ethical Conduct.................................... 3 B. Conflicts of Interest......................................... 3 C. Use of Personal Fund Shareholder Information.................. 5 D. Public Communications......................................... 5 E. Compliance with Applicable Laws, Rules and Regulations........ 5 IV. Violation Reporting.................................................... 5 A. Overview...................................................... 5 B. How to Report................................................. 6 C. Process for Violation Reporting to the Board.................. 6 D. Sanctions for Code Violations................................. 6 V. Waivers from the Code.................................................. 6 VI. Amendments to the Code................................................. 7 VII. Acknowledgement and Certification of Adherence to the Code............. 7 VIII. Recordkeeping.......................................................... 7 IX. Confidentiality........................................................ 7 Appendices Appendix A: Covered Officers and Definitions.............................. 8 Appendix B: Form of Certification......................................... 9 I. OVERVIEW This Code of Business Conduct and Ethics (the "Code") sets forth the legal and ethical standards of conduct for the principal executive officer and principal financial officer (the "Covered Officers"), of Mellon Institutional Funds Investment Trust and Mellon Institutional Funds Master Portfolio (collectively, the "Trust"). The Trust's Covered Officers are identified on Appendix A to this Code. Pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 and the Securities and Exchange Commission's (the "SEC") rules thereunder, the Board of Trustees of each Trust (collectively, the "Board") has implemented the Code to promote and demonstrate honest and ethical conduct in its Covered Officers. The Covered Officers are also employees of Standish Mellon Asset Management Company LLC and/or The Boston Company Asset Management, LLC. (collectively, the "Adviser"). In addition to adhering to the Code, these individuals must comply with other Trust and Adviser policies and procedures, such as the Trust's code of ethics governing personal trading activities, as adopted pursuant to Rule 17j-1 under the Investment Company Act of 1940, as amended (the "Investment Company Act"). The Trust's ethics compliance officer (the "Ethics Compliance Officer"), in consultation with counsel to the Trust, is primarily responsible for implementing and enforcing this Code. The Ethics Compliance Officer, in consultation with counsel to the Trust, has the authority to interpret the Code and its applicability to particular circumstances. Any questions about the Code should be directed to the Ethics Compliance Officer and counsel to the Trust. The Ethics Compliance Officer is not a Covered Officer under this Code. The Ethics Compliance Officer is identified on Appendix A to this Code. II. PURPOSES OF THE CODE The purposes of the Code are to deter wrongdoing and to: - promote honest and ethical conduct among Covered Officers, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; - promote full, fair, accurate, timely and understandable disclosures in reports and documents that the Trust files with or submits to the SEC (and in other public communications from the Trust or any series of the Trust (a "Fund")) and that are within the Covered Officers' responsibilities; - promote compliance with applicable laws, rules and regulations; - encourage the prompt internal reporting of violations of the Code to the Ethics Compliance Officer; and - establish accountability for adherence to the Code. 2 III. RESPONSIBILITIES OF COVERED OFFICERS A. HONEST AND ETHICAL CONDUCT It is the duty of every Covered Officer to encourage and demonstrate honest and ethical conduct, as well as adhere to and require adherence to the Code and any other applicable policies and procedures designed to promote this behavior. Covered Officers must at all times conduct themselves with integrity, putting first the interests of the shareholders of the Trust they serve. Covered Officers also must, at all times, act in good faith, responsibly and with due care, competence and diligence, without misrepresenting material facts or allowing their independent judgment to be subordinated. Covered Officers also should responsibly use and control all Trust assets and resources entrusted to them. Covered Officers may not discourage the reporting of, actual or apparent violations of the Code or applicable laws or regulations. Individuals that report in good faith suspected violations of the Code or applicable laws or regulations should not be adversely affected in employment or other matters for making such reports. Covered Officers should create an environment that encourages the exchange of information, including concerns of the type that this Code is designed to address. B. CONFLICTS OF INTEREST A "conflict of interest" occurs when a Covered Officer's personal interests interfere with the interests of the Trust for which he or she serves as an officer. Covered Officers may not improperly use their position with the Trust for personal or private gain to themselves, their family, or any other person. Certain conflicts of interest covered by this Code arise out of the relationships between Covered Officers and the Trust that already are subject to conflict of interest provisions in the Investment Company Act and the Investment Advisers Act of 1940, as amended. For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Trust because of their status as "affiliated persons" of the Trust. Covered Officers must comply with applicable laws and regulations. Therefore, any violations of existing statutory and regulatory prohibitions on individual behavior will also be deemed a violation of this Code. As to conflicts arising from, or as a result of the advisory relationship between the Trust and the Adviser, of which the Covered Officers are also officers or employees, it is recognized by the Board that, subject to the Adviser's fiduciary duties to the Trust, the Covered Officers will in the normal course of their duties (whether formally for the Trust or for the Adviser, or for both) be involved in establishing policies and implementing decisions which may have different effects on the Adviser and the Trust. The Board recognizes that the participation of the Covered Officers in such activities is inherent in the contract relationship between the Trust and the Adviser and is consistent with the expectation of the Board of the performance by the Covered Officers of their duties as officers of the Trust. 3 Covered Officers should avoid actual conflicts of interest, and appearances of conflicts of interest, between the Covered Officer's duties to the Trust and his or her personal interests. If a Covered Officer suspects or knows of a conflict or an appearance of one, the Covered Officer must immediately report the matter to the Ethics Compliance Officer and counsel for the Trust. When actual, apparent or suspected conflicts of interest arise that have not been addressed or reported in connection with a Covered Officer, the Adviser's personnel aware of the matter should promptly contact the Ethics Compliance Officer and counsel for the Trust. There will be no reprisal against any person reporting in good faith an actual, apparent or suspected conflict of interest. Upon receipt of a report of a possible conflict, the Ethics Compliance Officer and counsel to the Trust will take steps to determine whether a conflict exists. In so doing, the Ethics Compliance Officer and counsel to the Trust may take any actions they determine to be appropriate in their discretion and may use all reasonable resources, including retaining or engaging independent legal counsel, accounting firms or other consultants, subject to applicable law.(1) After full review of a report of a possible conflict of interest, the Ethics Compliance Officer and counsel to the Trust may determine that no conflict or reasonable appearance of a conflict exists. If, however, the Ethics Compliance Officer and counsel to the Trust determine that an actual conflict or appearance of a conflict exists, the Ethics Compliance Officer and counsel to the Trust will promptly inform the Chairman of the Independent Trustees of the conflict or appearance of a conflict and its proposed resolution in the best interests of the shareholders of the Trust. Absent any objection from the Independent Trustees, the Ethics Compliance Officer and counsel to the Trust will implement the proposed resolution. In lieu of determining whether a conflict exists, the Ethics Compliance Officer and counsel to the Trust may refer the matter to the Independent Trustees. After receiving a report of a possible conflict of interest, the Ethics Compliance Officer and counsel to the Trust will discuss the matter with the person who reported it (and with the Covered Officer at issue, if different) for purposes of educating those involved on conflicts of interests (including how to detect and avoid them, if appropriate). Appropriate resolution of conflicts may restrict the personal activities of the Covered Officer and/or his family, friends or other persons. Neither (a) the determination that no conflict or reasonable appearance of a conflict exists nor (b) the disclosure and resolution of a conflict or appearance of a conflict as described above is considered to be a waiver of the Code's requirements. Any questions about conflicts of interests, including whether a particular situation might be a conflict or an appearance of one, should be directed to the Ethics Compliance Officer and counsel to the Trust. (1) For example, retaining a Trust's independent accounting firm may require pre-approval by the Trust's audit committee. 4 C. USE OF PERSONAL FUND SHAREHOLDER INFORMATION A Covered Officer may not use or disclose personal information about Fund shareholders, except in the performance of his or her duties for a Fund. Each Covered Officer also must abide by the Trust's and the Adviser's privacy policies under SEC Regulation S-P. D. PUBLIC COMMUNICATIONS In connection with his or her responsibilities for or involvement with the Trust's public communications and disclosure documents (e.g., Fund shareholder reports, registration statements, press releases), each Covered Officer must provide information to Trust service providers (within the Adviser's organization or otherwise) and to government regulators and self-regulatory organizations that is accurate, complete, relevant and timely. Further, within the scope of their duties, Covered Officers will endeavor to ensure full, timely, and accurate disclosure in Trust disclosure documents. Covered Officers involved in or responsible for the Trust's public disclosure documents will oversee, or appoint others to oversee, processes for the timely creation and review of the accuracy of public reports and regulatory filings. Each Covered Officer also will familiarize himself or herself with the disclosure requirements applicable to the Trust, to the extent necessary to fulfill his or her responsibilities as a Covered Officer, and will adhere to, and will promote adherence to, Trust and Adviser disclosure controls, processes and procedures, including the Adviser's disclosure controls and procedures, which govern the process by which Trust disclosure documents are created and reviewed. To the extent that Covered Officers participate in the creation of a Fund's books and records, they must do so in a way that promotes the accuracy, fairness and timeliness of those records. E. COMPLIANCE WITH APPLICABLE LAWS, RULES AND REGULATIONS In connection with his or her duties and within the scope of his or her responsibilities as a Covered Officer, each Covered Officer must comply with governmental laws, rules and regulations that apply to his or her role, responsibilities and duties with respect to the Trust ("Applicable Laws"). These requirements do not impose on Covered Officers any additional substantive duties. Additionally, Covered Officers should promote compliance with Applicable Laws. If a Covered Officer knows of any material violations of Applicable Laws or suspects that such a violation may have occurred, the Covered Officer is expected to promptly report the matter to the Ethics Compliance Officer. IV. VIOLATION REPORTING A. OVERVIEW Each Covered Officer must promptly report, and promote the reporting of, any known or suspected violations of the Code to the Ethics Compliance Officer and the counsel to the Trust. 5 Examples of violations of the Code include, but are not limited to, the following: - Unethical or dishonest behavior - Obvious lack of adherence to policies surrounding review and approval of public communications and regulatory filings - Failure to report violations of the Code - Material violations of Applicable Laws - Failure to acknowledge and certify adherence to the Code The Ethics Compliance Officer and counsel to the Trust have the authority to take any and all action he or she considers appropriate in his or her sole discretion to investigate known or suspected Code violations, including consulting with the Trust's Board, the independent Board members, a Board committee, independent legal counsel and/or counsel to the independent Board members. The Ethics Compliance Officer and counsel to the Trust also has the authority to use all reasonable resources to investigate violations, including retaining or engaging legal counsel, accounting firms or other consultants, subject to applicable law. B. HOW TO REPORT Any known or suspected violations of the Code must be promptly reported to the Ethics Compliance Officer and counsel to the Trust. C. PROCESS FOR VIOLATION REPORTING TO THE BOARD The Ethics Compliance Officer and counsel to the Trust will report any violations of the Code promptly to the Chairman of the Independent Trustees. D. SANCTIONS FOR CODE VIOLATIONS Violations of the Code will be taken seriously. In response to reported or otherwise known violations, the Adviser and the Trust's Board may impose sanctions which they deem appropriate within the scope of their respective authority over the Covered Officer at issue. Sanctions imposed by the Adviser could include termination of employment. Sanctions imposed by the Trust's Board could include termination of association with the Trust. V. WAIVERS FROM THE CODE A Covered Officer may request a waiver from the Code by transmitting a written request for a waiver to the Ethics Compliance Officer and counsel to the Trust.(2) The request must include the rationale for the request and must explain how the waiver would be in furtherance of the standards of conduct described in and underlying purposes of the Code. The Ethics Compliance Officer and counsel to the Trust may grant waivers from the Code, as (2) There would not be a waiver of the Code if the Ethics Compliance Officer and counsel to the Trust determines that a matter is not a deviation from the Code's requirements or is otherwise not covered by the Code. 6 appropriate, subject to and in furtherance of, the standards of conduct described in the Code. The Ethics Compliance Officer and counsel to the Trust must fully document their consideration of any waiver request, including the rationale for granting or denying the waiver and promptly report the grant of any waiver (including the identification of any implicit waiver) to the Chairman of the Independent Trustees. In connection with the report of an implicit waiver, the Ethics Compliance Officer and Trust will propose (a) a resolution of the underlying departure from the Code, and (b) if appropriate under the circumstances, measures to ensure prompt discovery of such a departure in the future. The Ethics Compliance Officer and counsel to the Trust will monitor the activities subject to the waiver, as appropriate, and for compliance with any terms of the waiver and any violation of the terms of a waiver shall be treated as a violation of this Code. In lieu of determining whether to grant a waiver, the Ethics Compliance Officer and counsel to the Trust may refer the matter to the Independent Trustees. The Ethics Compliance Officer and counsel to the Trust will coordinate and facilitate any required public disclosures of any waivers granted or any implicit waivers. VI. AMENDMENTS TO THE CODE The Ethics Compliance Officer and counsel to the Trust may amend the Code as appropriate subject to the approval of the Independent Trustees. The Ethics Compliance Officer and counsel to the Trust will coordinate and facilitate any required public disclosures of Code amendments. VII. ACKNOWLEDGEMENT AND CERTIFICATION OF ADHERENCE TO THE CODE Each Covered Officer must sign a statement annually acknowledging that he or she has received a copy of the Code, as amended or updated, and confirming that he or she has complied with it (see Appendix B: Code Acknowledgement and Certification Form). VIII. RECORDKEEPING The Ethics Compliance Officer will create and maintain appropriate records regarding the implementation and operation of the Code, including records relating to conflicts of interest determinations and investigations of possible Code violations. IX. CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code shall be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Ethics Compliance Officer, the Covered Officer, the Trust's Board and legal counsel. 7 APPENDIX A COVERED OFFICERS AND DEFINITIONS PRINCIPAL EXECUTIVE OFFICER Individual holding the office of President of the Trust, or a person performing a similar function. Patrick J. Sheppard serves as the President of the Trust and is a Covered Officer. PRINCIPAL FINANCIAL OFFICER Individual holding the office of Treasurer of the Trust, or a person performing a similar function. Steven M. Anderson serves as the Treasurer of the Trust and is a Covered Officer. ETHICS COMPLIANCE OFFICER Barbara A. McCann serves as the Ethics Compliance Officer of the Trust. REGISTERED MANAGEMENT INVESTMENT COMPANY Registered investment companies other than a face-amount certificate company or a unit investment trust. WAIVER A waiver is an approval of an exemption from a Code requirement. IMPLICIT WAIVER An implicit waiver is the failure to take action within a reasonable period of time regarding a material departure from a requirement or provision of the Code that has been made known to the Ethics Compliance Officer and counsel to the Trust. INDEPENDENT TRUSTEES Those Trustees of the Trust who are not "interested persons" of the Trust or the Adviser as that term is defined in Section 2(a)(19) of the Investment Company Act. 8 APPENDIX B CERTIFICATION Annual Acknowledgement and Certification of Obligations Under the Code of Business Conduct and Ethics 1. I acknowledge and certify that I am a Covered Officer under the Mellon Institutional Funds Code of Business Conduct and Ethics (the "Code") and therefore subject to all of its requirements and provisions. 2. I have read and understand the requirements and provisions set forth in the Code. 3. I have adhered to the Code and will continue to adhere to the Code. Signature Date Print Name Title 9 EXHIBIT 99CERT.302 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002: I, Patrick J. Sheppard, certify that: 1. I have reviewed this report on Form N-CSR of Mellon Institutional Funds Investment Trust (the "Registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 10, 2005 /s/ PATRICK J SHEPPARD ------------------------------------ Patrick J. Sheppard President and Chief Executive Officer EXHIBIT 99CERT.302 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002: I, Steven M. Anderson, certify that: 1. I have reviewed this report on Form N-CSR of Mellon Institutional Funds Investment Trust (the "Registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 10, 2005 /s/ STEVEN M. ANDERSON ---------------------------------- Steven M. Anderson Vice President and Treasurer EXHIBIT 99CERT.906 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Patrick J. Sheppard, President and Chief Executive Officer and Steven M. Anderson, Vice President and Treasurer of Mellon Institutional Funds Investment Trust (the "Registrant"), each certify to the best of their knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended December 31, 2004 (the "Form N- CSR") fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. A signed original of this written statement required by Rule 30a-216, under the Investment Company Act of 1940 and 18 U.S.C. Section 1350 will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. This certification is being furnished to the Securities and Exchange Commission solely pursuant to Rule 30a-2(b) under the Investment Company Act of 1940, as amended, and 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR with the Commission. /s/ PATRICK J. SHEPPARD -------------------------------------- Patrick J. Sheppard President and Chief Executive Officer Date: March 10, 2005 /s/ STEVEN M. ANDERSON -------------------------------------- Steven M. Anderson Vice President and Treasurer Date: March 10, 2005
