Federated Hermes MDT Small Cap Core Fund (QCSCX) N-CSR Certified annual shareholder report (management investment company)

United States

Securities and Exchange Commission

Washington, D.C.  20549

Form N-CSR

Certified Shareholder Report of Registered Management Investment Companies

811-21904

(Investment Company Act File Number)

Federated MDT Series

_______________________________________________________________

(Exact Name of Registrant as Specified in Charter)

Federated Investors Funds

5800 Corporate Drive

Pittsburgh, Pennsylvania 15237-7000

(Address of Principal Executive Offices)

(412) 288-1900

(Registrant's Telephone Number)

John W. McGonigle, Esquire

Federated Investors Tower

1001 Liberty Avenue

Pittsburgh, Pennsylvania 15222-3779

(Name and Address of Agent for Service)

(Notices should be sent to the Agent for Service)

Date of Fiscal Year End:  7/31/08

Date of Reporting Period:  Fiscal year ended 7/31/08

Item 1.                      Reports to Stockholders

Federated
World-Class Investment Manager

Federated MDT All Cap Core Fund

Established 2002

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Class A Shares
Class C Shares
Class K Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

Year Ended July 31	2008		2007	1	2006	2	2005		2004
Net Asset Value, Beginning of Period	$16.74		$15.08		$15.26		$13.52		$11.75
Income From Investment Operations:
Net investment income (loss)	0.06		0.02	3	0.00	3,4	(0.00	) 3,4	0.01
Net realized and unrealized gain (loss) on investments	(1.56	)	2.18		0.70		2.85		2.05
TOTAL FROM INVESTMENT OPERATIONS	(1.50	)	2.20		0.70		2.85		2.06
Less Distributions:
Distributions from net investment income	- --		- --		(0.00	) 4	(0.03	)	(0.02	)
Distributions from net realized gain on investments	(1.19	)	(0.54	)	(0.88	)	(1.08	)	(0.27	)
TOTAL DISTRIBUTIONS	(1.19	)	(0.54	)	(0.88	)	(1.11	)	(0.29	)
Net Asset Value, End of Period	$14.05		$16.74		$15.08		$15.26		$13.52
Total Return 5	(9.98	)%	14.67	%	4.59	%	21.79	%	17.53	%
Ratios to Average Net Assets:
Net expenses	1.29	%	1.36	%	1.50	%	1.50	%	1.50	%
Net investment income (loss)	0.43	%	0.13	%	0.03	%	(0.02	)%	0.05	%
Expense waiver/reimbursement 6	0.00	% 7	0.00	% 7	0.05	%	0.04	%	0.15	%
Supplemental Data:
Net assets, end of period (000 omitted)	$194,867		$201,888		$101,723		$30,336		$9,628
Portfolio turnover	199	%	225	%	212	%	204	%	96	%

1 MDT All Cap Core Fund (the "Predecessor Fund") was reorganized into Federated MDT All Cap Core Fund (the "Fund") as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the organization, are the Fund's operations.

2 Beginning with the year ended July 31, 2006, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.

3 Per share numbers have been calculated using the average shares method.

4 Represents less than $0.01.

5 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

7 Represents less than 0.01%.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$16.51		$14.99		$15.25
Income From Investment Operations:
Net investment income (loss)	(0.04	)	(0.11	) 3	(0.10	) 3
Net realized and unrealized gain (loss) on investments	(1.55	)	2.17		0.72
TOTAL FROM INVESTMENT OPERATIONS	(1.59	)	2.06		0.62
Less Distributions:
Distributions from net realized gain on investments	(1.19	)	(0.54	)	(0.88	)
Net Asset Value, End of Period	$13.73		$16.51		$14.99
Total Return 4	(10.69	)%	13.81	%	4.01	%
Ratios to Average Net Assets:
Net expenses	2.08	%	2.13	%	2.25	% 5
Net investment income (loss)	(0.36	)%	(0.64	)%	(0.72	)% 5
Expense waiver/reimbursement 6	0.00	% 7	0.00	% 7	0.05	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$96,601		$104,957		$48,189
Portfolio turnover	199	%	225	%	212	% 8

1 The Predecessor Fund was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the organization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

7 Represents less than 0.01%.

8 Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended July 31, 2006.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class K Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended		Period Ended
	7/31/2008		7/31/2007	1
Net Asset Value, Beginning of Period	$16.86		$16.82
Income From Investment Operations:
Net investment income (loss)	(0.00	) 2	(0.03	) 3
Net realized and unrealized gain (loss) on investments	(1.57	)	0.61
TOTAL FROM INVESTMENT OPERATIONS	(1.57	)	0.58
Less Distributions:
Distributions from net realized gain on investments	(1.19	)	(0.54	)
Net Asset Value, End of Period	$14.10		$16.86
Total Return 4	(10.34	)%	3.52	%
Ratios to Average Net Assets
Net expenses	1.75	%	1.80	% 5
Net investment income (loss)	(0.00	)% 6	0.30	% 5
Expense waiver/reimbursement 7	0.00	% 6	0.02	% 5
Supplemental Data
Net assets, end of period (000 omitted)	$1,393		$135
Portfolio turnover	199	%	225	% 8

1 Reflects operations for the period from December 12, 2006 (date of initial public investment) to July 31, 2007.

2 Represents less than $0.01.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, or redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 Represents less than 0.01%.

7 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

8 Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended July 31, 2007.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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, such as sales charges (loads) on purchase or redemption payments. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual:
Class A Shares	$1,000	$ 917.10	$ 6.20
Class C Shares	$1,000	$ 913.50	$10.04
Class K Shares	$1,000	$ 915.00	$ 8.33
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,018.40	$ 6.52
Class C Shares	$1,000	$1,014.37	$10.57
Class K Shares	$1,000	$1,016.16	$ 8.77

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half-year-period). The annualized net expense ratios are as follows:

Class A Shares	1.30	%
Class C Shares	2.11	%
Class K Shares	1.75	%

Management's Discussion of Fund Performance

The fund's total return based on net asset value for the fiscal year ended July 31, 2008 was (9.98)% for Class A Shares, (10.69)% for Class C Shares, and (10.34)% for Class K Shares. The total return of the Russell 3000 ^® Index (Russell 3000 ^® ) ¹ was (10.32)% and the total return of the Lipper Multi-Cap Core Funds Index ² was (11.11)% for the same reporting period. The fund's total return for the fiscal year reflected actual cash flows, transaction costs and other expenses which are not reflected in the total return of the Russell Index.

1 The Russell 3000 ^® Index offers investors access to the broad U.S. equity universe representing approximately 98% of the U.S. market. The Russell 3000 is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The index is unmanaged and investments can not be made directly in an index.

2 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

MARKET OVERVIEW

Over the 12-month reporting period ending July 31, 2008 domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® , which represents the performance of the 3,000 largest U.S. companies by market capitalization, finished the period down (10.32)%. Small cap stocks had the best relative results as demonstrated by the (6.71)% return on the Russell 2000 ^® Index ³ , which exceeded the (10.10)% and (10.81)% results for the Russell Midcap ^® Index ⁴ and the Russell Top 200 ^® Index ⁵ , respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000 ^® Growth Index ⁶ returning (6.00)% as compared to (14.72)% for the Russell 3000 Value ^® Index ⁷ ..

The best performing sectors during the reporting period, as measured by the Russell 3000 ^® were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

3 The Russell 2000 ^® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index. The index is unmanaged and investments can not be made directly in an index.

4 The Russell Midcap ^® Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 31% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

5 Russell Top 200 ^® Index measures the performance of the 200 largest companies in the Russell 1000 Index, which represents approximately 69% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

6 The Russell 3000 ^® Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000 Growth or the Russell 2000 Growth indexes. The index is unmanaged and investments cannot be made directly in an index.

7 The Russell 3000 ^® Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000 Value or the Russell 2000 Value indexes. The index is unmanaged and investments cannot be made directly in an index.

FUND PERFORMANCE

The most significant positive factor in the fund's performance relative to the Russell 3000 ^® was stock selection in the Materials sector. Additionally, the fund's overweight in the Energy sector provided a significant contribution to relative performance. The most significant negative factor in the fund's performance relative to the Russell 3000 ^® was its overweight in the Financials sector. Additionally, stock selection and an underweight in the Consumer Saples sector detracted moderately from relative performance.

Individual stocks contributing to the fund's performance relative to the Russell 3000 ^® included: Monsanto Company , Apple Computer, Inc. , Apache Corporation , General Electric Company and Helmerich & Payne, Inc ..

Individual stocks detracting from the fund's performance relative to the Russell 3000 ^® included: Bank of America Corporation, JP Morgan Chase & Company, Regions Financial Corporation, MBIA, Inc. and Keycorp.

GROWTH OF A $10,000 INVESTMENT - CLASS A SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT All Cap Core Fund (Class A Shares) (the "Fund") from October 1, 2002 (start of performance) to July 31, 2008, compared to the Russell 3000 ^® Index (Russell 3000 ^® ) ² and the Lipper Multi-Cap Core Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(14.91	)%
5 Years	7.87	%
Start of Performance (10/1/2002) 4	9.71	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum sales charge of 5.50%.

1 Represents a hypothetical investment of $10,000 in the fund after deducting the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge = $9,450). The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 3000 ^® and the Lipper Multi-Cap Core Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 3000 ^® is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

4 The start of performance date was October 1, 2002. Class A Shares of the fund were offered beginning February 12, 2003. Performance results shown before that date are for the fund's Institutional Shares and have been adjusted for the maximum sales charge and total annual operating expenses applicable to the fund's Class A Shares. The fund's Institutional Shares commenced operations on October 1, 2002. The fund's Class A Shares annual returns would have been substantially similar to those of the fund's Institutional Shares because Shares of each class are invested in the same portfolio of securities.

GROWTH OF A $10,000 INVESTMENT - CLASS C SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT All Cap Core Fund (Class C Shares) (the "Fund") from October 1, 2002 (start of performance) to July 31, 2008, compared to the Russell 3000 ^® Index (Russell 3000 ^® ) ² and the Lipper Multi-Cap Core Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(11.52	)%
5 Years	8.28	%
Start of Performance (10/1/2002) 4	9.95	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum contingent deferred sales charge (CDSC) of 1.00%, as applicable.

1 Represents a hypothetical investment of $10,000 in the fund. The maximum CDSC is 1.00% on any redemption less than one year from the purchase date. The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 3000 ^® and the Lipper Multi-Cap Core Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 3000 ^® is not adjusted to reflect sales charges, expenses or other fees that the SEC requires to be reflected in the Fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

4 The start of performance date was October 1, 2002. Class C Shares of the fund were offered beginning September 15, 2005. Performance results shown before that date are for the fund's Institutional Shares and have been adjusted for the maximum CDSC and total annual operating expenses applicable to the fund's Class C Shares. The fund's Institutional Shares commenced operations on October 1, 2002. The fund's Class C Shares annual returns would have been substantially similar to those of the fund's Institutional Shares because Shares of each class are invested in the same portfolio of securities.

GROWTH OF A $10,000 INVESTMENT - CLASS K SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT All Cap Core Fund (Class K Shares) (the "Fund") from October 1, 2002 (start of performance) to July 31, 2008, compared to the Russell 3000 ^® Index (Russell 3000 ^® ) ² and the Lipper Multi-Cap Core Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(10.34	)%
5 Years	8.65	%
Start of Performance (10/1/2002) 4	10.31	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 3000 ^® and the Lipper Multi-Cap Core Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 3000 ^® is not adjusted to reflect sales charges, expenses or other fees that the SEC requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

4 The start of performance date was October 1, 2002. Class K Shares of the fund were offered beginning December 12, 2006. Performance results shown before that date are for the fund's Institutional Shares and have been adjusted for the total annual operating expenses applicable to the fund's Class K Shares. The fund's Institutional Shares commenced operations on October 1, 2002. The fund's Class K Shares annual returns would have been substantially similar to those of the fund's Institutional Shares because Shares of each class are invested in the same portfolio of securities.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund's industry composition ¹ was as follows:

Industry	Percentage of Total Net Assets
Crude Oil & Gas Production	5.6	%
Multi-Line Insurance	5.4	%
Integrated Domestic Oil	5.0	%
Life Insurance	4.8	%
Integrated International Oil	4.8	%
Agricultural Chemicals	4.7	%
Property Liability Insurance	4.6	%
Telecommunication Equipment & Services	3.8	%
Truck Manufacturing	3.5	%
Regional Bank	3.4	%
Diversified Oil	3.3	%
Oil Well Supply	2.7	%
Money Center Bank	2.6	%
Electric Utility	2.4	%
Home Building	2.4	%
Commodity Chemicals	2.2	%
Railroad	1.9	%
Ethical Drugs	1.9	%
Internet Services	1.8	%
Industry	Percentage of Total Net Assets
Oil Service, Explore & Drill	1.7	%
Savings and Loan	1.5	%
Software Packaged/Custom	1.5	%
Clothing Stores	1.5	%
Semiconductor Manufacturing	1.4	%
Undesignated Consumer Cyclicals	1.3	%
Miscellaneous Food Products	1.3	%
Cogeneration	1.3	%
Airline - Regional	1.3	%
Department Stores	1.2	%
Miscellaneous Machinery	1.2	%
Miscellaneous Components	1.1	%
Printed Circuit Boards	1.0	%
Financial Services	1.0	%
Other 2	14.0	%
Cash Equivalents 3	0.5	%
Other Assets and Liabilities--Net 4	0.4	%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's total net assets have been aggregated under the designation "Other."

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares					Value
			COMMON STOCKS--99.1%
			Agricultural Chemicals--4.7%
	150,700		Monsanto Co.	$	17,949,877
			Agricultural Machinery--0.1%
	5,800		Lindsay Manufacturing Co.		535,166
			Airline - Regional--1.3%
	14,100	1	Alaska Air Group, Inc.		252,108
	289,900		Southwest Airlines Co.		4,519,541
			TOTAL		4,771,649
			Aluminum--0.1%
	10,000		Kaiser Aluminum Corp.		527,500
			Apparel--0.5%
	7,600		Columbia Sportswear Co.		283,556
	4,800		Liz Claiborne, Inc.		62,736
	37,000	1	Warnaco Group, Inc.		1,552,150
			TOTAL		1,898,442
			AT&T Divestiture--0.9%
	112,600		AT&T, Inc.		3,469,206
			Auto Original Equipment Manufacturers--0.1%
	6,300		Sun Hydraulics Corp.		259,560
	6,400		Superior Industries International, Inc.		108,096
			TOTAL		367,656
			Biotechnology--0.1%
	12,500	1	Affymetrix, Inc.		98,500
	6,800	1	Martek Biosciences Corp.		255,748
			TOTAL		354,248
Shares					Value
			COMMON STOCKS--continued
			Broadcasting--0.7%
	65,900	1	American Tower Systems Corp.	$	2,761,210
			Building Materials--0.2%
	6,000		Apogee Enterprises, Inc.		103,680
	23,800	1	Owens Corning, Inc.		619,038
	6,500		Universal Forest Products, Inc.		175,500
			TOTAL		898,218
			Cable TV--0.0%
	5,500	1	Viacom, Inc., Class B		153,615
			Clothing Stores--1.5%
	7,400	1	Children's Place Retail Stores, Inc.		281,570
	16,000	1	Fossil, Inc.		428,480
	42,200	1	Hanesbrands, Inc.		904,768
	2,900	1	Jos A. Bank Clothiers, Inc.		64,960
	117,000	1	Urban Outfitters, Inc.		3,862,170
			TOTAL		5,541,948
			Cogeneration--1.3%
	159,600	1	Mirant Corp.		4,885,356
			Commodity Chemicals--2.2%
	247,500		Dow Chemical Co.		8,244,225
	3,100		PPG Industries, Inc.		187,984
	3,600		Westlake Chemical Corp.		63,036
			TOTAL		8,495,245
			Computer Peripherals--0.8%
	54,400	1	Lexmark International Group, Class A		1,908,352
	35,000	1	Sandisk Corp.		493,500
	19,600	1	Western Digital Corp.		564,284
			TOTAL		2,966,136
			Computer Services--0.1%
	13,500	1	Synnex Corp.		315,360
	4,600		Syntel, Inc.		151,570
			TOTAL		466,930
Shares					Value
			COMMON STOCKS--continued
			Computer Stores--0.3%
	26,300	1	GameStop Corp.	$	1,065,413
			Crude Oil & Gas Production--5.6%
	141,600		Apache Corp.		15,883,272
	48,500		Cimarex Energy Co.		2,527,335
	4,000		Devon Energy Corp.		379,560
	13,200	1	Newfield Exploration Co.		646,536
	15,500	1	Stone Energy Corp.		790,810
	19,600	1	Swift Energy Co.		996,072
			TOTAL		21,223,585
			Defense Aerospace--0.7%
	32,900		Boeing Co.		2,010,519
	7,200	1	Spirit Aerosystems Holdings, Inc., Class A		155,952
	9,300		Triumph Group, Inc.		492,528
			TOTAL		2,658,999
			Department Stores--1.2%
	32,500		Dillards, Inc., Class A		328,575
	2,500		Penney (J.C.) Co., Inc.		77,075
	42,800	1	Saks, Inc.		436,132
	45,800	1	Sears Holdings Corp.		3,709,800
			TOTAL		4,551,582
			Discount Department Stores--0.3%
	14,100	1	99 Cents Only Stores		94,329
	19,800	1	BJ's Wholesale Club, Inc.		743,094
	8,200		Family Dollar Stores, Inc.		191,060
			TOTAL		1,028,483
			Diversified Leisure--0.4%
	15,100	1	Bally Technologies, Inc.		480,029
	1,800		Carnival Corp.		66,492
	21,600	1	Gaylord Entertainment Co.		648,864
	15,000	1	Pinnacle Entertainment, Inc.		169,500
			TOTAL		1,364,885
Shares					Value
			COMMON STOCKS--continued
			Diversified Oil--3.3%
	160,700		Occidental Petroleum Corp.	$	12,667,981
			Electric Utility--2.4%
	6,300		American Electric Power Co., Inc.		248,850
	5,700		Avista Corp.		128,934
	36,800		CMS Energy Corp.		496,800
	36,200		DTE Energy Co.		1,483,476
	16,500	1	Dynegy, Inc.		111,045
	75,600		Edison International		3,654,504
	5,500	1	El Paso Electric Co.		113,630
	7,600		Hawaiian Electric Industries, Inc.		188,024
	7,200		OGE Energy Corp.		235,584
	9,500		PPL Corp.		446,120
	15,600		Pepco Holdings, Inc.		389,064
	9,900		Portland General Electric Co.		232,551
	40,600	1	Reliant Resources, Inc.		735,266
	22,100		SCANA Corp.		799,799
			TOTAL		9,263,647
			Electrical Equipment--0.3%
	75,400		Xerox Corp.		1,028,456
			Electronic Instruments--0.2%
	3,000		Analogic Corp.		219,540
	2,500	1	Axsys Technologies, Inc.		183,600
	4,900	1	Trimble Navigation Ltd.		162,680
			TOTAL		565,820
			Ethical Drugs--1.9%
	54,800	1	Forest Laboratories, Inc., Class A		1,945,948
	108,400	1	King Pharmaceuticals, Inc.		1,247,684
	72,200		Merck & Co., Inc.		2,375,380
	80,000		Pfizer, Inc.		1,493,600
			TOTAL		7,062,612
Shares					Value
			COMMON STOCKS--continued
			Financial Services--1.0%
	78,000		Ameriprise Financial, Inc.	$	3,315,000
	48,500		Fulton Financial Corp.		511,190
			TOTAL		3,826,190
			Gas Distributor--0.1%
	7,700		WGL Holdings, Inc.		265,881
			Grocery Chain--0.3%
	35,700		Safeway, Inc.		953,904
	3,400		Weis Markets, Inc.		129,166
			TOTAL		1,083,070
			Home Building--2.4%
	51,500		Centex Corp.		756,020
	152,400		D.R. Horton, Inc.		1,694,688
	58,700		KB HOME		1,032,533
	60,300		Lennar Corp., Class A		729,630
	26,500		M.D.C. Holdings, Inc.		1,100,280
	1,400	1	NVR, Inc.		773,248
	117,500		Pulte Homes, Inc.		1,434,675
	27,500		Ryland Group, Inc.		566,225
	54,600	1	Toll Brothers, Inc.		1,096,914
			TOTAL		9,184,213
			Home Health Care--0.0%
	3,400	1	Amerigroup Corp.		86,360
			Household Appliances--0.1%
	2,400		Whirlpool Corp.		181,680
			Industrial Machinery--0.2%
	10,500	1	Terex Corp.		496,965
	2,600		Valmont Industries, Inc.		277,966
			TOTAL		774,931
			Insurance Brokerage--0.1%
	10,700		Odyssey Re Holdings Corp.		418,049
			Integrated Domestic Oil--5.0%
	6,000	1	Callon Petroleum Corp.		137,940
	229,900		ConocoPhillips		18,764,438
			TOTAL		18,902,378
Shares					Value
			COMMON STOCKS--continued
			Integrated International Oil--4.8%
	216,300		Chevron Corp.	$	18,290,328
			Internet Services--1.8%
	6,100	1	Amazon.com, Inc.		465,674
	29,400	1	NetFlix, Inc.		908,166
	6,300	1	Overstock.com, Inc.		111,888
	37,100	1	Priceline.com, Inc.		4,264,645
	35,100	1	eBay, Inc.		883,467
			TOTAL		6,633,840
			Jewelry Stores--0.1%
	8,100		Tiffany & Co.		306,099
			Leasing--0.2%
	14,100		GATX Corp.		641,127
			Life Insurance--4.8%
	259,200		MetLife, Inc.		13,159,584
	8,500		Principal Financial Group		361,335
	25,500		Protective Life Corp.		916,980
	26,400		StanCorp Financial Group, Inc.		1,303,896
	45,600		Torchmark Corp.		2,647,080
			TOTAL		18,388,875
			Long-Term Care Centers--0.1%
	6,900	1	Kindred Healthcare, Inc.		186,093
			Lumber Products--0.1%
	25,100		Louisiana-Pacific Corp.		212,346
			Maritime--0.8%
	7,900	1	Kirby Corp.		376,988
	32,100		Overseas Shipholding Group, Inc.		2,527,875
			TOTAL		2,904,863
			Medical Supplies--0.0%
	3,500	1	Kensey Nash Corp.		121,555
	1,200		Steris Corp.		41,004
			TOTAL		162,559
			Medical Technology--0.3%
	20,000	1	Masimo Corp.		755,400
	7,400		Stryker Corp.		475,006
			TOTAL		1,230,406
Shares					Value
			COMMON STOCKS--continued
			Metal Fabrication--0.6%
	14,200		Mueller Industries, Inc.	$	364,514
	3,400		Olympic Steel, Inc.		172,890
	48,900		Timken Co.		1,614,678
	10,900		Worthington Industries, Inc.		193,366
			TOTAL		2,345,448
			Mini-Mill Producer--0.4%
	46,300		Commercial Metals Corp.		1,382,055
			Miscellaneous Components--1.1%
	89,900		Amphenol Corp., Class A		4,285,533
			Miscellaneous Food Products--1.3%
	155,100		Archer-Daniels-Midland Co.		4,440,513
	12,200		The Anderson's, Inc.		554,490
			TOTAL		4,995,003
			Miscellaneous Machinery--1.2%
	14,200		Fastenal Co.		693,812
	19,300		Nordson Corp.		1,363,738
	38,300		Parker-Hannifin Corp.		2,362,344
			TOTAL		4,419,894
			Money Center Bank--2.6%
	208,500		Bank of America Corp.		6,859,650
	77,100		JPMorgan Chase & Co.		3,132,573
			TOTAL		9,992,223
			Mortgage and Title--0.1%
	8,300		LandAmerica Financial Group, Inc.		95,367
	24,000		PMI Group, Inc.		60,240
	18,600		Radian Group, Inc.		32,364
	1,100		Stewart Information Services Corp.		19,206
			TOTAL		207,177
			Multi-Industry Capital Goods--0.9%
	7,300		Carlisle Cos., Inc.		223,307
	8,900	1	Ceradyne, Inc.		412,515
	6,400		KBR, Inc.		182,400
	3,100	1	Tecumseh Products Co., Class A		101,525
	14,600		Textron, Inc.		634,662
	38,400		Tyco International Ltd.		1,711,104
			TOTAL		3,265,513
Shares					Value
			COMMON STOCKS--continued
			Multi-Industry Transportation--0.0%
	3,800		Expeditors International Washington, Inc.	$	134,938
			Multi-Line Insurance--5.4%
	231,450		Allstate Corp.		10,697,619
	66,600		Assurant, Inc.		4,003,992
	15,000		Cincinnati Financial Corp.		417,600
	4,100		FBL Financial Group, Inc., Class A		85,485
	22,600		Hanover Insurance Group, Inc.		969,992
	600	1	Navigators Group, Inc.		28,536
	169,800		UNUMProvident Corp.		4,102,368
			TOTAL		20,305,592
			Offshore Driller--0.6%
	28,100		ENSCO International, Inc.		1,942,834
	5,100	1	Hornbeck Offshore Services, Inc.		227,358
			TOTAL		2,170,192
			Oil Service, Explore & Drill--1.7%
	1,000	1	Dawson Geophysical Co.		65,630
	14,700	1	Gulfmark Offshore, Inc.		737,646
	28,300	1	Mariner Energy, Inc.		748,818
	76,300	1	Pride International, Inc.		2,957,388
	31,100	1	Unit Corp.		2,100,805
			TOTAL		6,610,287
			Oil Well Supply--2.7%
	103,200	1	FMC Technologies, Inc.		6,375,696
	37,400	1	Oil States International, Inc.		2,052,512
	19,200	1	Superior Energy Services, Inc.		910,656
	28,900	1	Weatherford International Ltd.		1,090,397
			TOTAL		10,429,261
			Other Communications Equipment--0.1%
	42,500	1	Tellabs, Inc.		218,450
			Paper Products--0.2%
	25,000		MeadWestvaco Corp.		670,250
			Personal Loans--0.0%
	4,700	1	World Acceptance Corp.		153,972
			Personnel Agency--0.0%
	3,900	1	Kenexa Corp.		72,891
Shares					Value
			COMMON STOCKS--continued
			Poultry Products--0.2%
	15,200		Sanderson Farms, Inc.	$	604,048
			Printed Circuit Boards--1.0%
	9,700	1	Benchmark Electronics, Inc.		142,008
	254,000	1	Marvell Technology Group Ltd.		3,756,660
			TOTAL		3,898,668
			Property Liability Insurance--4.6%
	38,000		American Financial Group, Inc.		1,100,860
	158,300		Chubb Corp.		7,604,732
	188,200		The Travelers Cos., Inc.		8,303,384
	5,100		Transatlantic Holdings, Inc.		295,494
			TOTAL		17,304,470
			Psychiatric Centers--0.2%
	23,700	1	Psychiatric Solutions, Inc.		829,974
			Railroad--1.9%
	43,000		CSX Corp.		2,905,940
	53,700		Union Pacific Corp.		4,427,028
			TOTAL		7,332,968
			Recreational Vehicles--0.0%
	4,200		Harley Davidson, Inc.		158,928
			Regional Bank--3.4%
	294,400		BB&T Corp.		8,249,088
	18,200		Bancorpsouth, Inc.		387,660
	11,000		City National Corp.		540,430
	3,200		FirstMerit Corp.		62,976
	22,100		M & T Bank Corp.		1,555,398
	14,600		Oriental Financial Group		253,602
	11,700		PacWest Bancorp		217,854
	41,500		TCF Financial Corp.		529,125
	10,700		Trustmark Corp.		193,242
	10,600		UnionBanCal Corp.		569,432
	1,500		Whitney Holding Corp.		30,840
	13,100		Wilmington Trust Corp.		308,767
			TOTAL		12,898,414
Shares					Value
			COMMON STOCKS--continued
			Restaurant--0.1%
	1,900	1	Buffalo Wild Wings, Inc.	$	62,567
	7,800	1	Panera Bread Co.		390,780
			TOTAL		453,347
			Roofing & Wallboard--0.2%
	30,400	1	USG Corp.		872,480
			Savings and Loan--1.5%
	7,900		Downey Financial Corp.		16,669
	103,900		Federal Home Loan Mortgage Corp.		848,863
	160,800		Federal National Mortgage Association		1,849,200
	103,500		Hudson City Bancorp, Inc.		1,889,910
	25,500		Newalliance Bancshares, Inc.		330,990
	27,300		Washington Federal, Inc.		507,780
	12,900		Webster Financial Corp. Waterbury		256,194
			TOTAL		5,699,606
			Securities Brokerage--0.5%
	2,100	1	FCStone Group, Inc.		40,446
	13,900	1	Interactive Brokers Group, Inc., Class A		390,034
	9,200	1	KBW, Inc.		243,064
	25,500	1	Knight Capital Group, Inc., Class A		417,945
	5,000	1	Piper Jaffray Cos., Inc.		177,500
	11,400		Raymond James Financial, Inc.		329,460
	8,700		SWS Group, Inc.		164,604
			TOTAL		1,763,053
			Semiconductor Distribution--0.0%
	8,500	1	FormFactor, Inc.		147,900
			Semiconductor Manufacturing--1.4%
	183,400	1	Broadcom Corp.		4,454,786
	146,600	1	Micron Technology, Inc.		708,078
	5,500	1	Silicon Laboratories, Inc.		179,905
			TOTAL		5,342,769
Shares					Value
			COMMON STOCKS--continued
			Semiconductor Manufacturing Equipment--0.1%
	24,500	1	Novellus Systems, Inc.	$	499,065
			Services to Medical Professionals -0.1%
	9,100	1	Athenahealth, Inc.		274,820
			Shoes--0.2%
	4,900	1	Deckers Outdoor Corp.		553,749
	17,600	1	Skechers USA, Inc., Class A		332,640
			TOTAL		886,389
			Software Packaged/Custom--1.5%
	12,000	1	Advent Software, Inc.		522,480
	4,000	1	CSG Systems International, Inc.		70,960
	105,000	1	Computer Sciences Corp.		4,973,850
	10,700	1	Wind River Systems, Inc.		125,511
			TOTAL		5,692,801
			Specialty Chemicals--0.2%
	8,100		Minerals Technologies, Inc.		522,531
	3,400	1	OM Group, Inc.		114,240
			TOTAL		636,771
			Specialty Retailing--0.7%
	22,900	1	Cabela's, Inc., Class A		266,098
	32,000		Costco Wholesale Corp.		2,005,760
	11,000		Pep Boys-Manny Moe & Jack		81,180
	400	1	Tractor Supply Co.		15,204
	4,000		Williams-Sonoma, Inc.		69,760
	13,900	1	Zale Corp.		307,468
			TOTAL		2,745,470
			Telecomm Equipment & Services--3.8%
	64,600	1	ADC Telecommunications, Inc.		611,116
	682,400		Corning, Inc.		13,654,824
			TOTAL		14,265,940
Shares					Value
			COMMON STOCKS--continued
			Toys & Games--0.1%
	18,200	1	JAKKS Pacific, Inc.	$	400,036
			Truck Manufacturing--3.5%
	177,400		Cummins, Inc.		11,768,716
	31,500		PACCAR, Inc.		1,324,890
			TOTAL		13,093,606
			Trucking--0.3%
	2,800		Arkansas Best Corp.		103,992
	17,300		Ryder System, Inc.		1,141,108
			TOTAL		1,245,100
			Undesignated Consumer Cyclicals--1.3%
	7,300	1	CoStar Group, Inc.		364,197
	1,800	1	Covance, Inc.		165,240
	53,000		DeVRY, Inc.		3,010,930
	9,400	1	Parexel International Corp.		274,762
	27,700		Pharmaceutical Product Development, Inc.		1,056,478
	8,900		Speedway Motorsports, Inc.		171,859
			TOTAL		5,043,466
			TOTAL COMMON STOCKS (IDENTIFIED COST $389,146,119)		375,951,921
			MUTUAL FUND--0.5%
	1,891,293	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)		1,891,293
			TOTAL INVESTMENTS--99.6% (IDENTIFIED COST $391,037,412) 4		377,843,214
			OTHER ASSETS AND LIABILITIES - NET--0.4% 5		1,698,972
			TOTAL NET ASSETS--100%	$	379,542,186

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $401,399,971.

5 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $1,891,293 of investments in an affiliated issuer (Note 5) (identified cost $391,037,412)			$	377,843,214
Cash				677,078
Income receivable				434,017
Receivable for investments sold				2,736,236
Receivable for shares sold				1,036,811
TOTAL ASSETS				382,727,356
Liabilities:
Payable for investments purchased	$	1,990,242
Payable for shares redeemed		806,538
Payable for distribution services fee (Note 5)		60,114
Payable for shareholder services fee (Note 5)		175,047
Accrued expenses		153,229
TOTAL LIABILITIES				3,185,170
Net assets for 27,099,539 shares outstanding			$	379,542,186
Net Assets Consist of:
Paid-in capital			$	417,142,225
Net unrealized depreciation of investments				(13,194,198	)
Accumulated net realized loss on investments				(25,592,067	)
Undistributed net investment income				1,186,226
TOTAL NET ASSETS			$	379,542,186
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($86,681,060 ÷ 6,094,730 shares outstanding), no par value, unlimited shares authorized				$14.22
Offering price per share				$14.22
Redemption proceeds per share				$14.22
Class A Shares:
Net asset value per share ($194,867,302 ÷ 13,869,526 shares outstanding), no par value, unlimited shares authorized				$14.05
Offering price per share (100/94.50 of $14.05) 1				$14.87
Redemption proceeds per share				$14.05
Class C Shares:
Net asset value per share ($96,600,960 ÷ 7,036,485 shares outstanding), no par value, unlimited shares authorized				$13.73
Offering price per share				$13.73
Redemption proceeds per share (99.00/100 of $13.73) 1				$13.59
Class K Shares:
Net asset value per share ($1,392,864 ÷ 98,798 shares outstanding), no par value, unlimited shares authorized				$14.10
Offering price per share				$14.10
Redemption proceeds per share				$14.10

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $179,957 received from an affiliated issuer (Note 5) and net of foreign taxes withheld of $370)							$	7,021,617
Expenses:
Investment adviser fee (Note 5)				$	3,048,726
Administrative personnel and services fee (Note 5)					318,594
Custodian fees					45,162
Transfer and dividend disbursing agent fees and expenses--Institutional Shares					76,674
Transfer and dividend disbursing agent fees and expenses--Class A Shares					235,299
Transfer and dividend disbursing agent fees and expenses--Class C Shares					179,185
Transfer and dividend disbursing agent fees and expenses--Class K Shares					1,962
Directors'/Trustees' fees					5,246
Auditing fees					24,700
Legal fees					15,958
Portfolio accounting fees					133,610
Distribution services fee--Class C Shares (Note 5)					801,234
Distribution services fee--Class K Shares (Note 5)					3,098
Shareholder services fee--Class A Shares (Note 5)					511,653
Shareholder services fee--Class C Shares (Note 5)					255,768
Account administration fee--Class A Shares					814
Account administration fee--Class C Shares					115
Share registration costs					77,655
Printing and postage					97,671
Insurance premiums					5,389
Interest expense					2,208
Miscellaneous					7,654
TOTAL EXPENSES					5,848,375
Reimbursement and Waiver (Note 5):
Reimbursement of investment adviser fee	$	(3,838	)
Waiver of administrative personnel and services fee		(9,146	)
TOTAL REIMBURSEMENT AND WAIVER					(12,984	)
Net expenses								5,835,391
Net investment income								1,186,226
Realized and Unrealized Loss on Investments:
Net realized loss on investments								(25,156,859	)
Net change in unrealized appreciation of investments								(20,313,246	)
Net realized and unrealized loss on investments								(45,470,105	)
Change in net assets resulting from operations							$	(44,283,879	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	1,186,226		$	(65,931	)
Net realized gain (loss) on investments		(25,156,859	)		29,303,764
Net change in unrealized appreciation/depreciation of investments		(20,313,246	)		5,456,660
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(44,283,879	)		34,694,493
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(6,297,925	)		(1,675,959	)
Class A Shares		(14,822,479	)		(5,228,169	)
Class C Shares		(7,853,780	)		(2,497,031	)
Class K Shares		(32,808	)		(3	)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(29,006,992	)		(9,401,162	)
Share Transactions:
Proceeds from sale of shares		148,687,842			235,142,870
Net asset value of shares issued to shareholders in payment of distributions declared		25,603,826			8,258,175
Cost of shares redeemed		(113,566,093	)		(69,157,702	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		60,725,575			174,243,343
Redemption fees		- --			3,869
Change in net assets		(12,565,296	)		199,540,543
Net Assets:
Beginning of period		392,107,482			192,566,939
End of period (including undistributed net investment income of $1,186,226 and $0, respectively)	$	379,542,186		$	392,107,482

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine portfolios. The financial statements included herein are only those of Federated MDT All Cap Core Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Institutional Shares, Class A Shares, Class C Shares and Class K Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The Financial Highlights of the Institutional Shares are presented separately. The investment objective of the Fund is long-term capital appreciation.

MDT All Cap Core Fund (the "Predecessor Fund") was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced offering Class C Shares on September 15, 2005. The Fund commenced offering Class K Shares on December 12, 2006.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the "Trustees").
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their (cost adjusted for the accretion of any discount or amortization of any premium).
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear distribution services fees, shareholder services fees, account administration fees and certain transfer and dividend disbursing agent fees unique to those classes. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2005 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

Withholding taxes and where appropriate, deferred withholding taxes on foreign interest, dividends and capital gains have been provided for in accordance with the applicable country's tax rules and rates.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	2,316,132		$	37,878,322		2,677,589		$	45,134,764
Shares issued to shareholders in payment of distributions declared	306,108			5,075,279		90,311			1,481,998
Shares redeemed	(1,569,357	)		(25,328,179	)	(537,678	)		(8,951,521	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	1,052,883		$	17,625,422		2,230,222		$	37,665,241
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	4,864,131		$	77,675,376		7,981,369		$	129,791,451
Shares issued to shareholders in payment of distributions declared	864,495			14,186,366		300,058			4,887,949
Shares redeemed	(3,920,927	)		(61,812,706	)	(2,963,223	)		(48,937,368	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	1,807,699		$	30,049,036		5,318,204		$	85,742,032
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	1,978,773		$	31,441,573		3,709,500		$	60,072,675
Shares issued to shareholders in payment of distributions declared	391,649			6,309,458		116,918			1,888,228
Shares redeemed	(1,692,463	)		(26,152,035	)	(681,786	)		(11,263,611	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	677,959		$	11,598,996		3,144,632		$	50,697,292
Year Ended July 31	2008					2007
Class K Shares:	Shares			Amount		Shares			Amount
Shares sold	106,180		$	1,692,571		8,309		$	143,980
Shares issued to shareholders in payment of distributions declared	1,982			32,723		- --			- --
Shares redeemed	(17,383	)		(273,173	)	(290	)		(5,202	)
NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS	90,779		$	1,452,121		8,019		$	138,778
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	3,629,320		$	60,725,575		10,701,077		$	174,243,343

Redemption Fees

Prior to December 11, 2006, the Predecessor Fund imposed a 2.00% redemption fee to shareholders of the Fund's Institutional Shares, Class A Shares and Class C Shares who redeemed shares held for 30 days or less. Shares acquired by reinvestment of dividends or distributions of the Fund, or purchased pursuant to the Systematic Investment Program or withdrawn pursuant to the Systematic Withdrawal Program, were not subject to the redemption fee. All redemption fees are recorded by the Fund as additions to paid-in capital. For the year ended July 31, 2007, the Predecessor Fund incurred redemption fees for Institutional Shares, Class A Shares and Class C Shares amounted to $508, $2,298 and $1,063, respectively.

4. FEDERAL TAX INFORMATION

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2008 and 2007, was as follows:

	2008	2007
Ordinary income 1	$21,537,947	$4,625,312
Long-term capital gains	$ 7,469,045	$4,775,850

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	1,182,169
Net unrealized depreciation	$	(23,556,757	)
Capital loss carryforwards and deferrals	$	(15,225,451	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $401,399,971. The net unrealized depreciation of investments for federal tax purposes was $23,556,757. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $21,848,796 and net unrealized depreciation from investments for those securities having an excess of cost over value of $45,405,553.

At July 31, 2008, the Fund had a capital loss carryforward of $3,647,165 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the 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. Pursuant to the Code, such capital loss carryforward will expire in 2016.

Under current tax regulations, capital losses on securities transactions realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post-October losses of $11,578,286 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for certain classes of the Fund based on average daily net assets:

Share Class Name	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.25%
Class A Shares	1.50%
Class C Shares	2.25%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after filling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.

For a period of three years after the fiscal year in which the Adviser waived or reimbursed Fund expenses, the Adviser could seek reimbursement from the Fund to the extent that the Fund's total annual operating expenses are less than the expense limitation. Due to the reorganization of the Fund, expenses cannot be recovered by the Adviser after December 8, 2006.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the net fee paid to FAS was 0.076% of average daily net assets of the Fund. FAS waived $9,146 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares, Class C Shares and Class K Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%
Class K Shares	0.50%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $232,025 of fees paid by the Fund. For the year ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee. On November 15, 2007, the Fund's Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

For the year ended July 31, 2008, FSC, the principal distributor, retained $55,161 in sales charges from the sale of Class A Shares. FSC also retained $12,726 of contingent deferred sales charges relating to redemptions of Class C Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

Effective November 11, 2006, The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the year ended July 31, 2008, FSSC received $5,988 of fees paid by the Fund.

General

Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $3,838. Transactions with the affiliated company during the year ended July 31, 2008 were as follows:

Affiliate	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	5,916,667	63,599,312	67,624,686	1,891,293	$1,891,293	$179,957

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	837,842,223
Sales	$	802,015,313

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses, and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2008, the amount of long-term capital gains designated by the Fund was $7,469,045.

For the fiscal year ended July 31, 2008, 18.31% of total income (including short-term capital gain) distributions made by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended July 31, 2008, 18.68% qualify for the dividend-received deduction available to corporate shareholders.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND
SHAREHOLDERS OF FEDERATED MDT ALL CAP CORE FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT All Cap Core Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the two years in the period ended July 31, 2005 were audited by another independent registered public accounting firm whose report, dated September 19, 2005 expressed an unqualified opinion on those financial highlights.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT All Cap Core Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory Contract - May 2008

FEDERATED MDT ALL CAP CORE FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For both the one- and three-year periods ending December 31, 2007, the Fund's performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same periods, the Fund outperformed its benchmark index for the one-year period and outperformed its benchmark index for the three-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee, after waivers and expense reimbursements, if any, was above the median of the relevant peer group. The Board reviewed the fees and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive. In this regard, the Board had been previously advised that, while comparisons to fund peer groups are highly important in judging the reasonableness of advisory fees, the Fund's quantitative focus makes fee and expense comparisons particularly difficult. Although the Fund's advisory fee was above the median of the peer range, the peer group of funds varied widely in their complexity, and the management of the Fund is among the more complex relative to its peers. The Board will continue to monitor advisory fees and other expenses borne by the Fund.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT All Cap Core Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R106
Cusip 31421R205
Cusip 31421R718

37309 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT All Cap
Core Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights

(For a Share Outstanding Throughout Each Period)

Year Ended July 31	2008		2007	1	2006	2	2005		2004
Net Asset Value, Beginning of Period	$16.88		$15.17		$15.32		$13.55		$11.76
Income From Investment Operations:
Net investment income	0.10		0.07	3	0.05	3	0.03	3	0.04
Net realized and unrealized gain (loss) on investments	(1.57	)	2.18		0.70		2.87		2.05
TOTAL FROM INVESTMENT OPERATIONS	(1.47	)	2.25		0.75		2.90		2.09
Less Distributions:
Distributions from net investment income	- --		- --		(0.02	)	(0.05	)	(0.03	)
Distributions from net realized gain on investments	(1.19	)	(0.54	)	(0.88	)	(1.08	)	(0.27	)
TOTAL DISTRIBUTIONS	(1.19	)	(0.54	)	(0.90	)	(1.13	)	(0.30	)
Net Asset Value, End of Period	$14.22		$16.88		$15.17		$15.32		$13.55
Total Return 4	(9.71	)%	14.92	%	4.85	%	22.14	%	17.78	%
Ratios to Average Net Assets:
Net expenses	1.01	%	1.07	%	1.25	%	1.25	%	1.25	%
Net investment income	0.72	%	0.40	%	0.28	%	0.23	%	0.30	%
Expense waiver/reimbursement 5	0.00	% 6	0.01	%	0.05	%	0.04	%	0.15	%
Supplemental Data:
Net assets, end of period (000 omitted)	$86,681		$85,128		$42,656		$43,782		$31,532
Portfolio turnover	199	%	225	%	212	%	204	%	96	%

1 MDT All Cap Core Fund (the "Predecessor Fund") was reorganized into Federated MDT All Cap Core Fund (the "Fund"), as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Beginning with the year ended July 31, 2006, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.

5 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

6 Represents less than 0.01%.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual	$1,000	$ 918.00	$4.86
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,019.79	$5.12

1 Expenses are equal to the Fund's annualized net expense ratio of 1.02%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half-year period).

Management's Discussion of Fund Performance

The fund's total return for the fiscal year ended July 31, 2008 was (9.71)% for Institutional Shares. The total return of the Russell 3000 ^® Index (Russell 3000 ^® ) ¹ was (10.32)% and the total return of the Lipper Multi-Cap Core Funds Index ² was (11.11)% for the same reporting period. The fund's total return for the fiscal year reflected actual cash flows, transaction costs and other expenses which were not reflected in the total return of the Russell Index.

1 The Russell 3000 ^® Index offers investors access to the broad U.S. equity universe representing approximately 98% of the U.S. market. The Russell 3000 is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The index is unmanaged and investments can not be made directly in an index.

2 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

MARKET OVERVIEW

Over the 12-month reporting period ending July 31, 2008, domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000, ^® which represents the performance of the 3,000 largest U.S. companies by market capitalization, finished the period down 10.32%. Small-cap stocks had the best relative results as demonstrated by the (6.71)% return on the Russell 2000 ^® Index, ³ which exceeded the (10.10)% and (10.81)% results for the Russell Midcap ^® Index ⁴ and the Russell Top 200 ^® Index, ⁵ respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000 ^® Growth Index ⁶ returning (6.00)% as compared to (14.72)% for the Russell 3000 Value ^® Index. ⁷

The best performing sectors during the reporting period, as measured by the Russell 3000 ^® were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

FUND PERFORMANCE

The most significant positive factor in the fund's performance relative to the Russell 3000 ^® was stock selection in the Materials sector. Additionally, the fund's overweight in the Energy sector provided a significant contribution to relative performance. The most significant negative factor in the fund's performance relative to the Russell 3000 ^® was its overweight in the Financials sector. Additionally, stock selection and an underweight in the Consumer Staples sector detracted moderately from relative performance.

Individual stocks contributing to the fund's performance relative to the Russell 3000 ^® included: Monsanto Company , Apple Computer, Inc., Apache Corporation, General Electric Company and Helmerich & Payne, Inc.

Individual stocks detracting from the fund's performance relative to the Russell 3000 ^® included: Bank of America Corporation, JP Morgan Chase & Company, Regions Financial Corporation, MBIA, Inc. and Keycorp.

3 The Russell 2000 ^® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index. The index is unmanaged and investments cannot be made directly in an index.

4 The Russell Midcap ^® Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 31% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

5 Russell Top 200 ^® Index measures the performance of the 200 largest companies in the Russell 1000 Index, which represents approximately 69% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

6 The Russell 3000 ^® Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000 Growth or the Russell 2000 Growth indexes. The index is unmanaged and investments cannot be made directly in an index.

7 The Russell 3000 ^® Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000 Value or the Russell 2000 Value indexes. The index is unmanaged and investments cannot be made directly in an index.

GROWTH OF A $25,000 INVESTMENT - INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000 ¹ in the Federated MDT All Cap Core Fund (Institutional Shares) (the "Fund") from October 1, 2002 (start of performance) to July 31, 2008, compared to the Russell 3000 ^® Index (Russell 3000 ^® ) ² and the Lipper Multi-Cap Core Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(9.71	)%
5 Years	9.37	%
Start of Performance (10/1/2002)	11.05	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 3000® and the Lipper Multi-Cap Core Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 3000® is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund's industry composition ¹ was as follows:

Industry	Percentage of Total Net Assets
Crude Oil & Gas Production	5.6	%
Multi-Line Insurance	5.4	%
Integrated Domestic Oil	5.0	%
Life Insurance	4.8	%
Integrated International Oil	4.8	%
Agricultural Chemicals	4.7	%
Property Liability Insurance	4.6	%
Telecommunication Equipment & Services	3.8	%
Truck Manufacturing	3.5	%
Regional Bank	3.4	%
Diversified Oil	3.3	%
Oil Well Supply	2.7	%
Money Center Bank	2.6	%
Electric Utility	2.4	%
Home Building	2.4	%
Commodity Chemicals	2.2	%
Railroad	1.9	%
Ethical Drugs	1.9	%
Internet Services	1.8	%
Industry	Percentage of Total Net Assets
Oil Service, Explore & Drill	1.7	%
Savings and Loan	1.5	%
Software Packaged/Custom	1.5	%
Clothing Stores	1.5	%
Semiconductor Manufacturing	1.4	%
Undesignated Consumer Cyclicals	1.3	%
Miscellaneous Food Products	1.3	%
Cogeneration	1.3	%
Airline - Regional	1.3	%
Department Stores	1.2	%
Miscellaneous Machinery	1.2	%
Miscellaneous Components	1.1	%
Printed Circuit Boards	1.0	%
Financial Services	1.0	%
Other 2	14.0	%
Cash Equivalents 3	0.5	%
Other Assets and Liabilities--Net 4	0.4	%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's total net assets have been aggregated under the designation "Other."

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares					Value
			COMMON STOCKS--99.1%
			Agricultural Chemicals--4.7%
	150,700		Monsanto Co.	$	17,949,877
			Agricultural Machinery--0.1%
	5,800		Lindsay Manufacturing Co.		535,166
			Airline - Regional--1.3%
	14,100	1	Alaska Air Group, Inc.		252,108
	289,900		Southwest Airlines Co.		4,519,541
			TOTAL		4,771,649
			Aluminum--0.1%
	10,000		Kaiser Aluminum Corp.		527,500
			Apparel--0.5%
	7,600		Columbia Sportswear Co.		283,556
	4,800		Liz Claiborne, Inc.		62,736
	37,000	1	Warnaco Group, Inc.		1,552,150
			TOTAL		1,898,442
			AT&T Divestiture--0.9%
	112,600		AT&T, Inc.		3,469,206
			Auto Original Equipment Manufacturers--0.1%
	6,300		Sun Hydraulics Corp.		259,560
	6,400		Superior Industries International, Inc.		108,096
			TOTAL		367,656
			Biotechnology--0.1%
	12,500	1	Affymetrix, Inc.		98,500
	6,800	1	Martek Biosciences Corp.		255,748
			TOTAL		354,248
Shares					Value
			COMMON STOCKS--continued
			Broadcasting--0.7%
	65,900	1	American Tower Systems Corp.	$	2,761,210
			Building Materials--0.2%
	6,000		Apogee Enterprises, Inc.		103,680
	23,800	1	Owens Corning, Inc.		619,038
	6,500		Universal Forest Products, Inc.		175,500
			TOTAL		898,218
			Cable TV--0.0%
	5,500	1	Viacom, Inc., Class B		153,615
			Clothing Stores--1.5%
	7,400	1	Children's Place Retail Stores, Inc.		281,570
	16,000	1	Fossil, Inc.		428,480
	42,200	1	Hanesbrands, Inc.		904,768
	2,900	1	Jos A. Bank Clothiers, Inc.		64,960
	117,000	1	Urban Outfitters, Inc.		3,862,170
			TOTAL		5,541,948
			Cogeneration--1.3%
	159,600	1	Mirant Corp.		4,885,356
			Commodity Chemicals--2.2%
	247,500		Dow Chemical Co.		8,244,225
	3,100		PPG Industries, Inc.		187,984
	3,600		Westlake Chemical Corp.		63,036
			TOTAL		8,495,245
			Computer Peripherals--0.8%
	54,400	1	Lexmark International Group, Class A		1,908,352
	35,000	1	Sandisk Corp.		493,500
	19,600	1	Western Digital Corp.		564,284
			TOTAL		2,966,136
			Computer Services--0.1%
	13,500	1	Synnex Corp.		315,360
	4,600		Syntel, Inc.		151,570
			TOTAL		466,930
Shares					Value
			COMMON STOCKS--continued
			Computer Stores--0.3%
	26,300	1	GameStop Corp.	$	1,065,413
			Crude Oil & Gas Production--5.6%
	141,600		Apache Corp.		15,883,272
	48,500		Cimarex Energy Co.		2,527,335
	4,000		Devon Energy Corp.		379,560
	13,200	1	Newfield Exploration Co.		646,536
	15,500	1	Stone Energy Corp.		790,810
	19,600	1	Swift Energy Co.		996,072
			TOTAL		21,223,585
			Defense Aerospace--0.7%
	32,900		Boeing Co.		2,010,519
	7,200	1	Spirit Aerosystems Holdings, Inc., Class A		155,952
	9,300		Triumph Group, Inc.		492,528
			TOTAL		2,658,999
			Department Stores--1.2%
	32,500		Dillards, Inc., Class A		328,575
	2,500		Penney (J.C.) Co., Inc.		77,075
	42,800	1	Saks, Inc.		436,132
	45,800	1	Sears Holdings Corp.		3,709,800
			TOTAL		4,551,582
			Discount Department Stores--0.3%
	14,100	1	99 Cents Only Stores		94,329
	19,800	1	BJ's Wholesale Club, Inc.		743,094
	8,200		Family Dollar Stores, Inc.		191,060
			TOTAL		1,028,483
			Diversified Leisure--0.4%
	15,100	1	Bally Technologies, Inc.		480,029
	1,800		Carnival Corp.		66,492
	21,600	1	Gaylord Entertainment Co.		648,864
	15,000	1	Pinnacle Entertainment, Inc.		169,500
			TOTAL		1,364,885
Shares					Value
			COMMON STOCKS--continued
			Diversified Oil--3.3%
	160,700		Occidental Petroleum Corp.	$	12,667,981
			Electric Utility--2.4%
	6,300		American Electric Power Co., Inc.		248,850
	5,700		Avista Corp.		128,934
	36,800		CMS Energy Corp.		496,800
	36,200		DTE Energy Co.		1,483,476
	16,500	1	Dynegy, Inc.		111,045
	75,600		Edison International		3,654,504
	5,500	1	El Paso Electric Co.		113,630
	7,600		Hawaiian Electric Industries, Inc.		188,024
	7,200		OGE Energy Corp.		235,584
	9,500		PPL Corp.		446,120
	15,600		Pepco Holdings, Inc.		389,064
	9,900		Portland General Electric Co.		232,551
	40,600	1	Reliant Resources, Inc.		735,266
	22,100		SCANA Corp.		799,799
			TOTAL		9,263,647
			Electrical Equipment--0.3%
	75,400		Xerox Corp.		1,028,456
			Electronic Instruments--0.2%
	3,000		Analogic Corp.		219,540
	2,500	1	Axsys Technologies, Inc.		183,600
	4,900	1	Trimble Navigation Ltd.		162,680
			TOTAL		565,820
			Ethical Drugs--1.9%
	54,800	1	Forest Laboratories, Inc., Class A		1,945,948
	108,400	1	King Pharmaceuticals, Inc.		1,247,684
	72,200		Merck & Co., Inc.		2,375,380
	80,000		Pfizer, Inc.		1,493,600
			TOTAL		7,062,612
Shares					Value
			COMMON STOCKS--continued
			Financial Services--1.0%
	78,000		Ameriprise Financial, Inc.	$	3,315,000
	48,500		Fulton Financial Corp.		511,190
			TOTAL		3,826,190
			Gas Distributor--0.1%
	7,700		WGL Holdings, Inc.		265,881
			Grocery Chain--0.3%
	35,700		Safeway, Inc.		953,904
	3,400		Weis Markets, Inc.		129,166
			TOTAL		1,083,070
			Home Building--2.4%
	51,500		Centex Corp.		756,020
	152,400		D.R. Horton, Inc.		1,694,688
	58,700		KB HOME		1,032,533
	60,300		Lennar Corp., Class A		729,630
	26,500		M.D.C. Holdings, Inc.		1,100,280
	1,400	1	NVR, Inc.		773,248
	117,500		Pulte Homes, Inc.		1,434,675
	27,500		Ryland Group, Inc.		566,225
	54,600	1	Toll Brothers, Inc.		1,096,914
			TOTAL		9,184,213
			Home Health Care--0.0%
	3,400	1	Amerigroup Corp.		86,360
			Household Appliances--0.1%
	2,400		Whirlpool Corp.		181,680
			Industrial Machinery--0.2%
	10,500	1	Terex Corp.		496,965
	2,600		Valmont Industries, Inc.		277,966
			TOTAL		774,931
			Insurance Brokerage--0.1%
	10,700		Odyssey Re Holdings Corp.		418,049
			Integrated Domestic Oil--5.0%
	6,000	1	Callon Petroleum Corp.		137,940
	229,900		ConocoPhillips		18,764,438
			TOTAL		18,902,378
Shares					Value
			COMMON STOCKS--continued
			Integrated International Oil--4.8%
	216,300		Chevron Corp.	$	18,290,328
			Internet Services--1.8%
	6,100	1	Amazon.com, Inc.		465,674
	29,400	1	NetFlix, Inc.		908,166
	6,300	1	Overstock.com, Inc.		111,888
	37,100	1	Priceline.com, Inc.		4,264,645
	35,100	1	eBay, Inc.		883,467
			TOTAL		6,633,840
			Jewelry Stores--0.1%
	8,100		Tiffany & Co.		306,099
			Leasing--0.2%
	14,100		GATX Corp.		641,127
			Life Insurance--4.8%
	259,200		MetLife, Inc.		13,159,584
	8,500		Principal Financial Group		361,335
	25,500		Protective Life Corp.		916,980
	26,400		StanCorp Financial Group, Inc.		1,303,896
	45,600		Torchmark Corp.		2,647,080
			TOTAL		18,388,875
			Long-Term Care Centers--0.1%
	6,900	1	Kindred Healthcare, Inc.		186,093
			Lumber Products--0.1%
	25,100		Louisiana-Pacific Corp.		212,346
			Maritime--0.8%
	7,900	1	Kirby Corp.		376,988
	32,100		Overseas Shipholding Group, Inc.		2,527,875
			TOTAL		2,904,863
			Medical Supplies--0.0%
	3,500	1	Kensey Nash Corp.		121,555
	1,200		Steris Corp.		41,004
			TOTAL		162,559
			Medical Technology--0.3%
	20,000	1	Masimo Corp.		755,400
	7,400		Stryker Corp.		475,006
			TOTAL		1,230,406
Shares					Value
			COMMON STOCKS--continued
			Metal Fabrication--0.6%
	14,200		Mueller Industries, Inc.	$	364,514
	3,400		Olympic Steel, Inc.		172,890
	48,900		Timken Co.		1,614,678
	10,900		Worthington Industries, Inc.		193,366
			TOTAL		2,345,448
			Mini-Mill Producer--0.4%
	46,300		Commercial Metals Corp.		1,382,055
			Miscellaneous Components--1.1%
	89,900		Amphenol Corp., Class A		4,285,533
			Miscellaneous Food Products--1.3%
	155,100		Archer-Daniels-Midland Co.		4,440,513
	12,200		The Anderson's, Inc.		554,490
			TOTAL		4,995,003
			Miscellaneous Machinery--1.2%
	14,200		Fastenal Co.		693,812
	19,300		Nordson Corp.		1,363,738
	38,300		Parker-Hannifin Corp.		2,362,344
			TOTAL		4,419,894
			Money Center Bank--2.6%
	208,500		Bank of America Corp.		6,859,650
	77,100		JPMorgan Chase & Co.		3,132,573
			TOTAL		9,992,223
			Mortgage and Title--0.1%
	8,300		LandAmerica Financial Group, Inc.		95,367
	24,000		PMI Group, Inc.		60,240
	18,600		Radian Group, Inc.		32,364
	1,100		Stewart Information Services Corp.		19,206
			TOTAL		207,177
			Multi-Industry Capital Goods--0.9%
	7,300		Carlisle Cos., Inc.		223,307
	8,900	1	Ceradyne, Inc.		412,515
	6,400		KBR, Inc.		182,400
	3,100	1	Tecumseh Products Co., Class A		101,525
	14,600		Textron, Inc.		634,662
	38,400		Tyco International Ltd.		1,711,104
			TOTAL		3,265,513
Shares					Value
			COMMON STOCKS--continued
			Multi-Industry Transportation--0.0%
	3,800		Expeditors International Washington, Inc.	$	134,938
			Multi-Line Insurance--5.4%
	231,450		Allstate Corp.		10,697,619
	66,600		Assurant, Inc.		4,003,992
	15,000		Cincinnati Financial Corp.		417,600
	4,100		FBL Financial Group, Inc., Class A		85,485
	22,600		Hanover Insurance Group, Inc.		969,992
	600	1	Navigators Group, Inc.		28,536
	169,800		UNUMProvident Corp.		4,102,368
			TOTAL		20,305,592
			Offshore Driller--0.6%
	28,100		ENSCO International, Inc.		1,942,834
	5,100	1	Hornbeck Offshore Services, Inc.		227,358
			TOTAL		2,170,192
			Oil Service, Explore & Drill--1.7%
	1,000	1	Dawson Geophysical Co.		65,630
	14,700	1	Gulfmark Offshore, Inc.		737,646
	28,300	1	Mariner Energy, Inc.		748,818
	76,300	1	Pride International, Inc.		2,957,388
	31,100	1	Unit Corp.		2,100,805
			TOTAL		6,610,287
			Oil Well Supply--2.7%
	103,200	1	FMC Technologies, Inc.		6,375,696
	37,400	1	Oil States International, Inc.		2,052,512
	19,200	1	Superior Energy Services, Inc.		910,656
	28,900	1	Weatherford International Ltd.		1,090,397
			TOTAL		10,429,261
			Other Communications Equipment--0.1%
	42,500	1	Tellabs, Inc.		218,450
			Paper Products--0.2%
	25,000		MeadWestvaco Corp.		670,250
			Personal Loans--0.0%
	4,700	1	World Acceptance Corp.		153,972
			Personnel Agency--0.0%
	3,900	1	Kenexa Corp.		72,891
Shares					Value
			COMMON STOCKS--continued
			Poultry Products--0.2%
	15,200		Sanderson Farms, Inc.	$	604,048
			Printed Circuit Boards--1.0%
	9,700	1	Benchmark Electronics, Inc.		142,008
	254,000	1	Marvell Technology Group Ltd.		3,756,660
			TOTAL		3,898,668
			Property Liability Insurance--4.6%
	38,000		American Financial Group, Inc.		1,100,860
	158,300		Chubb Corp.		7,604,732
	188,200		The Travelers Cos., Inc.		8,303,384
	5,100		Transatlantic Holdings, Inc.		295,494
			TOTAL		17,304,470
			Psychiatric Centers--0.2%
	23,700	1	Psychiatric Solutions, Inc.		829,974
			Railroad--1.9%
	43,000		CSX Corp.		2,905,940
	53,700		Union Pacific Corp.		4,427,028
			TOTAL		7,332,968
			Recreational Vehicles--0.0%
	4,200		Harley Davidson, Inc.		158,928
			Regional Bank--3.4%
	294,400		BB&T Corp.		8,249,088
	18,200		Bancorpsouth, Inc.		387,660
	11,000		City National Corp.		540,430
	3,200		FirstMerit Corp.		62,976
	22,100		M & T Bank Corp.		1,555,398
	14,600		Oriental Financial Group		253,602
	11,700		PacWest Bancorp		217,854
	41,500		TCF Financial Corp.		529,125
	10,700		Trustmark Corp.		193,242
	10,600		UnionBanCal Corp.		569,432
	1,500		Whitney Holding Corp.		30,840
	13,100		Wilmington Trust Corp.		308,767
			TOTAL		12,898,414
Shares					Value
			COMMON STOCKS--continued
			Restaurant--0.1%
	1,900	1	Buffalo Wild Wings, Inc.	$	62,567
	7,800	1	Panera Bread Co.		390,780
			TOTAL		453,347
			Roofing & Wallboard--0.2%
	30,400	1	USG Corp.		872,480
			Savings and Loan--1.5%
	7,900		Downey Financial Corp.		16,669
	103,900		Federal Home Loan Mortgage Corp.		848,863
	160,800		Federal National Mortgage Association		1,849,200
	103,500		Hudson City Bancorp, Inc.		1,889,910
	25,500		Newalliance Bancshares, Inc.		330,990
	27,300		Washington Federal, Inc.		507,780
	12,900		Webster Financial Corp. Waterbury		256,194
			TOTAL		5,699,606
			Securities Brokerage--0.5%
	2,100	1	FCStone Group, Inc.		40,446
	13,900	1	Interactive Brokers Group, Inc., Class A		390,034
	9,200	1	KBW, Inc.		243,064
	25,500	1	Knight Capital Group, Inc., Class A		417,945
	5,000	1	Piper Jaffray Cos., Inc.		177,500
	11,400		Raymond James Financial, Inc.		329,460
	8,700		SWS Group, Inc.		164,604
			TOTAL		1,763,053
			Semiconductor Distribution--0.0%
	8,500	1	FormFactor, Inc.		147,900
			Semiconductor Manufacturing--1.4%
	183,400	1	Broadcom Corp.		4,454,786
	146,600	1	Micron Technology, Inc.		708,078
	5,500	1	Silicon Laboratories, Inc.		179,905
			TOTAL		5,342,769
Shares					Value
			COMMON STOCKS--continued
			Semiconductor Manufacturing Equipment--0.1%
	24,500	1	Novellus Systems, Inc.	$	499,065
			Services to Medical Professionals -0.1%
	9,100	1	Athenahealth, Inc.		274,820
			Shoes--0.2%
	4,900	1	Deckers Outdoor Corp.		553,749
	17,600	1	Skechers USA, Inc., Class A		332,640
			TOTAL		886,389
			Software Packaged/Custom--1.5%
	12,000	1	Advent Software, Inc.		522,480
	4,000	1	CSG Systems International, Inc.		70,960
	105,000	1	Computer Sciences Corp.		4,973,850
	10,700	1	Wind River Systems, Inc.		125,511
			TOTAL		5,692,801
			Specialty Chemicals--0.2%
	8,100		Minerals Technologies, Inc.		522,531
	3,400	1	OM Group, Inc.		114,240
			TOTAL		636,771
			Specialty Retailing--0.7%
	22,900	1	Cabela's, Inc., Class A		266,098
	32,000		Costco Wholesale Corp.		2,005,760
	11,000		Pep Boys-Manny Moe & Jack		81,180
	400	1	Tractor Supply Co.		15,204
	4,000		Williams-Sonoma, Inc.		69,760
	13,900	1	Zale Corp.		307,468
			TOTAL		2,745,470
			Telecomm Equipment & Services--3.8%
	64,600	1	ADC Telecommunications, Inc.		611,116
	682,400		Corning, Inc.		13,654,824
			TOTAL		14,265,940
Shares					Value
			COMMON STOCKS--continued
			Toys & Games--0.1%
	18,200	1	JAKKS Pacific, Inc.	$	400,036
			Truck Manufacturing--3.5%
	177,400		Cummins, Inc.		11,768,716
	31,500		PACCAR, Inc.		1,324,890
			TOTAL		13,093,606
			Trucking--0.3%
	2,800		Arkansas Best Corp.		103,992
	17,300		Ryder System, Inc.		1,141,108
			TOTAL		1,245,100
			Undesignated Consumer Cyclicals--1.3%
	7,300	1	CoStar Group, Inc.		364,197
	1,800	1	Covance, Inc.		165,240
	53,000		DeVRY, Inc.		3,010,930
	9,400	1	Parexel International Corp.		274,762
	27,700		Pharmaceutical Product Development, Inc.		1,056,478
	8,900		Speedway Motorsports, Inc.		171,859
			TOTAL		5,043,466
			TOTAL COMMON STOCKS (IDENTIFIED COST $389,146,119)		375,951,921
			MUTUAL FUND--0.5%
	1,891,293	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)		1,891,293
			TOTAL INVESTMENTS--99.6% (IDENTIFIED COST $391,037,412) 4		377,843,214
			OTHER ASSETS AND LIABILITIES - NET--0.4% 5		1,698,972
			TOTAL NET ASSETS--100%	$	379,542,186

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $401,399,971.

5 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $1,891,293 of investments in an affiliated issuer (Note 5) (identified cost $391,037,412)			$	377,843,214
Cash				677,078
Income receivable				434,017
Receivable for investments sold				2,736,236
Receivable for shares sold				1,036,811
TOTAL ASSETS				382,727,356
Liabilities:
Payable for investments purchased	$	1,990,242
Payable for shares redeemed		806,538
Payable for distribution services fee (Note 5)		60,114
Payable for shareholder services fee (Note 5)		175,047
Accrued expenses		153,229
TOTAL LIABILITIES				3,185,170
Net assets for 27,099,539 shares outstanding			$	379,542,186
Net Assets Consist of:
Paid-in capital			$	417,142,225
Net unrealized depreciation of investments				(13,194,198	)
Accumulated net realized loss on investments				(25,592,067	)
Undistributed net investment income				1,186,226
TOTAL NET ASSETS			$	379,542,186
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($86,681,060 ÷ 6,094,730 shares outstanding), no par value, unlimited shares authorized				$14.22
Offering price per share				$14.22
Redemption proceeds per share				$14.22
Class A Shares:
Net asset value per share ($194,867,302 ÷ 13,869,526 shares outstanding), no par value, unlimited shares authorized				$14.05
Offering price per share (100/94.50 of $14.05) 1				$14.87
Redemption proceeds per share				$14.05
Class C Shares:
Net asset value per share ($96,600,960 ÷ 7,036,485 shares outstanding), no par value, unlimited shares authorized				$13.73
Offering price per share				$13.73
Redemption proceeds per share (99.00/100 of $13.73) 1				$13.59
Class K Shares:
Net asset value per share ($1,392,864 ÷ 98,798 shares outstanding), no par value, unlimited shares authorized				$14.10
Offering price per share				$14.10
Redemption proceeds per share				$14.10

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $179,957 received from an affiliated issuer (Note 5) and net of foreign taxes withheld of $370)							$	7,021,617
Expenses:
Investment adviser fee (Note 5)				$	3,048,726
Administrative personnel and services fee (Note 5)					318,594
Custodian fees					45,162
Transfer and dividend disbursing agent fees and expenses--Institutional Shares					76,674
Transfer and dividend disbursing agent fees and expenses--Class A Shares					235,299
Transfer and dividend disbursing agent fees and expenses--Class C Shares					179,185
Transfer and dividend disbursing agent fees and expenses--Class K Shares					1,962
Directors'/Trustees' fees					5,246
Auditing fees					24,700
Legal fees					15,958
Portfolio accounting fees					133,610
Distribution services fee--Class C Shares (Note 5)					801,234
Distribution services fee--Class K Shares (Note 5)					3,098
Shareholder services fee--Class A Shares (Note 5)					511,653
Shareholder services fee--Class C Shares (Note 5)					255,768
Account administration fee--Class A Shares					814
Account administration fee--Class C Shares					115
Share registration costs					77,655
Printing and postage					97,671
Insurance premiums					5,389
Interest expense					2,208
Miscellaneous					7,654
TOTAL EXPENSES					5,848,375
Reimbursement and Waiver (Note 5):
Reimbursement of investment adviser fee	$	(3,838	)
Waiver of administrative personnel and services fee		(9,146	)
TOTAL REIMBURSEMENT AND WAIVER					(12,984	)
Net expenses								5,835,391
Net investment income								1,186,226
Realized and Unrealized Loss on Investments:
Net realized loss on investments								(25,156,859	)
Net change in unrealized appreciation of investments								(20,313,246	)
Net realized and unrealized loss on investments								(45,470,105	)
Change in net assets resulting from operations							$	(44,283,879	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	1,186,226		$	(65,931	)
Net realized gain (loss) on investments		(25,156,859	)		29,303,764
Net change in unrealized appreciation/depreciation of investments		(20,313,246	)		5,456,660
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(44,283,879	)		34,694,493
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(6,297,925	)		(1,675,959	)
Class A Shares		(14,822,479	)		(5,228,169	)
Class C Shares		(7,853,780	)		(2,497,031	)
Class K Shares		(32,808	)		(3	)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(29,006,992	)		(9,401,162	)
Share Transactions:
Proceeds from sale of shares		148,687,842			235,142,870
Net asset value of shares issued to shareholders in payment of distributions declared		25,603,826			8,258,175
Cost of shares redeemed		(113,566,093	)		(69,157,702	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		60,725,575			174,243,343
Redemption fees		- --			3,869
Change in net assets		(12,565,296	)		199,540,543
Net Assets:
Beginning of period		392,107,482			192,566,939
End of period (including undistributed net investment income of $1,186,226 and $0, respectively)	$	379,542,186		$	392,107,482

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine portfolios. The financial statements included herein are only those of Federated MDT All Cap Core Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Institutional Shares, Class A Shares, Class C Shares and Class K Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The Financial Highlights of the Class A Shares, Class C Shares and Class K Shares are presented separately. The investment objective of the Fund is long-term capital appreciation.

MDT All Cap Core Fund (the "Predecessor Fund") was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced offering Class C Shares on September 15, 2005. The Fund commenced offering Class K Shares on December 12, 2006.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the "Trustees").
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their (cost adjusted for the accretion of any discount or amortization of any premium).
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear distribution services fees, shareholder services fees, account administration fees and certain transfer and dividend disbursing agent fees unique to those classes. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2005 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

Withholding taxes and where appropriate, deferred withholding taxes on foreign interest, dividends and capital gains have been provided for in accordance with the applicable country's tax rules and rates.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	2,316,132		$	37,878,322		2,677,589		$	45,134,764
Shares issued to shareholders in payment of distributions declared	306,108			5,075,279		90,311			1,481,998
Shares redeemed	(1,569,357	)		(25,328,179	)	(537,678	)		(8,951,521	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	1,052,883		$	17,625,422		2,230,222		$	37,665,241
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	4,864,131		$	77,675,376		7,981,369		$	129,791,451
Shares issued to shareholders in payment of distributions declared	864,495			14,186,366		300,058			4,887,949
Shares redeemed	(3,920,927	)		(61,812,706	)	(2,963,223	)		(48,937,368	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	1,807,699		$	30,049,036		5,318,204		$	85,742,032
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	1,978,773		$	31,441,573		3,709,500		$	60,072,675
Shares issued to shareholders in payment of distributions declared	391,649			6,309,458		116,918			1,888,228
Shares redeemed	(1,692,463	)		(26,152,035	)	(681,786	)		(11,263,611	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	677,959		$	11,598,996		3,144,632		$	50,697,292
Year Ended July 31	2008					2007
Class K Shares:	Shares			Amount		Shares			Amount
Shares sold	106,180		$	1,692,571		8,309		$	143,980
Shares issued to shareholders in payment of distributions declared	1,982			32,723		- --			- --
Shares redeemed	(17,383	)		(273,173	)	(290	)		(5,202	)
NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS	90,779		$	1,452,121		8,019		$	138,778
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	3,629,320		$	60,725,575		10,701,077		$	174,243,343

Redemption Fees

Prior to December 11, 2006, the Predecessor Fund imposed a 2.00% redemption fee to shareholders of the Fund's Institutional Shares, Class A Shares and Class C Shares who redeemed shares held for 30 days or less. Shares acquired by reinvestment of dividends or distributions of the Fund, or purchased pursuant to the Systematic Investment Program or withdrawn pursuant to the Systematic Withdrawal Program, were not subject to the redemption fee. All redemption fees are recorded by the Fund as additions to paid-in capital. For the year ended July 31, 2007, the Predecessor Fund incurred redemption fees for Institutional Shares, Class A Shares and Class C Shares amounted to $508, $2,298 and $1,063, respectively.

4. FEDERAL TAX INFORMATION

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2008 and 2007, was as follows:

	2008	2007
Ordinary income 1	$21,537,947	$4,625,312
Long-term capital gains	$ 7,469,045	$4,775,850

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	1,182,169
Net unrealized depreciation	$	(23,556,757	)
Capital loss carryforwards and deferrals	$	(15,225,451	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $401,399,971. The net unrealized depreciation of investments for federal tax purposes was $23,556,757. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $21,848,796 and net unrealized depreciation from investments for those securities having an excess of cost over value of $45,405,553.

At July 31, 2008, the Fund had a capital loss carryforward of $3,647,165 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the 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. Pursuant to the Code, such capital loss carryforward will expire in 2016.

Under current tax regulations, capital losses on securities transactions realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post-October losses of $11,578,286 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for certain classes of the Fund based on average daily net assets:

Share Class Name	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.25%
Class A Shares	1.50%
Class C Shares	2.25%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after filling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.

For a period of three years after the fiscal year in which the Adviser waived or reimbursed Fund expenses, the Adviser could seek reimbursement from the Fund to the extent that the Fund's total annual operating expenses are less than the expense limitation. Due to the reorganization of the Fund, expenses cannot be recovered by the Adviser after December 8, 2006.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the net fee paid to FAS was 0.076% of average daily net assets of the Fund. FAS waived $9,146 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares, Class C Shares and Class K Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%
Class K Shares	0.50%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $232,025 of fees paid by the Fund. For the year ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee. On November 15, 2007, the Fund's Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

For the year ended July 31, 2008, FSC, the principal distributor, retained $55,161 in sales charges from the sale of Class A Shares. FSC also retained $12,726 of contingent deferred sales charges relating to redemptions of Class C Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

Effective November 11, 2006, The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the year ended July 31, 2008, FSSC received $5,988 of fees paid by the Fund.

General

Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $3,838. Transactions with the affiliated company during the year ended July 31, 2008 were as follows:

Affiliate	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	5,916,667	63,599,312	67,624,686	1,891,293	$1,891,293	$179,957

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	837,842,223
Sales	$	802,015,313

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses, and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2008, the amount of long-term capital gains designated by the Fund was $7,469,045.

For the fiscal year ended July 31, 2008, 18.31% of total income (including short-term capital gain) distributions made by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended July 31, 2008, 18.68% qualify for the dividend-received deduction available to corporate shareholders.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND
SHAREHOLDERS OF FEDERATED MDT ALL CAP CORE FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT All Cap Core Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the two years in the period ended July 31, 2005 were audited by another independent registered public accounting firm whose report, dated September 19, 2005 expressed an unqualified opinion on those financial highlights.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT All Cap Core Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT ALL CAP CORE FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For both the one- and three-year periods ending December 31, 2007, the Fund's performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same periods, the Fund outperformed its benchmark index for the one-year period and outperformed its benchmark index for the three-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee, after waivers and expense reimbursements, if any, was above the median of the relevant peer group. The Board reviewed the fees and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive. In this regard, the Board had been previously advised that, while comparisons to fund peer groups are highly important in judging the reasonableness of advisory fees, the Fund's quantitative focus makes fee and expense comparisons particularly difficult. Although the Fund's advisory fee was above the median of the peer range, the peer group of funds varied widely in their complexity, and the management of the Fund is among the more complex relative to its peers. The Board will continue to monitor advisory fees and other expenses borne by the Fund.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT All CapCore Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R304

37312 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Balanced Fund

Established 2002

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Class A Shares
Class C Shares
Class K Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLES
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$13.75		$13.21		$13.67
Income From Investment Operations:
Net investment income	0.28	3	0.20	3	0.18	3
Net realized and unrealized gain (loss) on investments, futures contracts, swap contracts and foreign currency transactions	(1.00	)	1.15		0.46
TOTAL FROM INVESTMENT OPERATIONS	(0.72	)	1.35		0.64
Less Distributions:
Distributions from net investment income	(0.17	)	(0.16	)	(0.17	)
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions	(0.35	)	(0.65	)	(0.93	)
TOTAL DISTRIBUTIONS	(0.52	)	(0.81	)	(1.10	)
Net Asset Value, End of Period	$12.51		$13.75		$13.21
Total Return 4	(5.60	)%	10.39	%	4.85	%
Ratios to Average Net Assets:
Net expenses	1.31	%	1.40	%	1.50	% 5
Net investment income	2.08	%	1.42	%	1.60	% 5
Expense waiver/reimbursement 6	0.03	%	0.13	%	0.17	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$153,458		$51,167		$1,962
Portfolio turnover	158	%	174	%	139	% 7

1 MDT Balanced Fund (the "Predecessor Fund") was reorganized into Federated MDT Balanced Fund (the "Fund") as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

7 Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended July 31, 2006.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period:	$13.60		$13.13		$13.67
Income From Investment Operations:
Net investment income	0.19	3	0.09	3	0.10	3
Net realized and unrealized gain (loss) on investments, futures contracts, swap contracts and foreign currency transactions	(1.00	)	1.14		0.44
TOTAL FROM INVESTMENT OPERATIONS	(0.81	)	1.23		0.54
Less Distributions:
Distributions from net investment income	(0.14	)	(0.11	)	(0.15	)
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions	(0.35	)	(0.65	)	(0.93	)
TOTAL DISTRIBUTIONS	(0.49	)	(0.76	)	(1.08	)
Net Asset Value, End of Period	$12.30		$13.60		$13.13
Total Return 4	(6.28	)%	9.50	%	4.04	%
Ratios to Average Net Assets:
Net expenses	2.05	%	2.15	%	2.25	% 5
Net investment income	1.41	%	0.66	%	0.85	% 5
Expense waiver/reimbursement 6	0.03	%	0.16	%	0.17	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$82,033		$15,775		$3,910
Portfolio turnover	158	%	174	%	139	% 7

1 The Predecessor Fund was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

7 Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended
July 31, 2006.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class K Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended		Period Ended
	7/31/2008		7/31/2007	1
Net Asset Value, Beginning of Period	$13.77		$14.28
Income From Investment Operations:
Net investment income	0.20	2	0.05	2
Net realized and unrealized gain (loss) on investments, futures contracts, swap contracts and foreign currency transactions	(0.98	)	0.26
TOTAL FROM INVESTMENT OPERATIONS	(0.78	)	0.31
Less Distributions:
Distributions from net investment income	(0.13	)	(0.17	)
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions	(0.35	)	(0.65	)
TOTAL DISTRIBUTIONS	(0.48	)	(0.82	)
Net Asset Value, End of Period	$12.51		$13.77
Total Return 3	(6.01	)%	2.33	%
Ratios to Average Net Assets:
Net expenses	1.77	%	1.90	% 4
Net investment income	1.53	%	0.60	% 4
Expense waiver/reimbursement 5	0.02	%	0.05	% 4
Supplemental Data:
Net assets, end of period (000 omitted)	$708		$18
Portfolio turnover	158	%	174	% 6

1 Reflects operations for the period from December 12, 2006 (date of initial public investment) to July 31, 2007.

2 Per share numbers have been calculated using the average shares method.

3 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

4 Computed on an annualized basis.

5 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

6 Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended July 31, 2007.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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, such as sales charges (loads) on purchase or redemption payments. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual:
Class A Shares	$1,000	$ 947.00	$ 6.24
Class C Shares	$1,000	$ 943.30	$ 9.81
Class K Shares	$1,000	$ 944.90	$ 8.51
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,018.45	$ 6.47
Class C Shares	$1,000	$1,014.77	$10.17
Class K Shares	$1,000	$1,016.11	$ 8.82

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

Class A Shares	1.29%
Class C Shares	2.03%
Class K Shares	1.76%

Management's Discussion of Fund Performance

For the reporting period ended July 31, 2008 the fund's Class A, Class C and Class K shares produced total returns of (5.60)%, (6.28)% and (6.01)%, respectively, at net asset value. The Standard & Poor's 500 Index ¹ and the Lehman Brothers Aggregate Bond Index ("Lehman Aggregate") ² returned (11.09)% and 6.15%, respectively, while the Lipper Balanced Funds Index returned (5.17)%. ³

1 The Standard & Poor's 500 Index is an unmanaged capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Investments cannot be made directly in an index.

2 The Lehman Brothers Aggregate Bond Index is an unmanaged index composed of securities from the Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index and the Asset-Backed Securities Index. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. Indices are rebalanced monthly by market capitalization. Investments cannot be made directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

MARKET OVERVIEW

Over the 12-month period ended July 31, 2008, domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® Index, ⁴ which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period down 10.32%. Small-cap stocks ⁵ had the best relative results as demonstrated by the (6.71)% return on the Russell 2000 ^® Index, ⁶ which exceeded the (10.10)% and (10.81)% results for the Russell Midcap ^® Index ⁷ and the Russell Top 200 ^® Index, ⁸ respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000 ^® Growth Index ⁹ returning (6.11)% as compared to (14.75)% for the Russell 3000 Value ^® Index. ¹⁰

The best performing sectors during the period, as measured by the Russell 3000 ^® Index, were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

4 The Russell 3000 Index offers investors access to the broad U.S. equity universe representing approximately 98% of the U.S. market. The Russell 3000 is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The index is unmanaged and investments cannot be made directly in an index.

5 Small company stocks may be less liquid and subject to greater price volatility than large capitalization stocks.

6 The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index. The index is unmanaged and investments cannot be made directly in an index.

7 The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 31% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

8 The Russell Top 200 Index measures the performance of the 200 largest companies in the Russell 1000 Index, which represents approximately 69% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

9 The Russell 3000 Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000 Growth or the Russell 2000 Growth indexes. The index is unmanaged and investments cannot be made directly in an index.

10 The Russell 3000 Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000 Value or the Russell 2000 Value indexes. The index is unmanaged and investments cannot be made directly in an index.

Real Estate Investment Trust ("REIT") fundamentals held up well through what was an extremely difficult environment. Although negative, performance was solid on a relative basis as demonstrated by the (5.40)% return on the S&P REIT Index. ¹¹

International equity performance ¹² benefited from a decline in the value of the dollar over the period. Emerging markets, which generally experienced stronger economic growth, outperformed developed markets as evidenced by the (4.36)% return on the MSCI Emerging Markets Free Index, ¹³ which exceeded the (12.19)% return on the MSCI EAFE Index. ¹⁴

Fixed-income markets experienced a tumultuous period which featured aggressive and innovative actions on the part of the Federal Reserve Board (the "Fed"), a dramatic reduction in yields on U.S. Treasuries and significant widening in yield spreads on risk-bearing instruments. The Fed reduced the target federal funds rate on seven occasions totaling 3.25% during the period which contributed to a meaningful decline in treasury yields, most significantly at the short end of the curve. Responding to disruptions in the money markets and asset-backed securities markets, the Fed also introduced new lending facilities in an effort to provide liquidity. The collapse in housing prices and increasing uncertainty about the economy led to an increase in risk premiums across credit markets. The average yield of the Lehman Aggregate stood at 5.14% on July 31, 2008, compared to 5.57% 12 months earlier.

11 The S&P REIT Index tracks the market performance of U.S. Real Estate Investment Trusts, known as REITs. It consists of 100 REITs chosen for their liquidity and importance in representing a diversified real estate portfolio. Investments in REITs involve special risks associated with an investment in real estate, such as limited liquidity and interest rate risks. The index is unmanaged and investments cannot be made directly in an index.

12 International investing involves special risks including currency risk, increased volatility of foreign securities, political risks and differences in auditing and other financial standards. Prices of emerging markets securities can be significantly more volatile than the prices of securities in developed countries, and currency risks and political risks are accentuated in emerging markets.

13 The MSCI Emerging Markets Free Index is an unmanaged index reflecting approximately 60% of the market capitalization, by industry, in each of 26 emerging market countries. The index is unmanaged and investments cannot be made directly in an index.

14 The MSCI EAFE Index measures international equity performance. It comprises 21 MSCI country indices, representing the developed markets outside of North America. The index is unmanaged and investments cannot be made directly in an index.

ASSET ALLOCATION

During the reporting period, equity investments accounted for an average of approximately 66% of the portfolio while fixed income and cash averaged 34%. Cash balances were maintained at an average of more than 5% of fund assets in response to the volatility in the market, which helped performance. Within the fund's equity portfolio, investments in international equities and REITs contributed negatively to fund performance as these allocations underperformed.

EQUITIES

Domestic equity investments, which are managed under our proprietary All Cap Core strategy, marginally outperformed their benchmark, the Russell 3000 ^® Index, during the period. An overweight to the Energy sector provided the most significant positive contribution to relative results. The most significant negative contributions to relative performance resulted from an overweight to the Financial sector, which underperformed, and an underweight to the Consumer Staples sector, which outperformed.

International equity investments underperformed the MSCI EAFE Index during the period. The international allocation was reduced over the course of the year and performance was negatively affected by the timing of these moves in what was a very volatile period. REIT investments performed poorly, however, the allocation to this sector was much lower than the fund has historically maintained, at an average of just 2.5% of assets, so the impact on fund performance was marginal.

FIXED INCOME

The bond portion of the fund outperformed its benchmark (the Lehman Aggregate) modestly during the period. Three of the five portfolio tools we used to manage fixed-income investments (duration, ¹⁵ yield curve and security selection) added value to varying degrees. Sector was the lone exception, with overweights to mortgage-backed securities, commercial mortgage-backed securities, and high yield providing a considerable drag on performance. ¹⁶ Another tool, currency management, had little effect on results. Security selection in the corporate areas (investment-grade and high yield) contributed positively to results during the year.

1 5 Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.

16 High-yield, lower-rated securities generally entail greater market, credit and liquidity risk than investment-grade securities and may include higher volatility and higher risk of default. Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.

GROWTH OF A $10,000 INVESTMENT - CLASS A SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Balanced Fund (Class A Shares) (the "Fund") from October 1, 2002 (start of performance) to July 31, 2008, compared to the Standard and Poor's 500 Index (S&P 500), ² the Lipper Balanced Funds Index (LBFI) ³ and the Lehman Brothers Aggregate Bond Index (LBAB). ²

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(10.79	)%
5 Years	6.83	%
Start of Performance (10/1/2002) 4	8.22	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum sales charge of 5.50%.

1 Represents a hypothetical investment of $10,000 in the fund after deducting the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge = $9,450). The fund's performance assumes the reinvestment of all dividends and distributions. The S&P 500, LBAB and the LBFI have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The S&P 500 and the LBAB are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the fund's performance. The indexes are unmanaged and, unlike the fund, are not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends. Lipper figures do not reflect sales charges.

4 The start of performance date was October 1, 2002. Class A Shares of the fund were offered beginning September 15, 2005. Performance results shown before that date are for the fund's Institutional Shares and have been adjusted for the maximum sales charge and total annual operating expenses applicable to the fund's Class A Shares. The fund's Institutional Shares commenced operations on October 1, 2002. The fund's Class A Shares annual returns would have been substantially similar to those of the fund's Institutional Shares because Shares of each class are invested in the same portfolio of securities.

GROWTH OF A $10,000 INVESTMENT - CLASS C SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Balanced Fund (Class C Shares) (the "Fund") from October 1, 2002 (start of performance) to July 31, 2008, compared to the Standard and Poor's 500 Index (S&P 500), ² the Lipper Balanced Funds Index (LBFI) ³ and the Lehman Brothers Aggregate Bond Index (LBAB). ²

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(7.19	)%
5 Years	7.21	%
Start of Performance (10/1/2002) 4	8.43	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum contingent deferred sales charge (CDSC) of 1.00%, as applicable.

1 Represents a hypothetical investment of $10,000 in the fund. The maximum CDSC is 1.00% on any redemption less than one year from the purchase date. The fund's performance assumes the reinvestment of all dividends and distributions. The S&P 500, LBAB and LBFI have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The S&P 500 and LBAB are not adjusted to reflect sales charges, expenses or other fees that the SEC requires to be reflected in the fund's performance. The indexes are unmanaged and, unlike the fund, are not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends. Lipper figures do not reflect sales charges.

4 The start of performance date was October 1, 2002. Class C Shares of the fund were offered beginning September 15, 2005. Performance results shown before that date are for the fund's Institutional Shares and have been adjusted for the maximum CDSC and total annual operating expenses applicable to the fund's Class C Shares. The fund's Institutional Shares commenced operations on October 1, 2002. The fund's Class C Shares annual returns would have been substantially similar to those of the fund's Institutional Shares because Shares of each class are invested in the same portfolio of securities.

GROWTH OF A $10,000 INVESTMENT - CLASS K SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Balanced Fund (Class K Shares) (the "Fund") from October 1, 2002 (start of performance) to July 31, 2008, compared to the Standard and Poor's 500 Index (S&P 500), ² the Lipper Balanced Funds Index ³ and the Lehman Brothers Aggregate Bond Index (LBAB). ²

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(6.01	)%
5 Years	7.58	%
Start of Performance (10/1/2002) 4	8.80	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 The fund's performance assumes the reinvestment of all dividends and distributions. The S&P 500, LBAB and the LBFI have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The S&P 500 and the LBAB are not adjusted to reflect sales charges, expenses or other fees that the SEC requires to be reflected in the fund's performance. The indexes are unmanaged and, unlike the fund, are not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends. Lipper figures do not reflect sales charges.

4 The start of performance date was October 1, 2002. Class K Shares of the fund were offered beginning December 12, 2006. Performance results shown before that date are for the fund's Institutional Shares and have been adjusted for total annual operating expenses applicable to the fund's Class K Shares. The fund's Institutional Shares commenced operations on October 1, 2002. The fund's Class K Shares annual returns would have been substantially similar to those of the Fund's Institutional Shares because Shares of each class are invested in the same portfolio of securities.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Tables

At July 31, 2008, the Fund's portfolio composition ¹ was as follows:

Security Type	Percentage of Total Net Assets
Domestic Equity	55.5	%
Mortgage-Backed Securities	12.4	%
Corporate Debt Securities	8.5	%
U.S. Treasury and Agency Securities 2	5.9	%
Collateralized Mortgage Obligations	3.8	%
Foreign Stock ETF	3.3	%
International Equity	1.4	%
Adjustable Rate Mortgage Securities	1.4	%
Foreign Debt Securities	1.1	%
Asset-Backed Securities	0.5	%
Derivative Contracts 3,4	0.0	%
Cash Equivalents 5	8.5	%
Other Assets and Liabilities--Net 6	(2.3	)%
TOTAL	100.0	%

1 See the Fund's Prospectus for a description of the principal types of securities in which the Fund invests. As of the date specified above, the Fund owned shares of one or more affiliated investment companies. For purposes of these tables, the affiliated investment company (other than an affiliated money market fund) is not treated as a single portfolio security, but rather the Fund is treated as owning a pro rata portion of each security and each other asset and liability owned by the affiliated investment company. Accordingly, the percentages of total net assets shown in the table will differ from those presented on the Portfolio of Investments.

2 Also includes $3,500,592 held in U.S. Treasuries pledged as collateral to ensure the Fund is able to satisfy the obligations of its outstanding futures contract.

3 Based upon net unrealized appreciation (depreciation) on the derivative contracts. Derivative contracts may consist of futures, forwards, options and swaps. The impact of a derivative contract on the Fund's performance may be larger than its unrealized appreciation (depreciation) may indicate. In many cases, the notional value or notional principal amount of a derivative contract may provide a better indication of the contract's significance to the portfolio. More complete information regarding the Fund's direct investments in derivative contracts, including unrealized appreciation (depreciation) and notional values or amounts of such contracts, can be found in the table at the end of the Portfolio of Investments included in this report.

4 Represents less than 0.1%.

5 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

6 Assets, other than investments in securities and derivative contracts, less liabilities. See Statement of Assets and Liabilities.

At July 31, 2008, the Fund's industry composition ⁷ for its equity securities was as follows:

Industry	Percentage of Equity Securities
Crude Oil & Gas Production	5.6	%
Multi-Line Insurance	4.9	%
Agricultural Chemicals	4.8	%
Integrated Domestic Oil	4.7	%
Integrated International Oil	4.6	%
Real Estate Investment Trusts	4.5	%
Life Insurance	4.4	%
Property Liability Insurance	4.3	%
Telecommunication Equipment & Services	3.8	%
Truck Manufacturing	3.3	%
Diversified Oil	3.1	%
Regional Bank	2.9	%
Money Center Bank	2.7	%
Oil Well Supply	2.6	%
Electric Utility	2.5	%
Commodity Chemicals	2.1	%
Home Building	2.0	%
Ethical Drugs	1.9	%
Railroad	1.8	%
Oil Service, Explore & Drill	1.8	%
Internet Services	1.7	%
Other 8	30.0	%
TOTAL	100.0	%

7 Industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the Adviser assigns a classification to securities not classified by the GICS and to securities for which the Adviser does not have access to the classification made by the GICS.

8 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's equity securities have been aggregated under the designation "Other."

Portfolio of Investments

July 31, 2008

Shares					Value
			COMMON STOCKS--56.9%
			Agricultural Chemicals--2.7%
	70,600		Monsanto Co.	$	8,409,166
			Agricultural Machinery--0.1%
	2,600		Lindsay Manufacturing Co.		239,902
			Airline - Regional--0.7%
	5,100	1	Alaska Air Group, Inc.		91,188
	126,900		Southwest Airlines Co.		1,978,371
			TOTAL		2,069,559
			Aluminum--0.1%
	3,400		Kaiser Aluminum Corp.		179,350
			Apparel--0.3%
	2,900		Columbia Sportswear Co.		108,199
	4,600		Liz Claiborne, Inc.		60,122
	16,100	1	Warnaco Group, Inc.		675,395
			TOTAL		843,716
			AT&T Divestiture--0.6%
	64,200		AT&T, Inc.		1,978,002
			Auto Original Equipment Manufacturer--0.1%
	3,000		Sun Hydraulics, Inc.		123,600
	3,600		Superior Industries International, Inc.		60,804
			TOTAL		184,404
			Biotechnology--0.1%
	4,800	1	Affymetrix, Inc.		37,824
	3,100	1	Martek Biosciences Corp.		116,591
			TOTAL		154,415
			Broadcasting--0.4%
	31,800	1	American Tower Systems Corp.		1,332,420
			Building Materials--0.1%
	3,500		Apogee Enterprises, Inc.		60,480
	9,500	1	Owens Corning, Inc.		247,095
	2,100		Universal Forest Products, Inc.		56,700
			TOTAL		364,275
Shares					Value
			COMMON STOCKS--continued
			Cable TV--0.0%
	3,500	1	Viacom, Inc., Class B	$	97,755
			Clothing Stores--0.8%
	2,800	1	Children's Place Retail Stores, Inc.		106,540
	6,200	1	Fossil, Inc.		166,036
	24,400	1	Hanesbrands, Inc.		523,136
	2,600	1	Jos A. Bank Clothiers, Inc.		58,240
	46,300	1	Urban Outfitters, Inc.		1,528,363
			TOTAL		2,382,315
			Cogeneration--0.7%
	71,100	1	Mirant Corp.		2,176,371
			Commodity Chemicals--1.2%
	107,100		Dow Chemical Co.		3,567,501
	2,400		PPG Industries, Inc.		145,536
	1,600		Westlake Chemical Corp.		28,016
			TOTAL		3,741,053
			Computer Peripherals--0.4%
	25,500	1	Lexmark International Group, Class A		894,540
	15,800	1	Sandisk Corp.		222,780
	8,100	1	Western Digital Corp.		233,199
			TOTAL		1,350,519
			Computer Services--0.1%
	5,900	1	Synnex Corp.		137,824
	3,000		Syntel, Inc.		98,850
			TOTAL		236,674
			Computer Stores--0.1%
	10,100	1	GameStop Corp.		409,151
			Crude Oil & Gas Production--3.2%
	3,500		Anadarko Petroleum Corp.		202,685
	51,800		Apache Corp.		5,810,406
	26,900		Cimarex Energy Co.		1,401,759
	8,600		Devon Energy Corp.		816,054
	16,900	1	Newfield Exploration Co.		827,762
	6,600	1	Stone Energy Corp.		336,732
	9,000	1	Swift Energy Co.		457,380
			TOTAL		9,852,778
Shares					Value
			COMMON STOCKS--continued
			Defense Aerospace--0.4%
	17,500		Boeing Co.	$	1,069,425
	2,000	1	Spirit Aerosystems Holdings, Inc., Class A		43,320
	4,300		Triumph Group, Inc.		227,728
			TOTAL		1,340,473
			Department Stores--0.6%
	13,800		Dillards, Inc., Class A		139,518
	900		Penney (J.C.) Co., Inc.		27,747
	18,900	1	Saks, Inc.		192,591
	19,800	1	Sears Holdings Corp.		1,603,800
			TOTAL		1,963,656
			Discount Department Stores--0.1%
	7,900	1	99 Cents Only Stores		52,851
	8,100	1	BJ's Wholesale Club, Inc.		303,993
	3,200		Family Dollar Stores, Inc.		74,560
			TOTAL		431,404
			Diversified Leisure--0.2%
	6,100	1	Bally Technologies, Inc.		193,919
	1,100		Carnival Corp.		40,634
	10,100	1	Gaylord Entertainment Co.		303,404
	6,500	1	Pinnacle Entertainment, Inc.		73,450
			TOTAL		611,407
			Diversified Oil--1.7%
	68,200		Occidental Petroleum Corp.		5,376,206
			Electric Utility--1.4%
	2,400		American Electric Power Co., Inc.		94,800
	2,600		Avista Corp.		58,812
	16,200		CMS Energy Corp.		218,700
	17,200		DTE Energy Co.		704,856
	12,600	1	Dynegy, Inc.		84,798
	36,300		Edison International		1,754,742
	2,600	1	El Paso Electric Co.		53,716
	4,000		Hawaiian Electric Industries, Inc.		98,960
	3,000		OGE Energy Corp.		98,160
Shares					Value
			COMMON STOCKS--continued
			Electric Utility--continued
	4,800		PPL Corp.	$	225,408
	6,600		Pepco Holdings, Inc.		164,604
	3,700		Portland General Electric Co.		86,913
	18,400	1	Reliant Energy, Inc.		333,224
	9,300		SCANA Corp.		336,567
			TOTAL		4,314,260
			Electrical Equipment--0.2%
	36,300		Xerox Corp.		495,132
			Electronic Instruments--0.1%
	1,100		Analogic Corp.		80,498
	800	1	Axsys Technologies, Inc.		58,752
	2,600	1	Trimble Navigation Ltd.		86,320
			TOTAL		225,570
			Ethical Drugs--1.1%
	22,400	1	Forest Laboratories, Inc., Class A		795,424
	40,000	1	King Pharmaceuticals, Inc.		460,400
	39,900		Merck & Co., Inc.		1,312,710
	42,200		Pfizer, Inc.		787,874
			TOTAL		3,356,408
			Financial Services--0.5%
	33,100		Ameriprise Financial, Inc.		1,406,750
	22,200		Fulton Financial Corp.		233,988
			TOTAL		1,640,738
			Gas Distributor--0.1%
	1,800		AGL Resources, Inc.		62,208
	1,500		Laclede Group, Inc.		63,615
	3,400		WGL Holdings, Inc.		117,402
			TOTAL		243,225
			Gas Pipeline--0.1%
	7,700		Williams Companies, Inc.		246,785
			Generic Drugs--0.0%
	600		Perrigo Co.		21,138
Shares					Value
			COMMON STOCKS--continued
			Grocery Chain--0.2%
	16,400		Safeway, Inc.	$	438,208
	1,800		Weis Markets, Inc.		68,382
			TOTAL		506,590
			Home Building--1.2%
	23,300		Centex Corp.		342,044
	67,000		D. R. Horton, Inc.		745,040
	25,400		KB HOME		446,786
	26,300		Lennar Corp., Class A		318,230
	8,600		M.D.C. Holdings, Inc.		357,072
	100	1	NVR, Inc.		55,232
	51,500		Pulte Homes, Inc.		628,815
	12,500		Ryland Group, Inc.		257,375
	21,600	1	Toll Brothers, Inc.		433,944
			TOTAL		3,584,538
			Home Health Care--0.0%
	1,600	1	Amerigroup Corp.		40,640
			Household Appliances--0.0%
	1,000		Whirlpool Corp.		75,700
			Industrial Machinery--0.1%
	4,300	1	Terex Corp.		203,519
	1,100		Valmont Industries, Inc.		117,601
			TOTAL		321,120
			Insurance Brokerage--0.0%
	1,500		Odyssey Re Holdings Corp.		58,605
			Integrated Domestic Oil--2.6%
	3,900	1	Callon Petroleum Corp.		89,661
	90,400		ConocoPhillips		7,378,448
	13,900		Marathon Oil Corp.		687,633
			TOTAL		8,155,742
			Integrated International Oil--2.6%
	96,400		Chevron Corp.		8,151,584
			Internet Services--1.0%
	4,100	1	Amazon.com, Inc.		312,994
	14,000	1	NetFlix, Inc.		432,460
Shares					Value
			COMMON STOCKS--continued
			Internet Services--continued
	4,000	1	Overstock.com, Inc.	$	71,040
	15,700	1	Priceline.com, Inc.		1,804,715
	14,900	1	eBay, Inc.		375,033
			TOTAL		2,996,242
			Jewelry Stores--0.1%
	4,700		Tiffany & Co.		177,613
			Leasing--0.1%
	5,900		GATX Corp.		268,273
			Life Insurance--2.5%
	96,900		MetLife, Inc.		4,919,613
	3,700		Principal Financial Group		157,287
	16,500		Protective Life Corp.		593,340
	12,800		StanCorp Financial Group, Inc.		632,192
	24,500		Torchmark Corp.		1,422,225
			TOTAL		7,724,657
			Long-Term Care Centers--0.0%
	4,000	1	Kindred Healthcare, Inc.		107,880
			Lumber Products--0.0%
	12,900	1	Louisiana-Pacific Corp.		109,134
			Maritime--0.4%
	2,900	1	Kirby Corp.		138,388
	14,300		Overseas Shipholding Group, Inc.		1,126,125
			TOTAL		1,264,513
			Medical Supplies--0.0%
	1,600	1	Kensey Nash Corp.		55,568
	2,000	1	Merit Medical Systems, Inc.		40,420
			TOTAL		95,988
			Medical Technology--0.2%
	7,000	1	Masimo Corp.		264,390
	3,700		Stryker Corp.		237,503
			TOTAL		501,893
Shares					Value
			COMMON STOCKS--continued
			Metal Fabrication--0.3%
	5,700		Mueller Industries, Inc.	$	146,319
	1,800		Olympic Steel, Inc.		91,530
	19,500		Timken Co.		643,890
	5,900		Worthington Industries, Inc.		104,666
			TOTAL		986,405
			Mini-Mill Producer--0.2%
	21,200		Commercial Metals Corp.		632,820
			Miscellaneous Components--0.6%
	40,100		Amphenol Corp., Class A		1,911,567
			Miscellaneous Food Products--0.6%
	50,700		Archer-Daniels-Midland Co.		1,451,541
	5,800		The Anderson's, Inc.		263,610
			TOTAL		1,715,151
			Miscellaneous Machinery--0.8%
	12,900		Fastenal Co.		630,294
	8,200		Nordson Corp.		579,412
	17,800		Parker-Hannifin Corp.		1,097,904
			TOTAL		2,307,610
			Money Center Bank--1.5%
	97,700		Bank of America Corp.		3,214,330
	37,400		JPMorgan Chase & Co.		1,519,562
			TOTAL		4,733,892
			Mortgage and Title--0.0%
	3,500		LandAmerica Financial Group, Inc.		40,215
	10,400		PMI Group, Inc.		26,104
	8,300		Radian Group, Inc.		14,442
			TOTAL		80,761
			Multi-Industry Capital Goods--0.7%
	3,800	1	Ceradyne, Inc.		176,130
	1,000	1	Tecumseh Products Co., Class A		32,750
	3,200		Textron, Inc.		139,104
	41,000		Tyco International Ltd.		1,826,960
			TOTAL		2,174,944
Shares					Value
			COMMON STOCKS--continued
			Multi-Industry Transportation--0.0%
	2,700		Expeditors International Washington, Inc.	$	95,877
			Multi-Line Insurance--2.8%
	96,150		Allstate Corp.		4,444,053
	19,500		Assurant, Inc.		1,172,340
	11,900		Cincinnati Financial Corp.		331,296
	2,400		FBL Financial Group, Inc., Class A		50,040
	11,000		Hanover Insurance Group, Inc.		472,120
	1,600		Harleysville Group, Inc.		57,008
	85,000		UNUMProvident Corp.		2,053,600
			TOTAL		8,580,457
			Offshore Driller--0.3%
	11,700		ENSCO International, Inc.		808,938
	3,000	1	Hornbeck Offshore Services, Inc.		133,740
			TOTAL		942,678
			Oil Service, Explore & Drill--1.0%
	700	1	Dawson Geophysical Co.		45,941
	6,100	1	Gulfmark Offshore, Inc.		306,098
	19,800	1	Mariner Energy, Inc.		523,908
	1,200		Patterson-UTI Energy, Inc.		34,104
	30,100	1	Pride International, Inc.		1,166,676
	14,900	1	Unit Corp.		1,006,495
			TOTAL		3,083,222
			Oil Well Supply--1.5%
	43,100	1	FMC Technologies, Inc.		2,662,718
	15,000	1	Oil States International, Inc.		823,200
	9,400	1	Superior Energy Services, Inc.		445,842
	18,200	1	Weatherford International, Inc.		686,686
			TOTAL		4,618,446
			Other Communications Equipment--0.0%
	21,700	1	Tellabs, Inc.		111,538
			Paper Products--0.1%
	10,700		MeadWestvaco Corp.		286,867
Shares					Value
			COMMON STOCKS--continued
			Personal Loans--0.0%
	1,200	1	World Acceptance Corp.	$	39,312
			Poultry Products--0.1%
	6,900		Sanderson Farms, Inc.		274,206
			Printed Circuit Boards--0.6%
	4,400	1	Benchmark Electronics, Inc.		64,416
	110,400	1	Marvell Technology Group Ltd.		1,632,816
			TOTAL		1,697,232
			Property Liability Insurance--2.5%
	17,450		American Financial Group, Inc. Ohio		505,526
	70,600		Chubb Corp.		3,391,624
	300		Reinsurance Group of America		14,910
	80,300		The Travelers Cos, Inc.		3,542,836
	2,200		Transatlantic Holdings, Inc.		127,468
			TOTAL		7,582,364
			Psychiatric Centers--0.1%
	8,800	1	Psychiatric Solutions, Inc.		308,176
			Railroad--1.0%
	15,800		CSX Corp.		1,067,764
	25,900		Union Pacific Corp.		2,135,196
			TOTAL		3,202,960
			Real Estate Investment Trusts--2.6%
	99,000		Annaly Mortgage Management, Inc.		1,491,930
	7,950		Boston Properties, Inc.		764,711
	11,700		Equity Residential Properties Trust		505,089
	9,600		Federal Realty Investment Trust		697,056
	20,200		HCP, Inc.		728,614
	39,500		Host Hotels & Resorts, Inc.		517,845
	9,000		Prologis Trust		439,920
	6,100		SL Green Realty Corp.		508,374
	8,900		Simon Property Group, Inc.		824,407
	14,500		Taubman Centers, Inc.		696,000
	7,250		Vornado Realty Trust		689,258
			TOTAL		7,863,204
Shares					Value
			COMMON STOCKS--continued
			Recreational Goods--0.0%
	5,500		Callaway Golf Co.	$	69,740
			Recreational Vehicles--0.0%
	1,400		Harley Davidson, Inc.		52,976
			Regional Bank--1.6%
	114,900		BB&T Corp.		3,219,498
	7,100		Bancorpsouth, Inc.		151,230
	6,500		City National Corp.		319,345
	300		FirstMerit Corp.		5,904
	9,100		M & T Bank Corp.		640,458
	5,900		Oriental Financial Group		102,483
	5,300		PacWest Bancorp		98,686
	13,100		TCF Financial Corp.		167,025
	5,500		Trustmark Corp.		99,330
	2,300		UnionBanCal Corp.		123,556
	700		Whitney Holding Corp.		14,392
	4,500		Wilmington Trust Corp.		106,065
			TOTAL		5,047,972
			Restaurant--0.1%
	900	1	Buffalo Wild Wings, Inc.		29,637
	3,600	1	Panera Bread Co.		180,360
			TOTAL		209,997
			Roofing & Wallboard--0.1%
	12,900	1	U.S.G. Corp.		370,230
			Savings and Loan--0.8%
	6,400		Downey Financial Corp.		13,504
	44,900		Federal Home Loan Mortgage Corp.		366,833
	65,400		Federal National Mortgage Association		752,100
	41,800		Hudson City Bancorp, Inc.		763,268
	10,100		Newalliance Bancshares, Inc.		131,098
	14,000		Washington Federal, Inc.		260,400
	4,100		Webster Financial Corp. Waterbury		81,426
			TOTAL		2,368,629
Shares					Value
			COMMON STOCKS--continued
			Securities Brokerage--0.2%
	1,500	1	Fcstone Group., Inc.	$	28,890
	6,300	1	Interactive Brokers Group, Inc., Class A		176,778
	4,100	1	KBW, Inc.		108,322
	11,000	1	Knight Capital Group, Inc., Class A		180,290
	2,800	1	Piper Jaffray Cos., Inc.		99,400
	4,700		Raymond James Financial, Inc.		135,830
			TOTAL		729,510
			Semiconductor Distribution--0.0%
	5,000	1	FormFactor, Inc.		87,000
			Semiconductor Manufacturing--0.8%
	84,000	1	Broadcom Corp.		2,040,360
	62,500	1	Micron Technology, Inc.		301,875
	2,300	1	Silicon Laboratories, Inc.		75,233
			TOTAL		2,417,468
			Semiconductor Manufacturing Equipment--0.1%
	12,700	1	Novellus Systems, Inc.		258,699
			Services to Medical Professionals--0.0%
	2,200	1	Athenahealth, Inc.		66,440
			Shoes--0.1%
	2,000	1	Deckers Outdoor Corp.		226,020
	6,700	1	Skechers USA, Inc., Class A		126,630
			TOTAL		352,650
			Software Packaged/Custom--0.8%
	5,100	1	Advent Software, Inc.		222,054
	100	1	CSG Systems International, Inc.		1,774
	45,500	1	Computer Sciences Corp.		2,155,335
	4,800	1	Wind River Systems, Inc.		56,304
			TOTAL		2,435,467
			Specialty Chemicals--0.1%
	3,800		Minerals Technologies, Inc.		245,138
	1,400	1	OM Group, Inc.		47,040
			TOTAL		292,178
Shares					Value
			COMMON STOCKS--continued
			Specialty Retailing--0.5%
	9,800	1	Cabela's, Inc., Class A	$	113,876
	15,500		Costco Wholesale Corp.		971,540
	2,700		Nordstrom, Inc.		77,598
	4,600		Pep Boys-Manny Moe & Jack		33,948
	400	1	Tractor Supply Co.		15,204
	1,800		Williams-Sonoma, Inc.		31,392
	6,800	1	Zale Corp.		150,416
			TOTAL		1,393,974
			Telecommunication Equipment & Services--2.2%
	27,800	1	ADC Telecommunications, Inc.		262,988
	321,300		Corning, Inc.		6,429,213
			TOTAL		6,692,201
			Toys & Games--0.1%
	9,400	1	JAKKS Pacific, Inc.		206,612
			Truck Manufacturing--1.9%
	78,300		Cummins, Inc.		5,194,422
	12,200		Paccar, Inc.		513,132
			TOTAL		5,707,554
			Trucking--0.2%
	3,100		Arkansas Best Corp.		115,134
	7,100		Ryder Systems, Inc.		468,316
			TOTAL		583,450
			Undesignated Consumer Cyclicals--0.8%
	4,100	1	CoStar Group, Inc.		204,549
	1,000	1	Covance, Inc.		91,800
	23,300		DeVRY, Inc.		1,323,673
	3,800	1	Navigant Consulting, Inc.		70,224
	3,100	1	Parexel International Corp.		90,613
	13,800		Pharmaceutical Product Development, Inc.		526,332
	3,200		Speedway Motorsports, Inc.		61,792
			TOTAL		2,368,983
			TOTAL COMMON STOCKS (IDENTIFIED COST $183,106,381)		175,350,358
Principal Amount					Value
			ASSET-BACKED SECURITIES--1.7%
$	400,000		Bank of America Commercial Mortgage, Inc. 2007-1 A2, 5.381%, 1/15/2049	$	389,352
	250,000		Bank of America Commercial Mortgage, Inc. 2007-4, Series 2007-4, 5.745%, 2/10/2051		233,080
	1,200,000		Citigroup/Deutsche Bank Commercial Mortgage 2007-CD5, Series 2007-CD5, 5.886%, 11/15/2044		1,121,291
	450,284		Community Program Loan Trust 1987-A, Series 1987-A, 4.500%, 10/01/2018		446,269
	1,000,000		Credit Suisse Mortgage Capital Certificate 2006-C4, Series 2006-C4, 5.509%, 09/15/2039		919,385
	43,792		CS First Boston Mortgage Securities Corp. 2002-HE4 AF, 5.51%, 8/25/2032		40,931
	675,000		LB-UBS Commercial Mortgage Trust 2008-C1 Series 2008CI, 6.150%, 4/15/2041		646,087
	150,000		Merrill Lynch Mortgage Trust 2008-C1, Series 2008-C1, 5.425%, 02/12/2051		144,757
	100,000		Merrill Lynch Mortgage Trust 2008-C1, Series 2008-C1, 6.266%, 02/12/2051		92,490
	715,000		Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.331%, 03/12/2051		693,966
	250,000		Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.485%, 03/12/2051		228,315
	140,000		Morgan Stanley Capital I 2006-IQ12 A4, 5.332%, 12/15/2043		129,919
			TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $5,272,726)		5,085,842
			COLLATERALIZED MORTGAGE OBLIGATIONS--0.3%
	4,355		Bear Stearns Mortgage Securities, Inc. 1997-6 1A, 6.67%, 3/25/2031		4,141
	410,000		Citigroup/Deutsche Bank Commercial Mortgage 2007-CD4 A3, 5.293%, 12/11/2049		386,689
	14,017		Federal Home Loan Mortgage Corp. REMIC 1311 K, 7.000%, 7/15/2022		14,289
	24,923		Federal Home Loan Mortgage Corp. REMIC 1384 D, 7.000%, 9/15/2022		25,406
	25,029		Federal Home Loan Mortgage Corp. REMIC 1595 D, 7.000%, 10/15/2013		25,419
	75,000		Federal Home Loan Mortgage Corp. REMIC 2497 JH, 6.000%, 9/15/2032		75,312
	60,227		Federal National Mortgage Association REMIC 1993-113 SB, 9.748%, 7/25/2023		66,385
	8,125		Federal National Mortgage Association REMIC 2001-37 GA, 8.000%, 7/25/2016		8,611
	15,935		Federal National Mortgage Association REMIC 2003-35 UC, 3.750%, 5/25/2033		14,666
	9,647		Government National Mortgage Association REMIC 1999-29 PB, 7.250%, 7/16/2028		9,813
Principal Amount					Value
			COLLATERALIZED MORTGAGE OBLIGATIONS--continued
$	46,401		Government National Mortgage Association REMIC 2002-17 B, 6.000%, 3/20/2032	$	46,644
	350,000		JPMorgan Chase Commercial Mortgage Securities 2007-CB19 A2, 5.478%, 2/12/2049		343,702
			TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (IDENTIFIED COST $1,057,880)		1,021,077
			CORPORATE BONDS--6.6%
			Basic Industry - Chemicals--0.1%
	100,000		Albemarle Corp., Sr. Note, 5.100%, 02/01/2015		94,880
	85,000		Du Pont (E.I.) de Nemours & Co., 5.000%, 01/15/2013		85,568
	30,000		Du Pont (E.I.) de Nemours & Co., 6.000%, 07/15/2018		30,477
	70,000		Praxair, Inc., 4.625%, 03/30/2015		67,452
	75,000		Rohm & Haas Co., 6.000%, 09/15/2017		73,631
			TOTAL		352,008
			Basic Industry - Metals & Mining--0.2%
	50,000		Alcan, Inc., 5.000%, 06/01/2015		47,184
	85,000		Alcoa, Inc., Note, 5.550%, 02/01/2017		78,827
	10,000	2,3	ArcelorMittal, 6.125%, 06/01/2018		9,614
	150,000		BHP Finance (USA), Inc., Company Guarantee, 5.250%, 12/15/2015		143,155
	50,000		Newmont Mining Corp., Company Guarantee, 5.875%, 04/01/2035		41,946
	85,000		Rio Tinto Finance USA Ltd., 5.875%, 07/15/2013		86,382
	85,000		Rio Tinto Finance USA Ltd., 6.500%, 07/15/2018		86,186
			TOTAL		493,294
			Basic Industry - Paper--0.0%
	50,000		Weyerhaeuser Co., Deb., 7.375%, 03/15/2032		48,444
			Capital Goods - Aerospace & Defense--0.1%
	50,000	2,3	BAE Systems Holdings, Inc., 5.200%, 08/15/2015		47,419
	125,000		Boeing Co., Note, 5.125%, 02/15/2013		127,188
	30,000		Lockheed Martin Corp., Sr. Note, 4.121%, 03/14/2013		29,165
	100,000		Raytheon Co., Unsecd. Note, 5.375%, 04/01/2013		102,401
			TOTAL		306,173
			Capital Goods - Building Materials--0.0%
	70,000		RPM International, Inc., 6.500%, 02/15/2018		69,193
Principal Amount					Value
			CORPORATE BONDS--continued
			Capital Goods - Diversified Manufacturing--0.3%
$	60,000		Dover Corp., Note, 5.450%, 03/15/2018	$	59,435
	100,000		Emerson Electric Co., Unsecd. Note, 5.750%, 11/01/2011		104,796
	160,000		Harsco Corp., 5.750%, 05/15/2018		160,490
	50,000		Honeywell International, Inc., Note, 7.500%, 03/01/2010		53,100
	80,000		Hubbell, Inc., 5.950%, 06/01/2018		81,857
	90,000		Roper Industries, Inc., 6.625%, 08/15/2013		90,674
	140,000		Textron Financial Corp., 5.400%, 04/28/2013		138,546
	40,000	2,3	Textron Financial Corp., Jr. Sub. Note, 6.000%, 02/15/2067		28,870
	130,000		Tyco Electronics Group SA, 5.950%, 01/15/2014		129,284
			TOTAL		847,052
			Capital Goods - Packaging--0.0%
	20,000		Pactiv Corp., 6.40%, 1/15/2018		19,361
			Communications - Media & Cable--0.1%
	100,000		Comcast Corp., 7.125%, 06/15/2013		105,955
	200,000		Comcast Corp., Company Guarantee, 6.500%, 01/15/2017		201,713
	75,000		Cox Communications, Inc., Unsecd. Note, 5.450%, 12/15/2014		72,821
	25,000		Time Warner Cable, Inc., Sr. Unsecd. Note, 5.850%, 05/01/2017		23,933
			TOTAL		404,422
			Communications - Media Noncable--0.1%
	75,000		News America Holdings, Inc., Company Guarantee, 8.000%, 10/17/2016		83,019
	75,000		News America Holdings, Inc., Sr. Deb., 9.250%, 02/01/2013		85,822
			TOTAL		168,841
			Communications - Telecom Wireless--0.2%
	150,000		AT&T Wireless Services, Inc., 8.750%, 03/01/2031		179,604
	100,000		America Movil S.A.B. de C.V., Note, 5.750%, 01/15/2015		98,520
	100,000		Cingular Wireless LLC, Sr. Note, 6.500%, 12/15/2011		103,954
	60,000		Vodafone Group PLC, 5.350%, 02/27/2012		60,479
	100,000		Vodafone Group PLC, Note, 5.625%, 02/27/2017		97,081
			TOTAL		539,638
			Communications - Telecom Wirelines--0.2%
	50,000		Embarq Corp., 6.738%, 06/01/2013		48,252
	100,000		Telecom Italia Capital, Note, 4.875%, 10/01/2010		99,684
Principal Amount					Value
			CORPORATE BONDS--continued
			Communications - Telecom Wirelines--continued
$	40,000		Telefonica SA, Company Guarantee, 7.045%, 06/20/2036	$	41,146
	150,000		Telefonica SA, Sr. Note, 5.855%, 02/04/2013		150,615
	125,000		Verizon Global Funding, Note, 7.250%, 12/01/2010		132,300
			TOTAL		471,997
			Consumer Cyclical - Automotive--0.1%
	100,000	2,3	American Honda Finance Corp., 4.625%, 04/02/2013		97,840
	75,000		DaimlerChrysler North America Holding Corp., 6.500%, 11/15/2013		75,927
	150,000		DaimlerChrysler North America Holding Corp., Note, 4.875%, 06/15/2010		150,409
	100,000	2,3	Nissan Motor Acceptance Corp., Sr. Unsecd. Note, 5.625%, 03/14/2011		99,294
			TOTAL		423,470
			Consumer Cyclical - Entertainment--0.1%
	100,000		Time Warner, Inc., 5.500%, 11/15/2011		98,674
	175,000		Walt Disney Co., Note, 5.700%, 07/15/2011		183,268
			TOTAL		281,942
			Consumer Cyclical - Lodging--0.0%
	100,000		Wyndham Worldwide Corp., Sr. Unsecd. Note, 6.000%, 12/01/2016		86,278
			Consumer Cyclical - Retailers--0.2%
	70,000	2,3	Best Buy Co., Inc., 6.750%, 07/15/2013		71,008
	190,000		CVS Caremark Corp., Sr. Unsecd. Note, 5.750%, 06/01/2017		186,925
	80,000		Costco Wholesale Corp., 5.300%, 03/15/2012		82,857
	85,000		JCPenney Corp., Inc., Sr. Unsecd. Note, 5.750%, 02/15/2018		74,919
	25,000		Kohl's Corp., Unsecd. Note, 7.375%, 10/15/2011		25,838
	100,000		Target Corp., 5.875%, 03/01/2012		103,614
	50,000		Target Corp., Note, 5.875%, 07/15/2016		50,303
	40,000		Wal-Mart Stores, Inc., 6.200%, 04/15/2038		39,131
			TOTAL		634,595
			Consumer Non-Cyclical - Food/Beverage--0.2%
	100,000		Bottling Group LLC, Note, 5.500%, 04/01/2016		100,378
	90,000		General Mills, Inc., Note, 5.700%, 02/15/2017		89,596
	135,000		Kellogg Co., 4.250%, 03/06/2013		131,534
	40,000		Kellogg Co., Sr. Unsub., 5.125%, 12/03/2012		40,469
	75,000		Kraft Foods, Inc., Note, 5.250%, 10/01/2013		73,544
Principal Amount					Value
			CORPORATE BONDS--continued
			Consumer Non-Cyclical - Food/Beverage--continued
$	10,000		Kraft Foods, Inc., Note, 6.250%, 06/01/2012	$	10,229
	75,000		PepsiCo, Inc., 4.650%, 02/15/2013		76,311
	100,000	2,3	SABMiller PLC, Note, 6.200%, 07/01/2011		102,061
			TOTAL		624,122
			Consumer Non-Cyclical Health Care--0.1%
	40,000		Baxter International, Inc., 6.250%, 12/01/2037		39,871
	100,000		Medtronic, Inc., Note, Series B, 4.375%, 09/15/2010		101,430
	190,000		Quest Diagnostics, Inc., Sr. Unsecd. Note, 6.400%, 07/01/2017		190,018
			TOTAL		331,319
			Consumer Non-Cyclical Pharmaceuticals--0.2%
	60,000		Abbott Laboratories, 5.150%, 11/30/2012		61,843
	60,000		Eli Lilly & Co., Bond, 5.200%, 03/15/2017		60,459
	125,000		Eli Lilly & Co., Unsecd. Note, 6.570%, 01/01/2016		135,500
	100,000		Genentech, Inc., Note, 4.750%, 07/15/2015		95,338
	100,000		Pharmacia Corp., Sr. Deb., 6.500%, 12/01/2018		109,362
			TOTAL		462,502
			Consumer Non-Cyclical Products--0.0%
	75,000		Philips Electronics NV, 5.750%, 03/11/2018		74,414
	80,000		Whirlpool Corp., 5.500%, 03/01/2013		77,488
			TOTAL		151,902
			Consumer Non-Cyclical Supermarkets--0.0%
	40,000		Kroger Co., Bond, 6.900%, 04/15/2038		40,271
	50,000		Sysco Corp., Sr. Unsecd. Note, 4.200%, 02/12/2013		49,291
			TOTAL		89,562
			Consumer Non-Cyclical Tobacco--0.0%
	90,000		Philip Morris International, Inc., 5.650%, 05/16/2018		87,579
			Energy - Independent--0.2%
	105,000		Anadarko Petroleum Corp., Sr. Unsecd. Note, 5.950%, 09/15/2016		105,026
	50,000		Canadian Natural Resources Ltd., 4.900%, 12/01/2014		48,629
	150,000		Pemex Project Funding Master, Company Guarantee, 9.125%, 10/13/2010		163,410
	75,000		XTO Energy, Inc., 6.375%, 06/15/2038		70,215
	60,000		XTO Energy, Inc., 6.750%, 08/01/2037		58,578
	65,000		XTO Energy, Inc., Sr. Unsecd. Note, 6.250%, 08/01/2017		64,802
			TOTAL		510,660
Principal Amount					Value
			CORPORATE BONDS--continued
			Energy - Integrated--0.2%
$	225,000		Conoco, Inc., 7.250%, 10/15/2031	$	256,628
	200,000		Husky Oil Ltd., Deb., 7.550%, 11/15/2016		220,542
			TOTAL		477,170
			Energy - Oil Field Services--0.0%
	80,000		Weatherford International Ltd., 6.000%, 03/15/2018		79,042
			Energy - Refining--0.1%
	100,000		Valero Energy Corp., 6.875%, 04/15/2012		103,144
	115,000		Valero Energy Corp., 7.500%, 04/15/2032		110,086
	35,000		Valero Energy Corp., Note, 4.750%, 04/01/2014		32,203
			TOTAL		245,433
			Financial Institution - Banking--0.8%
	125,000	2,3	Barclays Bank PLC, 5.926%, 12/31/2049		101,974
	200,000		Citigroup, Inc., Note, 5.125%, 02/14/2011		198,401
	155,000		Citigroup, Inc., Sr. Unsecd. Note, 6.875%, 03/05/2038		151,622
	150,000		Credit Suisse First Boston USA, Inc., 5.125%, 01/15/2014		146,362
	150,000		Credit Suisse First Boston USA, Inc., Sr. Note, 5.500%, 08/16/2011		151,466
	200,000		Household Finance Corp., 7.000%, 05/15/2012		207,655
	100,000		JPMorgan Chase & Co., Sub. Note, 5.125%, 09/15/2014		95,303
	100,000		Marshall & Ilsley Bank, Milwaukee, Sr. Note, 4.400%, 03/15/2010		96,976
	200,000		Northern Trust Corp., Sr. Note, 5.300%, 08/29/2011		203,568
	200,000		PNC Funding Corp., Sub. Note, 5.625%, 02/01/2017		183,647
	100,000		PNC Funding Corp., Sub. Note, 7.500%, 11/01/2009		103,572
	100,000		Popular North America, Inc., 5.650%, 04/15/2009		98,300
	250,000		U.S. Bank, N.A., Sub. Note, 4.950%, 10/30/2014		239,425
	200,000		Wachovia Bank N.A., 4.800%, 11/01/2014		168,920
	30,000		Wachovia Corp., 5.750%, 02/01/2018		25,820
	200,000		Washington Mutual Bank, 5.125%, 01/15/2015		130,162
	100,000		Wells Fargo Bank, N.A., Sub. Note, 6.450%, 02/01/2011		103,902
	100,000		Wilmington Trust Corp., Sub. Note, 8.500%, 04/02/2018		100,544
	75,000		Zions Bancorp, Sub. Note, 5.500%, 11/16/2015		50,689
			TOTAL		2,558,308
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - Brokerage--0.6%
$	130,000		Bear Stearns Cos., Inc., Sr. Unsecd. Note, 7.250%, 02/01/2018	$	136,668
	250,000		Blackrock, Inc., 6.250%, 09/15/2017		242,168
	120,000		Eaton Vance Corp., 6.500%, 10/02/2017		121,233
	150,000	2,3	FMR Corp., Bond, 7.570%, 06/15/2029		163,700
	25,000		Goldman Sachs Group, Inc., 6.125%, 02/15/2033		21,747
	150,000		Goldman Sachs Group, Inc., Note, 5.250%, 10/15/2013		147,198
	170,000		Goldman Sachs Group, Inc., Sr. Note, 6.150%, 04/01/2018		164,638
	100,000		Invesco Ltd., Note, 4.500%, 12/15/2009		98,320
	75,000		Janus Capital Group, Inc., Sr. Note, 6.250%, 06/15/2012		72,714
	80,000		Janus Capital Group, Inc., Sr. Note, 6.700%, 06/15/2017		74,604
	135,000		Lehman Brothers Holdings, Inc., Sub. Deb., 6.500%, 07/19/2017		122,348
	115,000		Lehman Brothers Holdings, Inc., Sub. Deb., 6.875%, 07/17/2037		96,231
	85,000		Merrill Lynch & Co., Inc., Note, 4.125%, 09/10/2009		83,173
	150,000		Merrill Lynch & Co., Inc., Unsecd. Note, 5.450%, 07/15/2014		134,946
	100,000		Morgan Stanley, Note, 4.000%, 01/15/2010		98,704
	35,000		Morgan Stanley, Sr. Unsecd. Note, 5.950%, 12/28/2017		31,035
	70,000		Morgan Stanley, Sr. Unsecd. Note, 6.000%, 04/28/2015		64,920
	110,000		Morgan Stanley, Sr. Unsecd. Note, 6.625%, 04/01/2018		103,073
			TOTAL		1,977,420
			Financial Institution - Finance Noncaptive--0.5%
	100,000		American Express Co., 4.750%, 06/17/2009		100,452
	100,000		American Express Co., 4.875%, 07/15/2013		94,994
	150,000		American Express Credit Corp., 5.875%, 05/02/2013		147,772
	100,000		American General Finance Corp., 4.000%, 03/15/2011		88,700
	150,000		Berkshire Hathaway, Inc., Company Guarantee, 4.850%, 01/15/2015		149,359
	120,000		Capital One Capital IV, 6.745%, 02/17/2037		85,289
	90,000		Capmark Financial Group, Inc., Company Guarantee, Series WI, 6.300%, 05/10/2017		53,047
	240,000		General Electric Capital Corp., 5.625%, 05/01/2018		234,328
	200,000		General Electric Capital Corp., Note, 4.875%, 03/04/2015		196,870
	100,000		HSBC Finance Capital Trust IX, Note, 5.911%, 11/30/2035		80,163
	200,000	2,3	ILFC E-Capital Trust I, 5.900%, 12/21/2065		145,102
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - Finance Noncaptive--continued
$	100,000		International Lease Finance Corp., 4.875%, 09/01/2010	$	93,399
	100,000		International Lease Finance Corp., 6.625%, 11/15/2013		89,431
			TOTAL		1,558,906
			Financial Institution - Insurance - Health--0.1%
	75,000		Aetna US Healthcare, 5.750%, 06/15/2011		75,878
	60,000		CIGNA Corp., 6.350%, 03/15/2018		60,011
	100,000		UnitedHealth Group, Inc., Bond, 6.000%, 02/15/2018		95,770
			TOTAL		231,659
			Financial Institution - Insurance - Life--0.2%
	200,000		AXA-UAP, Sub. Note, 8.600%, 12/15/2030		196,297
	85,000	2,3	Pacific Life Global Funding, Note, 5.150%, 04/15/2013		84,639
	120,000		Prudential Financial, Inc., 5.150%, 01/15/2013		117,244
	85,000		Prudential Financial, Inc., 6.625%, 12/01/2037		78,583
			TOTAL		476,763
			Financial Institution - Insurance - P&C--0.3%
	90,000		ACE INA Holdings, Inc., 5.600%, 05/15/2015		86,478
	91,000		ACE INA Holdings, Inc., Sr. Note, 5.700%, 02/15/2017		87,346
	100,000		Allstate Corp., Unsecd. Note, 5.000%, 08/15/2014		97,386
	75,000		CNA Financial Corp., 6.500%, 08/15/2016		71,406
	20,000		Chubb Corp., Sr. Note, 5.750%, 05/15/2018		19,336
	100,000	2,3	Liberty Mutual Group, Inc., Unsecd. Note, 5.750%, 03/15/2014		94,197
	100,000		The Travelers Cos., Inc., Sr. Unsecd. Note, 5.500%, 12/01/2015		96,973
	500,000	2,3	ZFS Finance USA Trust I, Jr. Sub. Note, 6.150%, 12/15/2065		457,634
			TOTAL		1,010,756
			Financial Institution - REITs--0.1%
	40,000		AMB Property LP, 6.300%, 06/01/2013		39,582
	20,000		Equity One, Inc., Bond, 6.000%, 09/15/2017		16,576
	75,000		Liberty Property LP, 6.625%, 10/01/2017		69,016
	100,000		Prologis, Sr. Note, 5.500%, 04/01/2012		96,156
	95,000		Simon Property Group LP, 6.125%, 05/30/2018		88,741
			TOTAL		310,071
Principal Amount					Value
			CORPORATE BONDS--continued
			Foreign-Local-Government--0.0%
$	100,000		Ontario, Province of, Note, 4.500%, 02/03/2015	$	100,344
			Technology--0.4%
	40,000		BMC Software, Inc., 7.250%, 06/01/2018		40,595
	75,000		Cisco Systems, Inc., Note, 5.250%, 02/22/2011		77,396
	60,000		Cisco Systems, Inc., Sr. Unsecd. Note, 5.500%, 02/22/2016		60,783
	200,000		Dell Computer Corp., Deb., 7.100%, 04/15/2028		205,441
	75,000		Dun & Bradstreet Corp., Sr. Unsecd. Note, 5.500%, 03/15/2011		76,052
	80,000		Fiserv, Inc., Sr. Note, 6.800%, 11/20/2017		79,908
	65,000		Harris Corp., 5.950%, 12/01/2017		65,242
	100,000		Hewlett-Packard Co., Note, 5.400%, 03/01/2017		99,068
	125,000		Hewlett-Packard Co., Note, 6.500%, 07/01/2012		133,700
	100,000		IBM Corp., Deb., 8.375%, 11/01/2019		122,236
	70,000		KLA-Tencor Corp., 6.900%, 05/01/2018		69,089
	150,000		Oracle Corp., 6.500%, 04/15/2038		150,118
			TOTAL		1,179,628
			Transportation - Airlines--0.0%
	75,000		Southwest Airlines Co., 6.500%, 03/01/2012		73,986
	50,000		Southwest Airlines Co., Deb., 7.375%, 03/01/2027		43,996
			TOTAL		117,982
			Transportation - Railroads--0.1%
	75,000		Burlington Northern Santa Fe Corp., 4.875%, 01/15/2015		71,249
	100,000		Canadian Pacific RR, 7.125%, 10/15/2031		97,974
	100,000		Norfolk Southern Corp., Note, 6.750%, 02/15/2011		104,616
	100,000		Union Pacific Corp., 4.875%, 01/15/2015		93,976
			TOTAL		367,815
			Transportation - Services--0.1%
	90,000	2,3	Enterprise Rent-A-Car USA Finance Co., 6.375%, 10/15/2017		78,421
	100,000		FedEx Corp., Note, 5.500%, 08/15/2009		101,301
			TOTAL		179,722
			Utility - Electric--0.6%
	150,000		Alabama Power Co., 5.700%, 02/15/2033		140,713
	100,000		Cleveland Electric Illuminating Co., Sr. Unsecd. Note, 5.950%, 12/15/2036		84,553
Principal Amount					Value
			CORPORATE BONDS--continued
			Utility - Electric--continued
$	105,000		Commonwealth Edison Co., 1st Mtg. Bond, 5.800%, 03/15/2018	$	102,609
	100,000		Consolidated Edison Co., Sr. Unsecd. Note, 5.500%, 09/15/2016		100,211
	100,000		Exelon Generation Co. LLC, Note, 5.350%, 01/15/2014		96,042
	100,000		FPL Group Capital, Inc., Unsecd. Note, 5.350%, 06/15/2013		101,779
	100,000		FirstEnergy Corp., 6.450%, 11/15/2011		102,310
	48,018	2,3	Great River Energy, 1st Mtg. Note, 5.829%, 07/01/2017		46,596
	200,000		MidAmerican Energy Co., 4.650%, 10/01/2014		194,093
	40,000		National Rural Utilities Cooperative Finance Corp., 5.450%, 02/01/2018		38,941
	90,000		National Rural Utilities Cooperative Finance Corp., Collateral Trust, 5.500%, 07/01/2013		91,725
	80,000		Northern States Power Co., MN, 1st Mtg. Bond, 5.250%, 3/01/2018		79,303
	50,000		PPL Energy Supply LLC, Sr. Unsecd. Note, 6.000%, 12/15/2036		41,308
	100,000		PSEG Power LLC, Company Guarantee, 7.750%, 04/15/2011		105,373
	75,000		PSI Energy, Inc., Bond, 6.050%, 06/15/2016		75,144
	50,000		Pacific Gas & Electric Co., 6.050%, 03/01/2034		48,151
	100,000		Pacific Gas & Electric Co., Unsecd. Note, 4.200%, 03/01/2011		99,519
	90,000		Union Electric Co., 6.000%, 04/01/2018		87,330
	90,000		Virginia Electric & Power Co., Sr. Unsecd. Note, 5.100%, 11/30/2012		90,168
			TOTAL		1,725,868
			Utility - Natural Gas Pipelines--0.1%
	150,000		Consolidated Natural Gas Co., 5.000%, 12/01/2014		143,973
	75,000		Duke Capital Corp., Sr. Note, 6.250%, 02/15/2013		77,073
	40,000		Enbridge, Inc., Sr. Note, 5.600%, 04/01/2017		38,702
	100,000		Kinder Morgan Energy Partners LP, Sr. Unsecd. Note, 5.800%, 03/15/2035		85,188
			TOTAL		344,936
			TOTAL CORPORATE BONDS (IDENTIFIED COST $21,232,917)		20,346,177
			CORPORATE NOTE--1.6%
			Securities Brokerage--1.6%
	5,000,000	4	Merrill Lynch & Co., Inc., Commodity-Linked Note, 3.020%, 01/05/2009 (IDENTIFIED COST $5,000,000)		5,047,200
			GOVERNMENT/AGENCY--0.0%
	75,000		United Mexican States, 6.625%, 03/03/2015 (IDENTIFIED COST $81,171)		80,359
Principal Amount or Shares					Value
			GOVERNMENT AGENCIES--4.5%
$	750,000		Federal Home Loan Mortgage Corp., 5.500%, 7/18/2016	$	797,035
	8,600,000		Federal National Mortgage Association, 4.375%, 3/15/2013		8,747,525
	4,300,000		Federal National Mortgage Association, 4.750%, 11/19/2012		4,433,670
			TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $14,027,553)		13,978,230
			MORTGAGE-BACKED SECURITIES--0.7%
	2,176,489		Federal Home Loan Mortgage Corp. Pool G04281, 5.500%, 30 Year, 5/1/2038		2,134,248
	17,012		Federal National Mortgage Association Pool 408761, 7.000%, 12/1/2012		17,590
	10,592		Federal National Mortgage Association Pool 512255, 7.500%, 9/1/2014		11,125
	22,659		Federal National Mortgage Association Pool 609554, 7.500%, 10/1/2016		23,881
			TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $2,249,622)		2,186,844
			U.S. TREASURY--1.4%
	1,983,940	5	U.S. Treasury Inflation-Protected Note, 2.500%, 7/15/2016		2,133,351
	800,000		United States Treasury Note, 3.375%, 6/30/2013		805,562
	1,300,000	5	United States Treasury Note, 4.750%, 3/31/2011		1,367,241
			TOTAL U.S. TREASURY (IDENTIFIED COST $4,187,018)		4,306,154
			EXCHANGE-TRADED FUNDS--3.3%
	107,000		iShares MSCI EAFE Index Fund		7,103,730
	69,420		iShares MSCI Emerging Market Fund		2,960,763
			TOTAL EXCHANGE-TRADED FUNDS (IDENTIFIED COST $8,901,974)		10,064,493
			MUTUAL FUNDS--22.5% 6
	37,605		Emerging Markets Fixed Income Core Fund		821,392
	4,634,906		Federated Mortgage Core Portfolio		45,143,982
	544,156		High Yield Bond Portfolio		3,346,557
	19,839,871	7	Prime Value Obligations Fund, Institutional Shares, 2.58%		19,839,871
			TOTAL MUTUAL FUNDS (IDENTIFIED COST $69,084,509)		69,151,802
			TOTAL INVESTMENTS--99.5% (IDENTIFIED COST $314,201,751) 8		306,618,536
			OTHER ASSETS AND LIABILITIES - NET--0.5% 9		1,528,218
			TOTAL NET ASSETS--100%	$	308,146,754

At July 31, 2008, the Fund had the following outstanding futures contracts:

	Description	Number of Contracts	Notional Value	Expiration Date	Unrealized Appreciation
1	United States Treasury Notes 5-Year Long Futures	182	$20,263,141	September 2008	$55,873

Unrealized Appreciation on Futures Contracts is included in "Other Assets and Liabilities - Net."

1 Non-income-producing security.

2 Denotes a restricted security that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) is subject to a contractual restriction on public sales. At July 31, 2008, these restricted securities amounted to $1,628,369, which represented 0.5% of total net assets.

3 Denotes a restricted security that may be resold without restriction to "qualified institutional buyers" as defined in Rule 144A under the Securities Act of 1933 and that the Fund has determined to be liquid under criteria established by the Fund's Board of Trustees (the "Trustees"). At July 31, 2008, these liquid restricted securities amounted to $1,628,369, which represented 0.5% of total net assets.

4 Zero coupon bond, reflects effective rate at time of purchase.

5 Pledged as collateral to ensure the Fund is able to satisfy the obligations of its outstanding futures contracts.

6 Affiliated companies.

7 7-Day net yield.

8 The cost of investments for federal tax purposes amounts to $318,880,098.

9 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

The following acronyms are used throughout this portfolio:

REITs	- --Real Estate Investment Trust
REMIC	- --Real Estate Mortgage Investment Conduit

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $69,151,802 of investments in affiliated issuers (Note 5) (identified cost $314,201,751)			$	306,618,536
Cash				249,085
Income receivable				750,935
Receivable for investments sold				1,645,242
Receivable for shares sold				236,481
Receivable for daily variation margin				76,387
TOTAL ASSETS				309,576,666
Liabilities:
Payable for investments purchased	$	786,625
Payable for shares redeemed		291,398
Payable for auditing fees		24,100
Payable for transfer and dividend disbursing agent fees and expenses		41,464
Payable for portfolio accounting fees		9,351
Payable for share registration costs		37,263
Payable for distribution services fee (Note 5)		52,923
Payable for shareholder services fee (Note 5)		116,527
Accrued expenses		70,261
TOTAL LIABILITIES				1,429,912
Net assets for 24,721,175 shares outstanding			$	308,146,754
Net Assets Consist of:
Paid-in capital			$	330,910,495
Net unrealized depreciation of investments, futures contracts and translation of assets and liabilities in foreign currency				(7,527,342	)
Accumulated net realized loss on investments, futures contracts, swap contracts and foreign currency transactions				(18,415,616	)
Undistributed net investment income				3,179,217
TOTAL NET ASSETS			$	308,146,754
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($71,948,769 ÷ 5,724,530 shares outstanding), no par value, unlimited shares authorized				$12.57
Offering price per share				$12.57
Redemption proceeds per share				$12.57

Statement of Assets and Liabilities - continued

Class A Shares:
Net asset value per share ($153,457,857 ÷ 12,269,700 shares outstanding), no par value, unlimited shares authorized	$12.51
Offering price per share (100/94.50 of $12.51) 1	$13.24
Redemption proceeds per share	$12.51
Class C Shares:
Net asset value per share ($82,032,623 ÷ 6,670,393 shares outstanding), no par value, unlimited shares authorized	$12.30
Offering price per share	$12.30
Redemption proceeds per share (99.00/100 of $12.30) 1	$12.18
Class K Shares:
Net asset value per share ($707,505 ÷ 56,552 shares outstanding), no par value, unlimited shares authorized	$12.51
Offering price per share	$12.51
Redemption proceeds per share	$12.51

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $3,080,536 received from affiliated issuers (Note 5) and net of foreign taxes withheld of $102)			$	7,360,457
Interest				1,958,392
Investment income allocated from affiliated partnership (Note 2 and Note 5)				97,665
TOTAL INCOME				9,416,514
Expenses:
Investment adviser fee (Note 5)	$	2,090,538
Administrative personnel and services fee (Note 5)		270,000
Custodian fees		57,543
Transfer and dividend disbursing agent fees and expenses--Institutional Shares		61,784
Transfer and dividend disbursing agent fees and expenses--Class A Shares		136,273
Transfer and dividend disbursing agent fees and expenses--Class C Shares		70,632
Transfer and dividend disbursing agent fees and expenses--Class K Shares		375
Directors'/Trustees' fees		1,419
Auditing fees		26,800
Legal fees		12,266
Portfolio accounting fees		127,318
Distribution services fee--Class C Shares (Note 5)		554,405
Distribution services fee--Class K Shares (Note 5)		687
Shareholder services fee--Class A Shares (Note 5)		279,844
Shareholder services fee--Class C Shares (Note 5)		126,617
Account administration fee--Class A Shares		25,061
Account administration fee--Class C Shares		55,877
Share registration costs		77,652
Printing and postage		93,081
Insurance premiums		4,814
Taxes		741
Interest expense		825
Miscellaneous		5,896
EXPENSES BEFORE ALLOCATION		4,080,448
Expenses allocated from affiliated partnership (Note 2)		872
TOTAL EXPENSES		4,081,320

Statement of Operations - continued

Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee	$	(20,727	)
Waiver of administrative personnel and services fee		(52,211	)
Reimbursement of transfer and dividend disbursing agent fees and expenses--Institutional Shares		(29	)
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class A Shares		(5,071	)
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class C Shares		(2,054	)
Reimbursement of other operating expenses		(741	)
TOTAL WAIVERS AND REIMBURSEMENTS				$	(80,833	)
Net expenses							$	4,000,487
Net investment income								5,416,027
Realized and Unrealized Gain (Loss) on Investments, Futures Contracts, Swap Contracts and Foreign Currency Transactions:
Net realized loss on investments and foreign currency transactions (including realized loss of $181,396 on sales of investments in affiliated issuers)								(17,823,283	)
Net realized gain on futures contracts								275,392
Net realized gain on swap contracts								9,511
Net realized loss and foreign currency transactions allocated from affiliated partnership								(11,795)
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign currency								(17,051,005	)
Net change in unrealized depreciation of futures contracts								96,209
Net realized and unrealized loss on investments, futures contracts, swap contracts and foreign currency transactions								(34,504,971	)
Change in net assets resulting from operations							$	(29,088,944	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31,		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	5,416,027		$	2,013,061
Net realized gain (loss) on investments including allocations from partnership, futures contracts and swap contracts		(17,550,175	)		8,572,488
Net change in unrealized appreciation/depreciation of investments, futures contracts and translation of assets and liabilities in foreign currency		(16,954,796	)		746,098
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(29,088,944	)		11,331,647
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares		(1,062,997	)		(966,746	)
Class A Shares		(1,792,159	)		(418,667	)
Class C Shares		(1,022,750	)		(75,923	)
Class K Shares		(302	)		(1	)
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions
Institutional Shares		(1,999,436	)		(3,727,211	)
Class A Shares		(3,699,741	)		(1,712,874	)
Class C Shares		(2,473,216	)		(451,805	)
Class K Shares		(818	)		(4	)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(12,051,419	)		(7,353,231	)
Share Transactions:
Proceeds from sale of shares		79,093,725			84,031,582
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Conservative Allocation Fund		52,857,254			- --
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Growth Allocation Fund		48,170,456			- --
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Moderate Allocation Fund		93,208,403			- --
Net asset value of shares issued to shareholders in payment of distributions declared		11,084,827			7,010,766
Cost of shares redeemed		(83,721,442	)		(26,053,811	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		200,693,223			64,988,537
Redemption Fees		- --			7,476
Change in net assets		159,552,860			68,974,429
Net Assets:
Beginning of period		148,593,894			79,619,465
End of period (including undistributed net investment income of $3,179,217 and $1,154,151, respectively)	$	308,146,754		$	148,593,894

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine portfolios. The financial statements included herein are only those of Federated MDT Balanced Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Institutional Shares, Class A Shares, Class C Shares and Class K Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The Financial Highlights of the Institutional Shares are presented separately. The primary investment objective of the Fund is the possibility of long-term growth of capital and income.

MDT Balanced Fund (the "Predecessor Fund") was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced offering Class A Shares and Class C Shares on September 15, 2005.

The Fund commenced offering Class K Shares on December 12, 2006.

On October 26, 2007, the Fund received a tax-free transfer of assets from Federated Conservative Allocation Fund (FCAF), Federated Growth Allocation Fund (FGAF) and Federated Moderate Allocation Fund (FMAF) (collectively, "Acquired Funds") as follows:

	Shares of the Fund Issued	Acquired Funds Net Assets Received	Unrealized Appreciation 1	Net Assets of the Fund Immediately Prior to Combination	Net Assets of Acquired Funds Immediately Prior to Combination	Net Assets of the Fund Immediately After Combination
FCAF	3,640,126	$ 52,857,254	$1,026,380		$ 52,857,254
FGAF	3,325,359	$ 48,170,456	$1,009,181		$ 48,170,456
FMAF	6,421,560	$ 93,208,403	$1,945,499		$ 93,208,403
TOTAL	13,387,045	$194,236,113	$3,981,060	$161,345,386	$194,236,113	$355,581,499

1 Unrealized appreciation is included in the Acquired Funds Net Assets Received amount shown above.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
• Shares of other mutual funds are valued based upon their reported NAVs.
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund may invest in portfolios of Federated Core Trust (Core Trust), which is managed by Federated Investment Management Company, an affiliate of the Fund's Adviser. Core Trust is an open-end management company, registered under the Act, available only to registered investment companies and other institutional investors. The investment objective of High Yield Bond Portfolio, a series of Core Trust, is to seek high current income by investing primarily in a diversified portfolio of lower rated fixed-income securities. The investment objective of Federated Mortgage Core Portfolio, a series of Core Trust, is to achieve total return on assets. Federated receives no advisory or administrative fees on behalf of Core Trust. Income distributions from Core Trust are declared daily and paid monthly and are recorded by the Fund as dividend income. Capital gain distributions, if any, from Core Trust are declared and paid annually, and are recorded by the Fund as capital gains. The performance of the Fund is directly affected by the performance of the Core Trust. A copy of the Core Trust's financial statements is available on the EDGAR Database on the SEC's website www.sec.gov, at the Commission's Public Reference Room in Washington, DC or upon request from the Fund by calling 1-800-341-7400.

The Fund may also invest in portfolios of Federated Core Trust II (Core Trust II), pursuant to a separate Exemptive Order issued by the SEC. Core Trust II is independently managed by Federated Investment Counseling. Core Trust II is a limited partnership established under the laws of the state of Delaware on November 13, 2000, registered under the Act and offered only to registered investment companies and other accredited investors. The investment objective of Emerging Markets Fixed Income Core Fund (EMCORE), a series of Core Trust II, is to achieve total return on assets. Federated receives no advisory or administrative fees on behalf of the Core Trust II. The Fund records daily its proportionate share of income, expenses, realized and unrealized gains and losses from EMCORE. The performance of the Fund is directly affected by the performance of the portfolio. A copy of EMCORE's financial statements is available on the EDGAR Database on the SEC's website www.sec.gov, at the Commission's Public Reference Room in Washington, DC or upon request from the Fund by calling 1-800-341-7400.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Inflation adjustments on Treasury Inflation-Protected Securities (TIPS) are included in interest income. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that Institutional Shares, Class A Shares, Class C Shares and Class K Shares may bear distribution services fees, shareholder services fees, account administration fees and certain transfer and dividend disbursing agent fees unique to those classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization/Paydown Gains and Losses

All premiums and discounts on fixed-income securities, other than mortgage-backed securities, are amortized/accreted for financial statement purposes. Gains and losses realized on principal payment of mortgage-backed securities (paydown gains and losses) are classified as part of investment income.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2005 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

Withholding taxes and where appropriate, deferred withholding taxes on foreign interest, dividends and capital gains have been provided for in accordance with the applicable country's tax rules and rates.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Swap Contracts

Swap contracts involve two parties that agree to exchange the returns (or the differential in rates of return) earned or realized on particular predetermined investments, instruments, indices or other measures. The gross returns to be exchanged or "swapped" between parties are generally calculated with respect to a "notional amount" for a predetermined period of time. The Fund may enter into interest rate, total return, credit default, foreign exchange and other swap agreements.

Total return swap agreements involve the commitment to pay or receive an amount generally determined by reference to an interest rate in exchange for a specific market-linked return, based on notional amounts. To the extent that the total return of the security or index underlying the transactions exceeds or falls short of the offsetting interest-rate-based obligation, the Fund receives or makes a payment to the counterparty.

The "buyer" in a credit default swap is obligated to pay the "seller" a periodic stream of payments over the term of the contract provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or the "par value," of the reference obligation in exchange for the reference obligation. The Fund may be either the buyer or seller in a credit default swap transaction. Risks may arise upon entering into swap agreements from the potential inability of the counterparties to meet the terms of their contract or from unanticipated changes in the value of the swap agreement.

Upfront payments received or paid by the Fund will be reflected as an asset or liability on the Statement of Assets and Liabilities. Changes in the value of swap contracts are included in "Swaps, at value," on the Statement of Assets and Liabilities, and periodic payments are reported as "Net realized gain on swap contracts" in the Statement of Operations. For the year ended July 31, 2008, the Fund had a net realized gain on swap contracts of $9,511.

At July 31, 2008, the Fund had no outstanding swap contracts.

Futures Contracts

The Fund purchases and sells financial futures contracts to manage cashflows, enhance yield and to potentially reduce transaction costs. Upon entering into a financial futures contract with a broker, the Fund is required to deposit in a segregated account a specified amount of cash or U.S. government securities. Futures contracts are valued daily and unrealized gains or losses are recorded in a "variation margin" account. Daily, the Fund receives from or pays to the broker a specified amount of cash based upon changes in the variation margin account. When a contract is closed, the Fund recognizes a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with the changes in the value of the underlying securities. For the year ended July 31, 2008, the Fund had a net realized gain on futures contracts of $275,392.

Futures contracts outstanding at period end are listed after the Fund's Portfolio of Investments.

Foreign Exchange Contracts

The Fund may enter into foreign exchange contracts for the delayed delivery of securities or foreign currency exchange transactions. The Fund may enter into foreign exchange contracts to protect assets against adverse changes in foreign currency exchange rates or exchange control regulations. Purchased contracts are used to acquire exposure to foreign currencies, whereas, contracts to sell are used to hedge the Fund's securities against currency fluctuations. Risks may arise upon entering into these transactions from the potential inability of counterparties to meet the terms of their commitments and from unanticipated movements in security prices or foreign exchange rates. The foreign exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized until the settlement date.

At July 31, 2008, the Fund had no outstanding foreign exchange contracts.

Foreign Currency Translation

The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies (FCs) are translated into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. 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.

Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.

Restricted Securities

Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer's expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund's restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	453,471		$	6,231,682		603,137		$	8,390,088
Shares issued to shareholders in payment of distributions declared	213,271			2,951,673		346,321			4,668,405
Shares redeemed	(861,304	)		(11,695,320	)	(604,149	)		(8,303,830	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	(194,562	)	$	(2,511,965	)	345,309		$	4,754,663
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	4,581,561		$	60,907,542		4,589,586		$	62,628,792
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Conservative Allocation Fund	2,233,258			32,583,802		- --			- --
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Growth Allocation Fund	1,400,840			20,438,742		- --			- --
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Moderate Allocation Fund	3,731,944			54,450,162		- --			- --
Shares issued to shareholders in payment of distributions declared	349,074			4,817,220		144,782			1,948,759
Shares redeemed	(3,748,791	)		(50,990,523	)	(1,161,046	)		(16,085,114	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	8,547,886		$	122,206,945		3,573,322		$	48,492,437
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	840,926		$	11,168,941		954,270		$	12,994,037
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Conservative Allocation Fund	1,406,868			20,273,452		- --			- --
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Growth Allocation Fund	1,924,519			27,731,714		- --			- --
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Moderate Allocation Fund	2,689,616			38,758,241		- --			- --
Shares issued to shareholders in payment of distributions declared	243,200			3,314,815		29,439			393,602
Shares redeemed	(1,594,694	)		(20,976,254	)	(121,568	)		(1,664,768	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	5,510,435		$	80,270,909		862,141		$	11,722,871
	Year Ended 7/31/2008					Period Ended 7/31/2007 1
Class K Shares:	Shares			Amount		Shares			Amount
Shares sold	59,681		$	785,560		1,340		$	18,665
Shares issued to shareholders in payment of distributions declared	81			1,119		- --			- --
Shares redeemed	(4,543	)		(59,345	)	(7	)		(99	)
NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS	55,219		$	727,334		1,333		$	18,566
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	13,918,978		$	200,693,223		4,782,105		$	64,988,537

1 Reflects operations for the period from December 12, 2006 (date of initial public investment) to July 31, 2007.

Redemption Fees

Prior to December 11, 2006, the Predecessor Fund imposed a 2.00% redemption fee to shareholders of the Fund's Institutional Shares, Class A Shares and Class C Shares who redeemed shares held for 30 days or less. Shares acquired by reinvestment of dividends or distributions of the Fund, or purchased pursuant to the Systematic Investment Program or withdrawn pursuant to the Systematic Withdrawal Program, were not subject to the redemption fee. All redemption fees are recorded by the Fund as additions to paid-in capital. For the year ended July 31, 2007, the Predecessor Fund incurred redemption fees for Institutional Shares, Class A Shares and Class C Shares amounted to $4,965, $1,978 and $533, respectively.

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due to differing treatments for gain on sale of Commodity Linked Notes, partnership income, foreign currency, swap income, merger wash sale loss deferrals and discount accretion/premium amortization on debt securities.

For the year ended July 31, 2008, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gain (Loss)
$357,494	$487,247	$(844,741)

Net investment income (loss), net realized gains (losses) and net assets were not affected by this reclassification.

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2008 and 2007, was as follows:

	2008	2007
Ordinary income 1	$8,670,987	$3,667,344
Long-term capital gains	$3,380,432	$3,685,887

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	3,200,846
Net unrealized depreciation	$	(12,271,410	)
Capital loss carryforwards and deferrals	$	(13,693,177	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales, deferral of paydowns, REIT adjustments, defaulted bonds, discount accretion/premium amortization on debt securities and partnership investments.

At July 31, 2008, the cost of investments for federal tax purposes was $318,880,098. The net unrealized depreciation of investments for federal tax purposes excluding any unrealized appreciation resulting from futures contracts was $12,261,562. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $10,141,075 and net unrealized depreciation from investments for those securities having an excess of cost over value of $22,402,637.

At July 31, 2008, the Fund had a capital loss carryforward of $49,998 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the 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. Pursuant to the Code, such capital loss carryforward will expire in 2016.

Under current tax regulations, capital losses on securities transactions and foreign currency losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post-October losses of $13,643,179 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for certain Classes of the Fund based on average daily net assets:

Share Class	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.25%
Class A Shares	1.50%
Class C Shares	2.25%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment and subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimburse at any time at its sole discretion. For the year ended July 31, 2008, the Adviser voluntarily waived $6,130 of its fee and voluntarily reimbursed $741 of other operating expenses. In addition, an affiliate of the Adviser reimbursed $7,154 of transfer and dividend disbursing agent fees and expenses.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement (the "Agreement"), provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. During the period from July 15, 2006 through December 8, 2006, the administrator contractually agreed to waive a portion of its fee which it would otherwise be entitled to receive from the Fund under the Agreement. The level of fees payable by the Fund to FAS for the period did not exceed the level of fees which the Fund would have paid during the period to its previous service provider under its previous administrative services contract. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the net fee paid to FAS was 0.078% of average daily net assets of the Fund. FAS waived $52,211 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act, which became effective December 11, 2006. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares, Class C Shares and Class K Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%
Class K Shares	0.50%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC:

Share Class	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $51,189 of fees paid by the Fund. For the year ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

For the year ended July 31, 2008, FSC retained $60,025 in sales charges from the sale of Class A Shares. FSC also retained $2,782 of contingent deferred sales charges relating to redemptions of Class C Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the year ended July 31, 2008, FSSC did not receive any fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the Financial Highlights, but excluding expenses allocated from partnerships) paid by the Fund's Institutional Shares, Class A Shares, Class C Shares and Class K Shares (after the voluntary waivers and reimbursements) will not exceed 1.05%, 1.30%, 2.05% and 1.79%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $14,597. Transactions with affiliated companies during the year ended July 31, 2008 were as follows:

Affiliates	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income/ Allocated Investment Income
Emerging Markets Fixed Income Core Fund	29,223	67,130	58,748	37,605	$ 821,392	$ 97,665
Federated Mortgage Core Portfolio	1,720,828	3,694,626	780,548	4,634,906	$45,143,982	$2,110,983
High Yield Bond Portfolio	264,523	860,252	580,619	544,156	$3,346,557	$ 327,668
Prime Value Obligations Fund, Institutional Shares	8,187,131	138,246,863	126,594,123	19,839,871	$ 19,839,871	$ 641,885
TOTAL OF AFFILIATED TRANSACTIONS	10,201,705	142,868,871	128,014,038	25,056,538	$ 69,151,802	$3,178,201

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	390,481,971
Sales	$	385,049,550

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses, and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2008, the amount of long-term capital gains designated by the Fund was $3,380,432.

For the fiscal year ended July 31, 2008, 27.04% of total ordinary income (including short-term capital gain) distributions made by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended July 31, 2008, 18.34% qualify for the dividend-received deduction available to corporate shareholders.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND SHAREHOLDERS OF FEDERATED MDT BALANCED FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Balanced Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the two years in the period ended July 31, 2005 were audited by another independent registered public accounting firm whose report, dated September 19, 2005 expressed an unqualified opinion on those financial highlights.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Balanced Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/ Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT BALANCED FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For both the one- and three-year periods ending December 31, 2007, the Fund's performance was above the median of the relevant peer group.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee, after waivers and expense reimbursements, if any, was above the median of the relevant peer group. The Board reviewed the fees and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive. In this regard, the Board had been previously advised that, while comparisons to fund peer groups are highly important in judging the reasonableness of advisory fees, the Fund's quantitative focus makes fee and expense comparisons particularly difficult. Although the Fund's advisory fee was above the median of the peer range, the peer group of funds varied widely in their complexity, and the management of the Fund is among the more complex relative to its peers. The Board will continue to monitor advisory fees and other expenses borne by the Fund.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT Balanced Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R841
Cusip 31421R833
Cusip 31421R692

37326 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Balanced Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLES
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights

(For a Share Outstanding Throughout Each Period)

Year Ended July 31	2008		2007	1	2006	2	2005		2004
Net Asset Value, Beginning of Period	$13.79		$13.23		$13.60		$12.82		$11.36
Income From Investment Operations:
Net investment income	0.30	3	0.24	3	0.24	3	0.20		0.13
Net realized and unrealized gain (loss) on investments, futures contracts, swap contracts and foreign currency transactions	(0.98	)	1.14		0.50		1.87		1.61
TOTAL FROM INVESTMENT OPERATIONS	(0.68	)	1.38		0.74		2.07		1.74
Less Distributions:
Distributions from net investment income	(0.19	)	(0.17	)	(0.18	)	(0.15	)	(0.15	)
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions	(0.35	)	(0.65	)	(0.93	)	(1.14	)	(0.13	)
TOTAL DISTRIBUTIONS	(0.54	)	(0.82	)	(1.11	)	(1.29	)	(0.28	)
Net Asset Value, End of Period	$12.57		$13.79		$13.23		$13.60		$12.82
Total Return 4	(5.33	)%	10.61	%	5.62	%	16.81	%	15.37	%
Ratios to Average Net Assets:
Net expenses	1.06	%	1.14	%	1.25	%	1.19	%	1.17	%
Net investment income	2.22	%	1.74	%	1.82	%	1.54	%	1.03	%
Expense waiver/reimbursement 5	0.03	%	0.17	%	0.14	%	- --		- --
Supplemental Data:
Net assets, end of period (000 omitted)	$71,949		$81,634		$73,747		$69,320		$53,815
Portfolio turnover	158	%	174	%	139	%	127	%	78	%

1 MDT Balanced Fund (the "Predecessor Fund") was reorganized into Federated MDT Balanced Fund (the "Fund") as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Beginning with the year ended July 31, 2006, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect sales charge, redemption fee or contingent deferred sales charge, if applicable.

5 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual	$1,000	$ 948.00	$4.94
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,019.79	$5.12

1 Expenses are equal to the Fund's annualized net expense ratio of 1.02%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half-year period).

Management's Discussion of Fund Performance

For the reporting period ended July 31, 2008 the fund's Institutional Shares produced a total return of (5.33)%, at net asset value. The Standard & Poor's 500 Index ¹ and the Lehman Brothers Aggregate Bond Index ("Lehman Aggregate") ² returned (11.09)% and 6.15%, respectively, while the Lipper Balanced Funds Index returned (5.17)%. ³

1 The Standard & Poor's 500 Index is an unmanaged capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Investments cannot be made directly in an index.

2 The Lehman Brothers Aggregate Bond Index is an unmanaged index composed of securities from the Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index and the Asset-Backed Securities Index. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. Indices are rebalanced monthly by market capitalization. Investments cannot be made directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

MARKET OVERVIEW

Over the 12-month period ended July 31, 2008 domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® Index, ⁴ which represents the performance of the 3,000 largest U.S. companies by market capitalization, finished the period down 10.32%. Small cap stocks ⁵ had the best relative results as demonstrated by the (6.71)% return on the Russell 2000 ^® Index, ⁶ which exceeded the (10.10)% and (10.81)% results for the Russell Midcap ^® Index ⁷ and the Russell Top 200 ^® Index, ⁸ respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000 ^® Growth Index ⁹ returning (6.11)% as compared to (14.75)% for the Russell 3000 Value ^® Index. ¹⁰

The best performing sectors during the period, as measured by the Russell 3000 ^® Index, were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

4 The Russell 3000 Index offers investors access to the broad U.S. equity universe representing approximately 98% of the U.S. market. The Russell 3000 is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The index is unmanaged and investments cannot be made directly in an index.

5 Small company stocks may be less liquid and subject to greater price volatility than large capitalization stocks.

6 The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index. The index is unmanaged and investments cannot be made directly in an index.

7 The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 31% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

8 The Russell Top 200 Index measures the performance of the 200 largest companies in the Russell 1000 Index, which represents approximately 69% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

9 The Russell 3000 Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000 Growth or the Russell 2000 Growth indexes. The index is unmanaged and investments cannot be made directly in an index.

10 The Russell 3000 Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000 Value or the Russell 2000 Value indexes. The index is unmanaged and investments cannot be made directly in an index.

Real Estate Investment Trust ("REIT") fundamentals held up well through what was an extremely difficult environment. Although negative, performance was solid on a relative basis as demonstrated by the (5.40)% return on the S&P REIT Index. ¹¹

International equity performance ¹² benefited from a decline in the value of the dollar over the period. Emerging markets, which generally experienced stronger economic growth, outperformed developed markets as evidenced by the (4.36)% return on the MSCI Emerging Markets Free Index, ¹³ which exceeded the (12.19)% return on the MSCI EAFE Index. ¹⁴

Fixed-income markets experienced a tumultuous period which featured aggressive and innovative actions on the part of the Federal Reserve Board (the "Fed"), a dramatic reduction in yields on U.S. Treasuries and significant widening in yield spreads on risk-bearing instruments. The Fed reduced the target federal funds rate on seven occasions totaling 3.25% during the period which contributed to a meaningful decline in treasury yields, most significantly at the short-end of the curve. Responding to disruptions in the money markets and asset-backed securities markets, the Fed also introduced new lending facilities in an effort to provide liquidity. The collapse in housing prices and increasing uncertainty about the economy led to an increase in risk premiums across credit markets. The average yield of the Lehman Aggregate stood at 5.14% on July 31, 2008, compared to 5.57% 12 months earlier.

11 The S&P REIT Index tracks the market performance of U.S. Real Estate Investment Trusts, known as REITs. It consists of 100 REITs chosen for their liquidity and importance in representing a diversified real estate portfolio. Investments in REITs involve special risks associated with an investment in real estate, such as limited liquidity and interest rate risks. The index is unmanaged and investments cannot be made directly in an index.

12 International investing involves special risks including currency risk, increased volatility of foreign securities, political risks, and differences in auditing and other financial standards. Prices of emerging markets securities can be significantly more volatile than the prices of securities in developed countries, and currency risks and political risks are accentuated in emerging markets.

13 The MSCI Emerging Markets Free Index is an unmanaged index reflecting approximately 60% of the market capitalization, by industry, in each of 26 emerging market countries. The index is unmanaged and investments cannot be made directly in an index.

14 The MSCI EAFE Index measures international equity performance. It comprises 21 MSCI country indices, representing the developed markets outside of North America. The index is unmanaged and investments cannot be made directly in an index.

ASSET ALLOCATION

During the reporting period, equity investments accounted for an average of approximately 66% of the portfolio while fixed income and cash averaged 34%. Cash balances were maintained at an average of more than 5% of fund assets in response to the volatility in the market, which helped performance. Within the fund's equity portfolio, investments in international equities and REITs contributed negatively to fund performance as these allocations underperformed.

EQUITIES

Domestic equity investments, which are managed under our proprietary All Cap Core strategy, marginally outperformed their benchmark, the Russell 3000 ^® Index, during the period. An overweight to the Energy sector provided the most significant positive contribution to relative results. The most significant negative contributions to relative performance resulted from an overweight to the Financial sector, which underperformed, and an underweight to the Consumer Staples sector, which outperformed.

International equity investments underperformed the MSCI EAFE Index during the period. The international allocation was reduced over the course of the year and performance was negatively affected by the timing of these moves in what was a very volatile period. REIT investments performed poorly, however, the allocation to this sector was much lower than the fund has historically maintained, at an average of just 2.5% of assets, so the impact on fund performance was marginal.

FIXED INCOME

The bond portion of the fund outperformed its benchmark (the Lehman Aggregate) modestly during the period. Three of the five portfolio tools we used to manage fixed-income investments (duration, ¹⁵ yield curve and security selection) added value to varying degrees. Sector was the lone exception, with overweights to mortgage-backed securities, commercial mortgage-backed securities, and high yield providing a considerable drag on performance. ¹⁶ Another tool, currency management, had little effect on results. Security selection in the corporate areas (investment-grade and high yield) contributed positively to results during the year.

15 Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.

16 High-yield, lower-rated securities generally entail greater market, credit and liquidity risk than investment-grade securities and may include higher volatility and higher risk of default. Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.

GROWTH OF A $25,000 INVESTMENT - INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000 ¹ in the Federated MDT Balanced Fund (Institutional Shares) (the "Fund") from October 1, 2002 (start of performance) to July 31, 2008, compared to the Standard and Poor's 500 Index (S&P 500), ² the Lipper Balanced Funds Index (LBFI) ³ and the Lehman Brothers Aggregate Bond Index (LBAB). ²

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(5.33	)%
5 Years	8.31	%
Start of Performance (10/1/2002)	9.54	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 The fund's performance assumes the reinvestment of all dividends and distributions. The S&P 500, LBAB and the LBFI have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The S&P 500 and LBAB are not adjusted to reflect sales charges, expenses, or other fees that the Securities and Exchange Commission requires to be reflected in the fund's performance. The indexes are unmanaged and, unlike the fund, are not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends. Lipper figures do not reflect sales charges.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Tables

At July 31, 2008, the Fund's portfolio composition ¹ was as follows:

Security Type	Percentage of Total Net Assets
Domestic Equity	55.5	%
Mortgage-Backed Securities	12.4	%
Corporate Debt Securities	8.5	%
U.S. Treasury and Agency Securities 2	5.9	%
Collateralized Mortgage Obligations	3.8	%
Foreign Stock ETF	3.3	%
International Equity	1.4	%
Adjustable Rate Mortgage Securities	1.4	%
Foreign Debt Securities	1.1	%
Asset-Backed Securities	0.5	%
Derivative Contracts 3,4	0.0	%
Cash Equivalents 5	8.5	%
Other Assets and Liabilities--Net 6	(2.3	)%
TOTAL	100.0	%

1 See the Fund's Prospectus for a description of the principal types of securities in which the Fund invests. As of the date specified above, the Fund owned shares of one or more affiliated investment companies. For purposes of these tables, the affiliated investment company (other than an affiliated money market fund) is not treated as a single portfolio security, but rather the Fund is treated as owning a pro rata portion of each security and each other asset and liability owned by the affiliated investment company. Accordingly, the percentages of total net assets shown in the table will differ from those presented on the Portfolio of Investments.

2 Also includes $3,500,592 held in U.S. Treasuries pledged as collateral to ensure the Fund is able to satisfy the obligations of its outstanding futures contract.

3 Based upon net unrealized appreciation (depreciation) on the derivative contracts. Derivative contracts may consist of futures, forwards, options and swaps. The impact of a derivative contract on the Fund's performance may be larger than its unrealized appreciation (depreciation) may indicate. In many cases, the notional value or notional principal amount of a derivative contract may provide a better indication of the contract's significance to the portfolio. More complete information regarding the Fund's direct investments in derivative contracts, including unrealized appreciation (depreciation) and notional values or amounts of such contracts, can be found in the table at the end of the Portfolio of Investments included in this report.

4 Represents less than 0.1%.

5 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

6 Assets, other than investments in securities and derivative contracts, less liabilities. See Statement of Assets and Liabilities.

At July 31, 2008, the Fund's industry composition ⁷ for its equity securities was as follows:

Industry	Percentage of Equity Securities
Crude Oil & Gas Production	5.6	%
Multi-Line Insurance	4.9	%
Agricultural Chemicals	4.8	%
Integrated Domestic Oil	4.7	%
Integrated International Oil	4.6	%
Real Estate Investment Trusts	4.5	%
Life Insurance	4.4	%
Property Liability Insurance	4.3	%
Telecommunication Equipment & Services	3.8	%
Truck Manufacturing	3.3	%
Diversified Oil	3.1	%
Regional Bank	2.9	%
Money Center Bank	2.7	%
Oil Well Supply	2.6	%
Electric Utility	2.5	%
Commodity Chemicals	2.1	%
Home Building	2.0	%
Ethical Drugs	1.9	%
Railroad	1.8	%
Oil Service, Explore & Drill	1.8	%
Internet Services	1.7	%
Other 8	30.0	%
TOTAL	100.0	%

7 Industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the Adviser assigns a classification to securities not classified by the GICS and to securities for which the Adviser does not have access to the classification made by the GICS.

8 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's equity securities have been aggregated under the designation "Other."

Portfolio of Investments

July 31, 2008

Shares					Value
			COMMON STOCKS--56.9%
			Agricultural Chemicals--2.7%
	70,600		Monsanto Co.	$	8,409,166
			Agricultural Machinery--0.1%
	2,600		Lindsay Manufacturing Co.		239,902
			Airline - Regional--0.7%
	5,100	1	Alaska Air Group, Inc.		91,188
	126,900		Southwest Airlines Co.		1,978,371
			TOTAL		2,069,559
			Aluminum--0.1%
	3,400		Kaiser Aluminum Corp.		179,350
			Apparel--0.3%
	2,900		Columbia Sportswear Co.		108,199
	4,600		Liz Claiborne, Inc.		60,122
	16,100	1	Warnaco Group, Inc.		675,395
			TOTAL		843,716
			AT&T Divestiture--0.6%
	64,200		AT&T, Inc.		1,978,002
			Auto Original Equipment Manufacturer--0.1%
	3,000		Sun Hydraulics, Inc.		123,600
	3,600		Superior Industries International, Inc.		60,804
			TOTAL		184,404
			Biotechnology--0.1%
	4,800	1	Affymetrix, Inc.		37,824
	3,100	1	Martek Biosciences Corp.		116,591
			TOTAL		154,415
			Broadcasting--0.4%
	31,800	1	American Tower Systems Corp.		1,332,420
			Building Materials--0.1%
	3,500		Apogee Enterprises, Inc.		60,480
	9,500	1	Owens Corning, Inc.		247,095
	2,100		Universal Forest Products, Inc.		56,700
			TOTAL		364,275
Shares					Value
			COMMON STOCKS--continued
			Cable TV--0.0%
	3,500	1	Viacom, Inc., Class B	$	97,755
			Clothing Stores--0.8%
	2,800	1	Children's Place Retail Stores, Inc.		106,540
	6,200	1	Fossil, Inc.		166,036
	24,400	1	Hanesbrands, Inc.		523,136
	2,600	1	Jos A. Bank Clothiers, Inc.		58,240
	46,300	1	Urban Outfitters, Inc.		1,528,363
			TOTAL		2,382,315
			Cogeneration--0.7%
	71,100	1	Mirant Corp.		2,176,371
			Commodity Chemicals--1.2%
	107,100		Dow Chemical Co.		3,567,501
	2,400		PPG Industries, Inc.		145,536
	1,600		Westlake Chemical Corp.		28,016
			TOTAL		3,741,053
			Computer Peripherals--0.4%
	25,500	1	Lexmark International Group, Class A		894,540
	15,800	1	Sandisk Corp.		222,780
	8,100	1	Western Digital Corp.		233,199
			TOTAL		1,350,519
			Computer Services--0.1%
	5,900	1	Synnex Corp.		137,824
	3,000		Syntel, Inc.		98,850
			TOTAL		236,674
			Computer Stores--0.1%
	10,100	1	GameStop Corp.		409,151
			Crude Oil & Gas Production--3.2%
	3,500		Anadarko Petroleum Corp.		202,685
	51,800		Apache Corp.		5,810,406
	26,900		Cimarex Energy Co.		1,401,759
	8,600		Devon Energy Corp.		816,054
	16,900	1	Newfield Exploration Co.		827,762
	6,600	1	Stone Energy Corp.		336,732
	9,000	1	Swift Energy Co.		457,380
			TOTAL		9,852,778
Shares					Value
			COMMON STOCKS--continued
			Defense Aerospace--0.4%
	17,500		Boeing Co.	$	1,069,425
	2,000	1	Spirit Aerosystems Holdings, Inc., Class A		43,320
	4,300		Triumph Group, Inc.		227,728
			TOTAL		1,340,473
			Department Stores--0.6%
	13,800		Dillards, Inc., Class A		139,518
	900		Penney (J.C.) Co., Inc.		27,747
	18,900	1	Saks, Inc.		192,591
	19,800	1	Sears Holdings Corp.		1,603,800
			TOTAL		1,963,656
			Discount Department Stores--0.1%
	7,900	1	99 Cents Only Stores		52,851
	8,100	1	BJ's Wholesale Club, Inc.		303,993
	3,200		Family Dollar Stores, Inc.		74,560
			TOTAL		431,404
			Diversified Leisure--0.2%
	6,100	1	Bally Technologies, Inc.		193,919
	1,100		Carnival Corp.		40,634
	10,100	1	Gaylord Entertainment Co.		303,404
	6,500	1	Pinnacle Entertainment, Inc.		73,450
			TOTAL		611,407
			Diversified Oil--1.7%
	68,200		Occidental Petroleum Corp.		5,376,206
			Electric Utility--1.4%
	2,400		American Electric Power Co., Inc.		94,800
	2,600		Avista Corp.		58,812
	16,200		CMS Energy Corp.		218,700
	17,200		DTE Energy Co.		704,856
	12,600	1	Dynegy, Inc.		84,798
	36,300		Edison International		1,754,742
	2,600	1	El Paso Electric Co.		53,716
	4,000		Hawaiian Electric Industries, Inc.		98,960
	3,000		OGE Energy Corp.		98,160
Shares					Value
			COMMON STOCKS--continued
			Electric Utility--continued
	4,800		PPL Corp.	$	225,408
	6,600		Pepco Holdings, Inc.		164,604
	3,700		Portland General Electric Co.		86,913
	18,400	1	Reliant Energy, Inc.		333,224
	9,300		SCANA Corp.		336,567
			TOTAL		4,314,260
			Electrical Equipment--0.2%
	36,300		Xerox Corp.		495,132
			Electronic Instruments--0.1%
	1,100		Analogic Corp.		80,498
	800	1	Axsys Technologies, Inc.		58,752
	2,600	1	Trimble Navigation Ltd.		86,320
			TOTAL		225,570
			Ethical Drugs--1.1%
	22,400	1	Forest Laboratories, Inc., Class A		795,424
	40,000	1	King Pharmaceuticals, Inc.		460,400
	39,900		Merck & Co., Inc.		1,312,710
	42,200		Pfizer, Inc.		787,874
			TOTAL		3,356,408
			Financial Services--0.5%
	33,100		Ameriprise Financial, Inc.		1,406,750
	22,200		Fulton Financial Corp.		233,988
			TOTAL		1,640,738
			Gas Distributor--0.1%
	1,800		AGL Resources, Inc.		62,208
	1,500		Laclede Group, Inc.		63,615
	3,400		WGL Holdings, Inc.		117,402
			TOTAL		243,225
			Gas Pipeline--0.1%
	7,700		Williams Companies, Inc.		246,785
			Generic Drugs--0.0%
	600		Perrigo Co.		21,138
Shares					Value
			COMMON STOCKS--continued
			Grocery Chain--0.2%
	16,400		Safeway, Inc.	$	438,208
	1,800		Weis Markets, Inc.		68,382
			TOTAL		506,590
			Home Building--1.2%
	23,300		Centex Corp.		342,044
	67,000		D. R. Horton, Inc.		745,040
	25,400		KB HOME		446,786
	26,300		Lennar Corp., Class A		318,230
	8,600		M.D.C. Holdings, Inc.		357,072
	100	1	NVR, Inc.		55,232
	51,500		Pulte Homes, Inc.		628,815
	12,500		Ryland Group, Inc.		257,375
	21,600	1	Toll Brothers, Inc.		433,944
			TOTAL		3,584,538
			Home Health Care--0.0%
	1,600	1	Amerigroup Corp.		40,640
			Household Appliances--0.0%
	1,000		Whirlpool Corp.		75,700
			Industrial Machinery--0.1%
	4,300	1	Terex Corp.		203,519
	1,100		Valmont Industries, Inc.		117,601
			TOTAL		321,120
			Insurance Brokerage--0.0%
	1,500		Odyssey Re Holdings Corp.		58,605
			Integrated Domestic Oil--2.6%
	3,900	1	Callon Petroleum Corp.		89,661
	90,400		ConocoPhillips		7,378,448
	13,900		Marathon Oil Corp.		687,633
			TOTAL		8,155,742
			Integrated International Oil--2.6%
	96,400		Chevron Corp.		8,151,584
			Internet Services--1.0%
	4,100	1	Amazon.com, Inc.		312,994
	14,000	1	NetFlix, Inc.		432,460
Shares					Value
			COMMON STOCKS--continued
			Internet Services--continued
	4,000	1	Overstock.com, Inc.	$	71,040
	15,700	1	Priceline.com, Inc.		1,804,715
	14,900	1	eBay, Inc.		375,033
			TOTAL		2,996,242
			Jewelry Stores--0.1%
	4,700		Tiffany & Co.		177,613
			Leasing--0.1%
	5,900		GATX Corp.		268,273
			Life Insurance--2.5%
	96,900		MetLife, Inc.		4,919,613
	3,700		Principal Financial Group		157,287
	16,500		Protective Life Corp.		593,340
	12,800		StanCorp Financial Group, Inc.		632,192
	24,500		Torchmark Corp.		1,422,225
			TOTAL		7,724,657
			Long-Term Care Centers--0.0%
	4,000	1	Kindred Healthcare, Inc.		107,880
			Lumber Products--0.0%
	12,900	1	Louisiana-Pacific Corp.		109,134
			Maritime--0.4%
	2,900	1	Kirby Corp.		138,388
	14,300		Overseas Shipholding Group, Inc.		1,126,125
			TOTAL		1,264,513
			Medical Supplies--0.0%
	1,600	1	Kensey Nash Corp.		55,568
	2,000	1	Merit Medical Systems, Inc.		40,420
			TOTAL		95,988
			Medical Technology--0.2%
	7,000	1	Masimo Corp.		264,390
	3,700		Stryker Corp.		237,503
			TOTAL		501,893
Shares					Value
			COMMON STOCKS--continued
			Metal Fabrication--0.3%
	5,700		Mueller Industries, Inc.	$	146,319
	1,800		Olympic Steel, Inc.		91,530
	19,500		Timken Co.		643,890
	5,900		Worthington Industries, Inc.		104,666
			TOTAL		986,405
			Mini-Mill Producer--0.2%
	21,200		Commercial Metals Corp.		632,820
			Miscellaneous Components--0.6%
	40,100		Amphenol Corp., Class A		1,911,567
			Miscellaneous Food Products--0.6%
	50,700		Archer-Daniels-Midland Co.		1,451,541
	5,800		The Anderson's, Inc.		263,610
			TOTAL		1,715,151
			Miscellaneous Machinery--0.8%
	12,900		Fastenal Co.		630,294
	8,200		Nordson Corp.		579,412
	17,800		Parker-Hannifin Corp.		1,097,904
			TOTAL		2,307,610
			Money Center Bank--1.5%
	97,700		Bank of America Corp.		3,214,330
	37,400		JPMorgan Chase & Co.		1,519,562
			TOTAL		4,733,892
			Mortgage and Title--0.0%
	3,500		LandAmerica Financial Group, Inc.		40,215
	10,400		PMI Group, Inc.		26,104
	8,300		Radian Group, Inc.		14,442
			TOTAL		80,761
			Multi-Industry Capital Goods--0.7%
	3,800	1	Ceradyne, Inc.		176,130
	1,000	1	Tecumseh Products Co., Class A		32,750
	3,200		Textron, Inc.		139,104
	41,000		Tyco International Ltd.		1,826,960
			TOTAL		2,174,944
Shares					Value
			COMMON STOCKS--continued
			Multi-Industry Transportation--0.0%
	2,700		Expeditors International Washington, Inc.	$	95,877
			Multi-Line Insurance--2.8%
	96,150		Allstate Corp.		4,444,053
	19,500		Assurant, Inc.		1,172,340
	11,900		Cincinnati Financial Corp.		331,296
	2,400		FBL Financial Group, Inc., Class A		50,040
	11,000		Hanover Insurance Group, Inc.		472,120
	1,600		Harleysville Group, Inc.		57,008
	85,000		UNUMProvident Corp.		2,053,600
			TOTAL		8,580,457
			Offshore Driller--0.3%
	11,700		ENSCO International, Inc.		808,938
	3,000	1	Hornbeck Offshore Services, Inc.		133,740
			TOTAL		942,678
			Oil Service, Explore & Drill--1.0%
	700	1	Dawson Geophysical Co.		45,941
	6,100	1	Gulfmark Offshore, Inc.		306,098
	19,800	1	Mariner Energy, Inc.		523,908
	1,200		Patterson-UTI Energy, Inc.		34,104
	30,100	1	Pride International, Inc.		1,166,676
	14,900	1	Unit Corp.		1,006,495
			TOTAL		3,083,222
			Oil Well Supply--1.5%
	43,100	1	FMC Technologies, Inc.		2,662,718
	15,000	1	Oil States International, Inc.		823,200
	9,400	1	Superior Energy Services, Inc.		445,842
	18,200	1	Weatherford International, Inc.		686,686
			TOTAL		4,618,446
			Other Communications Equipment--0.0%
	21,700	1	Tellabs, Inc.		111,538
			Paper Products--0.1%
	10,700		MeadWestvaco Corp.		286,867
Shares					Value
			COMMON STOCKS--continued
			Personal Loans--0.0%
	1,200	1	World Acceptance Corp.	$	39,312
			Poultry Products--0.1%
	6,900		Sanderson Farms, Inc.		274,206
			Printed Circuit Boards--0.6%
	4,400	1	Benchmark Electronics, Inc.		64,416
	110,400	1	Marvell Technology Group Ltd.		1,632,816
			TOTAL		1,697,232
			Property Liability Insurance--2.5%
	17,450		American Financial Group, Inc. Ohio		505,526
	70,600		Chubb Corp.		3,391,624
	300		Reinsurance Group of America		14,910
	80,300		The Travelers Cos, Inc.		3,542,836
	2,200		Transatlantic Holdings, Inc.		127,468
			TOTAL		7,582,364
			Psychiatric Centers--0.1%
	8,800	1	Psychiatric Solutions, Inc.		308,176
			Railroad--1.0%
	15,800		CSX Corp.		1,067,764
	25,900		Union Pacific Corp.		2,135,196
			TOTAL		3,202,960
			Real Estate Investment Trusts--2.6%
	99,000		Annaly Mortgage Management, Inc.		1,491,930
	7,950		Boston Properties, Inc.		764,711
	11,700		Equity Residential Properties Trust		505,089
	9,600		Federal Realty Investment Trust		697,056
	20,200		HCP, Inc.		728,614
	39,500		Host Hotels & Resorts, Inc.		517,845
	9,000		Prologis Trust		439,920
	6,100		SL Green Realty Corp.		508,374
	8,900		Simon Property Group, Inc.		824,407
	14,500		Taubman Centers, Inc.		696,000
	7,250		Vornado Realty Trust		689,258
			TOTAL		7,863,204
Shares					Value
			COMMON STOCKS--continued
			Recreational Goods--0.0%
	5,500		Callaway Golf Co.	$	69,740
			Recreational Vehicles--0.0%
	1,400		Harley Davidson, Inc.		52,976
			Regional Bank--1.6%
	114,900		BB&T Corp.		3,219,498
	7,100		Bancorpsouth, Inc.		151,230
	6,500		City National Corp.		319,345
	300		FirstMerit Corp.		5,904
	9,100		M & T Bank Corp.		640,458
	5,900		Oriental Financial Group		102,483
	5,300		PacWest Bancorp		98,686
	13,100		TCF Financial Corp.		167,025
	5,500		Trustmark Corp.		99,330
	2,300		UnionBanCal Corp.		123,556
	700		Whitney Holding Corp.		14,392
	4,500		Wilmington Trust Corp.		106,065
			TOTAL		5,047,972
			Restaurant--0.1%
	900	1	Buffalo Wild Wings, Inc.		29,637
	3,600	1	Panera Bread Co.		180,360
			TOTAL		209,997
			Roofing & Wallboard--0.1%
	12,900	1	U.S.G. Corp.		370,230
			Savings and Loan--0.8%
	6,400		Downey Financial Corp.		13,504
	44,900		Federal Home Loan Mortgage Corp.		366,833
	65,400		Federal National Mortgage Association		752,100
	41,800		Hudson City Bancorp, Inc.		763,268
	10,100		Newalliance Bancshares, Inc.		131,098
	14,000		Washington Federal, Inc.		260,400
	4,100		Webster Financial Corp. Waterbury		81,426
			TOTAL		2,368,629
Shares					Value
			COMMON STOCKS--continued
			Securities Brokerage--0.2%
	1,500	1	Fcstone Group., Inc.	$	28,890
	6,300	1	Interactive Brokers Group, Inc., Class A		176,778
	4,100	1	KBW, Inc.		108,322
	11,000	1	Knight Capital Group, Inc., Class A		180,290
	2,800	1	Piper Jaffray Cos., Inc.		99,400
	4,700		Raymond James Financial, Inc.		135,830
			TOTAL		729,510
			Semiconductor Distribution--0.0%
	5,000	1	FormFactor, Inc.		87,000
			Semiconductor Manufacturing--0.8%
	84,000	1	Broadcom Corp.		2,040,360
	62,500	1	Micron Technology, Inc.		301,875
	2,300	1	Silicon Laboratories, Inc.		75,233
			TOTAL		2,417,468
			Semiconductor Manufacturing Equipment--0.1%
	12,700	1	Novellus Systems, Inc.		258,699
			Services to Medical Professionals--0.0%
	2,200	1	Athenahealth, Inc.		66,440
			Shoes--0.1%
	2,000	1	Deckers Outdoor Corp.		226,020
	6,700	1	Skechers USA, Inc., Class A		126,630
			TOTAL		352,650
			Software Packaged/Custom--0.8%
	5,100	1	Advent Software, Inc.		222,054
	100	1	CSG Systems International, Inc.		1,774
	45,500	1	Computer Sciences Corp.		2,155,335
	4,800	1	Wind River Systems, Inc.		56,304
			TOTAL		2,435,467
			Specialty Chemicals--0.1%
	3,800		Minerals Technologies, Inc.		245,138
	1,400	1	OM Group, Inc.		47,040
			TOTAL		292,178
Shares					Value
			COMMON STOCKS--continued
			Specialty Retailing--0.5%
	9,800	1	Cabela's, Inc., Class A	$	113,876
	15,500		Costco Wholesale Corp.		971,540
	2,700		Nordstrom, Inc.		77,598
	4,600		Pep Boys-Manny Moe & Jack		33,948
	400	1	Tractor Supply Co.		15,204
	1,800		Williams-Sonoma, Inc.		31,392
	6,800	1	Zale Corp.		150,416
			TOTAL		1,393,974
			Telecommunication Equipment & Services--2.2%
	27,800	1	ADC Telecommunications, Inc.		262,988
	321,300		Corning, Inc.		6,429,213
			TOTAL		6,692,201
			Toys & Games--0.1%
	9,400	1	JAKKS Pacific, Inc.		206,612
			Truck Manufacturing--1.9%
	78,300		Cummins, Inc.		5,194,422
	12,200		Paccar, Inc.		513,132
			TOTAL		5,707,554
			Trucking--0.2%
	3,100		Arkansas Best Corp.		115,134
	7,100		Ryder Systems, Inc.		468,316
			TOTAL		583,450
			Undesignated Consumer Cyclicals--0.8%
	4,100	1	CoStar Group, Inc.		204,549
	1,000	1	Covance, Inc.		91,800
	23,300		DeVRY, Inc.		1,323,673
	3,800	1	Navigant Consulting, Inc.		70,224
	3,100	1	Parexel International Corp.		90,613
	13,800		Pharmaceutical Product Development, Inc.		526,332
	3,200		Speedway Motorsports, Inc.		61,792
			TOTAL		2,368,983
			TOTAL COMMON STOCKS (IDENTIFIED COST $183,106,381)		175,350,358
Principal Amount					Value
			ASSET-BACKED SECURITIES--1.7%
$	400,000		Bank of America Commercial Mortgage, Inc. 2007-1 A2, 5.381%, 1/15/2049	$	389,352
	250,000		Bank of America Commercial Mortgage, Inc. 2007-4, Series 2007-4, 5.745%, 2/10/2051		233,080
	1,200,000		Citigroup/Deutsche Bank Commercial Mortgage 2007-CD5, Series 2007-CD5, 5.886%, 11/15/2044		1,121,291
	450,284		Community Program Loan Trust 1987-A, Series 1987-A, 4.500%, 10/01/2018		446,269
	1,000,000		Credit Suisse Mortgage Capital Certificate 2006-C4, Series 2006-C4, 5.509%, 09/15/2039		919,385
	43,792		CS First Boston Mortgage Securities Corp. 2002-HE4 AF, 5.51%, 8/25/2032		40,931
	675,000		LB-UBS Commercial Mortgage Trust 2008-C1 Series 2008CI, 6.150%, 4/15/2041		646,087
	150,000		Merrill Lynch Mortgage Trust 2008-C1, Series 2008-C1, 5.425%, 02/12/2051		144,757
	100,000		Merrill Lynch Mortgage Trust 2008-C1, Series 2008-C1, 6.266%, 02/12/2051		92,490
	715,000		Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.331%, 03/12/2051		693,966
	250,000		Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.485%, 03/12/2051		228,315
	140,000		Morgan Stanley Capital I 2006-IQ12 A4, 5.332%, 12/15/2043		129,919
			TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $5,272,726)		5,085,842
			COLLATERALIZED MORTGAGE OBLIGATIONS--0.3%
	4,355		Bear Stearns Mortgage Securities, Inc. 1997-6 1A, 6.67%, 3/25/2031		4,141
	410,000		Citigroup/Deutsche Bank Commercial Mortgage 2007-CD4 A3, 5.293%, 12/11/2049		386,689
	14,017		Federal Home Loan Mortgage Corp. REMIC 1311 K, 7.000%, 7/15/2022		14,289
	24,923		Federal Home Loan Mortgage Corp. REMIC 1384 D, 7.000%, 9/15/2022		25,406
	25,029		Federal Home Loan Mortgage Corp. REMIC 1595 D, 7.000%, 10/15/2013		25,419
	75,000		Federal Home Loan Mortgage Corp. REMIC 2497 JH, 6.000%, 9/15/2032		75,312
	60,227		Federal National Mortgage Association REMIC 1993-113 SB, 9.748%, 7/25/2023		66,385
	8,125		Federal National Mortgage Association REMIC 2001-37 GA, 8.000%, 7/25/2016		8,611
	15,935		Federal National Mortgage Association REMIC 2003-35 UC, 3.750%, 5/25/2033		14,666
	9,647		Government National Mortgage Association REMIC 1999-29 PB, 7.250%, 7/16/2028		9,813
Principal Amount					Value
			COLLATERALIZED MORTGAGE OBLIGATIONS--continued
$	46,401		Government National Mortgage Association REMIC 2002-17 B, 6.000%, 3/20/2032	$	46,644
	350,000		JPMorgan Chase Commercial Mortgage Securities 2007-CB19 A2, 5.478%, 2/12/2049		343,702
			TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (IDENTIFIED COST $1,057,880)		1,021,077
			CORPORATE BONDS--6.6%
			Basic Industry - Chemicals--0.1%
	100,000		Albemarle Corp., Sr. Note, 5.100%, 02/01/2015		94,880
	85,000		Du Pont (E.I.) de Nemours & Co., 5.000%, 01/15/2013		85,568
	30,000		Du Pont (E.I.) de Nemours & Co., 6.000%, 07/15/2018		30,477
	70,000		Praxair, Inc., 4.625%, 03/30/2015		67,452
	75,000		Rohm & Haas Co., 6.000%, 09/15/2017		73,631
			TOTAL		352,008
			Basic Industry - Metals & Mining--0.2%
	50,000		Alcan, Inc., 5.000%, 06/01/2015		47,184
	85,000		Alcoa, Inc., Note, 5.550%, 02/01/2017		78,827
	10,000	2,3	ArcelorMittal, 6.125%, 06/01/2018		9,614
	150,000		BHP Finance (USA), Inc., Company Guarantee, 5.250%, 12/15/2015		143,155
	50,000		Newmont Mining Corp., Company Guarantee, 5.875%, 04/01/2035		41,946
	85,000		Rio Tinto Finance USA Ltd., 5.875%, 07/15/2013		86,382
	85,000		Rio Tinto Finance USA Ltd., 6.500%, 07/15/2018		86,186
			TOTAL		493,294
			Basic Industry - Paper--0.0%
	50,000		Weyerhaeuser Co., Deb., 7.375%, 03/15/2032		48,444
			Capital Goods - Aerospace & Defense--0.1%
	50,000	2,3	BAE Systems Holdings, Inc., 5.200%, 08/15/2015		47,419
	125,000		Boeing Co., Note, 5.125%, 02/15/2013		127,188
	30,000		Lockheed Martin Corp., Sr. Note, 4.121%, 03/14/2013		29,165
	100,000		Raytheon Co., Unsecd. Note, 5.375%, 04/01/2013		102,401
			TOTAL		306,173
			Capital Goods - Building Materials--0.0%
	70,000		RPM International, Inc., 6.500%, 02/15/2018		69,193
Principal Amount					Value
			CORPORATE BONDS--continued
			Capital Goods - Diversified Manufacturing--0.3%
$	60,000		Dover Corp., Note, 5.450%, 03/15/2018	$	59,435
	100,000		Emerson Electric Co., Unsecd. Note, 5.750%, 11/01/2011		104,796
	160,000		Harsco Corp., 5.750%, 05/15/2018		160,490
	50,000		Honeywell International, Inc., Note, 7.500%, 03/01/2010		53,100
	80,000		Hubbell, Inc., 5.950%, 06/01/2018		81,857
	90,000		Roper Industries, Inc., 6.625%, 08/15/2013		90,674
	140,000		Textron Financial Corp., 5.400%, 04/28/2013		138,546
	40,000	2,3	Textron Financial Corp., Jr. Sub. Note, 6.000%, 02/15/2067		28,870
	130,000		Tyco Electronics Group SA, 5.950%, 01/15/2014		129,284
			TOTAL		847,052
			Capital Goods - Packaging--0.0%
	20,000		Pactiv Corp., 6.40%, 1/15/2018		19,361
			Communications - Media & Cable--0.1%
	100,000		Comcast Corp., 7.125%, 06/15/2013		105,955
	200,000		Comcast Corp., Company Guarantee, 6.500%, 01/15/2017		201,713
	75,000		Cox Communications, Inc., Unsecd. Note, 5.450%, 12/15/2014		72,821
	25,000		Time Warner Cable, Inc., Sr. Unsecd. Note, 5.850%, 05/01/2017		23,933
			TOTAL		404,422
			Communications - Media Noncable--0.1%
	75,000		News America Holdings, Inc., Company Guarantee, 8.000%, 10/17/2016		83,019
	75,000		News America Holdings, Inc., Sr. Deb., 9.250%, 02/01/2013		85,822
			TOTAL		168,841
			Communications - Telecom Wireless--0.2%
	150,000		AT&T Wireless Services, Inc., 8.750%, 03/01/2031		179,604
	100,000		America Movil S.A.B. de C.V., Note, 5.750%, 01/15/2015		98,520
	100,000		Cingular Wireless LLC, Sr. Note, 6.500%, 12/15/2011		103,954
	60,000		Vodafone Group PLC, 5.350%, 02/27/2012		60,479
	100,000		Vodafone Group PLC, Note, 5.625%, 02/27/2017		97,081
			TOTAL		539,638
			Communications - Telecom Wirelines--0.2%
	50,000		Embarq Corp., 6.738%, 06/01/2013		48,252
	100,000		Telecom Italia Capital, Note, 4.875%, 10/01/2010		99,684
Principal Amount					Value
			CORPORATE BONDS--continued
			Communications - Telecom Wirelines--continued
$	40,000		Telefonica SA, Company Guarantee, 7.045%, 06/20/2036	$	41,146
	150,000		Telefonica SA, Sr. Note, 5.855%, 02/04/2013		150,615
	125,000		Verizon Global Funding, Note, 7.250%, 12/01/2010		132,300
			TOTAL		471,997
			Consumer Cyclical - Automotive--0.1%
	100,000	2,3	American Honda Finance Corp., 4.625%, 04/02/2013		97,840
	75,000		DaimlerChrysler North America Holding Corp., 6.500%, 11/15/2013		75,927
	150,000		DaimlerChrysler North America Holding Corp., Note, 4.875%, 06/15/2010		150,409
	100,000	2,3	Nissan Motor Acceptance Corp., Sr. Unsecd. Note, 5.625%, 03/14/2011		99,294
			TOTAL		423,470
			Consumer Cyclical - Entertainment--0.1%
	100,000		Time Warner, Inc., 5.500%, 11/15/2011		98,674
	175,000		Walt Disney Co., Note, 5.700%, 07/15/2011		183,268
			TOTAL		281,942
			Consumer Cyclical - Lodging--0.0%
	100,000		Wyndham Worldwide Corp., Sr. Unsecd. Note, 6.000%, 12/01/2016		86,278
			Consumer Cyclical - Retailers--0.2%
	70,000	2,3	Best Buy Co., Inc., 6.750%, 07/15/2013		71,008
	190,000		CVS Caremark Corp., Sr. Unsecd. Note, 5.750%, 06/01/2017		186,925
	80,000		Costco Wholesale Corp., 5.300%, 03/15/2012		82,857
	85,000		JCPenney Corp., Inc., Sr. Unsecd. Note, 5.750%, 02/15/2018		74,919
	25,000		Kohl's Corp., Unsecd. Note, 7.375%, 10/15/2011		25,838
	100,000		Target Corp., 5.875%, 03/01/2012		103,614
	50,000		Target Corp., Note, 5.875%, 07/15/2016		50,303
	40,000		Wal-Mart Stores, Inc., 6.200%, 04/15/2038		39,131
			TOTAL		634,595
			Consumer Non-Cyclical - Food/Beverage--0.2%
	100,000		Bottling Group LLC, Note, 5.500%, 04/01/2016		100,378
	90,000		General Mills, Inc., Note, 5.700%, 02/15/2017		89,596
	135,000		Kellogg Co., 4.250%, 03/06/2013		131,534
	40,000		Kellogg Co., Sr. Unsub., 5.125%, 12/03/2012		40,469
	75,000		Kraft Foods, Inc., Note, 5.250%, 10/01/2013		73,544
Principal Amount					Value
			CORPORATE BONDS--continued
			Consumer Non-Cyclical - Food/Beverage--continued
$	10,000		Kraft Foods, Inc., Note, 6.250%, 06/01/2012	$	10,229
	75,000		PepsiCo, Inc., 4.650%, 02/15/2013		76,311
	100,000	2,3	SABMiller PLC, Note, 6.200%, 07/01/2011		102,061
			TOTAL		624,122
			Consumer Non-Cyclical Health Care--0.1%
	40,000		Baxter International, Inc., 6.250%, 12/01/2037		39,871
	100,000		Medtronic, Inc., Note, Series B, 4.375%, 09/15/2010		101,430
	190,000		Quest Diagnostics, Inc., Sr. Unsecd. Note, 6.400%, 07/01/2017		190,018
			TOTAL		331,319
			Consumer Non-Cyclical Pharmaceuticals--0.2%
	60,000		Abbott Laboratories, 5.150%, 11/30/2012		61,843
	60,000		Eli Lilly & Co., Bond, 5.200%, 03/15/2017		60,459
	125,000		Eli Lilly & Co., Unsecd. Note, 6.570%, 01/01/2016		135,500
	100,000		Genentech, Inc., Note, 4.750%, 07/15/2015		95,338
	100,000		Pharmacia Corp., Sr. Deb., 6.500%, 12/01/2018		109,362
			TOTAL		462,502
			Consumer Non-Cyclical Products--0.0%
	75,000		Philips Electronics NV, 5.750%, 03/11/2018		74,414
	80,000		Whirlpool Corp., 5.500%, 03/01/2013		77,488
			TOTAL		151,902
			Consumer Non-Cyclical Supermarkets--0.0%
	40,000		Kroger Co., Bond, 6.900%, 04/15/2038		40,271
	50,000		Sysco Corp., Sr. Unsecd. Note, 4.200%, 02/12/2013		49,291
			TOTAL		89,562
			Consumer Non-Cyclical Tobacco--0.0%
	90,000		Philip Morris International, Inc., 5.650%, 05/16/2018		87,579
			Energy - Independent--0.2%
	105,000		Anadarko Petroleum Corp., Sr. Unsecd. Note, 5.950%, 09/15/2016		105,026
	50,000		Canadian Natural Resources Ltd., 4.900%, 12/01/2014		48,629
	150,000		Pemex Project Funding Master, Company Guarantee, 9.125%, 10/13/2010		163,410
	75,000		XTO Energy, Inc., 6.375%, 06/15/2038		70,215
	60,000		XTO Energy, Inc., 6.750%, 08/01/2037		58,578
	65,000		XTO Energy, Inc., Sr. Unsecd. Note, 6.250%, 08/01/2017		64,802
			TOTAL		510,660
Principal Amount					Value
			CORPORATE BONDS--continued
			Energy - Integrated--0.2%
$	225,000		Conoco, Inc., 7.250%, 10/15/2031	$	256,628
	200,000		Husky Oil Ltd., Deb., 7.550%, 11/15/2016		220,542
			TOTAL		477,170
			Energy - Oil Field Services--0.0%
	80,000		Weatherford International Ltd., 6.000%, 03/15/2018		79,042
			Energy - Refining--0.1%
	100,000		Valero Energy Corp., 6.875%, 04/15/2012		103,144
	115,000		Valero Energy Corp., 7.500%, 04/15/2032		110,086
	35,000		Valero Energy Corp., Note, 4.750%, 04/01/2014		32,203
			TOTAL		245,433
			Financial Institution - Banking--0.8%
	125,000	2,3	Barclays Bank PLC, 5.926%, 12/31/2049		101,974
	200,000		Citigroup, Inc., Note, 5.125%, 02/14/2011		198,401
	155,000		Citigroup, Inc., Sr. Unsecd. Note, 6.875%, 03/05/2038		151,622
	150,000		Credit Suisse First Boston USA, Inc., 5.125%, 01/15/2014		146,362
	150,000		Credit Suisse First Boston USA, Inc., Sr. Note, 5.500%, 08/16/2011		151,466
	200,000		Household Finance Corp., 7.000%, 05/15/2012		207,655
	100,000		JPMorgan Chase & Co., Sub. Note, 5.125%, 09/15/2014		95,303
	100,000		Marshall & Ilsley Bank, Milwaukee, Sr. Note, 4.400%, 03/15/2010		96,976
	200,000		Northern Trust Corp., Sr. Note, 5.300%, 08/29/2011		203,568
	200,000		PNC Funding Corp., Sub. Note, 5.625%, 02/01/2017		183,647
	100,000		PNC Funding Corp., Sub. Note, 7.500%, 11/01/2009		103,572
	100,000		Popular North America, Inc., 5.650%, 04/15/2009		98,300
	250,000		U.S. Bank, N.A., Sub. Note, 4.950%, 10/30/2014		239,425
	200,000		Wachovia Bank N.A., 4.800%, 11/01/2014		168,920
	30,000		Wachovia Corp., 5.750%, 02/01/2018		25,820
	200,000		Washington Mutual Bank, 5.125%, 01/15/2015		130,162
	100,000		Wells Fargo Bank, N.A., Sub. Note, 6.450%, 02/01/2011		103,902
	100,000		Wilmington Trust Corp., Sub. Note, 8.500%, 04/02/2018		100,544
	75,000		Zions Bancorp, Sub. Note, 5.500%, 11/16/2015		50,689
			TOTAL		2,558,308
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - Brokerage--0.6%
$	130,000		Bear Stearns Cos., Inc., Sr. Unsecd. Note, 7.250%, 02/01/2018	$	136,668
	250,000		Blackrock, Inc., 6.250%, 09/15/2017		242,168
	120,000		Eaton Vance Corp., 6.500%, 10/02/2017		121,233
	150,000	2,3	FMR Corp., Bond, 7.570%, 06/15/2029		163,700
	25,000		Goldman Sachs Group, Inc., 6.125%, 02/15/2033		21,747
	150,000		Goldman Sachs Group, Inc., Note, 5.250%, 10/15/2013		147,198
	170,000		Goldman Sachs Group, Inc., Sr. Note, 6.150%, 04/01/2018		164,638
	100,000		Invesco Ltd., Note, 4.500%, 12/15/2009		98,320
	75,000		Janus Capital Group, Inc., Sr. Note, 6.250%, 06/15/2012		72,714
	80,000		Janus Capital Group, Inc., Sr. Note, 6.700%, 06/15/2017		74,604
	135,000		Lehman Brothers Holdings, Inc., Sub. Deb., 6.500%, 07/19/2017		122,348
	115,000		Lehman Brothers Holdings, Inc., Sub. Deb., 6.875%, 07/17/2037		96,231
	85,000		Merrill Lynch & Co., Inc., Note, 4.125%, 09/10/2009		83,173
	150,000		Merrill Lynch & Co., Inc., Unsecd. Note, 5.450%, 07/15/2014		134,946
	100,000		Morgan Stanley, Note, 4.000%, 01/15/2010		98,704
	35,000		Morgan Stanley, Sr. Unsecd. Note, 5.950%, 12/28/2017		31,035
	70,000		Morgan Stanley, Sr. Unsecd. Note, 6.000%, 04/28/2015		64,920
	110,000		Morgan Stanley, Sr. Unsecd. Note, 6.625%, 04/01/2018		103,073
			TOTAL		1,977,420
			Financial Institution - Finance Noncaptive--0.5%
	100,000		American Express Co., 4.750%, 06/17/2009		100,452
	100,000		American Express Co., 4.875%, 07/15/2013		94,994
	150,000		American Express Credit Corp., 5.875%, 05/02/2013		147,772
	100,000		American General Finance Corp., 4.000%, 03/15/2011		88,700
	150,000		Berkshire Hathaway, Inc., Company Guarantee, 4.850%, 01/15/2015		149,359
	120,000		Capital One Capital IV, 6.745%, 02/17/2037		85,289
	90,000		Capmark Financial Group, Inc., Company Guarantee, Series WI, 6.300%, 05/10/2017		53,047
	240,000		General Electric Capital Corp., 5.625%, 05/01/2018		234,328
	200,000		General Electric Capital Corp., Note, 4.875%, 03/04/2015		196,870
	100,000		HSBC Finance Capital Trust IX, Note, 5.911%, 11/30/2035		80,163
	200,000	2,3	ILFC E-Capital Trust I, 5.900%, 12/21/2065		145,102
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - Finance Noncaptive--continued
$	100,000		International Lease Finance Corp., 4.875%, 09/01/2010	$	93,399
	100,000		International Lease Finance Corp., 6.625%, 11/15/2013		89,431
			TOTAL		1,558,906
			Financial Institution - Insurance - Health--0.1%
	75,000		Aetna US Healthcare, 5.750%, 06/15/2011		75,878
	60,000		CIGNA Corp., 6.350%, 03/15/2018		60,011
	100,000		UnitedHealth Group, Inc., Bond, 6.000%, 02/15/2018		95,770
			TOTAL		231,659
			Financial Institution - Insurance - Life--0.2%
	200,000		AXA-UAP, Sub. Note, 8.600%, 12/15/2030		196,297
	85,000	2,3	Pacific Life Global Funding, Note, 5.150%, 04/15/2013		84,639
	120,000		Prudential Financial, Inc., 5.150%, 01/15/2013		117,244
	85,000		Prudential Financial, Inc., 6.625%, 12/01/2037		78,583
			TOTAL		476,763
			Financial Institution - Insurance - P&C--0.3%
	90,000		ACE INA Holdings, Inc., 5.600%, 05/15/2015		86,478
	91,000		ACE INA Holdings, Inc., Sr. Note, 5.700%, 02/15/2017		87,346
	100,000		Allstate Corp., Unsecd. Note, 5.000%, 08/15/2014		97,386
	75,000		CNA Financial Corp., 6.500%, 08/15/2016		71,406
	20,000		Chubb Corp., Sr. Note, 5.750%, 05/15/2018		19,336
	100,000	2,3	Liberty Mutual Group, Inc., Unsecd. Note, 5.750%, 03/15/2014		94,197
	100,000		The Travelers Cos., Inc., Sr. Unsecd. Note, 5.500%, 12/01/2015		96,973
	500,000	2,3	ZFS Finance USA Trust I, Jr. Sub. Note, 6.150%, 12/15/2065		457,634
			TOTAL		1,010,756
			Financial Institution - REITs--0.1%
	40,000		AMB Property LP, 6.300%, 06/01/2013		39,582
	20,000		Equity One, Inc., Bond, 6.000%, 09/15/2017		16,576
	75,000		Liberty Property LP, 6.625%, 10/01/2017		69,016
	100,000		Prologis, Sr. Note, 5.500%, 04/01/2012		96,156
	95,000		Simon Property Group LP, 6.125%, 05/30/2018		88,741
			TOTAL		310,071
Principal Amount					Value
			CORPORATE BONDS--continued
			Foreign-Local-Government--0.0%
$	100,000		Ontario, Province of, Note, 4.500%, 02/03/2015	$	100,344
			Technology--0.4%
	40,000		BMC Software, Inc., 7.250%, 06/01/2018		40,595
	75,000		Cisco Systems, Inc., Note, 5.250%, 02/22/2011		77,396
	60,000		Cisco Systems, Inc., Sr. Unsecd. Note, 5.500%, 02/22/2016		60,783
	200,000		Dell Computer Corp., Deb., 7.100%, 04/15/2028		205,441
	75,000		Dun & Bradstreet Corp., Sr. Unsecd. Note, 5.500%, 03/15/2011		76,052
	80,000		Fiserv, Inc., Sr. Note, 6.800%, 11/20/2017		79,908
	65,000		Harris Corp., 5.950%, 12/01/2017		65,242
	100,000		Hewlett-Packard Co., Note, 5.400%, 03/01/2017		99,068
	125,000		Hewlett-Packard Co., Note, 6.500%, 07/01/2012		133,700
	100,000		IBM Corp., Deb., 8.375%, 11/01/2019		122,236
	70,000		KLA-Tencor Corp., 6.900%, 05/01/2018		69,089
	150,000		Oracle Corp., 6.500%, 04/15/2038		150,118
			TOTAL		1,179,628
			Transportation - Airlines--0.0%
	75,000		Southwest Airlines Co., 6.500%, 03/01/2012		73,986
	50,000		Southwest Airlines Co., Deb., 7.375%, 03/01/2027		43,996
			TOTAL		117,982
			Transportation - Railroads--0.1%
	75,000		Burlington Northern Santa Fe Corp., 4.875%, 01/15/2015		71,249
	100,000		Canadian Pacific RR, 7.125%, 10/15/2031		97,974
	100,000		Norfolk Southern Corp., Note, 6.750%, 02/15/2011		104,616
	100,000		Union Pacific Corp., 4.875%, 01/15/2015		93,976
			TOTAL		367,815
			Transportation - Services--0.1%
	90,000	2,3	Enterprise Rent-A-Car USA Finance Co., 6.375%, 10/15/2017		78,421
	100,000		FedEx Corp., Note, 5.500%, 08/15/2009		101,301
			TOTAL		179,722
			Utility - Electric--0.6%
	150,000		Alabama Power Co., 5.700%, 02/15/2033		140,713
	100,000		Cleveland Electric Illuminating Co., Sr. Unsecd. Note, 5.950%, 12/15/2036		84,553
Principal Amount					Value
			CORPORATE BONDS--continued
			Utility - Electric--continued
$	105,000		Commonwealth Edison Co., 1st Mtg. Bond, 5.800%, 03/15/2018	$	102,609
	100,000		Consolidated Edison Co., Sr. Unsecd. Note, 5.500%, 09/15/2016		100,211
	100,000		Exelon Generation Co. LLC, Note, 5.350%, 01/15/2014		96,042
	100,000		FPL Group Capital, Inc., Unsecd. Note, 5.350%, 06/15/2013		101,779
	100,000		FirstEnergy Corp., 6.450%, 11/15/2011		102,310
	48,018	2,3	Great River Energy, 1st Mtg. Note, 5.829%, 07/01/2017		46,596
	200,000		MidAmerican Energy Co., 4.650%, 10/01/2014		194,093
	40,000		National Rural Utilities Cooperative Finance Corp., 5.450%, 02/01/2018		38,941
	90,000		National Rural Utilities Cooperative Finance Corp., Collateral Trust, 5.500%, 07/01/2013		91,725
	80,000		Northern States Power Co., MN, 1st Mtg. Bond, 5.250%, 3/01/2018		79,303
	50,000		PPL Energy Supply LLC, Sr. Unsecd. Note, 6.000%, 12/15/2036		41,308
	100,000		PSEG Power LLC, Company Guarantee, 7.750%, 04/15/2011		105,373
	75,000		PSI Energy, Inc., Bond, 6.050%, 06/15/2016		75,144
	50,000		Pacific Gas & Electric Co., 6.050%, 03/01/2034		48,151
	100,000		Pacific Gas & Electric Co., Unsecd. Note, 4.200%, 03/01/2011		99,519
	90,000		Union Electric Co., 6.000%, 04/01/2018		87,330
	90,000		Virginia Electric & Power Co., Sr. Unsecd. Note, 5.100%, 11/30/2012		90,168
			TOTAL		1,725,868
			Utility - Natural Gas Pipelines--0.1%
	150,000		Consolidated Natural Gas Co., 5.000%, 12/01/2014		143,973
	75,000		Duke Capital Corp., Sr. Note, 6.250%, 02/15/2013		77,073
	40,000		Enbridge, Inc., Sr. Note, 5.600%, 04/01/2017		38,702
	100,000		Kinder Morgan Energy Partners LP, Sr. Unsecd. Note, 5.800%, 03/15/2035		85,188
			TOTAL		344,936
			TOTAL CORPORATE BONDS (IDENTIFIED COST $21,232,917)		20,346,177
			CORPORATE NOTE--1.6%
			Securities Brokerage--1.6%
	5,000,000	4	Merrill Lynch & Co., Inc., Commodity-Linked Note, 3.020%, 01/05/2009 (IDENTIFIED COST $5,000,000)		5,047,200
			GOVERNMENT/AGENCY--0.0%
	75,000		United Mexican States, 6.625%, 03/03/2015 (IDENTIFIED COST $81,171)		80,359
Principal Amount or Shares					Value
			GOVERNMENT AGENCIES--4.5%
$	750,000		Federal Home Loan Mortgage Corp., 5.500%, 7/18/2016	$	797,035
	8,600,000		Federal National Mortgage Association, 4.375%, 3/15/2013		8,747,525
	4,300,000		Federal National Mortgage Association, 4.750%, 11/19/2012		4,433,670
			TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $14,027,553)		13,978,230
			MORTGAGE-BACKED SECURITIES--0.7%
	2,176,489		Federal Home Loan Mortgage Corp. Pool G04281, 5.500%, 30 Year, 5/1/2038		2,134,248
	17,012		Federal National Mortgage Association Pool 408761, 7.000%, 12/1/2012		17,590
	10,592		Federal National Mortgage Association Pool 512255, 7.500%, 9/1/2014		11,125
	22,659		Federal National Mortgage Association Pool 609554, 7.500%, 10/1/2016		23,881
			TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $2,249,622)		2,186,844
			U.S. TREASURY--1.4%
	1,983,940	5	U.S. Treasury Inflation-Protected Note, 2.500%, 7/15/2016		2,133,351
	800,000		United States Treasury Note, 3.375%, 6/30/2013		805,562
	1,300,000	5	United States Treasury Note, 4.750%, 3/31/2011		1,367,241
			TOTAL U.S. TREASURY (IDENTIFIED COST $4,187,018)		4,306,154
			EXCHANGE-TRADED FUNDS--3.3%
	107,000		iShares MSCI EAFE Index Fund		7,103,730
	69,420		iShares MSCI Emerging Market Fund		2,960,763
			TOTAL EXCHANGE-TRADED FUNDS (IDENTIFIED COST $8,901,974)		10,064,493
			MUTUAL FUNDS--22.5% 6
	37,605		Emerging Markets Fixed Income Core Fund		821,392
	4,634,906		Federated Mortgage Core Portfolio		45,143,982
	544,156		High Yield Bond Portfolio		3,346,557
	19,839,871	7	Prime Value Obligations Fund, Institutional Shares, 2.58%		19,839,871
			TOTAL MUTUAL FUNDS (IDENTIFIED COST $69,084,509)		69,151,802
			TOTAL INVESTMENTS--99.5% (IDENTIFIED COST $314,201,751) 8		306,618,536
			OTHER ASSETS AND LIABILITIES - NET--0.5% 9		1,528,218
			TOTAL NET ASSETS--100%	$	308,146,754

At July 31, 2008, the Fund had the following outstanding futures contracts:

	Description	Number of Contracts	Notional Value	Expiration Date	Unrealized Appreciation
1	United States Treasury Notes 5-Year Long Futures	182	$20,263,141	September 2008	$55,873

Unrealized Appreciation on Futures Contracts is included in "Other Assets and Liabilities - Net."

1 Non-income-producing security.

2 Denotes a restricted security that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) is subject to a contractual restriction on public sales. At July 31, 2008, these restricted securities amounted to $1,628,369, which represented 0.5% of total net assets.

3 Denotes a restricted security that may be resold without restriction to "qualified institutional buyers" as defined in Rule 144A under the Securities Act of 1933 and that the Fund has determined to be liquid under criteria established by the Fund's Board of Trustees (the "Trustees"). At July 31, 2008, these liquid restricted securities amounted to $1,628,369, which represented 0.5% of total net assets.

4 Zero coupon bond, reflects effective rate at time of purchase.

5 Pledged as collateral to ensure the Fund is able to satisfy the obligations of its outstanding futures contracts.

6 Affiliated companies.

7 7-Day net yield.

8 The cost of investments for federal tax purposes amounts to $318,880,098.

9 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

The following acronyms are used throughout this portfolio:

REITs	- --Real Estate Investment Trust
REMIC	- --Real Estate Mortgage Investment Conduit

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $69,151,802 of investments in affiliated issuers (Note 5) (identified cost $314,201,751)			$	306,618,536
Cash				249,085
Income receivable				750,935
Receivable for investments sold				1,645,242
Receivable for shares sold				236,481
Receivable for daily variation margin				76,387
TOTAL ASSETS				309,576,666
Liabilities:
Payable for investments purchased	$	786,625
Payable for shares redeemed		291,398
Payable for auditing fees		24,100
Payable for transfer and dividend disbursing agent fees and expenses		41,464
Payable for portfolio accounting fees		9,351
Payable for share registration costs		37,263
Payable for distribution services fee (Note 5)		52,923
Payable for shareholder services fee (Note 5)		116,527
Accrued expenses		70,261
TOTAL LIABILITIES				1,429,912
Net assets for 24,721,175 shares outstanding			$	308,146,754
Net Assets Consist of:
Paid-in capital			$	330,910,495
Net unrealized depreciation of investments, futures contracts and translation of assets and liabilities in foreign currency				(7,527,342	)
Accumulated net realized loss on investments, futures contracts, swap contracts and foreign currency transactions				(18,415,616	)
Undistributed net investment income				3,179,217
TOTAL NET ASSETS			$	308,146,754
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($71,948,769 ÷ 5,724,530 shares outstanding), no par value, unlimited shares authorized				$12.57
Offering price per share				$12.57
Redemption proceeds per share				$12.57

Statement of Assets and Liabilities - continued

Class A Shares:
Net asset value per share ($153,457,857 ÷ 12,269,700 shares outstanding), no par value, unlimited shares authorized	$12.51
Offering price per share (100/94.50 of $12.51) 1	$13.24
Redemption proceeds per share	$12.51
Class C Shares:
Net asset value per share ($82,032,623 ÷ 6,670,393 shares outstanding), no par value, unlimited shares authorized	$12.30
Offering price per share	$12.30
Redemption proceeds per share (99.00/100 of $12.30) 1	$12.18
Class K Shares:
Net asset value per share ($707,505 ÷ 56,552 shares outstanding), no par value, unlimited shares authorized	$12.51
Offering price per share	$12.51
Redemption proceeds per share	$12.51

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $3,080,536 received from affiliated issuers (Note 5) and net of foreign taxes withheld of $102)			$	7,360,457
Interest				1,958,392
Investment income allocated from affiliated partnership (Note 2 and Note 5)				97,665
TOTAL INCOME				9,416,514
Expenses:
Investment adviser fee (Note 5)	$	2,090,538
Administrative personnel and services fee (Note 5)		270,000
Custodian fees		57,543
Transfer and dividend disbursing agent fees and expenses--Institutional Shares		61,784
Transfer and dividend disbursing agent fees and expenses--Class A Shares		136,273
Transfer and dividend disbursing agent fees and expenses--Class C Shares		70,632
Transfer and dividend disbursing agent fees and expenses--Class K Shares		375
Directors'/Trustees' fees		1,419
Auditing fees		26,800
Legal fees		12,266
Portfolio accounting fees		127,318
Distribution services fee--Class C Shares (Note 5)		554,405
Distribution services fee--Class K Shares (Note 5)		687
Shareholder services fee--Class A Shares (Note 5)		279,844
Shareholder services fee--Class C Shares (Note 5)		126,617
Account administration fee--Class A Shares		25,061
Account administration fee--Class C Shares		55,877
Share registration costs		77,652
Printing and postage		93,081
Insurance premiums		4,814
Taxes		741
Interest expense		825
Miscellaneous		5,896
EXPENSES BEFORE ALLOCATION		4,080,448
Expenses allocated from affiliated partnership (Note 2)		872
TOTAL EXPENSES		4,081,320

Statement of Operations - continued

Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee	$	(20,727	)
Waiver of administrative personnel and services fee		(52,211	)
Reimbursement of transfer and dividend disbursing agent fees and expenses--Institutional Shares		(29	)
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class A Shares		(5,071	)
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class C Shares		(2,054	)
Reimbursement of other operating expenses		(741	)
TOTAL WAIVERS AND REIMBURSEMENTS				$	(80,833	)
Net expenses							$	4,000,487
Net investment income								5,416,027
Realized and Unrealized Gain (Loss) on Investments, Futures Contracts, Swap Contracts and Foreign Currency Transactions:
Net realized loss on investments and foreign currency transactions (including realized loss of $181,396 on sales of investments in affiliated issuers)								(17,823,283	)
Net realized gain on futures contracts								275,392
Net realized gain on swap contracts								9,511
Net realized loss and foreign currency transactions allocated from affiliated partnership								(11,795)
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign currency								(17,051,005	)
Net change in unrealized depreciation of futures contracts								96,209
Net realized and unrealized loss on investments, futures contracts, swap contracts and foreign currency transactions								(34,504,971	)
Change in net assets resulting from operations							$	(29,088,944	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31,		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	5,416,027		$	2,013,061
Net realized gain (loss) on investments including allocations from partnership, futures contracts and swap contracts		(17,550,175	)		8,572,488
Net change in unrealized appreciation/depreciation of investments, futures contracts and translation of assets and liabilities in foreign currency		(16,954,796	)		746,098
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(29,088,944	)		11,331,647
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares		(1,062,997	)		(966,746	)
Class A Shares		(1,792,159	)		(418,667	)
Class C Shares		(1,022,750	)		(75,923	)
Class K Shares		(302	)		(1	)
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions
Institutional Shares		(1,999,436	)		(3,727,211	)
Class A Shares		(3,699,741	)		(1,712,874	)
Class C Shares		(2,473,216	)		(451,805	)
Class K Shares		(818	)		(4	)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(12,051,419	)		(7,353,231	)
Share Transactions:
Proceeds from sale of shares		79,093,725			84,031,582
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Conservative Allocation Fund		52,857,254			- --
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Growth Allocation Fund		48,170,456			- --
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Moderate Allocation Fund		93,208,403			- --
Net asset value of shares issued to shareholders in payment of distributions declared		11,084,827			7,010,766
Cost of shares redeemed		(83,721,442	)		(26,053,811	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		200,693,223			64,988,537
Redemption Fees		- --			7,476
Change in net assets		159,552,860			68,974,429
Net Assets:
Beginning of period		148,593,894			79,619,465
End of period (including undistributed net investment income of $3,179,217 and $1,154,151, respectively)	$	308,146,754		$	148,593,894

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine portfolios. The financial statements included herein are only those of Federated MDT Balanced Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Institutional Shares, Class A Shares, Class C Shares and Class K Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The Financial Highlights of the Class A Shares, Class C Shares and Class K Shares are presented separately. The primary investment objective of the Fund is the possibility of long-term growth of capital and income.

MDT Balanced Fund (the "Predecessor Fund") was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced offering Class A Shares and Class C Shares on September 15, 2005.

The Fund commenced offering Class K Shares on December 12, 2006.

On October 26, 2007, the Fund received a tax-free transfer of assets from Federated Conservative Allocation Fund (FCAF), Federated Growth Allocation Fund (FGAF) and Federated Moderate Allocation Fund (FMAF) (collectively, "Acquired Funds") as follows:

	Shares of the Fund Issued	Acquired Funds Net Assets Received	Unrealized Appreciation 1	Net Assets of the Fund Immediately Prior to Combination	Net Assets of Acquired Funds Immediately Prior to Combination	Net Assets of the Fund Immediately After Combination
FCAF	3,640,126	$ 52,857,254	$1,026,380		$ 52,857,254
FGAF	3,325,359	$ 48,170,456	$1,009,181		$ 48,170,456
FMAF	6,421,560	$ 93,208,403	$1,945,499		$ 93,208,403
TOTAL	13,387,045	$194,236,113	$3,981,060	$161,345,386	$194,236,113	$355,581,499

1 Unrealized appreciation is included in the Acquired Funds Net Assets Received amount shown above.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
• Shares of other mutual funds are valued based upon their reported NAVs.
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund may invest in portfolios of Federated Core Trust (Core Trust), which is managed by Federated Investment Management Company, an affiliate of the Fund's Adviser. Core Trust is an open-end management company, registered under the Act, available only to registered investment companies and other institutional investors. The investment objective of High Yield Bond Portfolio, a series of Core Trust, is to seek high current income by investing primarily in a diversified portfolio of lower rated fixed-income securities. The investment objective of Federated Mortgage Core Portfolio, a series of Core Trust, is to achieve total return on assets. Federated receives no advisory or administrative fees on behalf of Core Trust. Income distributions from Core Trust are declared daily and paid monthly and are recorded by the Fund as dividend income. Capital gain distributions, if any, from Core Trust are declared and paid annually, and are recorded by the Fund as capital gains. The performance of the Fund is directly affected by the performance of the Core Trust. A copy of the Core Trust's financial statements is available on the EDGAR Database on the SEC's website www.sec.gov, at the Commission's Public Reference Room in Washington, DC or upon request from the Fund by calling 1-800-341-7400.

The Fund may also invest in portfolios of Federated Core Trust II (Core Trust II), pursuant to a separate Exemptive Order issued by the SEC. Core Trust II is independently managed by Federated Investment Counseling. Core Trust II is a limited partnership established under the laws of the state of Delaware on November 13, 2000, registered under the Act and offered only to registered investment companies and other accredited investors. The investment objective of Emerging Markets Fixed Income Core Fund (EMCORE), a series of Core Trust II, is to achieve total return on assets. Federated receives no advisory or administrative fees on behalf of the Core Trust II. The Fund records daily its proportionate share of income, expenses, realized and unrealized gains and losses from EMCORE. The performance of the Fund is directly affected by the performance of the portfolio. A copy of EMCORE's financial statements is available on the EDGAR Database on the SEC's website www.sec.gov, at the Commission's Public Reference Room in Washington, DC or upon request from the Fund by calling 1-800-341-7400.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Inflation adjustments on Treasury Inflation-Protected Securities (TIPS) are included in interest income. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that Institutional Shares, Class A Shares, Class C Shares and Class K Shares may bear distribution services fees, shareholder services fees, account administration fees and certain transfer and dividend disbursing agent fees unique to those classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization/Paydown Gains and Losses

All premiums and discounts on fixed-income securities, other than mortgage-backed securities, are amortized/accreted for financial statement purposes. Gains and losses realized on principal payment of mortgage-backed securities (paydown gains and losses) are classified as part of investment income.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2005 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

Withholding taxes and where appropriate, deferred withholding taxes on foreign interest, dividends and capital gains have been provided for in accordance with the applicable country's tax rules and rates.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Swap Contracts

Swap contracts involve two parties that agree to exchange the returns (or the differential in rates of return) earned or realized on particular predetermined investments, instruments, indices or other measures. The gross returns to be exchanged or "swapped" between parties are generally calculated with respect to a "notional amount" for a predetermined period of time. The Fund may enter into interest rate, total return, credit default, foreign exchange and other swap agreements.

Total return swap agreements involve the commitment to pay or receive an amount generally determined by reference to an interest rate in exchange for a specific market-linked return, based on notional amounts. To the extent that the total return of the security or index underlying the transactions exceeds or falls short of the offsetting interest-rate-based obligation, the Fund receives or makes a payment to the counterparty.

The "buyer" in a credit default swap is obligated to pay the "seller" a periodic stream of payments over the term of the contract provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or the "par value," of the reference obligation in exchange for the reference obligation. The Fund may be either the buyer or seller in a credit default swap transaction. Risks may arise upon entering into swap agreements from the potential inability of the counterparties to meet the terms of their contract or from unanticipated changes in the value of the swap agreement.

Upfront payments received or paid by the Fund will be reflected as an asset or liability on the Statement of Assets and Liabilities. Changes in the value of swap contracts are included in "Swaps, at value," on the Statement of Assets and Liabilities, and periodic payments are reported as "Net realized gain on swap contracts" in the Statement of Operations. For the year ended July 31, 2008, the Fund had a net realized gain on swap contracts of $9,511.

At July 31, 2008, the Fund had no outstanding swap contracts.

Futures Contracts

The Fund purchases and sells financial futures contracts to manage cashflows, enhance yield and to potentially reduce transaction costs. Upon entering into a financial futures contract with a broker, the Fund is required to deposit in a segregated account a specified amount of cash or U.S. government securities. Futures contracts are valued daily and unrealized gains or losses are recorded in a "variation margin" account. Daily, the Fund receives from or pays to the broker a specified amount of cash based upon changes in the variation margin account. When a contract is closed, the Fund recognizes a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with the changes in the value of the underlying securities. For the year ended July 31, 2008, the Fund had a net realized gain on futures contracts of $275,392.

Futures contracts outstanding at period end are listed after the Fund's Portfolio of Investments.

Foreign Exchange Contracts

The Fund may enter into foreign exchange contracts for the delayed delivery of securities or foreign currency exchange transactions. The Fund may enter into foreign exchange contracts to protect assets against adverse changes in foreign currency exchange rates or exchange control regulations. Purchased contracts are used to acquire exposure to foreign currencies, whereas, contracts to sell are used to hedge the Fund's securities against currency fluctuations. Risks may arise upon entering into these transactions from the potential inability of counterparties to meet the terms of their commitments and from unanticipated movements in security prices or foreign exchange rates. The foreign exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized until the settlement date.

At July 31, 2008, the Fund had no outstanding foreign exchange contracts.

Foreign Currency Translation

The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies (FCs) are translated into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. 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.

Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.

Restricted Securities

Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security has agreed to register such securities for resale, at the issuer's expense, either upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund's restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	453,471		$	6,231,682		603,137		$	8,390,088
Shares issued to shareholders in payment of distributions declared	213,271			2,951,673		346,321			4,668,405
Shares redeemed	(861,304	)		(11,695,320	)	(604,149	)		(8,303,830	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	(194,562	)	$	(2,511,965	)	345,309		$	4,754,663
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	4,581,561		$	60,907,542		4,589,586		$	62,628,792
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Conservative Allocation Fund	2,233,258			32,583,802		- --			- --
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Growth Allocation Fund	1,400,840			20,438,742		- --			- --
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Moderate Allocation Fund	3,731,944			54,450,162		- --			- --
Shares issued to shareholders in payment of distributions declared	349,074			4,817,220		144,782			1,948,759
Shares redeemed	(3,748,791	)		(50,990,523	)	(1,161,046	)		(16,085,114	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	8,547,886		$	122,206,945		3,573,322		$	48,492,437
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	840,926		$	11,168,941		954,270		$	12,994,037
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Conservative Allocation Fund	1,406,868			20,273,452		- --			- --
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Growth Allocation Fund	1,924,519			27,731,714		- --			- --
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Moderate Allocation Fund	2,689,616			38,758,241		- --			- --
Shares issued to shareholders in payment of distributions declared	243,200			3,314,815		29,439			393,602
Shares redeemed	(1,594,694	)		(20,976,254	)	(121,568	)		(1,664,768	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	5,510,435		$	80,270,909		862,141		$	11,722,871
	Year Ended 7/31/2008					Period Ended 7/31/2007 1
Class K Shares:	Shares			Amount		Shares			Amount
Shares sold	59,681		$	785,560		1,340		$	18,665
Shares issued to shareholders in payment of distributions declared	81			1,119		- --			- --
Shares redeemed	(4,543	)		(59,345	)	(7	)		(99	)
NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS	55,219		$	727,334		1,333		$	18,566
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	13,918,978		$	200,693,223		4,782,105		$	64,988,537

1 Reflects operations for the period from December 12, 2006 (date of initial public investment) to July 31, 2007.

Redemption Fees

Prior to December 11, 2006, the Predecessor Fund imposed a 2.00% redemption fee to shareholders of the Fund's Institutional Shares, Class A Shares and Class C Shares who redeemed shares held for 30 days or less. Shares acquired by reinvestment of dividends or distributions of the Fund, or purchased pursuant to the Systematic Investment Program or withdrawn pursuant to the Systematic Withdrawal Program, were not subject to the redemption fee. All redemption fees are recorded by the Fund as additions to paid-in capital. For the year ended July 31, 2007, the Predecessor Fund incurred redemption fees for Institutional Shares, Class A Shares and Class C Shares amounted to $4,965, $1,978 and $533, respectively.

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due to differing treatments for gain on sale of Commodity Linked Notes, partnership income, foreign currency, swap income, merger wash sale loss deferrals and discount accretion/premium amortization on debt securities.

For the year ended July 31, 2008, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gain (Loss)
$357,494	$487,247	$(844,741)

Net investment income (loss), net realized gains (losses) and net assets were not affected by this reclassification.

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2008 and 2007, was as follows:

	2008	2007
Ordinary income 1	$8,670,987	$3,667,344
Long-term capital gains	$3,380,432	$3,685,887

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	3,200,846
Net unrealized depreciation	$	(12,271,410	)
Capital loss carryforwards and deferrals	$	(13,693,177	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales, deferral of paydowns, REIT adjustments, defaulted bonds, discount accretion/premium amortization on debt securities and partnership investments.

At July 31, 2008, the cost of investments for federal tax purposes was $318,880,098. The net unrealized depreciation of investments for federal tax purposes excluding any unrealized appreciation resulting from futures contracts was $12,261,562. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $10,141,075 and net unrealized depreciation from investments for those securities having an excess of cost over value of $22,402,637.

At July 31, 2008, the Fund had a capital loss carryforward of $49,998 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the 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. Pursuant to the Code, such capital loss carryforward will expire in 2016.

Under current tax regulations, capital losses on securities transactions and foreign currency losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post-October losses of $13,643,179 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for certain Classes of the Fund based on average daily net assets:

Share Class	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.25%
Class A Shares	1.50%
Class C Shares	2.25%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment and subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimburse at any time at its sole discretion. For the year ended July 31, 2008, the Adviser voluntarily waived $6,130 of its fee and voluntarily reimbursed $741 of other operating expenses. In addition, an affiliate of the Adviser reimbursed $7,154 of transfer and dividend disbursing agent fees and expenses.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement (the "Agreement"), provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. During the period from July 15, 2006 through December 8, 2006, the administrator contractually agreed to waive a portion of its fee which it would otherwise be entitled to receive from the Fund under the Agreement. The level of fees payable by the Fund to FAS for the period did not exceed the level of fees which the Fund would have paid during the period to its previous service provider under its previous administrative services contract. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the net fee paid to FAS was 0.078% of average daily net assets of the Fund. FAS waived $52,211 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act, which became effective December 11, 2006. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares, Class C Shares and Class K Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%
Class K Shares	0.50%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC:

Share Class	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $51,189 of fees paid by the Fund. For the year ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

For the year ended July 31, 2008, FSC retained $60,025 in sales charges from the sale of Class A Shares. FSC also retained $2,782 of contingent deferred sales charges relating to redemptions of Class C Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the year ended July 31, 2008, FSSC did not receive any fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the Financial Highlights, but excluding expenses allocated from partnerships) paid by the Fund's Institutional Shares, Class A Shares, Class C Shares and Class K Shares (after the voluntary waivers and reimbursements) will not exceed 1.05%, 1.30%, 2.05% and 1.79%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $14,597. Transactions with affiliated companies during the year ended July 31, 2008 were as follows:

Affiliates	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income/ Allocated Investment Income
Emerging Markets Fixed Income Core Fund	29,223	67,130	58,748	37,605	$ 821,392	$ 97,665
Federated Mortgage Core Portfolio	1,720,828	3,694,626	780,548	4,634,906	$45,143,982	$2,110,983
High Yield Bond Portfolio	264,523	860,252	580,619	544,156	$3,346,557	$ 327,668
Prime Value Obligations Fund, Institutional Shares	8,187,131	138,246,863	126,594,123	19,839,871	$ 19,839,871	$ 641,885
TOTAL OF AFFILIATED TRANSACTIONS	10,201,705	142,868,871	128,014,038	25,056,538	$ 69,151,802	$3,178,201

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	390,481,971
Sales	$	385,049,550

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses, and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2008, the amount of long-term capital gains designated by the Fund was $3,380,432.

For the fiscal year ended July 31, 2008, 27.04% of total ordinary income (including short-term capital gain) distributions made by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended July 31, 2008, 18.34% qualify for the dividend-received deduction available to corporate shareholders.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND SHAREHOLDERS OF FEDERATED MDT BALANCED FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Balanced Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the two years in the period ended July 31, 2005 were audited by another independent registered public accounting firm whose report, dated September 19, 2005 expressed an unqualified opinion on those financial highlights.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Balanced Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/ Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT BALANCED FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For both the one- and three-year periods ending December 31, 2007, the Fund's performance was above the median of the relevant peer group.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee, after waivers and expense reimbursements, if any, was above the median of the relevant peer group. The Board reviewed the fees and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive. In this regard, the Board had been previously advised that, while comparisons to fund peer groups are highly important in judging the reasonableness of advisory fees, the Fund's quantitative focus makes fee and expense comparisons particularly difficult. Although the Fund's advisory fee was above the median of the peer range, the peer group of funds varied widely in their complexity, and the management of the Fund is among the more complex relative to its peers. The Board will continue to monitor advisory fees and other expenses borne by the Fund.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT Balanced Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R825

37323 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Large Cap Growth Fund

Established 2005

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Class A Shares
Class B Shares
Class C Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$12.12		$10.17		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.06	) 3	(0.14	) 3	(0.10	) 3
Net realized and unrealized gain (loss) on investments	(0.48	)	2.20		0.27
TOTAL FROM INVESTMENT OPERATIONS	(0.54	)	2.06		0.17
Less Distributions:
Distributions from net realized gain on investments	(1.35	)	(0.11	)	- --
Net Asset Value, End of Period	$10.23		$12.12		$10.17
Total Return 4	(5.76	)%	20.38	%	1.70	%
Ratios to Average Net Assets:
Net expenses	1.50	%	1.50	%	2.01	% 5
Net investment income (loss)	(0.49	)%	(1.14	)%	(0.93	)% 5
Expense waiver/reimbursement 6	0.14	%	2.30	%	20.55	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$102,600		$88,826		$183
Portfolio turnover	320	%	630	%	237	%

1 MDT Large Cap Growth Fund (the "Predecessor Fund") was reorganized into Federated MDT Large Cap Growth Fund (the "Fund") as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class B Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended 7/31/2008		Period Ended 7/31/2007	1
Net Asset Value, Beginning of Period	$12.18		$11.48
Income From Investment Operations:
Net investment income (loss)	(0.14	) 2	(0.08	) 2
Net realized and unrealized gain (loss) on investments	(0.48	)	0.78
TOTAL FROM INVESTMENT OPERATIONS	(0.62	)	0.70
Less Distributions:
Distributions from net realized gain on investments	(1.35	)	- --
Net Asset Value, End of Period	$10.21		$12.18
Total Return 3	(6.43	)%	6.10	%
Ratios to Average Net Assets:
Net expenses	2.25	%	2.24	% 4
Net investment income (loss)	(1.22	)%	(1.95	)% 4
Expense waiver/reimbursement 5	0.14	%	0.54	% 4
Supplemental Data:
Net assets, end of period (000 omitted)	$22,138		$46,933
Portfolio turnover	320	%	630	% 6

1 Reflects operations for the period from March 29, 2007 (date of initial public investment) to July 31, 2007.

2 Per share numbers have been calculated using the average shares method.

3 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

4 Computed on an annualized basis.

5 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

6 Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended July 31, 2007.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$11.94		$10.10		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.13	) 3	(0.22	) 3	(0.19	) 3
Net realized and unrealized gain (loss) on investments	(0.47	)	2.17		0.29
TOTAL FROM INVESTMENT OPERATIONS	(0.60	)	1.95		0.10
Less Distributions:
Distributions from net realized gain on investments	(1.35	)	(0.11	)	- --
Net Asset Value, End of Period	$9.99		$11.94		$10.10
Total Return 4	(6.39	)%	19.42	%	1.00	%
Ratios to Average Net Assets:
Net expenses	2.22	%	2.25	%	2.76	% 5
Net investment income (loss)	(1.21	)%	(1.83	)%	(1.68	)% 5
Expense waiver/reimbursement 6	0.14	%	5.64	%	20.55	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$14,895		$14,388		$147
Portfolio turnover	320	%	630	%	237	%

1 The Predecessor Fund was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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, such as sales charges (loads) on purchase or redemption payments. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual:
Class A Shares	$1,000	$ 971.50	$ 7.35
Class B Shares	$1,000	$ 967.80	$11.01
Class C Shares	$1,000	$ 968.00	$10.76
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,017.40	$ 7.52
Class B Shares	$1,000	$1,013.67	$11.27
Class C Shares	$1,000	$1,013.92	$11.02

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

Class A Shares	1.50%
Class B Shares	2.25%
Class C Shares	2.20%

Management's Discussion of Fund Performance

The fund's total return, based on net asset value, for the fiscal year ended July 31, 2008 was (5.76)% for Class A Shares, (6.43)% for Class B Shares and (6.39)% for Class C Shares. The total return of the Russell 1000 ^® Growth Index (Russell 1000 ^® Growth) ¹ was (6.29)% and the total return of the Lipper Multi-Cap Growth Funds Index ² was (8.00)% for the same reporting period. The fund's total return for the fiscal year reflected actual cash flows, transaction costs and other expenses which were not reflected in the total return of the Russell Index.

1 The Russell 1000 ^® Growth Index measures the performance of those Russell 1000 ^® companies with higher price-to-book ratios and higher forecasted growth values. The index is unmanaged, and unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

2 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

MARKET OVERVIEW

Over the 12-month reporting period ending July 31, 2008, domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® Index, ³ which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the reporting period down (10.32)%. Small cap stocks had the best relative results as demonstrated by the (6.71)% return on the Russell 2000 ^® Index, ⁴ which exceeded the (10.10)% and (10.81)% results for the Russell Midcap ^® Index ⁵ and the Russell Top 200 ^® Index, ⁶ respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000 ^® Growth Index ⁷ returning (6.11)% as compared to (14.75)% for the Russell 3000 Value ^® Index. ⁸

The best performing sectors during the reporting period, as measured by the Russell 3000 ^® Index, were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

3 Russell 3000 ^® Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. The index is unmanaged, and unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

4 The Russell 2000 ^® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index. The index is unmanaged, and unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

5 The Russell Midcap ^® Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 31% of the total market capitalization of the Russell 1000 Index. The index is unmanaged, and unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

6 The Russell Top 200 ^® Index measures the performance of the 200 largest companies in the Russell 1000 Index, which represents approximately 69% of the total market capitalization of the Russell 1000 Index. The index is unmanaged, and unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

7 The Russell 3000 ^® Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000 Growth or the Russell 2000 Growth indexes. The index is unmanaged, and unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

8 The Russell 3000 ^® Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000 Value or the Russell 2000 Value indexes. The index is unmanaged, and unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

FUND PERFORMANCE

The most significant positive factor in the fund's performance relative to the Russell 1000 ^® Growth was its stock selection in the Information Technology sector. Additionally, the fund's stock selection in the Industrials sector and an overweight in the Materials sector provided moderate contributions to relative performance. The most significant negative factor in the fund's performance relative to the Russell 1000 ^® Growth was its underweight in the Energy sector. Stock selection in the Energy and Consumer Discretionary sectors also detracted moderately from relative performance.

Individual stocks contributing to the fund's performance relative to the Russell 1000 ^® Growth included: Monsanto Company, First Solar, Inc., a designer and manufacturer of solar energy technology, Gilead Sciences, Inc., a biopharmaceutical company, Apple Computer, Inc. and Mastercard, Inc.

Individual stocks detracting from the fund's performance relative to the Russell 1000 ^® Growth included: Las Vegas Sands Corporation, Boeing Company, Coventry Health Care, Precision Castparts and Franklin Resources, Inc.

GROWTH OF A $10,000 INVESTMENT - CLASS A SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Large Cap Growth Fund (Class A Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 1000 ^® Growth Index (Russell 1000 ^® Growth) ² and the Lipper Large-Cap Growth Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(10.97)%
Start of Performance (9/15/2005)	3.06%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum sales charge of 5.50%.

1 Represents a hypothetical investment of $10,000 in the fund after deducting the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge = $9,450). The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 1000 ^® Growth and the Lipper Large-Cap Growth Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 1000 ^® Growth is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

GROWTH OF A $10,000 INVESTMENT - CLASS B SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Large Cap Growth Fund (Class B Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 1000 ^® Growth Index (Russell 1000 ^® Growth) ² and the Lipper Large-Cap Growth Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(11.04)%
Start of Performance (9/15/2005) 4	3.14%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum contingent deferred sales charge (CDSC) of 5.50%, as applicable.

1 Represents a hypothetical investment of $10,000 in the fund. The maximum CDSC is 5.50% on any redemption less than one year from the purchase date. The Fund's performance assumes the reinvestment of all dividends and distributions. The Russell 1000 ^® Growth and the Lipper Large-Cap Growth Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 1000 ^® Growth is not adjusted to reflect sales charges, expenses or other fees that the SEC requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

4 The start of performance date was September 15, 2005. Class B Shares of the fund were offered beginning March 29, 2007. Performance results shown before that date are for the fund's Institutional Shares and have been adjusted for the maximum CDSC and total annual operating expenses applicable to the fund's Class B Shares. The fund's Institutional Shares commenced operations September 15, 2005. The fund's Class B Shares annual returns would have been substantially similar to those of the fund's Institutional Shares because Shares of each class are invested in the same portfolio of securities. Lipper figures do not reflect sales charges.

GROWTH OF A $10,000 INVESTMENT - CLASS C SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Large Cap Growth Fund (Class C Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 1000 ^® Growth Index (Russell 1000 ^® Growth) ² and the Lipper Large-Cap Growth Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(7.22)%
Start of Performance (9/15/2005)	4.31%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum contingent deferred sales charge (CDSC) of 1.00%, as applicable.

1 Represents a hypothetical investment of $10,000 in the fund. The maximum CDSC is 1.00% on any redemption less than one year from the purchase date. The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 1000 ^® Growth and the Lipper Large-Cap Growth Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 1000 ^® Growth is not adjusted to reflect sales charges, expenses or other fees that the SEC requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund's industry composition ¹ was as follows:

Industry	Percentage of Total Net Assets
Oil Well Supply	7.7%
Defense Electronics	7.2%
Biotechnology	5.7%
Multi-Industry Capital Goods	5.2%
Agricultural Chemicals	5.1%
Broadcasting	4.4%
Medical Supplies	3.9%
Defense Aerospace	3.7%
Services to Medical Professionals	3.6%
Financial Services	3.4%
Crude Oil & Gas Production	3.1%
Miscellaneous Machinery	3.1%
Advertising	3.1%
Ethical Drugs	3.0%
Software Packaged/Custom	2.8%
Computers--High End	2.2%
Railroad	2.0%
Bituminous Coal	1.8%
Undesignated Consumer Cyclicals	1.7%
Oil Service, Explore & Drill	1.6%
Securities Brokerage	1.6%
Restaurant	1.4%
Integrated Domestic Oil	1.4%
Construction Machinery	1.4%
Diversified Oil	1.3%
Computers--Midrange	1.3%
Copper	1.3%
Internet Services	1.3%
Undesignated Consumer Durables	1.2%
Discount Department Stores	1.2%
Computer Services	1.0%
Other Communications Equipment	1.0%
Other 2	9.7%
Cash Equivalents 3	0.4%
Other Assets and Liabilities--Net 4	0.2%
TOTAL	100.0%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's total net assets have been aggregated under the designation "Other."

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares					Value
			COMMON STOCKS--99.4%
			Advertising--3.1%
	106,328		Omnicom Group, Inc.	$	4,539,142
			Agricultural Chemicals--5.1%
	50,895		Monsanto Co.		6,062,103
	10,702	1	Mosaic Co./The		1,361,401
			TOTAL		7,423,504
			Auto Original Equipment Manufacturers--0.5%
	5,703	1	AutoZone, Inc.		743,044
			Biotechnology--5.7%
	4,960	1	Alexion Pharmaceuticals, Inc.		465,000
	5,477	1	Cephalon, Inc.		400,697
	106,183	1	Gilead Sciences, Inc.		5,731,758
	9,292	1	Illumina, Inc.		866,386
	15,060	1	OSI Pharmaceuticals, Inc.		792,608
			TOTAL		8,256,449
			Bituminous Coal--1.8%
	7,070		Arch Coal, Inc.		398,112
	10,410		Fluor Corp.		846,854
	9,403		Foundation Coal Holdings, Inc.		558,538
	10,330		Massey Energy Co.		767,003
			TOTAL		2,570,507
			Broadcasting--4.4%
	78,833	1	American Tower Systems Corp.		3,303,103
	117,346	1	DIRECTV Group, Inc.		3,170,689
			TOTAL		6,473,792
			Clothing Stores--0.2%
	12,503	1	Hanesbrands, Inc.		268,064
			Commodity Chemicals--0.7%
	53,195		RPM International, Inc.		1,090,498
Shares					Value
			COMMON STOCKS--continued
			Computer Services--1.0%
	23,076	1	Salesforce.com, Inc.	$	1,472,018
			Computer Stores--0.6%
	22,136	1	GameStop Corp.		896,729
			Computers - High End--2.2%
	24,886		IBM Corp.		3,184,910
			Computers - Low End--0.9%
	8,448	1	Apple, Inc.		1,342,810
			Computers - Midrange--1.3%
	43,366		Hewlett-Packard Co.		1,942,797
			Construction Machinery--1.4%
	5,298		Caterpillar, Inc.		368,317
	22,538		Joy Global, Inc.		1,627,694
			TOTAL		1,996,011
			Contracting--0.7%
	12,437	1	Jacobs Engineering Group, Inc.		961,878
			Copper--1.3%
	20,042		Freeport-McMoRan Copper & Gold, Inc.		1,939,064
			Crude Oil & Gas Production--3.1%
	3,823		EOG Resources, Inc.		384,326
	39,161	1	Southwestern Energy Co.		1,421,936
	38,692	1	Ultra Petroleum Corp.		2,761,835
			TOTAL		4,568,097
			Defense Aerospace--3.7%
	82,794		Boeing Co.		5,059,541
	2,678		Lockheed Martin Corp.		279,396
			TOTAL		5,338,937
			Defense Electronics--7.2%
	20,604	1	FLIR Systems, Inc.		839,407
	13,551	1	First Solar, Inc.		3,863,526
	19,994		L-3 Communications Holdings, Inc.		1,973,208
	77,067		Rockwell Collins		3,829,459
			TOTAL		10,505,600
Shares					Value
			COMMON STOCKS--continued
			Discount Department Stores--1.2%
	28,879		Wal-Mart Stores, Inc.	$	1,692,887
			Diversified Oil--1.3%
	11,664		Murphy Oil Corp.		929,971
	13,002		Occidental Petroleum Corp.		1,024,948
			TOTAL		1,954,919
			Electrical Equipment--0.7%
	25,303		Hubbell, Inc., Class B		1,066,775
			Ethical Drugs--3.0%
	132,571		Merck & Co., Inc.		4,361,586
			Financial Services--3.4%
	20,456		Mastercard, Inc.		4,994,332
			Industrial Machinery--0.0%
	295		Dover Corp.		14,641
	279		Flowserve Corp.		37,202
			TOTAL		51,843
			Integrated Domestic Oil--1.4%
	19,773		Hess Corp.		2,004,982
			Internet Services--1.3%
	13,312	1	Priceline.com, Inc.		1,530,214
	13,354	1	eBay, Inc.		336,120
			TOTAL		1,866,334
			Leasing--0.3%
	8,891		GATX Corp.		404,274
			Life Insurance--0.4%
	11,220		Aflac, Inc.		623,944
			Major Steel Producer--0.4%
	3,426		United States Steel Corp.		549,393
			Medical Supplies--3.9%
	105,381		Cardinal Health, Inc.		5,662,121
			Medical Technology--0.9%
	4,350	1	Intuitive Surgical, Inc.		1,354,112
Shares					Value
			COMMON STOCKS--continued
			Metal Containers--0.1%
	3,856		Ball Corp.	$	171,901
			Miscellaneous Components--0.9%
	28,244		Amphenol Corp., Class A		1,346,391
			Miscellaneous Machinery--3.1%
	94,757		Cooper Industries Ltd., Class A		3,995,903
	2,147		Nordson Corp.		151,707
	6,491		Roper Industries, Inc.		397,119
			TOTAL		4,544,729
			Multi-Industry Capital Goods--5.2%
	83,508		3M Co.		5,878,128
	26,434		Textron, Inc.		1,149,086
	8,293		United Technologies Corp.		530,586
			TOTAL		7,557,800
			Natural Gas Production--0.3%
	15,249	1	Quicksilver Resources, Inc.		398,914
			Offshore Driller--0.5%
	11,456		ENSCO International, Inc.		792,068
			Oil Service, Explore & Drill--1.6%
	41,120	1	Continental Resources, Inc.		2,348,774
			Oil Well Supply--7.7%
	7,277		Baker Hughes, Inc.		603,336
	12,296	1	Cameron International Corp.		587,257
	13,373	1	Dresser-Rand Group, Inc.		509,511
	24,888	1	FMC Technologies, Inc.		1,537,581
	7,889		Halliburton Co.		353,585
	54,105		Schlumberger Ltd.		5,497,068
	56,815	1	Weatherford International Ltd.		2,143,630
			TOTAL		11,231,968
			Other Communications Equipment--1.0%
	30,448		Harris Corp.		1,466,071
Shares					Value
			COMMON STOCKS--continued
			Psychiatric Centers--0.2%
	9,021	1	Psychiatric Solutions, Inc.	$	315,915
			Railroad--2.0%
	3,764		Burlington Northern Santa Fe Corp.		391,945
	14,055		CSX Corp.		949,837
	19,026		Union Pacific Corp.		1,568,503
			TOTAL		2,910,285
			Restaurant--1.4%
	29,114		Darden Restaurants, Inc.		948,243
	28,624	1	Jack in the Box, Inc.		617,706
	7,657		McDonald's Corp.		457,812
			TOTAL		2,023,761
			Securities Brokerage--1.6%
	22,867	1	InterContinentalExchange, Inc.		2,282,127
			Services to Medical Professionals--3.6%
	53,054	1	Express Scripts, Inc., Class A		3,742,429
	31,764	1	Medco Health Solutions, Inc.		1,574,859
			TOTAL		5,317,288
			Software Packaged/Custom--2.8%
	19,911	1	Adobe Systems, Inc.		823,320
	11,348	1	Ansys, Inc.		520,646
	7,227	1	Electronic Arts, Inc.		312,062
	50,012		Microsoft Corp.		1,286,309
	32,011	1	Sybase, Inc.		1,075,890
			TOTAL		4,018,227
			Telecommunication Equipment & Services--0.8%
	35,010		Corning, Inc.		700,550
	8,476		Qualcomm, Inc.		469,062
			TOTAL		1,169,612
			Truck Manufacturing--0.6%
	12,192		Cummins, Inc.		808,817
Shares					Value
			COMMON STOCKS--continued
			Undesignated Consumer Cyclicals--1.7%
	12,770	1	Alliance Data Systems Corp.	$	819,196
	18,210		DeVRY, Inc.		1,034,510
	2,523		Strayer Education, Inc.		561,872
			TOTAL		2,415,578
			Undesignated Consumer Durables--1.2%
	17,406		Walter Industries, Inc.		1,825,367
			TOTAL COMMON STOCKS (IDENTIFIED COST $139,117,164)		145,046,946
			MUTUAL FUND--0.4%
	507,081	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)		507,081
			TOTAL INVESTMENTS--99.8% (IDENTIFIED COST $139,624,245) 4		145,554,027
			OTHER ASSETS AND LIABILITIES - NET--0.2% 5		359,352
			TOTAL NET ASSETS--100%	$	145,913,379

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $140,710,257.

5 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $507,081 of investments in an affiliated issuer (Note 5) (identified cost $139,624,245)			$	145,554,027
Cash				25
Income receivable				17,350
Receivable for investments sold				3,819,139
Receivable for shares sold				44,200
TOTAL ASSETS				149,434,741
Liabilities:
Payable for investments purchased	$	2,972,205
Payable for shares redeemed		307,672
Payable for Directors'/Trustees' fees		282
Payable for distribution services fee (Note 5)		24,464
Payable for shareholder services fee (Note 5)		71,631
Accrued expenses		145,108
TOTAL LIABILITIES				3,521,362
Net assets for 14,295,913 shares outstanding			$	145,913,379
Net Assets Consist of:
Paid-in capital			$	249,131,046
Net unrealized appreciation of investments				5,929,782
Accumulated net realized loss on investments				(109,147,449	)
TOTAL NET ASSETS			$	145,913,379
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($6,279,816 ÷ 607,832 shares outstanding), no par value, unlimited shares authorized				$10.33
Offering price per share				$10.33
Redemption proceeds per share				$10.33

Statement of Assets and Liabilities- continued

Class A Shares:
Net asset value per share ($102,600,218 ÷ 10,027,834 shares outstanding), no par value, unlimited shares authorized	$10.23
Offering price per share (100/94.50 of $10.23) 1	$10.83
Redemption proceeds per share	$10.23
Class B Shares:
Net asset value per share ($22,138,042 ÷ 2,168,910 shares outstanding), no par value, unlimited shares authorized	$10.21
Offering price per share	$10.21
Redemption proceeds per share (94.50/100 of $10.21) 1	$9.65
Class C Shares:
Net asset value per share ($14,895,303 ÷ 1,491,337 shares outstanding), no par value, unlimited shares authorized	$9.99
Offering price per share	$9.99
Redemption proceeds per share (99.00/100 of $9.99) 1	$9.89

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements.

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $68,397 received from an affiliated issuer (Note 5))							$	1,600,299
Expenses:
Investment adviser fee (Note 5)				$	1,181,780
Administrative personnel and services fee (Note 5)					270,000
Custodian fees					20,387
Transfer and dividend disbursing agent fees and expenses					419,072
Directors'/Trustees' fees					2,883
Auditing fees					26,700
Legal fees					26,077
Portfolio accounting fees					84,155
Distribution services fee--Class B Shares (Note 5)					268,793
Distribution services fee--Class C Shares (Note 5)					128,979
Shareholder services fee--Class A Shares (Note 5)					246,016
Shareholder services fee--Class B Shares (Note 5)					89,598
Shareholder services fee--Class C Shares (Note 5)					37,550
Account administration fee--Class A Shares					6,612
Account administration fee--Class C Shares					333
Share registration costs					78,526
Printing and postage					70,357
Insurance premiums					5,189
Interest expense					254
Miscellaneous					8,094
TOTAL EXPENSES					2,971,355
Waivers and Reimbursement (Note 5):
Waiver/reimbursement of investment adviser fee	$	(170,163	)
Waiver of administrative personnel and services fee		(53,423	)
TOTAL WAIVERS AND REIMBURSEMENT					(223,586	)
Net expenses								2,747,769
Net investment income (loss)								(1,147,470	)
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments								(10,506,699	)
Net change in unrealized appreciation of investments								1,380,057
Net realized and unrealized loss on investments								(9,126,642	)
Change in net assets resulting from operations							$	(10,274,112	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(1,147,470	)	$	(237,143	)
Net realized gain (loss) on investments		(10,506,699	)		21,083,611
Net change in unrealized appreciation/depreciation of investments		1,380,057			(22,417,969	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(10,274,112	)		(1,571,501	)
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(257,727	)		(7,447	)
Class A Shares		(11,660,461	)		(6,679	)
Class B Shares		(4,329,484	)		- --
Class C Shares		(2,139,318	)		(2,090	)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(18,386,990	)		(16,216	)
Share Transactions:
Proceeds from sale of shares		70,026,996			15,014,670
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Large Cap Growth Fund		- --			144,301,541
Net asset value of shares issued to shareholders in payment of distributions declared		15,708,083			12,437
Cost of shares redeemed		(63,105,962	)		(6,430,649	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		22,629,117			152,897,999
Redemption fees		- --			303
Change in net assets		(6,031,985	)		151,310,585
Net Assets:
Beginning of period		151,945,364			634,779
End of period	$	145,913,379		$	151,945,364

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine diversified portfolios. The financial statements included herein are only those of Federated MDT Large Cap Growth Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Institutional Shares, Class A Shares, Class B Shares and Class C Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The Financial Highlights of Institutional Shares are presented separately. The primary investment objective of the Fund is long-term capital appreciation.

MDT Large Cap Growth Fund (the "Predecessor Fund") was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced operations on September 15, 2005.

Effective March 29, 2007, the Fund began offering Class B Shares.

On June 22, 2007, the Fund received a tax-free transfer of assets from the Federated Large Cap Growth Fund, as follows:

Shares of the Fund Issued	Federated Large Cap Growth Fund Net Assets Received	Unrealized Appreciation 1	Net Assets of the Fund Immediately Prior to Combination	Net Assets of Federated Large Cap Growth Fund Immediately Prior to Combination	Net Assets of the Fund Immediately After Combination
11,747,685	$144,301,541	$26,980,742	$5,111,245	$144,301,541	$149,412,786

1 Unrealized appreciation is included in the Federated Large Cap Growth Fund Net Assets Received amount shown above.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the "Trustees").
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers, and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as account administration, distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	481,360		$	5,340,579		118,282		$	1,376,167
Shares issued to shareholders in payment of distributions declared	16,469			193,018		644			7,254
Shares redeemed	(37,394	)		(447,625	)	(1,456	)		(17,389	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	460,435		$	5,085,972		117,470		$	1,366,032
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	4,265,442		$	49,806,979		598,688		$	7,229,781
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Large Cap Growth Fund	- --			- --		7,017,437			86,102,187
Shares issued to shareholders in payment of distributions declared	882,581			10,255,594		405			4,547
Shares redeemed	(2,448,438	)		(27,452,372	)	(306,231	)		(3,782,665	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	2,699,585		$	32,610,201		7,310,299		$	89,553,850
	Year Ended 7/31/2008					Period Ended 7/31/2007 1
Class B Shares:	Shares			Amount		Shares			Amount
Shares sold	376,994		$	4,378,454		38,188		$	475,507
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Large Cap Growth Fund	- --			- --		4,008,927			49,471,669
Shares issued to shareholders in payment of distributions declared	344,460			4,012,963		- --			- --
Shares redeemed	(2,405,450	)		(27,366,232	)	(194,209	)		(2,424,626	)
NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS	(1,683,996	)	$	(18,974,815	)	3,852,906		$	47,522,550
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	912,018		$	10,500,984		486,056		$	5,933,215
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Large Cap Growth Fund	- --			- --		721,321			8,727,685
Shares issued to shareholders in payment of distributions declared	109,439			1,246,508		57			636
Shares redeemed	(734,780	)		(7,839,733	)	(17,323	)		(205,969	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	286,677		$	3,907,759		1,190,111		$	14,455,567
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	1,762,701		$	22,629,117		12,470,786		$	152,897,999

1 Reflects operations for the period from March 29, 2007 (date of initial public investment) to July 31, 2007.

Redemption Fees

Prior to December 11, 2006, the Predecessor Fund imposed a 2.00% redemption fee to shareholders of the Fund's Institutional Shares, Class A Shares and Class C Shares who redeemed shares held for 30 days or less. Shares acquired by reinvestment of dividends or distributions of the Fund, or purchased pursuant to the Systematic Investment Program or withdrawn pursuant to the Systematic Withdrawal Program, were not subject to the redemption fee. All redemption fees were recorded by the Fund as additions to paid-in capital. For the year ended July 31, 2007, the Predecessor Fund incurred redemption fees for Institutional Shares, Class A Shares and Class C Shares amounted to $99, $152 and $52, respectively.

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due to differing treatments for net operating loss and expiration of capital loss carryforwards.

For the year ended July 31, 2008, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Pad-In Capital	Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gain (Loss)
$(295,629,587)	$1,147,470	$294,482,117

Net investment income (loss), net realized gains (loss), and net assets were not affected by this reclassification.

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2008 and 2007, was as follows:

	2008	2007
Ordinary income 1	$ 6,355,795	$16,216
Long-term capital gains	$12,031,195	- --

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Net unrealized appreciation	$	4,843,770
Capital loss carryforwards and deferrals	$	(108,061,436	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $140,710,257. The net unrealized appreciation of investments for federal tax purposes was $4,843,770. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $14,279,223 and net unrealized depreciation from investments for those securities having an excess of cost over value of $9,435,453.

At July 31, 2008, the Fund had a capital loss carryforward of $98,518,058 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the 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. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year	Expiration Amount
2009	$76,646,626
2010	$21,688,057
2016	$ 183,375

As a result of the tax-free transfer of assets from Federated Large Cap Growth Fund, the use of certain capital loss carryforwards listed above may be limited.

Capital loss carryforwards of $294,478,872 expired during the year ended July 31, 2008.

Under current tax regulations, capital losses on securities transactions realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post October losses of $9,543,378 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for certain Classes of the Fund based on average daily net assets:

Share Class Name	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.80%
Class A Shares	2.05%
Class C Shares	2.80%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment and subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the Adviser waived $168,714 of its fee.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement (the "Agreement"), provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. During the period from July 15, 2006 through December 8, 2006, the administrator contractually agreed to waive the portion of its fee which it would otherwise be entitled to receive from the Fund under the Agreement. The level of fees payable by the Fund to FAS for the period did not exceed the level of fees which the Fund would have paid during the period to its previous service provider under its previous administrative services contract. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the net fee paid to FAS was 0.137% of average daily net assets of the Fund. FAS waived $53,423 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act which became effective on December 11, 2006. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class B Shares	0.75%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

Subject to terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $48,100 of fees paid by the Fund. For the year ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

For the year ended July 31, 2008, FSC retained $13,497 in sales charges from the sale of Class A Shares. FSC also retained $391 of contingent deferred sales charges relating to redemptions of Class A Shares and $1,333 relating to redemptions of Class C Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

Effective December 11, 2006, the Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Financial intermediaries may include a company affiliated with management of Federated Investors, Inc. A financial intermediary affiliated with management of Federated Investors, Inc. received $40,884 of Service Fees for the year ended July 31, 2008. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the year ended July 31, 2008, FSSC received $3,978 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the Financial Highlights) paid by the Fund's Institutional Shares, Class A Shares, Class B Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.25%, 1.50%, 2.25% and 2.25%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $1,449. Transactions with the affiliated company during the year ended July 31, 2008 were as follows:

Affiliate	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	2,729,873	51,480,305	53,703,097	507,081	$507,081	$68,397

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	505,168,946
Sales	$	500,665,876

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional 72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses, and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2008, the amount of long-term capital gains designated by the Fund was $12,031,195.

For the fiscal year ended July 31, 2008, 0.55% of total ordinary dividends paid by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended July 31, 2008, 0.56% qualify for the dividend received deduction available to corporate shareholders.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND
SHAREHOLDERS OF FEDERATED MDT LARGE CAP GROWTH FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Large Cap Growth Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Large Cap Growth Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory
Contract-May 2008

FEDERATED MDT LARGE CAP GROWTH FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser or what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds ( e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For the one-year period ending December 31, 2007, the Fund's performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same period, the Fund outperformed its benchmark index for the one-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT Large Cap Growth Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R700
Cusip 31421R684
Cusip 31421R809

37329 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Large Cap
Growth Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$12.20		$10.20		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.03	) 3	(0.03	) 3	(0.07	) 3
Net realized and unrealized gain (loss) on investments	(0.49	)	2.14		0.27
TOTAL FROM INVESTMENT OPERATIONS	(0.52	)	2.11		0.20
Less Distributions:
Distributions from net realized gain on investments	(1.35	)	(0.11	)	- --
Net Asset Value, End of Period	$10.33		$12.20		$10.20
Total Return 4	(5.55	)%	20.81	%	2.00	%
Ratios to Average Net Assets:
Net expenses	1.25	%	1.25	%	1.76	% 5
Net investment income (loss)	(0.28	)%	(0.29	)%	(0.68	)% 5
Expense waiver/reimbursement 6	0.14	%	19.41	%	20.55	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$6,280		$1,798		$305
Portfolio turnover	320	%	630	%	237	%

1 MDT Large Cap Growth Fund (the "Predecessor Fund") was reorganized into Federated MDT Large Cap Growth Fund (the "Fund") as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual	$1,000	$ 972.70	$6.13
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,018.65	$6.27

1 Expenses are equal to the Fund's annualized net expense ratio of 1.25%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half-year period).

Management's Discussion of Fund Performance

The fund's total return for the fiscal year ended July 31, 2008 was (5.55)% for Institutional Shares. The total return of the Russell 1000 ^® Growth Index (Russell 1000 ^® Growth) ¹ was (6.29)% and the total return of the Lipper Multi-Cap Growth Funds Index ² was (8.00)% for the same reporting period. The fund's total return for the fiscal year reflected actual cash flows, transaction costs and other expenses which were not reflected in the total return of the Russell Index.

MARKET OVERVIEW

Over the 12-month reporting period ending July 31, 2008, domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® Index ³ , which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the reporting period down (10.32)%. Small cap stocks had the best relative results as demonstrated by the (6.71)% return on the Russell 2000 ^® Index, ⁴ which exceeded the (10.10)% and (10.81)% results for the Russell Midcap ^® Index ⁵ and the Russell Top 200 ^® Index, ⁶ respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000 ^® Growth Index ⁷ returning (6.11)% as compared to (14.75)% for the Russell 3000 Value ^® Index. ⁸

The best performing sectors during the reporting period, as measured by the Russell 3000 ^® Index, were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

1 The Russell 1000 ^® Growth Index measures the performance of those Russell 1000 ^® companies with higher price-to-book ratios and higher forecasted growth values. The index is unmanaged, and unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

2 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

3 Russell 3000 ^® Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. The index is unmanaged, and unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

4 The Russell 2000 ^® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index. The index is unmanaged, and unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

5 The Russell Midcap ^® Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 31% of the total market capitalization of the Russell 1000 Index. The index is unmanaged, and unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

6 The Russell Top 200 ^® Index measures the performance of the 200 largest companies in the Russell 1000 Index, which represents approximately 69% of the total market capitalization of the Russell 1000 Index. The index is unmanaged, and unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

7 The Russell 3000 ^® Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000 Growth or the Russell 2000 Growth indexes. The index is unmanaged, and unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

8 The Russell 3000 ^® Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000 Value or the Russell 2000 Value indexes. The index is unmanaged, and unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

FUND PERFORMANCE

The most significant positive factor in the fund's performance relative to the Russell 1000 ^® Growth was its stock selection in the Information Technology sector. Additionally, the fund's stock selection in the Industrials sector and an overweight in the Materials sector provided moderate contributions to relative performance. The most significant negative factor in the fund's performance relative to the Russell 1000 ^® Growth was its underweight in the Energy sector. Stock selection in the Energy and Consumer Discretionary sectors also detracted moderately from relative performance.

Individual stocks contributing to the fund's performance relative to the Russell 1000® Growth included: Monsanto Company, First Solar, Inc., a designer and manufacturer of solar energy technology, Gilead Sciences, Inc., a biopharmaceutical company, Apple Computer, Inc., and Mastercard, Inc.

Individual stocks detracting from the fund's performance relative to the Russell 1000® Growth included: Las Vegas Sands Corporation, Boeing Company, Coventry Health Care, Precision Castparts, and Franklin Resources, Inc.

GROWTH OF A $25,000 INVESTMENT - INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000 ¹ in the Federated MDT Large Cap Growth Fund (Institutional Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 1000 ^® Growth Index (Russell 1000 ^® Growth) ² and the Lipper Large-Cap Growth Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(5.55	)%
Start of Performance (9/15/2005)	5.42	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 1000 ^® Growth and Lipper Large-Cap Growth Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 1000 ^® Growth is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund's industry composition ¹ was as follows:

Industry	Percentage of Total Net Assets
Oil Well Supply	7.7%
Defense Electronics	7.2%
Biotechnology	5.7%
Multi-Industry Capital Goods	5.2%
Agricultural Chemicals	5.1%
Broadcasting	4.4%
Medical Supplies	3.9%
Defense Aerospace	3.7%
Services to Medical Professionals	3.6%
Financial Services	3.4%
Crude Oil & Gas Production	3.1%
Miscellaneous Machinery	3.1%
Advertising	3.1%
Ethical Drugs	3.0%
Software Packaged/Custom	2.8%
Computers--High End	2.2%
Railroad	2.0%
Bituminous Coal	1.8%
Undesignated Consumer Cyclicals	1.7%
Oil Service, Explore & Drill	1.6%
Securities Brokerage	1.6%
Restaurant	1.4%
Integrated Domestic Oil	1.4%
Construction Machinery	1.4%
Diversified Oil	1.3%
Computers--Midrange	1.3%
Copper	1.3%
Internet Services	1.3%
Undesignated Consumer Durables	1.2%
Discount Department Stores	1.2%
Computer Services	1.0%
Other Communications Equipment	1.0%
Other 2	9.7%
Cash Equivalents 3	0.4%
Other Assets and Liabilities--Net 4	0.2%
TOTAL	100.0%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's total net assets have been aggregated under the designation "Other."

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares					Value
			COMMON STOCKS--99.4%
			Advertising--3.1%
	106,328		Omnicom Group, Inc.	$	4,539,142
			Agricultural Chemicals--5.1%
	50,895		Monsanto Co.		6,062,103
	10,702	1	Mosaic Co./The		1,361,401
			TOTAL		7,423,504
			Auto Original Equipment Manufacturers--0.5%
	5,703	1	AutoZone, Inc.		743,044
			Biotechnology--5.7%
	4,960	1	Alexion Pharmaceuticals, Inc.		465,000
	5,477	1	Cephalon, Inc.		400,697
	106,183	1	Gilead Sciences, Inc.		5,731,758
	9,292	1	Illumina, Inc.		866,386
	15,060	1	OSI Pharmaceuticals, Inc.		792,608
			TOTAL		8,256,449
			Bituminous Coal--1.8%
	7,070		Arch Coal, Inc.		398,112
	10,410		Fluor Corp.		846,854
	9,403		Foundation Coal Holdings, Inc.		558,538
	10,330		Massey Energy Co.		767,003
			TOTAL		2,570,507
			Broadcasting--4.4%
	78,833	1	American Tower Systems Corp.		3,303,103
	117,346	1	DIRECTV Group, Inc.		3,170,689
			TOTAL		6,473,792
			Clothing Stores--0.2%
	12,503	1	Hanesbrands, Inc.		268,064
			Commodity Chemicals--0.7%
	53,195		RPM International, Inc.		1,090,498
Shares					Value
			COMMON STOCKS--continued
			Computer Services--1.0%
	23,076	1	Salesforce.com, Inc.	$	1,472,018
			Computer Stores--0.6%
	22,136	1	GameStop Corp.		896,729
			Computers - High End--2.2%
	24,886		IBM Corp.		3,184,910
			Computers - Low End--0.9%
	8,448	1	Apple, Inc.		1,342,810
			Computers - Midrange--1.3%
	43,366		Hewlett-Packard Co.		1,942,797
			Construction Machinery--1.4%
	5,298		Caterpillar, Inc.		368,317
	22,538		Joy Global, Inc.		1,627,694
			TOTAL		1,996,011
			Contracting--0.7%
	12,437	1	Jacobs Engineering Group, Inc.		961,878
			Copper--1.3%
	20,042		Freeport-McMoRan Copper & Gold, Inc.		1,939,064
			Crude Oil & Gas Production--3.1%
	3,823		EOG Resources, Inc.		384,326
	39,161	1	Southwestern Energy Co.		1,421,936
	38,692	1	Ultra Petroleum Corp.		2,761,835
			TOTAL		4,568,097
			Defense Aerospace--3.7%
	82,794		Boeing Co.		5,059,541
	2,678		Lockheed Martin Corp.		279,396
			TOTAL		5,338,937
			Defense Electronics--7.2%
	20,604	1	FLIR Systems, Inc.		839,407
	13,551	1	First Solar, Inc.		3,863,526
	19,994		L-3 Communications Holdings, Inc.		1,973,208
	77,067		Rockwell Collins		3,829,459
			TOTAL		10,505,600
Shares					Value
			COMMON STOCKS--continued
			Discount Department Stores--1.2%
	28,879		Wal-Mart Stores, Inc.	$	1,692,887
			Diversified Oil--1.3%
	11,664		Murphy Oil Corp.		929,971
	13,002		Occidental Petroleum Corp.		1,024,948
			TOTAL		1,954,919
			Electrical Equipment--0.7%
	25,303		Hubbell, Inc., Class B		1,066,775
			Ethical Drugs--3.0%
	132,571		Merck & Co., Inc.		4,361,586
			Financial Services--3.4%
	20,456		Mastercard, Inc.		4,994,332
			Industrial Machinery--0.0%
	295		Dover Corp.		14,641
	279		Flowserve Corp.		37,202
			TOTAL		51,843
			Integrated Domestic Oil--1.4%
	19,773		Hess Corp.		2,004,982
			Internet Services--1.3%
	13,312	1	Priceline.com, Inc.		1,530,214
	13,354	1	eBay, Inc.		336,120
			TOTAL		1,866,334
			Leasing--0.3%
	8,891		GATX Corp.		404,274
			Life Insurance--0.4%
	11,220		Aflac, Inc.		623,944
			Major Steel Producer--0.4%
	3,426		United States Steel Corp.		549,393
			Medical Supplies--3.9%
	105,381		Cardinal Health, Inc.		5,662,121
			Medical Technology--0.9%
	4,350	1	Intuitive Surgical, Inc.		1,354,112
Shares					Value
			COMMON STOCKS--continued
			Metal Containers--0.1%
	3,856		Ball Corp.	$	171,901
			Miscellaneous Components--0.9%
	28,244		Amphenol Corp., Class A		1,346,391
			Miscellaneous Machinery--3.1%
	94,757		Cooper Industries Ltd., Class A		3,995,903
	2,147		Nordson Corp.		151,707
	6,491		Roper Industries, Inc.		397,119
			TOTAL		4,544,729
			Multi-Industry Capital Goods--5.2%
	83,508		3M Co.		5,878,128
	26,434		Textron, Inc.		1,149,086
	8,293		United Technologies Corp.		530,586
			TOTAL		7,557,800
			Natural Gas Production--0.3%
	15,249	1	Quicksilver Resources, Inc.		398,914
			Offshore Driller--0.5%
	11,456		ENSCO International, Inc.		792,068
			Oil Service, Explore & Drill--1.6%
	41,120	1	Continental Resources, Inc.		2,348,774
			Oil Well Supply--7.7%
	7,277		Baker Hughes, Inc.		603,336
	12,296	1	Cameron International Corp.		587,257
	13,373	1	Dresser-Rand Group, Inc.		509,511
	24,888	1	FMC Technologies, Inc.		1,537,581
	7,889		Halliburton Co.		353,585
	54,105		Schlumberger Ltd.		5,497,068
	56,815	1	Weatherford International Ltd.		2,143,630
			TOTAL		11,231,968
			Other Communications Equipment--1.0%
	30,448		Harris Corp.		1,466,071
Shares					Value
			COMMON STOCKS--continued
			Psychiatric Centers--0.2%
	9,021	1	Psychiatric Solutions, Inc.	$	315,915
			Railroad--2.0%
	3,764		Burlington Northern Santa Fe Corp.		391,945
	14,055		CSX Corp.		949,837
	19,026		Union Pacific Corp.		1,568,503
			TOTAL		2,910,285
			Restaurant--1.4%
	29,114		Darden Restaurants, Inc.		948,243
	28,624	1	Jack in the Box, Inc.		617,706
	7,657		McDonald's Corp.		457,812
			TOTAL		2,023,761
			Securities Brokerage--1.6%
	22,867	1	InterContinentalExchange, Inc.		2,282,127
			Services to Medical Professionals--3.6%
	53,054	1	Express Scripts, Inc., Class A		3,742,429
	31,764	1	Medco Health Solutions, Inc.		1,574,859
			TOTAL		5,317,288
			Software Packaged/Custom--2.8%
	19,911	1	Adobe Systems, Inc.		823,320
	11,348	1	Ansys, Inc.		520,646
	7,227	1	Electronic Arts, Inc.		312,062
	50,012		Microsoft Corp.		1,286,309
	32,011	1	Sybase, Inc.		1,075,890
			TOTAL		4,018,227
			Telecommunication Equipment & Services--0.8%
	35,010		Corning, Inc.		700,550
	8,476		Qualcomm, Inc.		469,062
			TOTAL		1,169,612
			Truck Manufacturing--0.6%
	12,192		Cummins, Inc.		808,817
Shares					Value
			COMMON STOCKS--continued
			Undesignated Consumer Cyclicals--1.7%
	12,770	1	Alliance Data Systems Corp.	$	819,196
	18,210		DeVRY, Inc.		1,034,510
	2,523		Strayer Education, Inc.		561,872
			TOTAL		2,415,578
			Undesignated Consumer Durables--1.2%
	17,406		Walter Industries, Inc.		1,825,367
			TOTAL COMMON STOCKS (IDENTIFIED COST $139,117,164)		145,046,946
			MUTUAL FUND--0.4%
	507,081	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)		507,081
			TOTAL INVESTMENTS--99.8% (IDENTIFIED COST $139,624,245) 4		145,554,027
			OTHER ASSETS AND LIABILITIES - NET--0.2% 5		359,352
			TOTAL NET ASSETS--100%	$	145,913,379

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $140,710,257.

5 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $507,081 of investments in an affiliated issuer (Note 5) (identified cost $139,624,245)			$	145,554,027
Cash				25
Income receivable				17,350
Receivable for investments sold				3,819,139
Receivable for shares sold				44,200
TOTAL ASSETS				149,434,741
Liabilities:
Payable for investments purchased	$	2,972,205
Payable for shares redeemed		307,672
Payable for Directors'/Trustees' fees		282
Payable for distribution services fee (Note 5)		24,464
Payable for shareholder services fee (Note 5)		71,631
Accrued expenses		145,108
TOTAL LIABILITIES				3,521,362
Net assets for 14,295,913 shares outstanding			$	145,913,379
Net Assets Consist of:
Paid-in capital			$	249,131,046
Net unrealized appreciation of investments				5,929,782
Accumulated net realized loss on investments				(109,147,449	)
TOTAL NET ASSETS			$	145,913,379
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($6,279,816 ÷ 607,832 shares outstanding), no par value, unlimited shares authorized				$10.33
Offering price per share				$10.33
Redemption proceeds per share				$10.33

Statement of Assets and Liabilities-- continued

Class A Shares:
Net asset value per share ($102,600,218 ÷ 10,027,834 shares outstanding), no par value, unlimited shares authorized	$10.23
Offering price per share (100/94.50 of $10.23) 1	$10.83
Redemption proceeds per share	$10.23
Class B Shares:
Net asset value per share ($22,138,042 ÷ 2,168,910 shares outstanding), no par value, unlimited shares authorized	$10.21
Offering price per share	$10.21
Redemption proceeds per share (94.50/100 of $10.21) 1	$9.65
Class C Shares:
Net asset value per share ($14,895,303 ÷ 1,491,337 shares outstanding), no par value, unlimited shares authorized	$9.99
Offering price per share	$9.99
Redemption proceeds per share (99.00/100 of $9.99) 1	$9.89

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements.

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $68,397 received from an affiliated issuer (Note 5))							$	1,600,299
Expenses:
Investment adviser fee (Note 5)				$	1,181,780
Administrative personnel and services fee (Note 5)					270,000
Custodian fees					20,387
Transfer and dividend disbursing agent fees and expenses					419,072
Directors'/Trustees' fees					2,883
Auditing fees					26,700
Legal fees					26,077
Portfolio accounting fees					84,155
Distribution services fee--Class B Shares (Note 5)					268,793
Distribution services fee--Class C Shares (Note 5)					128,979
Shareholder services fee--Class A Shares (Note 5)					246,016
Shareholder services fee--Class B Shares (Note 5)					89,598
Shareholder services fee--Class C Shares (Note 5)					37,550
Account administration fee--Class A Shares					6,612
Account administration fee--Class C Shares					333
Share registration costs					78,526
Printing and postage					70,357
Insurance premiums					5,189
Interest expense					254
Miscellaneous					8,094
TOTAL EXPENSES					2,971,355
Waivers and Reimbursement (Note 5):
Waiver/reimbursement of investment adviser fee	$	(170,163	)
Waiver of administrative personnel and services fee		(53,423	)
TOTAL WAIVERS AND REIMBURSEMENT					(223,586	)
Net expenses								2,747,769
Net investment income (loss)								(1,147,470	)
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments								(10,506,699	)
Net change in unrealized appreciation of investments								1,380,057
Net realized and unrealized loss on investments								(9,126,642	)
Change in net assets resulting from operations							$	(10,274,112	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(1,147,470	)	$	(237,143	)
Net realized gain (loss) on investments		(10,506,699	)		21,083,611
Net change in unrealized appreciation/depreciation of investments		1,380,057			(22,417,969	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(10,274,112	)		(1,571,501	)
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(257,727	)		(7,447	)
Class A Shares		(11,660,461	)		(6,679	)
Class B Shares		(4,329,484	)		- --
Class C Shares		(2,139,318	)		(2,090	)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(18,386,990	)		(16,216	)
Share Transactions:
Proceeds from sale of shares		70,026,996			15,014,670
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Large Cap Growth Fund		- --			144,301,541
Net asset value of shares issued to shareholders in payment of distributions declared		15,708,083			12,437
Cost of shares redeemed		(63,105,962	)		(6,430,649	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		22,629,117			152,897,999
Redemption fees		- --			303
Change in net assets		(6,031,985	)		151,310,585
Net Assets:
Beginning of period		151,945,364			634,779
End of period	$	145,913,379		$	151,945,364

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine diversified portfolios. The financial statements included herein are only those of Federated MDT Large Cap Growth Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Institutional Shares, Class A Shares, Class B Shares and Class C Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The Financial Highlights of Class A Shares, Class B Shares and Class C Shares are presented separately. The primary investment objective of the Fund is long-term capital appreciation.

MDT Large Cap Growth Fund (the "Predecessor Fund") was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced operations on September 15, 2005.

Effective March 29, 2007, the Fund began offering Class B Shares.

On June 22, 2007, the Fund received a tax-free transfer of assets from the Federated Large Cap Growth Fund, as follows:

Shares of the Fund Issued	Federated Large Cap Growth Fund Net Assets Received	Unrealized Appreciation 1	Net Assets of the Fund Immediately Prior to Combination	Net Assets of Federated Large Cap Growth Fund Immediately Prior to Combination	Net Assets of the Fund Immediately After Combination
11,747,685	$144,301,541	$26,980,742	$5,111,245	$144,301,541	$149,412,786

1 Unrealized appreciation is included in the Federated Large Cap Growth Fund Net Assets Received amount shown above.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the "Trustees").
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers, and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as account administration, distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	481,360		$	5,340,579		118,282		$	1,376,167
Shares issued to shareholders in payment of distributions declared	16,469			193,018		644			7,254
Shares redeemed	(37,394	)		(447,625	)	(1,456	)		(17,389	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	460,435		$	5,085,972		117,470		$	1,366,032
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	4,265,442		$	49,806,979		598,688		$	7,229,781
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Large Cap Growth Fund	- --			- --		7,017,437			86,102,187
Shares issued to shareholders in payment of distributions declared	882,581			10,255,594		405			4,547
Shares redeemed	(2,448,438	)		(27,452,372	)	(306,231	)		(3,782,665	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	2,699,585		$	32,610,201		7,310,299		$	89,553,850
	Year Ended 7/31/2008					Period Ended 7/31/2007 1
Class B Shares:	Shares			Amount		Shares			Amount
Shares sold	376,994		$	4,378,454		38,188		$	475,507
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Large Cap Growth Fund	- --			- --		4,008,927			49,471,669
Shares issued to shareholders in payment of distributions declared	344,460			4,012,963		- --			- --
Shares redeemed	(2,405,450	)		(27,366,232	)	(194,209	)		(2,424,626	)
NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS	(1,683,996	)	$	(18,974,815	)	3,852,906		$	47,522,550
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	912,018		$	10,500,984		486,056		$	5,933,215
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Large Cap Growth Fund	- --			- --		721,321			8,727,685
Shares issued to shareholders in payment of distributions declared	109,439			1,246,508		57			636
Shares redeemed	(734,780	)		(7,839,733	)	(17,323	)		(205,969	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	286,677		$	3,907,759		1,190,111		$	14,455,567
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	1,762,701		$	22,629,117		12,470,786		$	152,897,999

1 Reflects operations for the period from March 29, 2007 (date of initial public investment) to July 31, 2007.

Redemption Fees

Prior to December 11, 2006, the Predecessor Fund imposed a 2.00% redemption fee to shareholders of the Fund's Institutional Shares, Class A Shares and Class C Shares who redeemed shares held for 30 days or less. Shares acquired by reinvestment of dividends or distributions of the Fund, or purchased pursuant to the Systematic Investment Program or withdrawn pursuant to the Systematic Withdrawal Program, were not subject to the redemption fee. All redemption fees were recorded by the Fund as additions to paid-in capital. For the year ended July 31, 2007, the Predecessor Fund incurred redemption fees for Institutional Shares, Class A Shares and Class C Shares amounted to $99, $152 and $52, respectively.

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due to differing treatments for net operating loss and expiration of capital loss carryforwards.

For the year ended July 31, 2008, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Pad-In Capital	Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gain (Loss)
$(295,629,587)	$1,147,470	$294,482,117

Net investment income (loss), net realized gains (loss), and net assets were not affected by this reclassification.

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2008 and 2007, was as follows:

	2008	2007
Ordinary income 1	$ 6,355,795	$16,216
Long-term capital gains	$12,031,195	- --

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Net unrealized appreciation	$	4,843,770
Capital loss carryforwards and deferrals	$	(108,061,436	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $140,710,257. The net unrealized appreciation of investments for federal tax purposes was $4,843,770. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $14,279,223 and net unrealized depreciation from investments for those securities having an excess of cost over value of $9,435,453.

At July 31, 2008, the Fund had a capital loss carryforward of $98,518,058 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the 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. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year	Expiration Amount
2009	$76,646,626
2010	$21,688,057
2016	$ 183,375

As a result of the tax-free transfer of assets from Federated Large Cap Growth Fund, the use of certain capital loss carryforwards listed above may be limited.

Capital loss carryforwards of $294,478,872 expired during the year ended July 31, 2008.

Under current tax regulations, capital losses on securities transactions realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post October losses of $9,543,378 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for certain Classes of the Fund based on average daily net assets:

Share Class Name	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.80%
Class A Shares	2.05%
Class C Shares	2.80%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment and subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the Adviser waived $168,714 of its fee.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement (the "Agreement"), provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. During the period from July 15, 2006 through December 8, 2006, the administrator contractually agreed to waive the portion of its fee which it would otherwise be entitled to receive from the Fund under the Agreement. The level of fees payable by the Fund to FAS for the period did not exceed the level of fees which the Fund would have paid during the period to its previous service provider under its previous administrative services contract. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the net fee paid to FAS was 0.137% of average daily net assets of the Fund. FAS waived $53,423 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act which became effective on December 11, 2006. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class B Shares	0.75%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

Subject to terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $48,100 of fees paid by the Fund. For the year ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

For the year ended July 31, 2008, FSC retained $13,497 in sales charges from the sale of Class A Shares. FSC also retained $391 of contingent deferred sales charges relating to redemptions of Class A Shares and $1,333 relating to redemptions of Class C Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

Effective December 11, 2006, the Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Financial intermediaries may include a company affiliated with management of Federated Investors, Inc. A financial intermediary affiliated with management of Federated Investors, Inc. received $40,884 of Service Fees for the year ended July 31, 2008. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the year ended July 31, 2008, FSSC received $3,978 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the Financial Highlights) paid by the Fund's Institutional Shares, Class A Shares, Class B Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.25%, 1.50%, 2.25% and 2.25%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $1,449. Transactions with the affiliated company during the year ended July 31, 2008 were as follows:

Affiliate	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	2,729,873	51,480,305	53,703,097	507,081	$507,081	$68,397

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	505,168,946
Sales	$	500,665,876

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional 72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses, and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2008, the amount of long-term capital gains designated by the Fund was $12,031,195.

For the fiscal year ended July 31, 2008, 0.55% of total ordinary dividends paid by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended July 31, 2008, 0.56% qualify for the dividend received deduction available to corporate shareholders.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND
SHAREHOLDERS OF FEDERATED MDT LARGE CAP GROWTH FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Large Cap Growth Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Large Cap Growth Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT LARGE CAP GROWTH FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser or what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds ( e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For the one-year period ending December 31, 2007, the Fund's performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same period, the Fund outperformed its benchmark index for the one-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT Large CapGrowth Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R882

37314 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Large Cap Value Fund

Established 2008

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Class A Shares
Class C Shares
Class K Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout the Period)

Period Ended July 31	2008	1
Net Asset Value, Beginning of Period	$10.00
Income From Investment Operations:
Net investment income	0.03	2
Net realized and unrealized loss on investments	(0.57	)
TOTAL FROM INVESTMENT OPERATIONS	(0.54	)
Net Asset Value, End of Period	$ 9.46
Total Return 3	(5.40	)%
Ratios to Average Net Assets:
Net expenses	1.24	% 4
Net investment income	0.80	% 4
Expense waiver/reimbursement 5	111.75	% 4
Supplemental Data:
Net assets, end of period (000 omitted)	$64
Portfolio turnover	41	%

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

2 Per share numbers have been calculated using the average shares method.

3 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

4 Computed on an annualized basis.

5 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout the Period)

Period Ended July 31	2008	1
Net Asset Value, Beginning of Period	$10.00
Income From Investment Operations:
Net investment income	0.02	2
Net realized and unrealized loss on investments	(0.55	)
TOTAL FROM INVESTMENT OPERATIONS	(0.53	)
Net Asset Value, End of Period	$ 9.47
Total Return 3	(5.30	)%
Ratios to Average Net Assets:
Net expenses	1.99	% 4
Net investment income	0.05	% 4
Expense waiver/reimbursement 5	111.80	% 4
Supplemental Data:
Net assets, end of period (000 omitted)	$0	6
Portfolio turnover	41	%

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

2 Per share numbers have been calculated using the average shares method.

3 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

4 Computed on an annualized basis.

5 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

6 Represents less than $1,000.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class K Shares

(For a Share Outstanding Throughout the Period)

Period Ended July 31	2008	1
Net Asset Value, Beginning of Period	$10.00
Income From Investment Operations:
Net investment income	0.03	2
Net realized and unrealized loss on investments	(0.56	)
TOTAL FROM INVESTMENT OPERATIONS	(0.53	)
Net Asset Value, End of Period	$ 9.47
Total Return 3	(5.30	)%
Ratios to Average Net Assets:
Net expenses	1.74	% 4
Net investment income	0.30	% 4
Expense waiver/reimbursement 5	111.71	% 4
Supplemental Data:
Net assets, end of period (000 omitted)	$0	6
Portfolio turnover	41	%

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

2 Per share numbers have been calculated using the average shares method.

3 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

4 Computed on an annualized basis.

5 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

6 Represents less than $1,000.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 ¹ to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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, such as sales charges (loads) on purchase or redemption payments. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual:
Class A Shares	$1,000	$ 946.00	$4.85
Class C Shares	$1,000	$ 947.00	$7.78
Class K Shares	$1,000	$ 947.00	$6.80
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,018.70	$6.22
Class C Shares	$1,000	$1,014.97	$9.97
Class K Shares	$1,000	$1,016.21	$8.72

1 "Actual" expense information for the Fund's Class A Shares, Class C Shares and Class K Shares is for the period from March 7, 2008 (date of initial investment) to July 31, 2008. Actual expenses are equal to the annualized net expense ratios of the Fund's Class A Shares, Class C Shares and Class K Shares, multiplied by 147/366 (to reflect the period from initial investment to July 31, 2008). "Hypothetical" expense information for Class A Shares, Class C Shares and Class K Shares is presented on the basis of the full one-half-year period to enable comparison to other funds. It is based on assuming the same net expense ratios and average account value over the period, but it is multiplied by 182/366 (to reflect the full half-year period). The annualized net expense ratios are as follows:

Class A Shares	1.24%
Class C Shares	1.99%
Class K Shares	1.74%

Management's Discussion of Fund Performance

The fund's total return, based on net asset value, for the time period from March 7, 2008 to July 31, 2008 was (5.40)% for Class A Shares, (5.30)% for Class C Shares, and (5.30)% for Class K Shares. The total return of the Russell 1000 ^® Value Index ¹ was (3.88)% for the same period. The fund's total return for the most recently completed fiscal year reflected actual cash flows, transactions costs and other expenses which were not reflected in the total return of the Russell 1000 ^® Value Index.

MARKET OVERVIEW

Over the period from March 7, 2008 to July 31, 2008 domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® Index ² which represents the performance of the 3,000 largest U.S. companies by market capitalization, finished the period down 0.99%. Small cap stocks had the best relative results as demonstrated by the 8.42% return of the Russell 2000 ^® Index, ³ which exceeded the 0.81% and (2.77)% results for the Russell Midcap ^® Index ⁴ and the Russell Top 200 ^® Index, ⁵ respectively. Growth stocks significantly outperformed value stocks during the period, with the Russell 3000 ^® Growth Index ⁶ returning 0.86% as compared to (3.08)% for the Russell 3000 Value ^® Index. ⁷

1 The Russell 1000® Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values.

2 The Russell 3000® Index offers investors access to the broad U.S. equity universe representing approximately 98% of the U.S. market. The Russell 3000 is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The index is unmanaged and investments cannot be made directly in an index.

3 The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index, which represents approximately 10% of the total market capitalization of the Russell 3000® Index. The index is unmanaged and investments cannot be made directly in an index.

4 The Russell Midcap® Index measures the performance of the 800 smallest companies in the Russell 1000® Index, which represent approximately 31% of the total market capitalization of the Russell 1000® Index. The index is unmanaged and investments cannot be made directly in an index.

5 Russell Top 200® Index measures the performance of the 200 largest companies in the Russell 1000® Index, which represents approximately 69% of the total market capitalization of the Russell 1000® Index. The index is unmanaged and investments cannot be made directly in an index.

6 The Russell 3000® Growth Index measures the performance of those Russell 3000® Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000® Growth or the Russell 2000® Growth indexes. The index is unmanaged and investments cannot be made directly in an index.

7 The Russell 3000® Value Index measures the performance of those Russell 3000® Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000® Value or the Russell 2000® Value indexes. The index is unmanaged and investments cannot be made directly in an index.

FUND PERFORMANCE

The most significant positive factor in the fund's performance relative to the Russell 1000 ^® Value Index was its stock selection in the Industrials and Financials sectors. Additionally, the fund's stock selection in the Information Technology sector provided a modest contribution to relative performance. The most significant negative factor in the fund's performance relative to the Russell 1000 ^® Value Index was stock selection in the Energy sector. Stock selection in the Consumer Staples and Materials sectors also detracted more modestly from relative performance.

Individual stocks contributing to the fund's performance relative to the Russell 1000 ^® Value Index included: Norfolk Southern Corporation, General Electric Company, Goldman Sachs Group and Lehman Brothers Holdings, Inc.

Individual stocks detracting from the fund's performance relative to the Russell 1000 ^® Value Index included: Valero Energy Corporation, Archer-Daniel-Midland, Deere & Company, Sears Holdings Corporation and Dow Chemical Corporation.

GROWTH OF A $10,000 INVESTMENT - CLASS A SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Large Cap Value Fund (Class A Shares) (the "Fund") from March 7, 2008 (start of performance) to July 31, 2008, compared to the Russell 1000 ^® Value Index (Russell 1000 ^® Value). ²

Cumulative Total Return for the Period Ended 7/31/2008
Start of Performance (3/7/2008)	(10.59)%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum sales charge of 5.50%.

1 Represents a hypothetical investment of $10,000 in the fund after deducting the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge = $9,450). The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 1000 ^® Value has been adjusted to reflect reinvestment of dividends on securities in the index.

2 The Russell 1000 ^® Value is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

GROWTH OF A $10,000 INVESTMENT - CLASS C SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Large Cap Value Fund (Class C Shares) (the "Fund") from March 7, 2008 (start of performance) to July 31, 2008, compared to the Russell 1000 ^® Value Index (Russell 1000 ^® Value). ²

Cumulative Total Return for the Period Ended 7/31/2008
Start of Performance (3/7/2008)	(6.25)%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum contingent deferred sales charge (CDSC) of 1.00%, as applicable.

1 Represents a hypothetical investment of $10,000 in the fund. The maximum CDSC is 1.00% on any redemption less than one year from the purchase date. The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 1000® Value has been adjusted to reflect reinvestment of dividends on securities in the index.

2 The Russell 1000® Value is not adjusted to reflect sales charges, expenses, or other fees that the SEC requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

GROWTH OF A $10,000 INVESTMENT - CLASS K SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Large Cap Value Fund (Class K Shares) (the "Fund") from March 7, 2008 (start of performance) to July 31, 2008, compared to the Russell 1000 ^® Value Index (Russell 1000 ^® Value). ²

Cumulative Total Return for the Period Ended 7/31/2008
Start of Performance (3/7/2008)	(5.30)%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 Represents a hypothetical investment of $10,000 in the fund. The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 1000 ^® Value has been adjusted to reflect reinvestment of dividends on securities in the index.

2 The Russell 1000 ^® Value is not adjusted to reflect sales charges, expenses, or other fees that the SEC requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund's industry composition ¹ was as follows:

Industry	Percentage of Total Net Assets
Integrated Domestic Oil	8.5	%
Electric Utility	7.4	%
Life Insurance	5.6	%
Railroad	4.6	%
Integrated International Oil	4.4	%
Securities Brokerage	4.4	%
Regional Bank	4.4	%
Crude Oil & Gas Production	4.2	%
Multi-Line Insurance	4.2	%
Department Stores	3.5	%
Commodity Chemicals	3.5	%
Oil Refiner	3.5	%
Personal Loans	3.4	%
Services to Medical Professionals	3.2	%
Property Liability Insurance	3.0	%
Building Supply Stores	2.8	%
Specialty Retailing	2.5	%
Lumber Products	2.2	%
Miscellaneous Food Products	2.1	%
Discount Department Stores	2.1	%
Ethical Drugs	1.9	%
Biotechnology	1.9	%
Aluminum	1.5	%
Agricultural Machinery	1.5	%
Financial Services	1.2	%
Home Building	1.0	%
Other 2	11.3	%
Cash Equivalents 3	13.8	%
Other Assets and Liabilities--Net 4	(13.6	)%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's total net assets have been aggregated under the designation "Other."

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares					Value
			COMMON STOCKS--99.8%
			Agricultural Machinery--1.5%
	111		Deere & Co.	$	7,788
			Airline - Regional--0.2%
	84		Southwest Airlines Co.		1,310
			Aluminum--1.5%
	237		Alcoa, Inc.		7,999
			Apparel--0.3%
	20		Columbia Sportswear Co.		746
	64		Liz Claiborne, Inc.		836
			TOTAL		1,582
			AT&T Divestiture--0.5%
	95		AT&T, Inc.		2,927
			Auto Part Replacement--0.2%
	22		Genuine Parts Co.		882
			Biotechnology--1.9%
	145	1	Amgen, Inc.		9,081
	17	1	Biogen Idec, Inc.		1,186
			TOTAL		10,267
			Building Supply Stores--2.8%
	330		Home Depot, Inc.		7,864
	353		Lowe's Cos., Inc.		7,173
			TOTAL		15,037
			Clothing Stores--0.2%
	52	1	AnnTaylor Stores Corp.		1,173
			Commodity Chemicals--3.5%
	535		Dow Chemical Co.		17,821
	17		Eastman Chemical Co.		1,019
			TOTAL		18,840
			Computer Peripherals--0.2%
	76	1	Sandisk Corp.		1,072
Shares					Value
			COMMON STOCKS--continued
			Computer Stores--0.4%
	68	1	Ingram Micro, Inc., Class A	$	1,253
	19	1	Tech Data Corp.		663
			TOTAL		1,916
			Contracting--0.2%
	35		Granite Construction, Inc.		1,107
			Crude Oil & Gas Production--4.2%
	70		Apache Corp.		7,852
	124		Cimarex Energy Co.		6,462
	116		Pioneer Natural Resources, Inc.		6,896
	29	1	Swift Energy Co.		1,474
			TOTAL		22,684
			Defense Aerospace--0.7%
	34		Lockheed Martin Corp.		3,547
			Defense Electronics--0.5%
	17		Grainger (W.W.), Inc.		1,522
	19		Raytheon Co.		1,082
			TOTAL		2,604
			Department Stores--3.5%
	30		Dillards, Inc., Class A		303
	28		Penney (J.C.) Co., Inc.		863
	219	1	Sears Holdings Corp.		17,739
			TOTAL		18,905
			Discount Department Stores--2.1%
	57	1	BJ's Wholesale Club, Inc.		2,139
	152		Wal-Mart Stores, Inc.		8,910
			TOTAL		11,049
			Electric Utility--7.4%
	130		Alliant Energy Corp.		4,190
	155		DTE Energy Co.		6,352
	25		Dominion Resources, Inc.		1,105
	184		Entergy Corp.		19,673
	153		Sempra Energy		8,593
			TOTAL		39,913
Shares					Value
			COMMON STOCKS--continued
			Ethical Drugs--1.9%
	37	1	Forest Laboratories, Inc., Class A	$	1,314
	94		Johnson & Johnson		6,436
	143		Pfizer, Inc.		2,670
			TOTAL		10,420
			Financial Services--1.2%
	157		Ameriprise Financial, Inc.		6,673
			Gas Distributor--0.3%
	39		AGL Resources, Inc.		1,348
			Home Building--1.0%
	18		M.D.C. Holdings, Inc.		747
	8	1	NVR, Inc.		4,419
			TOTAL		5,166
			Home Products--0.8%
	18		Kimberly-Clark Corp.		1,041
	47		Procter & Gamble Co.		3,078
			TOTAL		4,119
			Integrated Domestic Oil--8.5%
	272		ConocoPhillips		22,201
	469		Marathon Oil Corp.		23,201
			TOTAL		45,402
			Integrated International Oil--4.4%
	282		Chevron Corp.		23,846
			Leasing--0.1%
	17		GATX Corp.		773
			Life Insurance--5.6%
	207		MetLife, Inc.		10,509
	30		Principal Financial Group		1,275
	225		Prudential Financial, Inc.		15,518
	14		StanCorp Financial Group, Inc.		691
	39		Torchmark Corp.		2,264
			TOTAL		30,257
			Lumber Products--2.2%
	220		Weyerhaeuser Co.		11,761
Shares					Value
			COMMON STOCKS--continued
			Machine Tools--0.9%
	46	1	Mettler Toledo International, Inc.	$	4,945
			Maritime--0.7%
	50		Overseas Shipholding Group, Inc.		3,938
			Medical Supplies--0.1%
	14		AmerisourceBergen Corp.		586
			Mini-Mill Producer--0.6%
	107		Commercial Metals Corp.		3,194
			Miscellaneous Food Products--2.1%
	397		Archer-Daniels-Midland Co.		11,366
			Motion Pictures--0.2%
	29	1	Dreamworks Animation SKG, Inc.		861
			Multi-Industry Capital Goods--0.1%
	22		General Electric Co.		622
			Multi-Line Insurance--4.2%
	344		Allstate Corp.		15,900
	107		Hartford Financial Services Group, Inc.		6,783
			TOTAL		22,683
			Oil Refiner--3.5%
	79		Frontier Oil Corp.		1,442
	512		Valero Energy Corp.		17,106
			TOTAL		18,548
			Oil Service, Explore & Drill--0.5%
	33	1	Seacor Holdings, Inc.		2,761
			Packaged Foods--0.1%
	10		General Mills, Inc.		644
			Paper Products--0.7%
	50		International Paper Co.		1,386
	90		MeadWestvaco Corp.		2,413
			TOTAL		3,799
			Personal Loans--3.4%
	432		Capital One Financial Corp.		18,084
Shares					Value
			COMMON STOCKS--continued
			Property Liability Insurance--3.0%
	92		Chubb Corp.	$	4,420
	264		The Travelers Cos., Inc.		11,648
			TOTAL		16,068
			Railroad--4.6%
	346		Norfolk Southern Corp.		24,884
			Regional Bank--4.4%
	25		City National Corp.		1,228
	178		Comerica, Inc.		5,112
	108		Fifth Third Bancorp		1,509
	125		Regions Financial Corp.		1,185
	291		SunTrust Banks, Inc.		11,948
	87		Zions Bancorp		2,546
			TOTAL		23,528
			Restaurant--0.8%
	68		McDonald's Corp.		4,066
			Savings and Loan--0.2%
	12		Federal Home Loan Mortgage Corp.		98
	44		Hudson City Bancorp, Inc.		803
			TOTAL		901
			Securities Brokerage--4.4%
	129		Goldman Sachs Group, Inc.		23,741
			Semiconductor Distribution--0.5%
	89	1	Arrow Electronics, Inc.		2,868
			Semiconductor Manufacturing Equipment--0.2%
	33	1	Novellus Systems, Inc.		672
	58	1	Teradyne, Inc.		543
			TOTAL		1,215
Shares					Value
			COMMON STOCKS--continued
			Services to Medical Professionals--3.2%
	97		Aetna, Inc.	$	3,978
	47	1	Health Net, Inc.		1,314
	51	1	Medco Health Solutions, Inc.		2,529
	162		UnitedHealth Group, Inc.		4,549
	89	1	Wellpoint, Inc.		4,668
			TOTAL		17,038
			Software Packaged/Custom--0.0%
	1	1	Computer Sciences Corp.		47
			Specialty Chemicals--0.1%
	7		Air Products & Chemicals, Inc.		666
			Specialty Retailing--2.5%
	46		Barnes & Noble, Inc.		1,088
	197		Costco Wholesale Corp.		12,348
			TOTAL		13,436
			Stainless Steel Producer--0.2%
	31		Carpenter Technology Corp.		1,200
			Trucking--0.8%
	61		Ryder System, Inc.		4,024
			TOTAL COMMON STOCKS (IDENTIFIED COST $571,926)		536,080
			MUTUAL FUND--13.8%
	73,796	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)		73,796
			TOTAL INVESTMENTS--113.6% (IDENTIFIED COST $645,722) 4		609,876
			OTHER ASSETS AND LIABILITIES - NET--(13.6)% 5		(72,807	)
			TOTAL NET ASSETS--100%	$	537,069

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $645,964.

5 Assets, other than investment in securities, less liabilities. See Statement of Assets and Liabilities. A significant portion of this balance represents accrued expenses.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $73,796 of investments in an affiliated issuer (Note 5) (identified cost $645,722)			$	609,876
Income receivable				661
Receivable for investments sold				1,988
TOTAL ASSETS				612,525
Liabilities:
Payable for administrative personnel and services fees (Note 5)	$	20,560
Payable for auditing fees		21,200
Payable for legal fees		5,375
Payable for portfolio accounting fees		12,500
Payable for share registration costs		14,468
Accrued expenses		1,353
TOTAL LIABILITIES				75,456
Net assets for 56,734 shares outstanding			$	537,069
Net Assets Consist of:
Paid-in capital			$	571,669
Net unrealized depreciation of investments				(35,846	)
Accumulated net realized loss on investments				(1,009	)
Undistributed net investment income				2,255
TOTAL NET ASSETS			$	537,069
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($473,346 ÷ 50,000 shares outstanding), no par value, unlimited shares authorized				$9.47
Offering price per share				$9.47
Redemption proceeds per share				$9.47
Class A Shares:
Net asset value per share ($63,534 ÷ 6,714 shares outstanding), no par value, unlimited shares authorized				$9.46
Offering price per share (100/94.50 of $9.46) 1				$10.01
Redemption proceeds per share				$9.46
Class C Shares:
Net asset value per share ($94.65 ÷ 10 shares outstanding), no par value, unlimited shares authorized				$9.47
Offering price per share				$9.47
Redemption proceeds per share (99.00/100 of $9.47) 1				$9.38
Class K Shares:
Net asset value per share ($94.65 ÷ 10 shares outstanding), no par value, unlimited shares authorized				$9.47
Offering price per share				$9.47
Redemption proceeds per share				$9.47

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Period Ended July 31, 2008 ¹

Investment Income:
Dividends (including $302 received from an affiliated issuer (Note 5))							$	4,447
Expenses:
Investment adviser fee (Note 5)				$	1,633
Administrative personnel and services fee (Note 5)					108,442
Custodian fees					2,590
Transfer and dividend disbursing agent fees and expenses					72
Transfer and dividend disbursing agent recordkeeping fees-- Institutional Shares					21
Transfer and dividend disbursing agent recordkeeping fees--Class A Shares					6
Auditing fees					21,200
Legal fees					7,767
Portfolio accounting fees					12,500
Shareholder services fee--Class A Shares (Note 5)					36
Share registration costs					78,146
Printing and postage					10,297
Miscellaneous					2,800
TOTAL EXPENSES					245,510
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(1,633	)
Waiver of administrative personnel and services fee (Note 5)		(22,088	)
Reimbursement of transfer and dividend disbursing agent recordkeeping fees--Institutional Shares		(21	)
Reimbursement of transfer and dividend disbursing agent recordkeeping fees--Class A Shares		(6	)
Reimbursement of other operating expenses (Note 5)		(219,570	)
TOTAL WAIVERS AND REIMBURSEMENTS					(243,318	)
Net expenses								2,192
Net investment income								2,255
Realized and Unrealized Loss on Investments:
Net realized loss on investments								(1,009	)
Net change in unrealized depreciation of investments								(35,846	)
Net realized and unrealized loss on investments								(36,855	)
Change in net assets resulting from operations							$	(34,600	)

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Period Ended July 31		2008	1
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	2,255
Net realized loss on investments		(1,009	)
Net change in unrealized depreciation of investments		(35,846	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(34,600	)
Share Transactions:
Proceeds from sale of shares		574,741
Cost of shares redeemed		(3,072	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		571,669
Change in net assets		537,069
Net Assets:
Beginning of period		- --
End of period (including undistributed net investment income of $2,255)	$	537,069

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine diversified portfolios. The financial statements included herein are only those of Federated MDT Large Cap Value Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Institutional Shares, Class A Shares, Class C Shares and Class K Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The Financial Highlights of the Institutional Shares are presented separately. The primary investment objective of the Fund is long-term capital appreciation.

The Fund's Institutional Shares, Class A Shares, Class C Shares and Class K Shares became effective with the Securities and Exchange Commission (SEC) on March 3, 2008.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the "Trustees").
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that Institutional Shares, Class A Shares, Class C Shares and Class K Shares may bear distribution services fees, shareholder services fees and certain transfer and dividend disbursing agent fees unique to those classes. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on March 7, 2008. As of and during the period ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. The Fund's effective date was March 3, 2008, accordingly there are no prior years that remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Period Ended July 31	2008 1
Institutional Shares:	Shares			Amount
Shares sold	50,010		$	500,100
Shares redeemed	(10	)		(100	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	50,000		$	500,000
Period Ended July 31	2008 1
Class A Shares:	Shares			Amount
Shares sold	7,012		$	74,441
Shares redeemed	(298	)		(2,972	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	6,714		$	71,469
Period Ended July 31	2008 1
Class C Shares:	Shares			Amount
Shares sold	10		$	100
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	10		$	100
Period Ended July 31	2008 1
Class K Shares:	Shares			Amount
Shares sold	10		$	100
NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS	10		$	100
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	56,734		$	571,669

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

4. FEDERAL TAX INFORMATION

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	2,255
Net unrealized depreciation	$	(36,088	)
Capital loss deferrals	$	(767	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $645,964. The net unrealized depreciation of investments for federal tax purposes was $36,088. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $19,877 and net unrealized depreciation from investments for those securities having an excess of cost over value of $55,965.

Under current tax regulations, capital losses on securities transactions realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post October losses of $767 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the period ended July 31, 2008, the Adviser voluntarily waived $1,628 of its fee and voluntarily reimbursed $219,570 of other operating expenses.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the period ended July 31, 2008, the net fee paid to FAS was 39.65% of average daily net assets of the Fund. FAS waived $22,088 of its fee. The Fund currently accrues the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares, Class C Shares and Class K Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%
Class K Shares	0.50%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the period ended July 31, 2008, FSC did not retain any fees paid by the Fund. For the period ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee.

Sales Charges

For the period ended July 31, 2008, FSC retained $220 in sales charges from the sale of Class A Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the period ended July 31, 2008, FSSC did not receive any fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares, Class C Shares and Class K Shares (after the voluntary waivers and reimbursements) will not exceed 0.97%, 1.22%, 1.97% and 1.72%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the period ended July 31, 2008, the Adviser reimbursed $5. Transactions with the affiliated company during the period ended July 31, 2008 were as follows:

Affiliate	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	660,732	586,936	73,796	$73,796	$302

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the period ended July 31, 2008, were as follows:

Purchases	$	792,337
Sales	$	219,402

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the period ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the period ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND SHAREHOLDERS OF FEDERATED MDT LARGE CAP VALUE FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Large Cap Value Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations, the statement of changes in net assets and the financial highlights for the period from March 7, 2008 (date of initial investment) to July 31, 2008. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.

We conducted our audit 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Large Cap Value Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations, the changes in its net assets and the financial highlights for the period from March 7, 2008 (date of initial investment) to July 31, 2008, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/ Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc. and Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT LARGE CAP VALUE FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. Because the Fund did not yet have a meaningful operating history, the Board's decision to approve the contract reflects the exercise of its business judgment primarily on whether to authorize the continued offering of this new investment vehicle, as originally proposed by, and based on information previously provided by, the Federated organization, and based on Federated's recommendation to go forward with the Fund.

The Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

The Board also considered the anticipated compensation and benefits to be received by the Adviser. This includes fees to be received for services provided to the Fund by other entities in the Federated organization and research services that may be received by the Adviser from brokers that execute fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the Fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as the Fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with the Fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in working with Federated on matters relating to other Federated funds, and was assisted in its deliberations by independent legal counsel. The Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); and the nature, quality and extent of the advisory and other services to be provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's anticipated investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund will compete. In this regard, the Senior Officer also reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the fees charged by other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

It was recognized that the factors mentioned above relating to such matters as fund performance and any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with the Fund, are essentially impossible to apply before the Fund has experienced any meaningful operating history. Nevertheless, the Board monitors the Fund's performance quarterly as information becomes available. Moreover, in connection with the Board's governance of other Federated funds, it should be noted that the Board regularly receives financial information about Federated, including reports on the compensation and benefits Federated derives from its relationships with the other Federated funds. These reports cover not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g. for serving as the Federated funds' administrator). The reports also discuss any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waive fees and/or reimburse expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

In connection with the Board's initial consideration of the contract, Federated had previously furnished reports, requested by the Senior Officer, that reported projected revenues and made estimates of the allocation of expenses using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that the Fund had only recently commenced its first fiscal year, and that the Fund's investment advisory fee has been waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. With due regard for the fact that the Fund did not yet have a meaningful operating history, the Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

The Board based its decision to approve the contract on the totality of the circumstances and relevant factors, and with a view to past and future long-term considerations. As noted, not all of the factors and considerations identified above were relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that are relevant, the Board's decision to approve the contract reflects its determination that, based upon the information previously requested and supplied, Federated's proposal to establish and manage the Fund, and its past performance and actions in providing services to other mutual funds, provide a satisfactory basis to support the business decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT Large Cap Value Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R668
Cusip 31421R650
Cusip 31421R643

39020 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Large Cap Value Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights

(For a Share Outstanding Throughout the Period)

Period Ended July 31	2008	1
Net Asset Value, Beginning of Period	$10.00
Income From Investment Operations:
Net investment income	0.04	2
Net realized and unrealized loss on investments	(0.57	)
TOTAL FROM INVESTMENT OPERATIONS	(0.53	)
Net Asset Value, End of Period	$ 9.47
Total Return 3	(5.30	)%
Ratios to Average Net Assets:
Net expenses	0.99	% 4
Net investment income	1.05	% 4
Expense waiver/reimbursement 5	111.72	% 4
Supplemental Data:
Net assets, end of period (000 omitted)	$473
Portfolio turnover	41	%

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

2 Per share numbers have been calculated using the average shares method.

3 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

4 Computed on an annualized basis.

5 This expense decrease is reflected in both the net expense and the net investment income ratios shown above.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 ¹ to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual	$1,000	$ 947.00	$3.87
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,019.94	$4.97

1 "Actual" expense information for the Fund's Shares is for the period from March 7, 2008 (date of initial investment) to July 31, 2008. Actual expenses are equal to the Fund's annualized net expense ratio of 0.99%, multiplied by 147/366 (to reflect the period from initial investment to July 31, 2008). "Hypothetical" expense information for the Fund's Shares is presented on the basis of the full one-half-year period to enable comparison to other funds. It is based on assuming the same net expense ratio and average account value over the period, but it is multiplied by 182/366 (to reflect the full half-year period).

Management's Discussion of Fund Performance

The fund's total return, at net asset value, for the time period from March 7, 2008 to July 31, 2008 was (5.30)% for Institutional Shares. The total return of the Russell 1000 ^® Value Index ¹ was (3.88)% for the same period. The fund's total return for the most recently completed fiscal year reflected actual cash flows, transactions costs and other expenses which were not reflected in the total return of the Russell 1000 ^® Value Index.

MARKET OVERVIEW

Over the period from March 7, 2008 to July 31, 2008 domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® Index, ² which represents the performance of the 3,000 largest U.S. companies by market capitalization, finished the period down 0.99%. Small cap stocks had the best relative results as demonstrated by the 8.42% return on the Russell 2000 ^® Index, ³ which exceeded the 0.81% and (2.77)% results for the Russell Midcap ^® Index ⁴ and the Russell Top 200 ^® Index, ⁵ respectively. Growth stocks significantly outperformed value stocks during the period, with the Russell 3000 ^® Growth Index ⁶ returning 0.86% as compared to (3.08)% for the Russell 3000 Value ^® Index. ⁷

1 The Russell 1000® Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values.

2 The Russell 3000® Index offers investors access to the broad U.S. equity universe representing approximately 98% of the U.S. market. The Russell 3000 is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The index is unmanaged and investments cannot be made directly in an index.

3 The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index, which represents approximately 10% of the total market capitalization of the Russell 3000® Index. The index is unmanaged and investments cannot be made directly in an index.

4 The Russell Midcap® Index measures the performance of the 800 smallest companies in the Russell 1000® Index, which represent approximately 31% of the total market capitalization of the Russell 1000® Index. The index is unmanaged and investments cannot be made directly in an index.

5 Russell Top 200® Index measures the performance of the 200 largest companies in the Russell 1000® Index, which represents approximately 69% of the total market capitalization of the Russell 1000® Index. The index is unmanaged and investments cannot be made directly in an index.

6 The Russell 3000® Growth Index measures the performance of those Russell 3000® Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000® Growth or the Russell 2000® Growth indexes. The index is unmanaged and investments cannot be made directly in an index.

7 The Russell 3000® Value Index measures the performance of those Russell 3000® Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000® Value or the Russell 2000® Value indexes. The index is unmanaged and investments cannot be made directly in an index.

FUND PERFORMANCE

The most significant positive factor in the fund's performance relative to the Russell 1000 ^® Value Index was its stock selection in the industrials and financials sectors. Additionally, the fund's stock selection in the information technology sector provided a modest contribution to relative performance. The most significant negative factor in the fund's performance relative to the Russell 1000 ^® Value Index was stock selection in the energy sector. Stock selection in the consumer staples and materials sectors also detracted more modestly from relative performance.

Individual stocks contributing to the fund's performance relative to the Russell 1000 ^® Value Index included: Norfolk Southern Corporation, General Electric Company, Goldman Sachs Group and Lehman Brothers Holdings, Inc.

Individual stocks detracting from the fund's performance relative to the Russell 1000 ^® Value Index included: Valero Energy Corporation, Archer-Daniel-Midland, Deere & Company, Sears Holdings Corporation and Dow Chemical Corporation.

GROWTH OF A $25,000 INVESTMENT - INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000 ¹ in the Federated MDT Large Cap Value Fund (Institutional Shares) (the "Fund") from March 7, 2008 (start of performance) to July 31, 2008, compared to the Russell 1000 ^® Value Index (Russell 1000 ^® Value). ²

Cumulative Total Return for the Period Ended 7/31/2008
Start of Performance (3/7/2008)	(5.30)%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 Represents a hypothetical investment of $25,000 in the fund. The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 1000® Value has been adjusted to reflect reinvestment of dividends on securities in the index.

2 The Russell 1000® Value is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund's industry composition ¹ was as follows:

Industry	Percentage of Total Net Assets
Integrated Domestic Oil	8.5	%
Electric Utility	7.4	%
Life Insurance	5.6	%
Railroad	4.6	%
Integrated International Oil	4.4	%
Securities Brokerage	4.4	%
Regional Bank	4.4	%
Crude Oil & Gas Production	4.2	%
Multi-Line Insurance	4.2	%
Department Stores	3.5	%
Commodity Chemicals	3.5	%
Oil Refiner	3.5	%
Personal Loans	3.4	%
Services to Medical Professionals	3.2	%
Property Liability Insurance	3.0	%
Building Supply Stores	2.8	%
Specialty Retailing	2.5	%
Lumber Products	2.2	%
Miscellaneous Food Products	2.1	%
Discount Department Stores	2.1	%
Ethical Drugs	1.9	%
Biotechnology	1.9	%
Aluminum	1.5	%
Agricultural Machinery	1.5	%
Financial Services	1.2	%
Home Building	1.0	%
Other 2	11.3	%
Cash Equivalents 3	13.8	%
Other Assets and Liabilities--Net 4	(13.6	)%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's total net assets have been aggregated under the designation "Other."

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares					Value
			COMMON STOCKS--99.8%
			Agricultural Machinery--1.5%
	111		Deere & Co.	$	7,788
			Airline - Regional--0.2%
	84		Southwest Airlines Co.		1,310
			Aluminum--1.5%
	237		Alcoa, Inc.		7,999
			Apparel--0.3%
	20		Columbia Sportswear Co.		746
	64		Liz Claiborne, Inc.		836
			TOTAL		1,582
			AT&T Divestiture--0.5%
	95		AT&T, Inc.		2,927
			Auto Part Replacement--0.2%
	22		Genuine Parts Co.		882
			Biotechnology--1.9%
	145	1	Amgen, Inc.		9,081
	17	1	Biogen Idec, Inc.		1,186
			TOTAL		10,267
			Building Supply Stores--2.8%
	330		Home Depot, Inc.		7,864
	353		Lowe's Cos., Inc.		7,173
			TOTAL		15,037
			Clothing Stores--0.2%
	52	1	AnnTaylor Stores Corp.		1,173
			Commodity Chemicals--3.5%
	535		Dow Chemical Co.		17,821
	17		Eastman Chemical Co.		1,019
			TOTAL		18,840
			Computer Peripherals--0.2%
	76	1	Sandisk Corp.		1,072
Shares					Value
			COMMON STOCKS--continued
			Computer Stores--0.4%
	68	1	Ingram Micro, Inc., Class A	$	1,253
	19	1	Tech Data Corp.		663
			TOTAL		1,916
			Contracting--0.2%
	35		Granite Construction, Inc.		1,107
			Crude Oil & Gas Production--4.2%
	70		Apache Corp.		7,852
	124		Cimarex Energy Co.		6,462
	116		Pioneer Natural Resources, Inc.		6,896
	29	1	Swift Energy Co.		1,474
			TOTAL		22,684
			Defense Aerospace--0.7%
	34		Lockheed Martin Corp.		3,547
			Defense Electronics--0.5%
	17		Grainger (W.W.), Inc.		1,522
	19		Raytheon Co.		1,082
			TOTAL		2,604
			Department Stores--3.5%
	30		Dillards, Inc., Class A		303
	28		Penney (J.C.) Co., Inc.		863
	219	1	Sears Holdings Corp.		17,739
			TOTAL		18,905
			Discount Department Stores--2.1%
	57	1	BJ's Wholesale Club, Inc.		2,139
	152		Wal-Mart Stores, Inc.		8,910
			TOTAL		11,049
			Electric Utility--7.4%
	130		Alliant Energy Corp.		4,190
	155		DTE Energy Co.		6,352
	25		Dominion Resources, Inc.		1,105
	184		Entergy Corp.		19,673
	153		Sempra Energy		8,593
			TOTAL		39,913
Shares					Value
			COMMON STOCKS--continued
			Ethical Drugs--1.9%
	37	1	Forest Laboratories, Inc., Class A	$	1,314
	94		Johnson & Johnson		6,436
	143		Pfizer, Inc.		2,670
			TOTAL		10,420
			Financial Services--1.2%
	157		Ameriprise Financial, Inc.		6,673
			Gas Distributor--0.3%
	39		AGL Resources, Inc.		1,348
			Home Building--1.0%
	18		M.D.C. Holdings, Inc.		747
	8	1	NVR, Inc.		4,419
			TOTAL		5,166
			Home Products--0.8%
	18		Kimberly-Clark Corp.		1,041
	47		Procter & Gamble Co.		3,078
			TOTAL		4,119
			Integrated Domestic Oil--8.5%
	272		ConocoPhillips		22,201
	469		Marathon Oil Corp.		23,201
			TOTAL		45,402
			Integrated International Oil--4.4%
	282		Chevron Corp.		23,846
			Leasing--0.1%
	17		GATX Corp.		773
			Life Insurance--5.6%
	207		MetLife, Inc.		10,509
	30		Principal Financial Group		1,275
	225		Prudential Financial, Inc.		15,518
	14		StanCorp Financial Group, Inc.		691
	39		Torchmark Corp.		2,264
			TOTAL		30,257
			Lumber Products--2.2%
	220		Weyerhaeuser Co.		11,761
Shares					Value
			COMMON STOCKS--continued
			Machine Tools--0.9%
	46	1	Mettler Toledo International, Inc.	$	4,945
			Maritime--0.7%
	50		Overseas Shipholding Group, Inc.		3,938
			Medical Supplies--0.1%
	14		AmerisourceBergen Corp.		586
			Mini-Mill Producer--0.6%
	107		Commercial Metals Corp.		3,194
			Miscellaneous Food Products--2.1%
	397		Archer-Daniels-Midland Co.		11,366
			Motion Pictures--0.2%
	29	1	Dreamworks Animation SKG, Inc.		861
			Multi-Industry Capital Goods--0.1%
	22		General Electric Co.		622
			Multi-Line Insurance--4.2%
	344		Allstate Corp.		15,900
	107		Hartford Financial Services Group, Inc.		6,783
			TOTAL		22,683
			Oil Refiner--3.5%
	79		Frontier Oil Corp.		1,442
	512		Valero Energy Corp.		17,106
			TOTAL		18,548
			Oil Service, Explore & Drill--0.5%
	33	1	Seacor Holdings, Inc.		2,761
			Packaged Foods--0.1%
	10		General Mills, Inc.		644
			Paper Products--0.7%
	50		International Paper Co.		1,386
	90		MeadWestvaco Corp.		2,413
			TOTAL		3,799
			Personal Loans--3.4%
	432		Capital One Financial Corp.		18,084
Shares					Value
			COMMON STOCKS--continued
			Property Liability Insurance--3.0%
	92		Chubb Corp.	$	4,420
	264		The Travelers Cos., Inc.		11,648
			TOTAL		16,068
			Railroad--4.6%
	346		Norfolk Southern Corp.		24,884
			Regional Bank--4.4%
	25		City National Corp.		1,228
	178		Comerica, Inc.		5,112
	108		Fifth Third Bancorp		1,509
	125		Regions Financial Corp.		1,185
	291		SunTrust Banks, Inc.		11,948
	87		Zions Bancorp		2,546
			TOTAL		23,528
			Restaurant--0.8%
	68		McDonald's Corp.		4,066
			Savings and Loan--0.2%
	12		Federal Home Loan Mortgage Corp.		98
	44		Hudson City Bancorp, Inc.		803
			TOTAL		901
			Securities Brokerage--4.4%
	129		Goldman Sachs Group, Inc.		23,741
			Semiconductor Distribution--0.5%
	89	1	Arrow Electronics, Inc.		2,868
			Semiconductor Manufacturing Equipment--0.2%
	33	1	Novellus Systems, Inc.		672
	58	1	Teradyne, Inc.		543
			TOTAL		1,215
Shares					Value
			COMMON STOCKS--continued
			Services to Medical Professionals--3.2%
	97		Aetna, Inc.	$	3,978
	47	1	Health Net, Inc.		1,314
	51	1	Medco Health Solutions, Inc.		2,529
	162		UnitedHealth Group, Inc.		4,549
	89	1	Wellpoint, Inc.		4,668
			TOTAL		17,038
			Software Packaged/Custom--0.0%
	1	1	Computer Sciences Corp.		47
			Specialty Chemicals--0.1%
	7		Air Products & Chemicals, Inc.		666
			Specialty Retailing--2.5%
	46		Barnes & Noble, Inc.		1,088
	197		Costco Wholesale Corp.		12,348
			TOTAL		13,436
			Stainless Steel Producer--0.2%
	31		Carpenter Technology Corp.		1,200
			Trucking--0.8%
	61		Ryder System, Inc.		4,024
			TOTAL COMMON STOCKS (IDENTIFIED COST $571,926)		536,080
			MUTUAL FUND--13.8%
	73,796	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)		73,796
			TOTAL INVESTMENTS--113.6% (IDENTIFIED COST $645,722) 4		609,876
			OTHER ASSETS AND LIABILITIES - NET--(13.6)% 5		(72,807	)
			TOTAL NET ASSETS--100%	$	537,069

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $645,964.

5 Assets, other than investment in securities, less liabilities. See Statement of Assets and Liabilities. A significant portion of this balance represents accrued expenses.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $73,796 of investments in an affiliated issuer (Note 5) (identified cost $645,722)			$	609,876
Income receivable				661
Receivable for investments sold				1,988
TOTAL ASSETS				612,525
Liabilities:
Payable for administrative personnel and services fees (Note 5)	$	20,560
Payable for auditing fees		21,200
Payable for legal fees		5,375
Payable for portfolio accounting fees		12,500
Payable for share registration costs		14,468
Accrued expenses		1,353
TOTAL LIABILITIES				75,456
Net assets for 56,734 shares outstanding			$	537,069
Net Assets Consist of:
Paid-in capital			$	571,669
Net unrealized depreciation of investments				(35,846	)
Accumulated net realized loss on investments				(1,009	)
Undistributed net investment income				2,255
TOTAL NET ASSETS			$	537,069
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($473,346 ÷ 50,000 shares outstanding), no par value, unlimited shares authorized				$9.47
Offering price per share				$9.47
Redemption proceeds per share				$9.47
Class A Shares:
Net asset value per share ($63,534 ÷ 6,714 shares outstanding), no par value, unlimited shares authorized				$9.46
Offering price per share (100/94.50 of $9.46) 1				$10.01
Redemption proceeds per share				$9.46
Class C Shares:
Net asset value per share ($94.65 ÷ 10 shares outstanding), no par value, unlimited shares authorized				$9.47
Offering price per share				$9.47
Redemption proceeds per share (99.00/100 of $9.47) 1				$9.38
Class K Shares:
Net asset value per share ($94.65 ÷ 10 shares outstanding), no par value, unlimited shares authorized				$9.47
Offering price per share				$9.47
Redemption proceeds per share				$9.47

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Period Ended July 31, 2008 ¹

Investment Income:
Dividends (including $302 received from an affiliated issuer (Note 5))							$	4,447
Expenses:
Investment adviser fee (Note 5)				$	1,633
Administrative personnel and services fee (Note 5)					108,442
Custodian fees					2,590
Transfer and dividend disbursing agent fees and expenses					72
Transfer and dividend disbursing agent recordkeeping fees-- Institutional Shares					21
Transfer and dividend disbursing agent recordkeeping fees--Class A Shares					6
Auditing fees					21,200
Legal fees					7,767
Portfolio accounting fees					12,500
Shareholder services fee--Class A Shares (Note 5)					36
Share registration costs					78,146
Printing and postage					10,297
Miscellaneous					2,800
TOTAL EXPENSES					245,510
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(1,633	)
Waiver of administrative personnel and services fee (Note 5)		(22,088	)
Reimbursement of transfer and dividend disbursing agent recordkeeping fees--Institutional Shares		(21	)
Reimbursement of transfer and dividend disbursing agent recordkeeping fees--Class A Shares		(6	)
Reimbursement of other operating expenses (Note 5)		(219,570	)
TOTAL WAIVERS AND REIMBURSEMENTS					(243,318	)
Net expenses								2,192
Net investment income								2,255
Realized and Unrealized Loss on Investments:
Net realized loss on investments								(1,009	)
Net change in unrealized depreciation of investments								(35,846	)
Net realized and unrealized loss on investments								(36,855	)
Change in net assets resulting from operations							$	(34,600	)

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Period Ended July 31		2008	1
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	2,255
Net realized loss on investments		(1,009	)
Net change in unrealized depreciation of investments		(35,846	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(34,600	)
Share Transactions:
Proceeds from sale of shares		574,741
Cost of shares redeemed		(3,072	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		571,669
Change in net assets		537,069
Net Assets:
Beginning of period		- --
End of period (including undistributed net investment income of $2,255)	$	537,069

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine diversified portfolios. The financial statements included herein are only those of Federated MDT Large Cap Value Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Institutional Shares, Class A Shares, Class C Shares and Class K Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The financial highlights of the Class A Shares, Class C Shares and Class K Shares are presented separately. The primary investment objective of the Fund is long-term capital appreciation.

The Fund's Institutional Shares, Class A Shares, Class C Shares and Class K Shares became effective with the Securities and Exchange Commission (SEC) on March 3, 2008.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the "Trustees").
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that Institutional Shares, Class A Shares, Class C Shares and Class K Shares may bear distribution services fees, shareholder services fees and certain transfer and dividend disbursing agent fees unique to those classes. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on March 7, 2008. As of and during the period ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. The Fund's effective date was March 3, 2008, accordingly there are no prior years that remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Period Ended July 31	2008 1
Institutional Shares:	Shares			Amount
Shares sold	50,010		$	500,100
Shares redeemed	(10	)		(100	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	50,000		$	500,000
Period Ended July 31	2008 1
Class A Shares:	Shares			Amount
Shares sold	7,012		$	74,441
Shares redeemed	(298	)		(2,972	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	6,714		$	71,469
Period Ended July 31	2008 1
Class C Shares:	Shares			Amount
Shares sold	10		$	100
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	10		$	100
Period Ended July 31	2008 1
Class K Shares:	Shares			Amount
Shares sold	10		$	100
NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS	10		$	100
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	56,734		$	571,669

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

4. FEDERAL TAX INFORMATION

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	2,255
Net unrealized depreciation	$	(36,088	)
Capital loss deferrals	$	(767	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $645,964. The net unrealized depreciation of investments for federal tax purposes was $36,088. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $19,877 and net unrealized depreciation from investments for those securities having an excess of cost over value of $55,965.

Under current tax regulations, capital losses on securities transactions realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post October losses of $767 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the period ended July 31, 2008, the Adviser voluntarily waived $1,628 of its fee and voluntarily reimbursed $219,570 of other operating expenses.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the period ended July 31, 2008, the net fee paid to FAS was 39.65% of average daily net assets of the Fund. FAS waived $22,088 of its fee. The Fund currently accrues the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares, Class C Shares and Class K Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%
Class K Shares	0.50%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the period ended July 31, 2008, FSC did not retain any fees paid by the Fund. For the period ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee.

Sales Charges

For the period ended July 31, 2008, FSC retained $220 in sales charges from the sale of Class A Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the period ended July 31, 2008, FSSC did not receive any fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares, Class C Shares and Class K Shares (after the voluntary waivers and reimbursements) will not exceed 0.97%, 1.22%, 1.97% and 1.72%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the period ended July 31, 2008, the Adviser reimbursed $5. Transactions with the affiliated company during the period ended July 31, 2008 were as follows:

Affiliate	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	660,732	586,936	73,796	$73,796	$302

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the period ended July 31, 2008, were as follows:

Purchases	$	792,337
Sales	$	219,402

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the period ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the period ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND SHAREHOLDERS OF FEDERATED MDT LARGE CAP VALUE FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Large Cap Value Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations, the statement of changes in net assets and the financial highlights for the period from March 7, 2008 (date of initial investment) to July 31, 2008. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.

We conducted our audit 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Large Cap Value Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations, the changes in its net assets and the financial highlights for the period from March 7, 2008 (date of initial investment) to July 31, 2008, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (Investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/ Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT LARGE CAP VALUE FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. Because the Fund did not yet have a meaningful operating history, the Board's decision to approve the contract reflects the exercise of its business judgment primarily on whether to authorize the continued offering of this new investment vehicle, as originally proposed by, and based on information previously provided by, the Federated organization, and based on Federated's recommendation to go forward with the Fund.

The Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

The Board also considered the anticipated compensation and benefits to be received by the Adviser. This includes fees to be received for services provided to the Fund by other entities in the Federated organization and research services that may be received by the Adviser from brokers that execute fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the Fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as the Fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with the Fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in working with Federated on matters relating to other Federated funds, and was assisted in its deliberations by independent legal counsel. The Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); and the nature, quality and extent of the advisory and other services to be provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's anticipated investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund will compete. In this regard, the Senior Officer also reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the fees charged by other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

It was recognized that the factors mentioned above relating to such matters as fund performance and any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with the Fund, are essentially impossible to apply before the Fund has experienced any meaningful operating history. Nevertheless, the Board monitors the Fund's performance quarterly as information becomes available. Moreover, in connection with the Board's governance of other Federated funds, it should be noted that the Board regularly receives financial information about Federated, including reports on the compensation and benefits Federated derives from its relationships with the other Federated funds. These reports cover not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts ( e.g. , for serving as the Federated funds' administrator). The reports also discuss any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waive fees and/or reimburse expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

In connection with the Board's initial consideration of the contract, Federated had previously furnished reports, requested by the Senior Officer, that reported projected revenues and made estimates of the allocation of expenses using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that the Fund had only recently commenced its first fiscal year, and that the Fund's investment advisory fee has been waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. With due regard for the fact that the Fund did not yet have a meaningful operating history, the Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

The Board based its decision to approve the contract on the totality of the circumstances and relevant factors, and with a view to past and future long-term considerations. As noted, not all of the factors and considerations identified above were relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that are relevant, the Board's decision to approve the contract reflects its determination that, based upon the information previously requested and supplied, Federated's proposal to establish and manage the Fund, and its past performance and actions in providing services to other mutual funds, provide a satisfactory basis to support the business decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT Large Cap Value Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R635

39021 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Mid Cap Growth Fund

Established 2005

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31,2008

Class A Shares
Class C Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$13.05		$10.67		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.11	) 3	(0.11	) 3	(0.09	) 3
Net realized and unrealized gain (loss) on investments	(0.72	)	2.81		0.76
TOTAL FROM INVESTMENT OPERATIONS	(0.83	)	2.70		0.67
Less Distributions:
Distributions from net realized gain on investments	(0.12	)	(0.32	)	- --
Redemption fees	- --		0.00	4	- --
Net Asset Value, End of Period	$12.10		$13.05		$10.67
Total Return 5	(6.47	)%	25.67	%	6.70	%
Ratios to Average Net Assets:
Net expenses	1.50	%	1.50	%	2.02	% 6
Net investment income (loss)	(0.82	)%	(0.88	)%	(0.92	)% 6
Expense waiver/reimbursement 7	4.06	%	15.03	%	27.33	% 6
Supplemental Data:
Net assets, end of period (000 omitted)	$10,242		$6,446		$104
Portfolio turnover	216	%	141	%	201	%

1 MDT Mid Cap Growth Fund (the "Predecessor Fund") was reorganized into Federated MDT Mid Cap Growth Fund (the "Fund") as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Represents less than $0.01.

5 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

6 Computed on an annualized basis.

7 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$12.86		$10.60		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.19	) 3	(0.19	) 3	(0.17	) 3
Net realized and unrealized gain (loss) on investments	(0.71	)	2.77		0.77
TOTAL FROM INVESTMENT OPERATIONS	(0.90	)	2.58		0.60
Less Distributions:
Distributions from net realized gain on investments	(0.12	)	(0.32	)	- --
Redemption fees	- --		0.00	4	- --
Net Asset Value, End of Period	$11.84		$12.86		$10.60
Total Return 5	(7.12	)%	24.69	%	6.00	%
Ratios to Average Net Assets:
Net expenses	2.24	%	2.25	%	2.77	% 6
Net investment income (loss)	(1.51	)%	(1.56	)%	(1.67	)% 6
Expense waiver/reimbursement 7	3.86	%	26.77	%	27.33	% 6
Supplemental Data:
Net assets, end of period (000 omitted)	$909		$123		$6
Portfolio turnover	216	%	141	%	201	%

1 The Predecessor Fund was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Represents less than $0.01.

5 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

6 Computed on an annualized basis.

7 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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, such as sales charges (loads) on purchase or redemption payments. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual:
Class A Shares	$1,000	$ 951.30	$ 7.28
Class C Shares	$1,000	$ 948.00	$10.80
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,017.40	$ 7.52
Class C Shares	$1,000	$1,013.77	$11.17

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

Class A Shares	1.50	%
Class C Shares	2.23	%

Management's Discussion of Fund Performance

The fund's total return, based on net asset value, for the fiscal year ended July 31, 2008 was (6.47)% for Class A Shares and (7.12)% for Class C Shares. ¹ The total return of the Russell Midcap ^® Growth Index ² (Russell Midcap ^® Growth) was (7.92)% and the total return of the Lipper Mid-Cap Growth Funds Index ³ was (5.68)% for the same period. The fund's total return for the fiscal year reflected actual cashflows, transaction costs and other expenses which were not reflected in the total return of the Russell Index.

1 The fund is the successor to the MDT Mid Cap Growth Fund pursuant to a reorganization that took place on December 8, 2006. Prior to that date, the fund had no investment operations. Accordingly, the performance information provided is historical information of the MDT Mid Cap Growth Fund.

2 Russell Midcap® Growth measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000® Growth index. The index is unmanaged and investments cannot be made in an index.

3 Lipper indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

MARKET OVERVIEW

During the 12-month period ending July 31, 2008 domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® Index, ⁴ which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period down 10.32%. Small cap stocks had the best relative results as demonstrated by the (6.71)% return on the Russell 2000 ^® Index ⁵ which exceeded the (10.10)% and (10.81)% results for the Russell Midcap ^® Index ⁶ and the Russell Top 200 ^® Index ⁷ respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000 ^® Growth Index ⁸ returning (6.11)% as compared to (14.75)% for the Russell 3000 Value ^® Index. ⁹

The best performing sectors during the period, as measured by the Russell ^® 3000 Index, were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services down 22.81%).

4 Russell 3000 ^® Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. The index is unmanaged and investments cannot be made in an index.

5 Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index, which represents approximately 10% of the total market capitalization of the Russell 3000® Index. The index is unmanaged and investments cannot be made in an index.

6 Russell Midcap® Index measures the performance of the 800 smallest companies in the Russell 1000® Index, which represent approximately 35% of the total market capitalization of the Russell 1000® Index. The index is unmanaged and investments cannot be made in an index.

7 Russell Top 200® Index measures the performance of the 200 largest companies in the Russell 1000® Index, which represents approximately 65% of the total market capitalization of the Russell 1000® Index. The index is unmanaged and investments cannot be made in an index.

8 Russell 3000® Growth Index measures the performance of those Russell 3000® Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000® Growth or the Russell 2000® Growth indexes. The index is unmanaged and investments cannot be made in an index.

9 Russell 3000® Value Index measures the performance of those Russell 3000® Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000® Value or the Russell 2000® Value indexes. The index is unmanaged and investments cannot be made in an index.

FUND PERFORMANCE

The most significant positive factor in the fund's performance relative to the Russell Midcap ^® Growth was its stock selection in the Industrials sector. Additionally, the fund's stock selection in the Health Care and Information Technology sectors provided moderate contributions to relative performance. The most significant negative factor in the fund's performance relative to the Russell Midcap ^® Growth was its underweight in the Energy sector. Additionally, stock selection in the Energy and Materials sectors detracted moderately from relative performance.

Individual stocks contributing to the fund's performance relative to the Russell Midcap ^® Growth included: First Solar, Inc., a designer and manufacturer of solar energy technology, Priceline.com, Inc .. , McDermott International, an engineering and construction company, Express Scripts Inc., a speciality pharmaceutical provider and Foster Wheeler Ltd.

Individual stocks detracting from the fund's performance relative to the Russell Midcap ^® Growth included: Apollo Group, Inc., an educational program provider, Tempur-Pedic International, Inc., Lear Corporation, Cheniere Energy, Inc., a natural gas pipeline company and Idearc, Inc., a publisher of telephone directories.

GROWTH OF A $10,000 INVESTMENT - CLASS A SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Mid Cap Growth Fund (Class A Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell Midcap ^® Growth Index (Russell Midcap ^® Growth) ² and the Lipper Mid-Cap Growth Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(11.62	)%
Start of Performance (9/15/2005)	6.09	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum sales charge of 5.50%.

1 Represents a hypothetical investment of $10,000 in the fund after deducting the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge = $9,450). The fund's performance assumes the reinvestment of all dividends and distributions. The Russell Midcap ^® Growth and the Lipper Mid-Cap Growth Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 Russell Midcap ^® Growth is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the Fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in anindex.

3 Lipper indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

GROWTH OF A $10,000 INVESTMENT - CLASS C SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Mid Cap Growth Fund (Class C Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell Midcap ^® Growth Index (Russell Midcap ^® Growth) ² and the Lipper Mid-Cap Growth Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(8.04	)%
Start of Performance (9/15/2005)	7.39	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum contingent deferred sales charge (CDSC) of 1.00%, as applicable.

1 Represents a hypothetical investment of $10,000 in the fund. The maximum CDSC is 1.00% on any redemption less than one year from the purchase date. The fund's performance assumes the reinvestment of all dividends and distributions. The Russell Midcap ^® Growth and Lipper Mid-Cap Growth Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 Russell Midcap ^® Growth is not adjusted to reflect sales charges, expenses or other fees that the SEC requires to be reflected in the fund's performance. The index is unmanaged and, unlike the Fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund's industry composition ¹ was as follows:

Industry	Percentage of Total Net Assets
Software Packaged/Custom	6.5	%
Commodity Chemicals	6.3	%
Biotechnology	5.9	%
Miscellaneous Machinery	5.9	%
Metal Containers	4.7	%
Defense Electronics	4.6	%
Miscellaneous Components	4.6	%
Multi-Industry Capital Goods	3.8	%
Telephone Utility	3.8	%
Semiconductor Manufacturing	3.2	%
Plastic Containers	3.1	%
Toys & Games	2.9	%
Internet Services	2.9	%
Crude Oil & Gas Production	2.7	%
Bituminous Coal	2.6	%
Undesignated Consumer Durables	2.6	%
Clothing Stores	2.4	%
Home Products	2.3	%
Undesignated Consumer Staples	2.1	%
Undesignated Consumer Cyclicals	1.9	%
Defense Aerospace	1.9	%
Medical Technology	1.9	%
Oil Service, Explore & Drill	1.7	%
Book Publishing	1.5	%
Beer	1.5	%
Electrical Equipment	1.5	%
Generic Drugs	1.5	%
Oil Well Supply	1.4	%
Financial Services	1.4	%
Psychiatric Centers	1.3	%
Industrial Machinery	1.1	%
Computer Services	1.0	%
Other 2	6.7	%
Cash Equivalents 3	6.6	%
Other Assets and Liabilities--Net 4	(5.8	)%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's total net assets have been aggregated under the designation "Other."

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares				Value
		COMMON STOCKS--99.2%
		Advertising--0.4%
1,355		Omnicom Group, Inc.	$	57,845
		Agricultural Chemicals--0.2%
132		CF Industries Holdings, Inc.		21,577
		Beer--1.5%
2,827	1	Central European Distribution Corp.		206,258
		Biotechnology--5.9%
3,321	1	Alexion Pharmaceuticals, Inc.		311,344
3,432	1	Cephalon, Inc.		251,085
4,981	1	OSI Pharmaceuticals, Inc.		262,150
		TOTAL		824,579
		Bituminous Coal--2.6%
839		Arch Coal, Inc.		47,244
2,251		CONSOL Energy, Inc.		167,452
1,006		Fluor Corp.		81,838
538		Foundation Coal Holdings, Inc.		31,957
451		Massey Energy Co.		33,487
		TOTAL		361,978
		Book Publishing--1.5%
4,742		Wiley (John) & Sons, Inc., Class A		215,002
		Clothing Stores--2.4%
11,282	1	Hanesbrands, Inc.		241,886
3,634		Limited Brands, Inc.		59,925
814	1	Urban Outfitters, Inc.		26,870
		TOTAL		328,681
		Commodity Chemicals--6.3%
13,651		Celanese Corp.		525,973
4,632		Compass Minerals International, Inc.		350,179
		TOTAL		876,152
		Computer Services--1.0%
227	1	Cognizant Technology Solutions Corp.		6,372
2,698	1	Fiserv, Inc.		129,018
		TOTAL		135,390
Shares				Value
		COMMON STOCKS--continued
		Computer Stores--0.8%
2,763	1	GameStop Corp.	$	111,929
		Construction Machinery--0.6%
1,063		Joy Global, Inc.		76,770
		Contracting--0.3%
508	1	Jacobs Engineering Group, Inc.		39,289
		Cosmetics & Toiletries--0.2%
558		Avon Products, Inc.		23,659
		Crude Oil & Gas Production--2.7%
913	1	Denbury Resources, Inc.		25,692
1,999	1	Southwestern Energy Co.		72,584
3,899	1	Ultra Petroleum Corp.		278,310
		TOTAL		376,586
		Defense Aerospace--1.9%
282		Goodrich (B.F.) Co.		13,857
6,723	1	TransDigm Group, Inc.		247,474
		TOTAL		261,331
		Defense Electronics--4.6%
1,581	1	FLIR Systems, Inc.		64,410
5,854		L-3 Communications Holdings, Inc.		577,731
		TOTAL		642,141
		Discount Department Stores--0.4%
1,476		TJX Cos., Inc.		49,756
		Diversified Leisure--0.0%
19	1	Bally Technologies, Inc.		604
		Electrical Equipment--1.5%
2,826		AMETEK, Inc.		135,252
1,337	1	GrafTech International Ltd.		31,353
930		Hubbell, Inc., Class B		39,209
		TOTAL		205,814
		Electronic Instruments--0.8%
3,308	1	Trimble Navigation Ltd.		109,826
		Financial Services--1.4%
971		Equifax, Inc.		34,072
7,022	1	Metavante Technologies, Inc.		156,310
		TOTAL		190,382
Shares				Value
		COMMON STOCKS--continued
		Generic Drugs--1.5%
12,100	1	Warner Chilcott Ltd., Class A	$	204,611
		Home Products--2.3%
8,291		Tupperware Brands Corp.		323,349
		Hospitals--0.6%
13,786	1	Tenet Healthcare Corp.		79,821
		Industrial Machinery--1.1%
1,368		Actuant Corp.		41,669
2,101		Dover Corp.		104,273
		TOTAL		145,942
		Internet Services--2.9%
3,559	1	Priceline.com, Inc.		409,107
		Jewelry Stores--0.1%
548		Tiffany & Co.		20,709
		Machine Tools--0.2%
306	1	Mettler Toledo International, Inc.		32,898
		Major Steel Producer--0.2%
545	1	AK Steel Holding Corp.		34,607
		Medical Technology--1.9%
5,583	1	St. Jude Medical, Inc.		260,056
		Metal Containers--4.7%
8,953		Ball Corp.		399,125
9,114	1	Crown Holdings, Inc.		255,465
		TOTAL		654,590
		Metal Fabrication--0.8%
5,142		Barnes Group, Inc.		116,158
		Miscellaneous Components--4.6%
15,068	1	Amkor Technology, Inc.		131,996
10,491		Amphenol Corp., Class A		500,106
		TOTAL		632,102
		Miscellaneous Machinery--5.9%
3,831		Nordson Corp.		270,698
4,356		SPX Corp.		552,254
		TOTAL		822,952
		Multi-Industry Capital Goods--3.8%
7,944		ITT Corp.		531,930
Shares				Value
		COMMON STOCKS--continued
		Natural Gas Production--0.2%
819	1	Quicksilver Resources, Inc.	$	21,425
		Offshore Driller--0.4%
773		ENSCO International, Inc.		53,445
		Oil Service, Explore & Drill--1.7%
4,197	1	Continental Resources, Inc.		239,733
		Oil Well Supply--1.4%
3,087	1	Dresser-Rand Group, Inc.		117,615
1,201	1	FMC Technologies, Inc.		74,198
		TOTAL		191,813
		Other Communications Equipment--0.1%
252		Harris Corp.		12,134
		Plastic Containers--3.1%
10,194	1	Owens-Illinois, Inc.		430,594
		Psychiatric Centers--1.3%
5,070	1	Psychiatric Solutions, Inc.		177,551
		Semiconductor Manufacturing--3.2%
21,547		National Semiconductor Corp.		451,410
		Software Packaged/Custom--6.5%
3,201	1	Ansys, Inc.		146,862
24,598		CA, Inc.		586,908
6,063	1	Solera Holdings, Inc.		175,766
		TOTAL		909,536
		Specialty Chemicals--0.4%
967		Airgas, Inc.		55,390
		Telephone Utility--3.8%
11,484		Embarq Corp.		525,623
		Toys & Games--2.9%
11,804	1	Marvel Entertainment, Inc.		409,599
		Undesignated Consumer Cyclicals--1.9%
1,520		DeVRY, Inc.		86,351
2,057	1	ITT Educational Services, Inc.		182,209
		TOTAL		268,560
		Undesignated Consumer Durables--2.6%
3,406		Walter Industries, Inc.		357,187
		Undesignated Consumer Staples--2.1%
12,048		Block (H&R), Inc.		293,128
		TOTAL COMMON STOCKS (IDENTIFIED COST $13,671,553)		13,781,509
Shares				Value
		MUTUAL FUND--6.6%
909,461	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)	$	909,461
		TOTAL INVESTMENTS--105.8% (IDENTIFIED COST $14,581,014) 4		14,690,970
		OTHER ASSETS AND LIABILITIES - NET--(5.8)% 5		(804,904	)
		TOTAL NET ASSETS--100%	$	13,886,066

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amount to $14,613,146.

5 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $909,461 of investments in an affiliated issuer (Note 5) (identified cost $14,581,014)			$	14,690,970
Income receivable				472
Receivable for investments sold				209,558
Receivable for shares sold				25,461
TOTAL ASSETS				14,926,461
Liabilities:
Payable for investments purchased	$	963,560
Payable for auditing fees		21,200
Payable for distribution services fee (Note 5)		583
Payable for shareholder services fee (Note 5)		7,087
Accrued expenses		47,965
TOTAL LIABILITIES				1,040,395
Net assets for 1,148,085 shares outstanding			$	13,886,066
Net Assets Consist of:
Paid-in capital			$	14,599,206
Net unrealized appreciation of investments				109,956
Accumulated net realized loss on investments				(823,096	)
TOTAL NET ASSETS			$	13,886,066
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($2,735,192 ÷ 224,615 shares outstanding), no par value, unlimited shares authorized				$12.18
Offering price per share				$12.18
Redemption proceeds per share				$12.18
Class A Shares:
Net asset value per share ($10,241,596 ÷ 846,650 shares outstanding), no par value, unlimited shares authorized				$12.10
Offering price per share (100/94.50 of $12.10) 1				$12.80
Redemption proceeds per share				$12.10
Class C Shares:
Net asset value per share ($909,278 ÷ 76,820 shares outstanding), no par value, unlimited shares authorized				$11.84
Offering price per share				$11.84
Redemption proceeds per share (99.00/100 of $11.84) 1				$11.72

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $7,502 received from an affiliated issuer) (Note 5)							$	78,738
Expenses:
Investment adviser fee (Note 5)				$	104,033
Administrative personnel and services fee (Note 5)					230,000
Custodian fees					15,984
Transfer and dividend disbursing agent fees and expenses					48,178
Directors'/Trustees' fees					1,472
Auditing fees					26,700
Legal fees					17,020
Portfolio accounting fees					70,400
Distribution services fee--Class C Shares (Note 5)					4,314
Shareholder services fee--Class A Shares (Note 5)					24,282
Shareholder services fee--Class C Shares (Note 5)					1,350
Share registration costs					58,071
Printing and postage					34,503
Insurance premiums					4,717
Miscellaneous					89
TOTAL EXPENSES					641,113
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee	$	(104,033	)
Waiver of administrative personnel and services fee		(44,884	)
Reimbursement of other operating expenses		(317,757	)
TOTAL WAIVERS AND REIMBURSEMENTS					(466,674	)
Net expenses								174,439
Net investment income (loss)								(95,701	)
Realized and Unrealized Loss on Investments:
Net realized loss on investments								(815,534	)
Net change in unrealized appreciation of investments								(274,204	)
Net realized and unrealized loss on investments								(1,089,738	)
Change in net assets resulting from operations							$	(1,185,439	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(95,701	)	$	(19,120	)
Net realized gain (loss) on investments		(815,534	)		127,473
Net change in unrealized appreciation/depreciation of investments		(274,204	)		379,049
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(1,185,439	)		487,402
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(10,164	)		(8,652	)
Class A Shares		(99,042	)		(8,228	)
Class C Shares		(4,334	)		(431	)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(113,540	)		(17,311	)
Share Transactions:
Proceeds from sale of shares		9,679,167			7,320,573
Net asset value of shares issued to shareholders in payment of distributions declared		104,453			16,366
Cost of shares redeemed		(1,875,638	)		(865,450	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		7,907,982			6,471,489
Redemption fees		- --			470
Change in net assets		6,609,003			6,942,050
Net Assets:
Beginning of period		7,277,063			335,013
End of period	$	13,886,066		$	7,277,063

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine portfolios. The financial statements included herein are only those of Federated MDT Mid Cap Growth Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Class A Shares and Class C Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The Financial Highlights of the Institutional Shares are presented separately. The primary investment objective of the Fund is long-term capital appreciation.

MDT Mid Cap Growth Fund (the "Predecessor Fund") was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced operations on September 15, 2005.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the "Trustees").
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	200,619		$	2,563,412		71,994		$	904,172
Shares issued to shareholders in payment of distributions declared	266			3,799		738			8,505
Shares redeemed	(30,323	)		(384,900	)	(39,756	)		(518,903	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	170,562		$	2,182,311		32,976		$	393,774
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	447,249		$	6,047,252		511,500		$	6,300,790
Shares issued to shareholders in payment of distributions declared	6,900			98,193		659			7,566
Shares redeemed	(101,571	)		(1,283,471	)	(27,853	)		(342,042	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	352,578		$	4,861,974		484,306		$	5,966,314
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	83,860		$	1,068,503		9,419		$	115,611
Shares issued to shareholders in payment of distributions declared	176			2,461		26			295
Shares redeemed	(16,800	)		(207,267	)	(384	)		(4,505	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	67,236		$	863,697		9,061		$	111,401
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	590,376		$	7,907,982		526,343		$	6,471,489

Redemption Fees

Prior to December 11, 2006, the Predecessor Fund imposed a 2.00% redemption fee to shareholders of the Fund's Institutional Shares, Class A Shares and Class C Shares who redeemed shares held for 30 days or less. Shares acquired by reinvestment of dividends or distributions of the Fund, or purchased pursuant to the Systematic Investment Program or withdrawn pursuant to the Systematic Withdrawal Program, were not subject to the redemption fee. All redemption fees were recorded by the Fund as additions to paid-in capital. For the year ended July 31, 2007, the Predecessor Fund incurred redemption fees for the Institutional Shares, Class A Shares and Class C Shares amounted to $194, $262 and $14, respectively.

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due to differing treatments for net operating loss.

For the year ended July 31, 2008, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gain (Loss)
$(95,847)	$95,701	$146

Net investment income (loss), net realized gains (losses) and net assets were not affected by this reclassification.

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2008 and 2007, was as follows:

	2008	2007
Ordinary income 1	$90,850	$16,615
Long-term capital gains	$22,690	$ 696

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Net unrealized appreciation	$	77,824
Capital loss carryforwards and deferrals	$	(790,964	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $14,613,146. The net unrealized appreciation of investments for federal tax purposes was $77,824. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $690,937 and net unrealized depreciation from investments for those securities having an excess of cost over value of $613,113.

At July 31, 2008, the Fund had a capital loss carryforward of $80,433 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the 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. Pursuant to the Code, such capital loss carryforward will expire in 2016.

Under current tax regulations, capital losses on securities transactions realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post October losses of $710,531 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.90% of the Fund's average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for each Class of the Fund based on average daily net assets:

Share Class Name	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.80%
Class A Shares	2.05%
Class C Shares	2.80%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment and subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the year ended July 31, 2008, the Adviser waived $103,867 of its fee and reimbursed $317,757 of other operating expenses.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement (the "Agreement"), provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. During the period from July 15, 2006 through December 8, 2006, the administrator contractually agreed to waive a portion of its fee which it would otherwise be entitled to receive from the Fund under the Agreement. The level of fees payable by the Fund to FAS for the period did not exceed the level of fees which the Fund would have paid during the period to its previous service provider under the previous administrative services contract. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the net fee paid to FAS was 1.601% of average daily net assets of the Fund. FAS waived $44,884 of its fee. The Fund currently accrues the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act which became effective December 11, 2006. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares and Class C Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $2,494 of fees paid by the Fund. For the year ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

For the year ended July 31, 2008, FSC retained $1,530 in sales charges from the sale of Class A Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

Effective December 11, 2006, the Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the year ended July 31, 2008, FSSC received $178 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the Financial Highlights) paid by the Fund's Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.24%, 1.49% and 2.24%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain of the Officers and Trustees of the Fund are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $166. Transactions with the affiliated company during the year ended July 31, 2008 were as follows:

Affiliate	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	148,403	6,950,379	6,189,321	909,461	$909,461	$7,502

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	32,373,528
Sales	$	24,726,746

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2008, the amount of long-term capital gains designated by the Fund was $22,690.

For the fiscal year ended July 31, 2008, 11.52% of total ordinary income (including short-term capital gain) distributions made by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended July 31, 2008, 8.78% qualify for the dividend received deduction available to corporate shareholders.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND SHAREHOLDERS OF FEDERATED MDT MID CAP GROWTH FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Mid Cap Growth Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Mid Cap Growth Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company and Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory Contract - May 2008

FEDERATED MDT MID CAP GROWTH FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds ( e.g. , institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For the one-year period ending December 31, 2007, the Fund's performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same period, the Fund outperformed its benchmark index for the one-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT Mid Cap Growth Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R874
Cusip 31421R866

37324 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Mid Cap Growth Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$13.10		$10.69		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.07	) 3	(0.05	) 3	(0.07	) 3
Net realized and unrealized gain (loss) on investments	(0.73	)	2.77		0.76
TOTAL FROM INVESTMENT OPERATIONS	(0.80	)	2.72		0.69
Less Distributions:
Distributions from net realized gain on investments	(0.12	)	(0.32	)	- --
Redemption fees	- --		0.01		- --
Net Asset Value, End of Period	$12.18		$13.10		$10.69
Total Return 4	(6.22	)%	25.90	%	6.90	%
Ratios to Average Net Assets:
Net expenses	1.25	%	1.25	%	1.77	% 5
Net investment income (loss)	(0.57	)%	(0.45	)%	(0.67	)% 5
Expense waiver/reimbursement 6	3.95	%	42.16	%	27.33	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$2,735		$708		$225
Portfolio turnover	216	%	141	%	201	%

1 MDT Mid Cap Growth Fund (the "Predecessor Fund") was reorganized into Federated MDT Mid Cap Growth Fund (the "Fund"), as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual	$1,000	$ 952.30	$6.12
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,018.60	$6.32

1 Expenses are equal to the Fund's annualized net expense ratio of 1.26%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half-year period).

Management's Discussion of Fund Performance

The fund's total return, based on net asset value, for the fiscal year ended July 31, 2008 was (6.22)% for Institutional Shares. ¹ The total return of the Russell Midcap ^® Growth Index ² (Russell Midcap ^® Growth) was (7.92)% and the total return of the Lipper Mid-Cap Growth Funds Index ³ was (5.68)% for the same period. The fund's total return for the fiscal year reflected actual cash flows, transaction costs and other expenses which were not reflected in the total return of the Russell Index.

1 The fund is the successor to the MDT Mid Cap Growth Fund pursuant to a reorganization that took place on December 8, 2006. Prior to that date, the fund had no investment operations. Accordingly, the performance information provided is historical information of the MDT Mid Cap Growth Fund.

2 Russell Midcap® Growth measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000® Growth index. The index is unmanaged and investments cannot be made in an index.

3 Lipper indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

MARKET OVERVIEW

During the 12-month period ending July 31, 2008 domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® Index, ⁴ which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period down 10.32%. Small cap stocks had the best relative results as demonstrated by the (6.71)% return on the Russell 2000 ^® Index ⁵ which exceeded the (10.10)% and (10.81)% results for the Russell Midcap ^® Index ⁶ and the Russell Top 200 ^® Index ⁷ respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000 ^® Growth Index ⁸ returning (6.11)% as compared to (14.75)% for the Russell 3000 Value ^® Index. ⁹

4 Russell 3000® Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. The index is unmanaged and investments cannot be made in an index.

5 Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index, which represents approximately 10% of the total market capitalization of the Russell 3000® Index. The index is unmanaged and investments cannot be made in an index.

6 Russell Midcap® Index measures the performance of the 800 smallest companies in the Russell 1000® Index, which represent approximately 35% of the total market capitalization of the Russell 1000® Index. The index is unmanaged and investments cannot be made in an index.

7 Russell Top 200® Index measures the performance of the 200 largest companies in the Russell 1000® Index, which represents approximately 65% of the total market capitalization of the Russell 1000® Index. The index is unmanaged and investments cannot be made in an index.

8 Russell 3000® Growth Index measures the performance of those Russell 3000® Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000® Growth or the Russell 2000® Growth indexes. The index is unmanaged and investments cannot be made in an index.

9 Russell 3000® Value Index measures the performance of those Russell 3000® Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000® Value or the Russell 2000® Value indexes. The index is unmanaged and investments cannot be made in an index.

The best performing sectors during the period as measured by the Russell 3000 ^® Index were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

FUND PERFORMANCE

The most significant positive factor in the fund's performance relative to the Russell Midcap ^® Growth was its stock selection in the Industrials sector. Additionally, the fund's stock selection in the Health Care and Information Technology sectors provided moderate contributions to relative performance. The most significant negative factor in the fund's performance relative to the Russell Midcap ^® Growth was its underweight in the Energy sector. Additionally, stock selection in the Energy and Materials sectors detracted moderately from relative performance.

Individual stocks contributing to the fund's performance relative to the Russell Midcap ^® Growth included: First Solar, Inc., a designer and manufacturer of solar energy technology, Priceline.com Inc., McDermott International, an engineering and construction company, Express Scripts, Inc., a specialty pharmaceutical provider and Foster Wheeler Ltd.

Individual stocks detracting from the fund's performance relative to the Russell Midcap ^® Growth included: Apollo Group, Inc., an educational program provider, Tempur-Pedic International Inc., Lear Corporation, Cheniere Energy, Inc., a natural gas pipeline company and Idearc, Inc., a publisher of telephone directories.

GROWTH OF A $25,000 INVESTMENT - INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000 ¹ in the Federated MDT Mid Cap Growth Fund (Institutional Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell Midcap ^® Growth Index (Russell Midcap ^® Growth) ² and the Lipper Mid-Cap Growth Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(6.22)%
Start of Performance (9/15/2005)	8.43%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 The fund's performance assumes the reinvestment of all dividends and distributions. The Russell Midcap ^® Growth and Lipper Mid-Cap Growth Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell Midcap ^® Growth is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund's industry composition ¹ was as follows:

Industry	Percentage of Total Net Assets
Software Packaged/Custom	6.5	%
Commodity Chemicals	6.3	%
Biotechnology	5.9	%
Miscellaneous Machinery	5.9	%
Metal Containers	4.7	%
Defense Electronics	4.6	%
Miscellaneous Components	4.6	%
Multi-Industry Capital Goods	3.8	%
Telephone Utility	3.8	%
Semiconductor Manufacturing	3.2	%
Plastic Containers	3.1	%
Toys & Games	2.9	%
Internet Services	2.9	%
Crude Oil & Gas Production	2.7	%
Bituminous Coal	2.6	%
Undesignated Consumer Durables	2.6	%
Clothing Stores	2.4	%
Home Products	2.3	%
Undesignated Consumer Staples	2.1	%
Undesignated Consumer Cyclicals	1.9	%
Defense Aerospace	1.9	%
Medical Technology	1.9	%
Oil Service, Explore & Drill	1.7	%
Book Publishing	1.5	%
Beer	1.5	%
Electrical Equipment	1.5	%
Generic Drugs	1.5	%
Oil Well Supply	1.4	%
Financial Services	1.4	%
Psychiatric Centers	1.3	%
Industrial Machinery	1.1	%
Computer Services	1.0	%
Other 2	6.7	%
Cash Equivalents 3	6.6	%
Other Assets and Liabilities--Net 4	(5.8	)%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's total net assets have been aggregated under the designation "Other."

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares				Value
		COMMON STOCKS--99.2%
		Advertising--0.4%
1,355		Omnicom Group, Inc.	$	57,845
		Agricultural Chemicals--0.2%
132		CF Industries Holdings, Inc.		21,577
		Beer--1.5%
2,827	1	Central European Distribution Corp.		206,258
		Biotechnology--5.9%
3,321	1	Alexion Pharmaceuticals, Inc.		311,344
3,432	1	Cephalon, Inc.		251,085
4,981	1	OSI Pharmaceuticals, Inc.		262,150
		TOTAL		824,579
		Bituminous Coal--2.6%
839		Arch Coal, Inc.		47,244
2,251		CONSOL Energy, Inc.		167,452
1,006		Fluor Corp.		81,838
538		Foundation Coal Holdings, Inc.		31,957
451		Massey Energy Co.		33,487
		TOTAL		361,978
		Book Publishing--1.5%
4,742		Wiley (John) & Sons, Inc., Class A		215,002
		Clothing Stores--2.4%
11,282	1	Hanesbrands, Inc.		241,886
3,634		Limited Brands, Inc.		59,925
814	1	Urban Outfitters, Inc.		26,870
		TOTAL		328,681
		Commodity Chemicals--6.3%
13,651		Celanese Corp.		525,973
4,632		Compass Minerals International, Inc.		350,179
		TOTAL		876,152
		Computer Services--1.0%
227	1	Cognizant Technology Solutions Corp.		6,372
2,698	1	Fiserv, Inc.		129,018
		TOTAL		135,390
Shares				Value
		COMMON STOCKS--continued
		Computer Stores--0.8%
2,763	1	GameStop Corp.	$	111,929
		Construction Machinery--0.6%
1,063		Joy Global, Inc.		76,770
		Contracting--0.3%
508	1	Jacobs Engineering Group, Inc.		39,289
		Cosmetics & Toiletries--0.2%
558		Avon Products, Inc.		23,659
		Crude Oil & Gas Production--2.7%
913	1	Denbury Resources, Inc.		25,692
1,999	1	Southwestern Energy Co.		72,584
3,899	1	Ultra Petroleum Corp.		278,310
		TOTAL		376,586
		Defense Aerospace--1.9%
282		Goodrich (B.F.) Co.		13,857
6,723	1	TransDigm Group, Inc.		247,474
		TOTAL		261,331
		Defense Electronics--4.6%
1,581	1	FLIR Systems, Inc.		64,410
5,854		L-3 Communications Holdings, Inc.		577,731
		TOTAL		642,141
		Discount Department Stores--0.4%
1,476		TJX Cos., Inc.		49,756
		Diversified Leisure--0.0%
19	1	Bally Technologies, Inc.		604
		Electrical Equipment--1.5%
2,826		AMETEK, Inc.		135,252
1,337	1	GrafTech International Ltd.		31,353
930		Hubbell, Inc., Class B		39,209
		TOTAL		205,814
		Electronic Instruments--0.8%
3,308	1	Trimble Navigation Ltd.		109,826
		Financial Services--1.4%
971		Equifax, Inc.		34,072
7,022	1	Metavante Technologies, Inc.		156,310
		TOTAL		190,382
Shares				Value
		COMMON STOCKS--continued
		Generic Drugs--1.5%
12,100	1	Warner Chilcott Ltd., Class A	$	204,611
		Home Products--2.3%
8,291		Tupperware Brands Corp.		323,349
		Hospitals--0.6%
13,786	1	Tenet Healthcare Corp.		79,821
		Industrial Machinery--1.1%
1,368		Actuant Corp.		41,669
2,101		Dover Corp.		104,273
		TOTAL		145,942
		Internet Services--2.9%
3,559	1	Priceline.com, Inc.		409,107
		Jewelry Stores--0.1%
548		Tiffany & Co.		20,709
		Machine Tools--0.2%
306	1	Mettler Toledo International, Inc.		32,898
		Major Steel Producer--0.2%
545	1	AK Steel Holding Corp.		34,607
		Medical Technology--1.9%
5,583	1	St. Jude Medical, Inc.		260,056
		Metal Containers--4.7%
8,953		Ball Corp.		399,125
9,114	1	Crown Holdings, Inc.		255,465
		TOTAL		654,590
		Metal Fabrication--0.8%
5,142		Barnes Group, Inc.		116,158
		Miscellaneous Components--4.6%
15,068	1	Amkor Technology, Inc.		131,996
10,491		Amphenol Corp., Class A		500,106
		TOTAL		632,102
		Miscellaneous Machinery--5.9%
3,831		Nordson Corp.		270,698
4,356		SPX Corp.		552,254
		TOTAL		822,952
		Multi-Industry Capital Goods--3.8%
7,944		ITT Corp.		531,930
Shares				Value
		COMMON STOCKS--continued
		Natural Gas Production--0.2%
819	1	Quicksilver Resources, Inc.	$	21,425
		Offshore Driller--0.4%
773		ENSCO International, Inc.		53,445
		Oil Service, Explore & Drill--1.7%
4,197	1	Continental Resources, Inc.		239,733
		Oil Well Supply--1.4%
3,087	1	Dresser-Rand Group, Inc.		117,615
1,201	1	FMC Technologies, Inc.		74,198
		TOTAL		191,813
		Other Communications Equipment--0.1%
252		Harris Corp.		12,134
		Plastic Containers--3.1%
10,194	1	Owens-Illinois, Inc.		430,594
		Psychiatric Centers--1.3%
5,070	1	Psychiatric Solutions, Inc.		177,551
		Semiconductor Manufacturing--3.2%
21,547		National Semiconductor Corp.		451,410
		Software Packaged/Custom--6.5%
3,201	1	Ansys, Inc.		146,862
24,598		CA, Inc.		586,908
6,063	1	Solera Holdings, Inc.		175,766
		TOTAL		909,536
		Specialty Chemicals--0.4%
967		Airgas, Inc.		55,390
		Telephone Utility--3.8%
11,484		Embarq Corp.		525,623
		Toys & Games--2.9%
11,804	1	Marvel Entertainment, Inc.		409,599
		Undesignated Consumer Cyclicals--1.9%
1,520		DeVRY, Inc.		86,351
2,057	1	ITT Educational Services, Inc.		182,209
		TOTAL		268,560
		Undesignated Consumer Durables--2.6%
3,406		Walter Industries, Inc.		357,187
		Undesignated Consumer Staples--2.1%
12,048		Block (H&R), Inc.		293,128
		TOTAL COMMON STOCKS (IDENTIFIED COST $13,671,553)		13,781,509
Shares				Value
		MUTUAL FUND--6.6%
909,461	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)	$	909,461
		TOTAL INVESTMENTS--105.8% (IDENTIFIED COST $14,581,014) 4		14,690,970
		OTHER ASSETS AND LIABILITIES - NET--(5.8)% 5		(804,904	)
		TOTAL NET ASSETS--100%	$	13,886,066

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amount to $14,613,146.

5 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $909,461 of investments in an affiliated issuer (Note 5) (identified cost $14,581,014)			$	14,690,970
Income receivable				472
Receivable for investments sold				209,558
Receivable for shares sold				25,461
TOTAL ASSETS				14,926,461
Liabilities:
Payable for investments purchased	$	963,560
Payable for auditing fees		21,200
Payable for distribution services fee (Note 5)		583
Payable for shareholder services fee (Note 5)		7,087
Accrued expenses		47,965
TOTAL LIABILITIES				1,040,395
Net assets for 1,148,085 shares outstanding			$	13,886,066
Net Assets Consist of:
Paid-in capital			$	14,599,206
Net unrealized appreciation of investments				109,956
Accumulated net realized loss on investments				(823,096	)
TOTAL NET ASSETS			$	13,886,066
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($2,735,192 ÷ 224,615 shares outstanding), no par value, unlimited shares authorized				$12.18
Offering price per share				$12.18
Redemption proceeds per share				$12.18
Class A Shares:
Net asset value per share ($10,241,596 ÷ 846,650 shares outstanding), no par value, unlimited shares authorized				$12.10
Offering price per share (100/94.50 of $12.10) 1				$12.80
Redemption proceeds per share				$12.10
Class C Shares:
Net asset value per share ($909,278 ÷ 76,820 shares outstanding), no par value, unlimited shares authorized				$11.84
Offering price per share				$11.84
Redemption proceeds per share (99.00/100 of $11.84) 1				$11.72

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $7,502 received from an affiliated issuer) (Note 5)							$	78,738
Expenses:
Investment adviser fee (Note 5)				$	104,033
Administrative personnel and services fee (Note 5)					230,000
Custodian fees					15,984
Transfer and dividend disbursing agent fees and expenses					48,178
Directors'/Trustees' fees					1,472
Auditing fees					26,700
Legal fees					17,020
Portfolio accounting fees					70,400
Distribution services fee--Class C Shares (Note 5)					4,314
Shareholder services fee--Class A Shares (Note 5)					24,282
Shareholder services fee--Class C Shares (Note 5)					1,350
Share registration costs					58,071
Printing and postage					34,503
Insurance premiums					4,717
Miscellaneous					89
TOTAL EXPENSES					641,113
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee	$	(104,033	)
Waiver of administrative personnel and services fee		(44,884	)
Reimbursement of other operating expenses		(317,757	)
TOTAL WAIVERS AND REIMBURSEMENTS					(466,674	)
Net expenses								174,439
Net investment income (loss)								(95,701	)
Realized and Unrealized Loss on Investments:
Net realized loss on investments								(815,534	)
Net change in unrealized appreciation of investments								(274,204	)
Net realized and unrealized loss on investments								(1,089,738	)
Change in net assets resulting from operations							$	(1,185,439	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(95,701	)	$	(19,120	)
Net realized gain (loss) on investments		(815,534	)		127,473
Net change in unrealized appreciation/depreciation of investments		(274,204	)		379,049
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(1,185,439	)		487,402
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(10,164	)		(8,652	)
Class A Shares		(99,042	)		(8,228	)
Class C Shares		(4,334	)		(431	)
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(113,540	)		(17,311	)
Share Transactions:
Proceeds from sale of shares		9,679,167			7,320,573
Net asset value of shares issued to shareholders in payment of distributions declared		104,453			16,366
Cost of shares redeemed		(1,875,638	)		(865,450	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		7,907,982			6,471,489
Redemption fees		- --			470
Change in net assets		6,609,003			6,942,050
Net Assets:
Beginning of period		7,277,063			335,013
End of period	$	13,886,066		$	7,277,063

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine portfolios. The financial statements included herein are only those of Federated MDT Mid Cap Growth Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Class A Shares and Class C Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The Financial Highlights of the Class A Shares and Class C Shares are presented separately. The primary investment objective of the Fund is long-term capital appreciation.

MDT Mid Cap Growth Fund (the "Predecessor Fund") was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced operations on September 15, 2005.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the "Trustees").
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Trustees.
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	200,619		$	2,563,412		71,994		$	904,172
Shares issued to shareholders in payment of distributions declared	266			3,799		738			8,505
Shares redeemed	(30,323	)		(384,900	)	(39,756	)		(518,903	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	170,562		$	2,182,311		32,976		$	393,774
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	447,249		$	6,047,252		511,500		$	6,300,790
Shares issued to shareholders in payment of distributions declared	6,900			98,193		659			7,566
Shares redeemed	(101,571	)		(1,283,471	)	(27,853	)		(342,042	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	352,578		$	4,861,974		484,306		$	5,966,314
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	83,860		$	1,068,503		9,419		$	115,611
Shares issued to shareholders in payment of distributions declared	176			2,461		26			295
Shares redeemed	(16,800	)		(207,267	)	(384	)		(4,505	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	67,236		$	863,697		9,061		$	111,401
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	590,376		$	7,907,982		526,343		$	6,471,489

Redemption Fees

Prior to December 11, 2006, the Predecessor Fund imposed a 2.00% redemption fee to shareholders of the Fund's Institutional Shares, Class A Shares and Class C Shares who redeemed shares held for 30 days or less. Shares acquired by reinvestment of dividends or distributions of the Fund, or purchased pursuant to the Systematic Investment Program or withdrawn pursuant to the Systematic Withdrawal Program, were not subject to the redemption fee. All redemption fees were recorded by the Fund as additions to paid-in capital. For the year ended July 31, 2007, the Predecessor Fund incurred redemption fees for the Institutional Shares, Class A Shares and Class C Shares amounted to $194, $262 and $14, respectively.

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due to differing treatments for net operating loss.

For the year ended July 31, 2008, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gain (Loss)
$(95,847)	$95,701	$146

Net investment income (loss), net realized gains (losses) and net assets were not affected by this reclassification.

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2008 and 2007, was as follows:

	2008	2007
Ordinary income 1	$90,850	$16,615
Long-term capital gains	$22,690	$ 696

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Net unrealized appreciation	$	77,824
Capital loss carryforwards and deferrals	$	(790,964	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $14,613,146. The net unrealized appreciation of investments for federal tax purposes was $77,824. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $690,937 and net unrealized depreciation from investments for those securities having an excess of cost over value of $613,113.

At July 31, 2008, the Fund had a capital loss carryforward of $80,433 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the 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. Pursuant to the Code, such capital loss carryforward will expire in 2016.

Under current tax regulations, capital losses on securities transactions realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post October losses of $710,531 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.90% of the Fund's average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for each Class of the Fund based on average daily net assets:

Share Class Name	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.80%
Class A Shares	2.05%
Class C Shares	2.80%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment and subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the year ended July 31, 2008, the Adviser waived $103,867 of its fee and reimbursed $317,757 of other operating expenses.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement (the "Agreement"), provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. During the period from July 15, 2006 through December 8, 2006, the administrator contractually agreed to waive a portion of its fee which it would otherwise be entitled to receive from the Fund under the Agreement. The level of fees payable by the Fund to FAS for the period did not exceed the level of fees which the Fund would have paid during the period to its previous service provider under the previous administrative services contract. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the net fee paid to FAS was 1.601% of average daily net assets of the Fund. FAS waived $44,884 of its fee. The Fund currently accrues the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act which became effective December 11, 2006. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares and Class C Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $2,494 of fees paid by the Fund. For the year ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

For the year ended July 31, 2008, FSC retained $1,530 in sales charges from the sale of Class A Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

Effective December 11, 2006, the Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the year ended July 31, 2008, FSSC received $178 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the Financial Highlights) paid by the Fund's Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.24%, 1.49% and 2.24%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain of the Officers and Trustees of the Fund are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $166. Transactions with the affiliated company during the year ended July 31, 2008 were as follows:

Affiliate	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	148,403	6,950,379	6,189,321	909,461	$909,461	$7,502

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	32,373,528
Sales	$	24,726,746

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2008, the amount of long-term capital gains designated by the Fund was $22,690.

For the fiscal year ended July 31, 2008, 11.52% of total ordinary income (including short-term capital gain) distributions made by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended July 31, 2008, 8.78% qualify for the dividend received deduction available to corporate shareholders.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND SHAREHOLDERS OF FEDERATED MDT MID CAP GROWTH FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Mid Cap Growth Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Mid Cap Growth Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company and Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory Contract - May 2008

FEDERATED MDT MID CAP GROWTH FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds ( e.g. , institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For the one-year period ending December 31, 2007, the Fund's performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same period, the Fund outperformed its benchmark index for the one-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual fund are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT Mid Cap Growth Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R858

37327 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Small Cap Core Fund

Established 2005

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Class A Shares
Class C Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$13.22		$11.11		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.08	) 3	(0.10	) 3	(0.13	) 3
Net realized and unrealized gain (loss) on investments	(2.22	)	2.21		1.24
TOTAL FROM INVESTMENT OPERATIONS	(2.30	)	2.11		1.11
Less Distributions:
Distributions from net realized gain on investments	(0.71	)	- --		- --
Net Asset Value, End of Period	$10.21		$13.22		$11.11
Total Return 4	(18.09	)%	18.99	%	11.10	%
Ratios to Average Net Assets:
Net expenses	1.75	%	1.75	%	2.01	% 5
Net investment income (loss)	(0.68	)%	(0.77	)%	(1.16	)% 5
Expense waiver/reimbursement 6	3.85	%	7.96	%	9.41	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$2,623		$2,414		$324
Portfolio turnover	243	%	237	%	209	%

1 The MDT Small Cap Core Fund (the "Predecessor Fund") was reorganized into Federated MDT Small Cap Core Fund (the "Fund") as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$13.04		$11.05		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.16	) 3	(0.19	) 3	(0.23	) 3
Net realized and unrealized gain (loss) on investments	(2.18	)	2.18		1.28
TOTAL FROM INVESTMENT OPERATIONS	(2.34	)	1.99		1.05
Less Distributions:
Distributions from net realized gain on investments	(0.71	)	- --		- --
Net Asset Value, End of Period	$9.99		$13.04		$11.05
Total Return 4	(18.66	)%	18.01	%	10.50	%
Ratios to Average Net Assets:
Net expenses	2.46	%	2.50	%	2.76	% 5
Net investment income (loss)	(1.40	)%	(1.52	)%	(1.91	)% 5
Expense waiver/reimbursement 6	3.90	%	8.63	%	9.41	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$2,759		$3,299		$1,505
Portfolio turnover	243	%	237	%	209	%

1 The Predecessor Fund was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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, such as sales charges (loads) on purchase or redemption payments. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual:
Class A Shares	$1,000	$ 958.70	$ 8.52
Class C Shares	$1,000	$ 954.20	$11.86
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,016.16	$ 8.77
Class C Shares	$1,000	$1,012.73	$12.21

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

Class A Shares	1.75%
Class C Shares	2.44%

Management's Discussion of Fund Performance

The fund's total return at net asset value for the fiscal year ended July 31, 2008 was (18.09)% for Class A Shares and (18.66)% for Class C Shares. The total return of the Russell 2000 ^® Index (Russell 2000 ^® ) was (6.71)% for the same period. ¹ The total return of the Lipper Small-Cap Core Funds Index was (8.48)% for the same period. ² The fund's total return for the fiscal year reflected actual cash flows, transaction costs and other expenses which were not reflected in the total return of the Russell index.

1 The Russell 2000 measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index. The index is unmanaged and investments cannot be made directly in an index.

2 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

MARKET OVERVIEW

Over the 12-month period ending July 31, 2008 domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® Index, ³ which represents the performance of the 3,000 largest U.S. companies by market capitalization, finished the period down 10.32%. Small cap stocks ⁴ had the best relative results as demonstrated by the (6.71)% return on the Russell 2000, ^® which exceeded the (10.10)% and (10.81)% results for the Russell Midcap ^® Index ⁵ and the Russell Top 200 ^® Index, ⁶ respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000 ^® Growth Index ⁷ returning (6.11)% as compared to (14.75)% for the Russell 3000 Value ^® Index. ⁸

3 The Russell 3000 Index offers investors access to the broad U.S. equity universe representing approximately 98% of the U.S. market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The index is unmanaged and investments cannot be made directly in an index.

4 Small company stocks may be less liquid and subject to greater price volatility than large capitalization stocks.

5 The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 31% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

6 The Russell Top 200 Index measures the performance of the 200 largest companies in the Russell 1000 Index, which represents approximately 69% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

7 The Russell 3000 Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000 Growth or the Russell 2000 Growth indexes. The index is unmanaged and investments cannot be made directly in an index.

8 The Russell 3000 Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000 Value or the Russell 2000 Value indexes. The index is unmanaged and investments cannot be made directly in an index.

The best performing sectors during the period, as measured by the Russell 3000 ^® Index, were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

FUND PERFORMANCE

The most significant positive factor in the fund's performance relative to the Russell 2000 ^® was its overweight in the Energy sector. Additionally, stock selection in the Consumer Discretionary and Materials sectors contributed modestly. The most significant negative factor in the fund's performance relative to the Russell 2000 ^® was its stock selection in the Financials and Energy sectors. Additionally, stock selection in the Industrials sector and an overweight in the Consumer Discretionary sector detracted moderately.

Individual stocks contributing to the fund's performance relative to the Russell 2000 ^® included: Priceline.com, Inc., GrafTech International Ltd., a developer and manufacturer of graphite and carbon materials, Walter Industries, Inc., a producer of high quality metallurgical coal and natural gas, Compass Minerals International, Inc., and Flir Systems, Inc., a designer and manufacturer of thermal imaging systems.

Individual stocks detracting from the fund's performance relative to the Russell 2000 ^® included: Crocs, Inc., Tempur-Pedic International, Inc., Perini Corporation, a general contracting and construction firm, Landamerica Financial Group, an insurance underwriter and Alon USA Energy, Inc.

GROWTH OF A $10,000 INVESTMENT - CLASS A SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Small Cap Core Fund (Class A Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 2000 ^® Index ² and the Lipper Small-Cap Core Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(22.59	)%
Start of Performance (9/15/2005)	0.81	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum sales charge of 5.50%.

1 Represents a hypothetical investment of $10,000 in the fund after deducting the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge = $9,450). The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 2000® Index and the Lipper Small-Cap Core Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 2000® Index is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the fund's performance. The index is unmanaged and, unlike the Fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends. Lipper figures do not reflect sales charges.

GROWTH OF A $10,000 INVESTMENT - CLASS C SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Small Cap Core Fund (Class C Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 2000 ^® Index ² and the Lipper Small-Cap Core Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(19.43	)%
Start of Performance (9/15/2005)	2.07	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum contingent deferred sales charge (CDSC) of 1.00%, as applicable.

1 Represents a hypothetical investment of $10,000 in the fund. The maximum CDSC is 1.00% on any redemptions less than one year from the purchase date. The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 2000® Index and the Lipper Small-Cap Core Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 2000® Index is not adjusted to reflect sales charges, expenses or other fees that the SEC requires to be reflected in the fund's performance. The index is unmanaged and, unlike the Fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends. Lipper figures do not reflect sales charges.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund's industry composition ¹ was as follows:

Industry	Percentage of Total Net Assets
Clothing Stores	6.2	%
Regional Bank	5.3	%
Undesignated Consumer Cyclicals	4.1	%
Electrical Equipment	4.0	%
Oil Well Supply	4.0	%
Property Liability Insurance	3.5	%
Apparel	3.4	%
Restaurant	3.3	%
Oil Service, Explore & Drill	3.1	%
Shoes	3.0	%
Commodity Chemicals	2.6	%
Securities Brokerage	2.4	%
Other Communications Equipment	2.2	%
Multi-Line Insurance	2.2	%
Mini-Mill Producer	2.1	%
Home Health Care	1.8	%
Savings and Loan	1.8	%
Defense Electronics	1.6	%
Printed Circuit Boards	1.6	%
Metal Fabrication	1.5	%
Specialty Chemicals	1.5	%
Contracting	1.4	%
Auto Original Equipment Manufacturers	1.3	%
Crude Oil & Gas Production	1.3	%
Multi-Industry Capital Goods	1.3	%
Psychiatric Centers	1.3	%
Software Packaged/Custom	1.3	%
Office Furniture	1.2	%
Miscellaneous Machinery	1.2	%
Telecommunication Equipment & Services	1.2	%
Computer Services	1.1	%
Industry	Percentage of Total Net Assets
Special Machinery	1.1	%
Electronic Instruments	1.1	%
Computer Networking	1.0	%
Paper Products	1.0	%
Financial Services	1.0	%
Industrial Machinery	1.0	%
Other 2	19.2	%
Cash Equivalents 3	1.2	%
Other Assets and Liabilities--Net 4	(0.4	)%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's total net assets have been aggregated under the designation "Other."

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares					Value
			COMMON STOCKS--99.2%
			Airline - National--0.4%
	1,108	1	Atlas Air Worldwide Holdings, Inc.	$	53,328
			Airline - Regional--0.1%
	1,179		SkyWest, Inc.		17,944
			Aluminum--0.8%
	2,326		Kaiser Aluminum Corp.		122,696
			Apparel--3.4%
	493		Jones Apparel Group, Inc.		8,253
	3,310		Liz Claiborne, Inc.		43,262
	919	1	Maidenform Brands, Inc.		14,070
	12,408	1	Quiksilver, Inc.		95,169
	1,804	1	Volcom, Inc.		32,364
	7,823	1	Warnaco Group, Inc.		328,175
			TOTAL		521,293
			Auto Original Equipment Manufacturers--1.3%
	5,171		American Axle & Manufacturing Holdings, Inc.		30,405
	1,711	1	Fuel Systems Solutions, Inc.		64,026
	2,221	1	Stoneridge, Inc.		29,251
	1,978		Sun Hydraulics Corp.		81,494
			TOTAL		205,176
			Biotechnology--0.7%
	2,574	1	Martek Biosciences Corp.		96,808
	961	1	Momenta Pharmaceuticals, Inc.		15,933
			TOTAL		112,741
			Bituminous Coal--0.3%
	4,264	1	International Coal Group, Inc.		44,644
			Building Materials--0.1%
	722		Apogee Enterprises, Inc.		12,476
			Cement--0.3%
	1,250	1	Astec Industries, Inc.		39,900
			Clothing Stores--6.2%
	7,099		Buckle, Inc.		365,386
	2,978		Cato Corp., Class A		53,276
	6,899	1	Children's Place Retail Stores, Inc.		262,507
Shares					Value
			COMMON STOCKS--continued
			Clothing Stores--continued
	9,617	1	Fossil, Inc.	$	257,543
	634	1	Jos A. Bank Clothiers, Inc.		14,202
			TOTAL		952,914
			Commodity Chemicals--2.6%
	5,225		Compass Minerals International, Inc.		395,010
			Computer Networking--1.0%
	6,747	1	Avocent Corp.		160,444
			Computer Services--1.1%
	5,535	1	Synnex Corp.		129,298
	1,277		Syntel, Inc.		42,077
			TOTAL		171,375
			Construction Machinery--0.7%
	2,985	1	NCI Building System, Inc.		111,818
			Contracting--1.4%
	2,960		Comfort Systems USA, Inc.		39,250
	6,484	1	Perini Corp.		177,402
			TOTAL		216,652
			Crude Oil & Gas Production--1.3%
	1,223	1	Bill Barrett Corp.		50,314
	3,662	1	EXCO Resources, Inc.		95,395
	1,074	1	Petroleum Development Corp.		59,403
			TOTAL		205,112
			Defense Aerospace--0.5%
	2,469	1	AAR Corp.		42,442
	739		Triumph Group, Inc.		39,137
			TOTAL		81,579
			Defense Electronics--1.6%
	6,216	1	FLIR Systems, Inc.		253,240
			Diversified Leisure--0.7%
	2,107	1	Bally Technologies, Inc.		66,982
	1,123	1	Life Time Fitness, Inc.		33,454
			TOTAL		100,436
			Electric & Electrical Original Equipment Manufacturers--0.1%
	293	1	Energy Conversion Devices, Inc.		20,489
			Electric Utility--0.2%
	1,180	1	El Paso Electric Co.		24,379
Shares					Value
			COMMON STOCKS--continued
			Electrical - Radio & TV--0.2%
	1,407	1	Universal Electronics, Inc.	$	31,967
			Electrical Equipment--4.0%
	1,411		Encore Wire Corp.		25,723
	15,503	1	GrafTech International Ltd.		363,545
	4,613		Robbins & Myers, Inc.		234,202
			TOTAL		623,470
			Electronic Components--0.2%
	2,049	1	Volterra Semiconductor Corp.		33,604
			Electronic Instruments--1.1%
	629	1	Axsys Technologies, Inc.		46,194
	4,218	1	Cogent, Inc.		42,770
	2,996	1	Cymer, Inc.		79,364
			TOTAL		168,328
			Financial Services--1.0%
	1,637	1	America's Car-Mart, Inc.		32,609
	5,670		Deluxe Corp.		81,081
	1,567		Heartland Payment Systems, Inc.		36,057
			TOTAL		149,747
			Food Wholesaling--0.5%
	1,878		Nash Finch Co.		74,125
			Furniture--0.0%
	246		Ethan Allen Interiors, Inc.		6,175
			Home Health Care--1.8%
	4,355	1	Amedisys, Inc.		279,243
			Home Products--0.6%
	2,436		Tupperware Brands Corp.		95,004
			Hotels and Motels--0.3%
	4,847	1	Boyd Gaming Corp.		48,373
			Industrial Machinery--1.0%
	1,367		Valmont Industries, Inc.		146,146
			Insurance Brokerage--0.7%
	4,338		AmTrust Financial Services, Inc.		63,205
	2,063		Employers Holdings, Inc.		36,763
			TOTAL		99,968
Shares					Value
			COMMON STOCKS--continued
			Internet Services--0.2%
	1,792	1	Overstock.com, Inc.	$	31,826
			Life Insurance--0.1%
	1,983		Phoenix Cos., Inc.		19,295
			Long-Term Care Centers--0.3%
	1,449	1	Kindred Healthcare, Inc.		39,080
			Machine Tools--0.5%
	1,616	1	AZZ, Inc.		73,964
	202	1	Hurco Co., Inc.		5,894
			TOTAL		79,858
			Machined Parts Original Equipment Manufacturers--0.0%
	1		Applied Industrial Technologies, Inc.		27
			Maritime--0.4%
	2,660		TAL International Group, Inc.		67,298
			Medical Supplies--0.9%
	309	1	ICU Medical, Inc.		8,785
	1,053	1	Kensey Nash Corp.		36,571
	963	1	Merit Medical Systems, Inc.		19,462
	1,668		West Pharmaceutical Services, Inc.		76,595
			TOTAL		141,413
			Medical Technology--0.1%
	706	1	Zoll Medical Corp.		22,239
			Metal Containers--0.8%
	2,139		Greif, Inc., Class A		130,137
			Metal Fabrication--1.5%
	3,247		CIRCOR International, Inc.		193,391
	1,372	1	Ladish Co., Inc.		27,166
	507		Mueller Industries, Inc.		13,015
			TOTAL		233,572
			Mini-Mill Producer--2.1%
	3,630		Schnitzer Steel Industries, Inc., Class A		327,571
			Miscellaneous Components--0.2%
	3,061	1	Applied Micro Circuits Corp.		23,753
			Miscellaneous Food Products--0.8%
	2,637	1	Fresh Del Monte Produce, Inc.		55,588
	1,423		The Anderson's, Inc.		64,675
			TOTAL		120,263
Shares					Value
			COMMON STOCKS--continued
			Miscellaneous Machinery--1.2%
	4,951		Briggs & Stratton Corp.	$	67,036
	259		Graham Corp.		23,051
	1,332		Nordson Corp.		94,119
			TOTAL		184,206
			Multi-Industry Capital Goods--1.3%
	4,329	1	Ceradyne, Inc.		200,649
			Multi-Line Insurance--2.2%
	2,386		FBL Financial Group, Inc., Class A		49,748
	779	1	FPIC Insurance Group, Inc.		38,911
	1,794		Harleysville Group, Inc.		63,920
	2,203		Tower Group, Inc.		50,184
	3,967		Zenith National Insurance Corp.		136,504
			TOTAL		339,267
			Newspaper Publishing--0.5%
	7,498		Belo (A.H.) Corp., Series A		50,911
	3,988		Lee Enterprises, Inc.		12,044
	4,672		McClatchy Co., Class A		19,949
			TOTAL		82,904
			Office Furniture--1.2%
	7,109		Miller Herman, Inc.		185,829
			Office Supplies--0.1%
	1,949	1	Acco Brands Corp.		16,703
			Offshore Driller--0.2%
	788	1	Hornbeck Offshore Services, Inc.		35,129
			Oil Refiner--0.3%
	5,773		Alon USA Energy, Inc.		49,532
			Oil Service, Explore & Drill--3.1%
	2,487	1	Brigham Exploration Co.		34,818
	9,544	1	Complete Production Services, Inc.		303,881
	2,867	1	Gulfmark Offshore, Inc.		143,866
			TOTAL		482,565
			Oil Well Supply--4.0%
	2,147		Gulf Island Fabrication, Inc.		95,219
	1,209		Lufkin Industries, Inc.		107,843
	6,167	1	Oil States International, Inc.		338,445
	4,644		RPC, Inc.		79,830
			TOTAL		621,337
Shares					Value
			COMMON STOCKS--continued
			Optical Reading Equipment--0.8%
	3,989	1	ScanSource, Inc.	$	122,422
			Other Communications Equipment--2.2%
	17,491	1	Skyworks Solutions, Inc.		165,465
	11,106	1	Syniverse Holdings, Inc.		179,917
			TOTAL		345,382
			Packaged Foods--0.5%
	4,961	1	Chiquita Brands International		76,151
			Paper Products--1.0%
	5,052	1	Buckeye Technologies, Inc.		49,257
	1,629		Neenah Paper, Inc.		30,430
	2,138		Rock-Tenn Co.		76,006
			TOTAL		155,693
			Personal Loans--0.3%
	1,508	1	World Acceptance Corp.		49,402
			Personnel Agency--0.3%
	2,133	1	Kenexa Corp.		39,866
			Printed Circuit Boards--1.6%
	11,390	1	Benchmark Electronics, Inc.		166,750
	10,734	1	PMC-Sierra, Inc.		77,714
			TOTAL		244,464
			Printing--0.5%
	935	1	Consolidated Graphics, Inc.		31,323
	5,335	1	Valassis Communications, Inc.		47,055
			TOTAL		78,378
			Property Liability Insurance--3.5%
	1,284		American Physicians Capital, Inc.		63,918
	1,944	1	CNA Surety Corp.		25,253
	1,047	1	First Mercury Financial Corp.		16,752
	3,470		Horace Mann Educators Corp.		48,094
	1,399	1	OneBeacon Insurance Group Ltd.		25,322
	3,573	1	ProAssurance Corp.		174,863
	3,580		Selective Insurance Group, Inc.		77,328
	1,535		State Auto Financial Corp.		44,377
	2,616		United Fire & Casualty Co.		71,077
			TOTAL		546,984
			Psychiatric Centers--1.3%
	5,556	1	Psychiatric Solutions, Inc.		194,571
Shares					Value
			COMMON STOCKS--continued
			Railroad--0.0%
	1		Celadon Group, Inc.	$	13
			Recreational Goods--0.2%
	1,281	1	Steinway Musical Instruments		35,509
			Regional Bank--5.3%
	6,185		Cathay Bancorp, Inc.		98,589
	4,124		Central Pacific Financial Corp.		45,653
	6,021	1	Citizens Banking Corp.		20,170
	6,031		First Midwest Bancorp, Inc.		123,816
	437		FirstMerit Corp.		8,600
	5,332		Pacific Capital Bancorp		69,689
	3,625		PacWest Bancorp		67,497
	533		Park National Corp.		33,382
	2,611		Provident Bankshares Corp.		23,760
	1,198		Republic Bancorp, Inc.		37,066
	1,970		Santander BanCorp		21,631
	4,583		Trustmark Corp.		82,769
	2,635		UMB Financial Corp.		145,109
	919		Whitney Holding Corp.		18,895
	966		Wintrust Financial Corp.		19,948
			TOTAL		816,574
			Restaurant--3.3%
	1,265	1	Buffalo Wild Wings, Inc.		41,656
	2,224		CBRL Group, Inc.		53,754
	5,891	1	CEC Entertainment, Inc.		205,360
	2,821		CKE Restaurants, Inc.		34,614
	1,256	1	Green Mountain Coffee, Inc.		45,656
	1,130	1	Panera Bread Co.		56,613
	3,036	1	Red Robin Gourmet Burgers		75,384
			TOTAL		513,037
			Savings and Loan--1.8%
	1,953		Dime Community Bancorp, Inc.		32,674
	1,690		Flushing Financial Corp.		29,795
	1,716		Northwest Bancorp, Inc.		44,530
	555		WSFS Financial Corp.		30,220
	7,141		Webster Financial Corp. Waterbury		141,820
			TOTAL		279,039
Shares					Value
			COMMON STOCKS--continued
			Securities Brokerage--2.4%
	6,025	1	Fcstone Group, Inc.	$	116,041
	8,942	1	Interactive Brokers Group, Inc., Class A		250,913
			TOTAL		366,954
			Semiconductor Manufacturing Equipment--0.2%
	2,164	1	IXYS Corp.		26,487
			Shoes--3.0%
	2,383	1	Deckers Outdoor Corp.		269,303
	5,191	1	Genesco, Inc.		152,615
	2,097	1	Skechers USA, Inc., Class A		39,633
			TOTAL		461,551
			Software Packaged/Custom--1.3%
	1,253	1	Advent Software, Inc.		54,556
	3,115	1	CSG Systems International, Inc.		55,260
	913	1	Websense, Inc.		19,054
	5,586	1	Wind River Systems, Inc.		65,524
			TOTAL		194,394
			Specialty Chemicals--1.5%
	3,434		Koppers Holdings, Inc.		148,383
	2,502	1	OM Group, Inc.		84,067
			TOTAL		232,450
			Specialty Machinery--1.1%
	1,752		Cascade Corp.		76,878
	2,028	1	Gardner Denver, Inc.		92,477
			TOTAL		169,355
			Specialty Retailing--0.8%
	1,733		Asbury Automotive Group, Inc.		17,174
	3,502	1	Jo-Ann Stores, Inc.		76,939
	1,467		Lithia Motors, Inc., Class A		6,822
	1,805	1	Rush Enterprises, Inc.		20,378
	758		Sonic Automotive, Inc.		7,633
			TOTAL		128,946
			Telecommunication Equipment & Services--1.2%
	6,818	1	ADC Telecommunications, Inc.		64,498
	1,884	1	Echostar Holding Corp.		60,269
	2,412	1	ViaSat, Inc.		55,548
			TOTAL		180,315
Shares					Value
			COMMON STOCKS--continued
			Toys & Games--0.9%
	6,124	1	JAKKS Pacific, Inc.	$	134,606
			Trucking--0.5%
	4,204	1	YRC Worldwide, Inc.		71,048
			Undesignated Consumer Cyclicals--4.1%
	603	1	American Public Education, Inc.		27,394
	1,197	1	CoStar Group, Inc.		59,718
	4,990	1	Navigant Consulting, Inc.		92,215
	2,937	1	Parexel International Corp.		85,848
	10,959	1	Rent-A-Center, Inc.		232,331
	2,957		Speedway Motorsports, Inc.		57,100
	4,107	1	Sykes Enterprises, Inc.		72,530
			TOTAL		627,136
			Undesignated Consumer Staples--0.2%
	821	1	USANA, Inc.		27,988
			Undesignated Health--0.6%
	5,124	1	Healthspring, Inc.		99,662
			Uniforms--0.6%
	2,134		Unifirst Corp.		95,539
			TOTAL COMMON STOCKS (IDENTIFIED COST $16,431,537)		15,328,165
			MUTUAL FUND--1.2%
	180,688	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)		180,688
			TOTAL INVESTMENTS--100.4% (IDENTIFIED COST $16,612,225) 4		15,508,853
			OTHER ASSETS AND LIABILITIES - NET--(0.4)% 5		(62,627	)
			TOTAL NET ASSETS--100%	$	15,446,226

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $16,711,173.

5 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $180,688 of investments in an affiliated issuer (Note 5) (identified cost $16,612,225)			$	15,508,853
Income receivable				7,742
Receivable for investments sold				110,821
Receivable for shares sold				14,456
TOTAL ASSETS				15,641,872
Liabilities:
Payable for investments purchased	$	117,657
Payable for shares redeemed		5,402
Payable for auditing fees		21,200
Payable for legal fees		5,525
Payable for portfolio accounting fees		5,342
Payable for share registration costs		26,883
Payable for distribution services fee (Note 5)		2,286
Payable for shareholder services fee (Note 5)		1,952
Accrued expenses		9,399
TOTAL LIABILITIES				195,646
Net assets for 1,511,767 shares outstanding			$	15,446,226
Net Assets Consist of:
Paid-in capital			$	17,577,599
Net unrealized depreciation of investments				(1,103,372	)
Accumulated net realized loss on investments				(1,028,001	)
TOTAL NET ASSETS			$	15,446,226
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($10,064,212 ÷ 978,822 shares outstanding), no par value, unlimited shares authorized				$10.28
Offering price per share				$10.28
Redemption proceeds per share				$10.28
Class A Shares:
Net asset value per share ($2,623,170 ÷ 256,918 shares outstanding), no par value, unlimited shares authorized				$10.21
Offering price per share (100/94.50 of $10.21) 1				$10.80
Redemption proceeds per share				$10.21
Class C Shares:
Net asset value per share ($2,758,844 ÷ 276,027 shares outstanding), no par value, unlimited shares authorized				$9.99
Offering price per share				$9.99
Redemption proceeds per share (99.00/100 of $9.99) 1				$9.89

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $9,815 received from an affiliated issuer) (Note 5)							$	140,226
Expenses:
Investment adviser fee (Note 5)				$	150,469
Administrative personnel and services fee (Note 5)					230,000
Custodian fees					21,586
Transfer and dividend disbursing agent fees and expenses					52,502
Directors'/Trustees' fees					1,608
Auditing fees					26,700
Legal fees					17,490
Portfolio accounting fees					76,830
Distribution services fee--Class C Shares (Note 5)					23,020
Shareholder services fee--Class A Shares (Note 5)					6,670
Shareholder services fee--Class C Shares (Note 5)					6,599
Share registration costs					59,259
Printing and postage					35,092
Insurance premiums					4,723
Miscellaneous					3,260
TOTAL EXPENSES					715,808
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee	$	(150,469	)
Waiver of administrative personnel and services fee		(44,869	)
Reimbursement of other operating expenses		(287,827	)
TOTAL WAIVERS AND REIMBURSEMENTS					(483,165	)
Net expenses								232,643
Net investment income (loss)								(92,417	)
Realized and Unrealized Loss on Investments:
Net realized loss on investments								(968,490	)
Net change in unrealized appreciation of investments								(1,160,449	)
Net realized and unrealized loss on investments								(2,128,939	)
Change in net assets resulting from operations							$	(2,221,356	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(92,417	)	$	(55,417	)
Net realized gain (loss) on investments		(968,490	)		658,018
Net change in unrealized appreciation/depreciation of investments		(1,160,449	)		108,637
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(2,221,356	)		711,238
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(217,102	)		- --
Class A Shares		(164,846	)		- --
Class C Shares		(186,389	)		- --
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(568,337	)		- --
Share Transactions:
Proceeds from sale of shares		11,231,271			7,293,553
Net asset value of shares issued to shareholders in payment of distributions declared		289,237			- --
Cost of shares redeemed		(2,591,978	)		(1,310,780	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		8,928,530			5,982,773
Change in net assets		6,138,837			6,694,011
Net Assets:
Beginning of period		9,307,389			2,613,378
End of period	$	15,446,226		$	9,307,389

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine portfolios. The financial statements included herein are only those of Federated MDT Small Cap Core Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Class A Shares and Class C Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The Financial Highlights of the Institutional Shares are presented separately. The primary investment objective of the Fund is long-term capital appreciation.

MDT Small Cap Core Fund (the "Predecessor Fund") was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced operations on September 15, 2005.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the "Trustees").
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	775,627		$	8,473,003		261,010		$	3,371,221
Shares issued to shareholders in payment of distributions declared	5,282			62,326		- --			- --
Shares redeemed	(72,893	)		(839,798	)	(60,527	)		(814,585	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	708,016		$	7,695,531		200,483		$	2,556,636
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	127,938		$	1,534,598		169,060		$	2,127,392
Shares issued to shareholders in payment of distributions declared	12,340			144,868		- --			- --
Shares redeemed	(65,972	)		(737,190	)	(15,640	)		(196,596	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	74,306		$	942,276		153,420		$	1,930,796
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	103,368		$	1,223,670		141,475		$	1,794,940
Shares issued to shareholders in payment of distributions declared	7,110			82,043		- --			- --
Shares redeemed	(87,328	)		(1,014,990	)	(24,800	)		(299,599	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	23,150		$	290,723		116,675		$	1,495,341
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	805,472		$	8,928,530		470,578		$	5,982,773

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due in part to differing treatments for net operating loss.

For the year ended July 31, 2008, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gain (Loss)
$(71,841)	$92,417	$(20,576)

Net investment income (loss), net realized gains (losses) and net assets were not affected by this reclassification.

The tax character of distributions as reported on the Statement of Changes in Net Assets for the year ended July 31, 2008, was as follows:

Ordinary income 1	$508,584
Long-term capital gains	$ 59,753

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Net unrealized depreciation	$	(1,202,320)
Capital loss deferrals	$	(929,053)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $16,711,173. The net unrealized depreciation of investments for federal tax purposes was $1,202,320. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $1,037,940 and net unrealized depreciation from investments for those securities having an excess of cost over value of $2,240,260.

Under current tax regulations, capital losses on securities transactions realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post October losses of $929,053 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 1.15% of the Fund's average daily net assets. Prior to December 8, 2006, the Adviser received an annual investment adviser fee equal to 1.25% of the Fund's average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for each Class of the Fund based on average daily net assets:

Share Class Name	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.80%
Class A Shares	2.05%
Class C Shares	2.80%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment and subject to the terms described in the Expense Limitation note, the Adviser may also voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the year ended July 31, 2008, the Adviser waived $150,261 of its fee and reimbursed $287,827 of other operating expenses.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement (the "Agreement"), provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. During the period from July 15, 2006 through December 8, 2006, the administrator contractually agreed to waive a portion of its fee which it would otherwise be entitled to receive from the Fund under the Agreement. The level of fees payable by the Fund to FAS for the period did not exceed the level of fees which the Fund would have paid during the period to its previous service provider under the previous administrative services contract. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the net fee paid to FAS was 1.415% of average daily net assets of the Fund. FAS waived $44,869 of its fee. The Fund currently accrues the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act which became effective on December 11, 2006. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares and Class C Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets
Class A Shares	0.25%
Class C Shares	1.00%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $8,245 of fees paid by the Fund. For the year ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

For the year ended July 31, 2008, FSC retained $1,666 in sales charges from the sale of Class A Shares. FSC also retained $520 of contingent deferred sales charges relating to redemptions of Class C Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares, to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the year ended July 31, 2008, FSSC received $165 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.49%, 1.74% and 2.49%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $208. Transactions with the affiliated company during the year ended July 31, 2008 were as follows:

Affiliate	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	166,831	9,856,539	9,842,682	180,688	$180,688	$9,815

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	39,589,382
Sales	$	31,353,585

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds, and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2008, the amount of long-term capital gains designated by the Fund was $59,753.

For the fiscal year ended July 31, 2008, 9.61% of total ordinary income (including short-term capital gain) distributions made by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended July 31, 2008, 9.92% qualify for the dividend received deduction available to corporate shareholders.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND SHAREHOLDERS OF FEDERATED MDT SMALL CAP CORE FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Small Cap Core Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Small Cap Core Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; and Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT SMALL CAP CORE FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For the one-year period ending December 31, 2007, the Fund's performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same period, the Fund outperformed its benchmark index for the one-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT Small Cap Core Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R817
Cusip 31421R791

37328 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Small Cap
Core Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$13.28		$11.14		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.05	) 3	(0.07	) 3	(0.10	) 3
Net realized and unrealized gain (loss) on investments	(2.24	)	2.21		1.24
TOTAL FROM INVESTMENT OPERATIONS	(2.29	)	2.14		1.14
Less Distributions:
Distributions from net realized gain on investments	(0.71	)	- --		- --
Net Asset Value, End of Period	$10.28		$13.28		$11.14
Total Return 4	(17.92	)%	19.21	%	11.40	%
Ratios to Average Net Assets:
Net expenses	1.50	%	1.50	%	1.76	% 5
Net investment income (loss)	(0.43	)%	(0.51	)%	(0.91	)% 5
Expense waiver/reimbursement 6	3.55	%	8.14	%	9.41	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$10,064		$3,595		$784
Portfolio turnover	243	%	237	%	209	%

1 MDT Small Cap Core Fund (the "Predecessor Fund") was reorganized into Federated MDT Small Cap Core Fund (the "Fund") as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual	$1,000	$ 959.00	$7.31
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,017.40	$7.52

1 Expenses are equal to the Fund's annualized net expense ratio of 1.50%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half-year period).

Management's Discussion of Fund Performance

The fund's total return at net asset value for the fiscal year ended July 31, 2008 was (17.92)% for Institutional Shares. The total return of the Russell 2000 ^® Index (Russell 2000 ^® ) was (6.71)% for the same period. ¹ The total return of the Lipper Small-Cap Core Funds Index was (8.48)% for the same period. ² The fund's total return for the fiscal year reflected actual cash flows, transaction costs and other expenses which were not reflected in the total return of the Russell index.

1 The Russell 2000 measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index. The index is unmanaged and investments cannot be made directly in an index.

2 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

MARKET OVERVIEW

Over the twelve month period ending July 31, 2008 domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® Index, ³ which represents the performance of the 3,000 largest U.S. companies by market capitalization, finished the period down 10.32%. Small cap stocks ⁴ had the best relative results as demonstrated by the (6.71)% return on the Russell 2000 ^® , which exceeded the (10.10)% and (10.81)% results for the Russell Midcap ^® Index ⁵ and the Russell Top 200 ^® Index, ⁶ respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000 ^® Growth Index ⁷ returning (6.11)% as compared to (14.75)% for the Russell 3000 Value ^® Index. ⁸

The best performing sectors during the period, as measured by the Russell 3000 ^® Index, were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

3 The Russell 3000 Index offers investors access to the broad U.S. equity universe representing approximately 98% of the U.S. market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The index is unmanaged and investments cannot be made directly in an index.

4 Small company stocks may be less liquid and subject to greater price volatility than large capitalization stocks.

5 The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 31% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

6 The Russell Top 200 Index measures the performance of the 200 largest companies in the Russell 1000 Index, which represents approximately 69% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

7 The Russell 3000 Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000 Growth or the Russell 2000 Growth indexes. The index is unmanaged and investments cannot be made directly in an index.

8 The Russell 3000 Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000 Value or the Russell 2000 Value indexes. The index is unmanaged and investments cannot be made directly in an index.

FUND PERFORMANCE

The most significant positive factor in the fund's performance relative to the Russell 2000 ^® was its overweight in the Energy sector. Additionally, stock selection in the Consumer Discretionary and Materials sectors contributed modestly. The most significant negative factor in the fund's performance relative to the Russell 2000 ^® was its stock selection in the Financials and Energy sectors. Additionally, stock selection in the Industrials sector and an overweight in the Consumer Discretionary sector detracted moderately.

Individual stocks contributing to the fund's performance relative to the Russell 2000 ^® included: Priceline.com, Inc., GrafTech International Ltd., a developer and manufacturer of graphite and carbon materials, Walter Industries, Inc., a producer of high quality metallurgical coal and natural gas, Compass Minerals International, Inc. and Flir Systems, Inc., a designer and manufacturer of thermal imaging systems.

Individual stocks detracting from the fund's performance relative to the Russell 2000 ^® included: Crocs, Inc., Tempur-Pedic International, Inc., Perini Corporation, a general contracting and construction firm, Landamerica Financial Group, an insurance underwriter, and Alon USA Energy, Inc.

GROWTH OF A $25,000 INVESTMENT - INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000 ¹ in the Federated MDT Small Cap Core Fund (Institutional Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 2000 ^® Index ² and the Lipper Small-Cap Core Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(17.92	)%
Start of Performance (9/15/2005)	3.04	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 Represents a hypothetical investment of $25,000 in the fund. The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 2000 ^® Index and the Lipper Small-Cap Core Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 2000 ^® Index is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends. Lipper figures do not reflect sales charges.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund's industry composition ¹ was as follows:

Industry	Percentage of Total Net Assets
Clothing Stores	6.2	%
Regional Bank	5.3	%
Undesignated Consumer Cyclicals	4.1	%
Electrical Equipment	4.0	%
Oil Well Supply	4.0	%
Property Liability Insurance	3.5	%
Apparel	3.4	%
Restaurant	3.3	%
Oil Service, Explore & Drill	3.1	%
Shoes	3.0	%
Commodity Chemicals	2.6	%
Securities Brokerage	2.4	%
Other Communications Equipment	2.2	%
Multi-Line Insurance	2.2	%
Mini-Mill Producer	2.1	%
Home Health Care	1.8	%
Savings and Loan	1.8	%
Defense Electronics	1.6	%
Printed Circuit Boards	1.6	%
Metal Fabrication	1.5	%
Specialty Chemicals	1.5	%
Contracting	1.4	%
Auto Original Equipment Manufacturers	1.3	%
Crude Oil & Gas Production	1.3	%
Multi-Industry Capital Goods	1.3	%
Psychiatric Centers	1.3	%
Software Packaged/Custom	1.3	%
Office Furniture	1.2	%
Miscellaneous Machinery	1.2	%
Telecommunication Equipment & Services	1.2	%
Computer Services	1.1	%
Industry	Percentage of Total Net Assets
Special Machinery	1.1	%
Electronic Instruments	1.1	%
Computer Networking	1.0	%
Paper Products	1.0	%
Financial Services	1.0	%
Industrial Machinery	1.0	%
Other 2	19.2	%
Cash Equivalents 3	1.2	%
Other Assets and Liabilities--Net 4	(0.4	)%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's total net assets have been aggregated under the designation "Other."

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares					Value
			COMMON STOCKS--99.2%
			Airline - National--0.4%
	1,108	1	Atlas Air Worldwide Holdings, Inc.	$	53,328
			Airline - Regional--0.1%
	1,179		SkyWest, Inc.		17,944
			Aluminum--0.8%
	2,326		Kaiser Aluminum Corp.		122,696
			Apparel--3.4%
	493		Jones Apparel Group, Inc.		8,253
	3,310		Liz Claiborne, Inc.		43,262
	919	1	Maidenform Brands, Inc.		14,070
	12,408	1	Quiksilver, Inc.		95,169
	1,804	1	Volcom, Inc.		32,364
	7,823	1	Warnaco Group, Inc.		328,175
			TOTAL		521,293
			Auto Original Equipment Manufacturers--1.3%
	5,171		American Axle & Manufacturing Holdings, Inc.		30,405
	1,711	1	Fuel Systems Solutions, Inc.		64,026
	2,221	1	Stoneridge, Inc.		29,251
	1,978		Sun Hydraulics Corp.		81,494
			TOTAL		205,176
			Biotechnology--0.7%
	2,574	1	Martek Biosciences Corp.		96,808
	961	1	Momenta Pharmaceuticals, Inc.		15,933
			TOTAL		112,741
			Bituminous Coal--0.3%
	4,264	1	International Coal Group, Inc.		44,644
			Building Materials--0.1%
	722		Apogee Enterprises, Inc.		12,476
			Cement--0.3%
	1,250	1	Astec Industries, Inc.		39,900
			Clothing Stores--6.2%
	7,099		Buckle, Inc.		365,386
	2,978		Cato Corp., Class A		53,276
	6,899	1	Children's Place Retail Stores, Inc.		262,507
Shares					Value
			COMMON STOCKS--continued
			Clothing Stores--continued
	9,617	1	Fossil, Inc.	$	257,543
	634	1	Jos A. Bank Clothiers, Inc.		14,202
			TOTAL		952,914
			Commodity Chemicals--2.6%
	5,225		Compass Minerals International, Inc.		395,010
			Computer Networking--1.0%
	6,747	1	Avocent Corp.		160,444
			Computer Services--1.1%
	5,535	1	Synnex Corp.		129,298
	1,277		Syntel, Inc.		42,077
			TOTAL		171,375
			Construction Machinery--0.7%
	2,985	1	NCI Building System, Inc.		111,818
			Contracting--1.4%
	2,960		Comfort Systems USA, Inc.		39,250
	6,484	1	Perini Corp.		177,402
			TOTAL		216,652
			Crude Oil & Gas Production--1.3%
	1,223	1	Bill Barrett Corp.		50,314
	3,662	1	EXCO Resources, Inc.		95,395
	1,074	1	Petroleum Development Corp.		59,403
			TOTAL		205,112
			Defense Aerospace--0.5%
	2,469	1	AAR Corp.		42,442
	739		Triumph Group, Inc.		39,137
			TOTAL		81,579
			Defense Electronics--1.6%
	6,216	1	FLIR Systems, Inc.		253,240
			Diversified Leisure--0.7%
	2,107	1	Bally Technologies, Inc.		66,982
	1,123	1	Life Time Fitness, Inc.		33,454
			TOTAL		100,436
			Electric & Electrical Original Equipment Manufacturers--0.1%
	293	1	Energy Conversion Devices, Inc.		20,489
			Electric Utility--0.2%
	1,180	1	El Paso Electric Co.		24,379
Shares					Value
			COMMON STOCKS--continued
			Electrical - Radio & TV--0.2%
	1,407	1	Universal Electronics, Inc.	$	31,967
			Electrical Equipment--4.0%
	1,411		Encore Wire Corp.		25,723
	15,503	1	GrafTech International Ltd.		363,545
	4,613		Robbins & Myers, Inc.		234,202
			TOTAL		623,470
			Electronic Components--0.2%
	2,049	1	Volterra Semiconductor Corp.		33,604
			Electronic Instruments--1.1%
	629	1	Axsys Technologies, Inc.		46,194
	4,218	1	Cogent, Inc.		42,770
	2,996	1	Cymer, Inc.		79,364
			TOTAL		168,328
			Financial Services--1.0%
	1,637	1	America's Car-Mart, Inc.		32,609
	5,670		Deluxe Corp.		81,081
	1,567		Heartland Payment Systems, Inc.		36,057
			TOTAL		149,747
			Food Wholesaling--0.5%
	1,878		Nash Finch Co.		74,125
			Furniture--0.0%
	246		Ethan Allen Interiors, Inc.		6,175
			Home Health Care--1.8%
	4,355	1	Amedisys, Inc.		279,243
			Home Products--0.6%
	2,436		Tupperware Brands Corp.		95,004
			Hotels and Motels--0.3%
	4,847	1	Boyd Gaming Corp.		48,373
			Industrial Machinery--1.0%
	1,367		Valmont Industries, Inc.		146,146
			Insurance Brokerage--0.7%
	4,338		AmTrust Financial Services, Inc.		63,205
	2,063		Employers Holdings, Inc.		36,763
			TOTAL		99,968
Shares					Value
			COMMON STOCKS--continued
			Internet Services--0.2%
	1,792	1	Overstock.com, Inc.	$	31,826
			Life Insurance--0.1%
	1,983		Phoenix Cos., Inc.		19,295
			Long-Term Care Centers--0.3%
	1,449	1	Kindred Healthcare, Inc.		39,080
			Machine Tools--0.5%
	1,616	1	AZZ, Inc.		73,964
	202	1	Hurco Co., Inc.		5,894
			TOTAL		79,858
			Machined Parts Original Equipment Manufacturers--0.0%
	1		Applied Industrial Technologies, Inc.		27
			Maritime--0.4%
	2,660		TAL International Group, Inc.		67,298
			Medical Supplies--0.9%
	309	1	ICU Medical, Inc.		8,785
	1,053	1	Kensey Nash Corp.		36,571
	963	1	Merit Medical Systems, Inc.		19,462
	1,668		West Pharmaceutical Services, Inc.		76,595
			TOTAL		141,413
			Medical Technology--0.1%
	706	1	Zoll Medical Corp.		22,239
			Metal Containers--0.8%
	2,139		Greif, Inc., Class A		130,137
			Metal Fabrication--1.5%
	3,247		CIRCOR International, Inc.		193,391
	1,372	1	Ladish Co., Inc.		27,166
	507		Mueller Industries, Inc.		13,015
			TOTAL		233,572
			Mini-Mill Producer--2.1%
	3,630		Schnitzer Steel Industries, Inc., Class A		327,571
			Miscellaneous Components--0.2%
	3,061	1	Applied Micro Circuits Corp.		23,753
			Miscellaneous Food Products--0.8%
	2,637	1	Fresh Del Monte Produce, Inc.		55,588
	1,423		The Anderson's, Inc.		64,675
			TOTAL		120,263
Shares					Value
			COMMON STOCKS--continued
			Miscellaneous Machinery--1.2%
	4,951		Briggs & Stratton Corp.	$	67,036
	259		Graham Corp.		23,051
	1,332		Nordson Corp.		94,119
			TOTAL		184,206
			Multi-Industry Capital Goods--1.3%
	4,329	1	Ceradyne, Inc.		200,649
			Multi-Line Insurance--2.2%
	2,386		FBL Financial Group, Inc., Class A		49,748
	779	1	FPIC Insurance Group, Inc.		38,911
	1,794		Harleysville Group, Inc.		63,920
	2,203		Tower Group, Inc.		50,184
	3,967		Zenith National Insurance Corp.		136,504
			TOTAL		339,267
			Newspaper Publishing--0.5%
	7,498		Belo (A.H.) Corp., Series A		50,911
	3,988		Lee Enterprises, Inc.		12,044
	4,672		McClatchy Co., Class A		19,949
			TOTAL		82,904
			Office Furniture--1.2%
	7,109		Miller Herman, Inc.		185,829
			Office Supplies--0.1%
	1,949	1	Acco Brands Corp.		16,703
			Offshore Driller--0.2%
	788	1	Hornbeck Offshore Services, Inc.		35,129
			Oil Refiner--0.3%
	5,773		Alon USA Energy, Inc.		49,532
			Oil Service, Explore & Drill--3.1%
	2,487	1	Brigham Exploration Co.		34,818
	9,544	1	Complete Production Services, Inc.		303,881
	2,867	1	Gulfmark Offshore, Inc.		143,866
			TOTAL		482,565
			Oil Well Supply--4.0%
	2,147		Gulf Island Fabrication, Inc.		95,219
	1,209		Lufkin Industries, Inc.		107,843
	6,167	1	Oil States International, Inc.		338,445
	4,644		RPC, Inc.		79,830
			TOTAL		621,337
Shares					Value
			COMMON STOCKS--continued
			Optical Reading Equipment--0.8%
	3,989	1	ScanSource, Inc.	$	122,422
			Other Communications Equipment--2.2%
	17,491	1	Skyworks Solutions, Inc.		165,465
	11,106	1	Syniverse Holdings, Inc.		179,917
			TOTAL		345,382
			Packaged Foods--0.5%
	4,961	1	Chiquita Brands International		76,151
			Paper Products--1.0%
	5,052	1	Buckeye Technologies, Inc.		49,257
	1,629		Neenah Paper, Inc.		30,430
	2,138		Rock-Tenn Co.		76,006
			TOTAL		155,693
			Personal Loans--0.3%
	1,508	1	World Acceptance Corp.		49,402
			Personnel Agency--0.3%
	2,133	1	Kenexa Corp.		39,866
			Printed Circuit Boards--1.6%
	11,390	1	Benchmark Electronics, Inc.		166,750
	10,734	1	PMC-Sierra, Inc.		77,714
			TOTAL		244,464
			Printing--0.5%
	935	1	Consolidated Graphics, Inc.		31,323
	5,335	1	Valassis Communications, Inc.		47,055
			TOTAL		78,378
			Property Liability Insurance--3.5%
	1,284		American Physicians Capital, Inc.		63,918
	1,944	1	CNA Surety Corp.		25,253
	1,047	1	First Mercury Financial Corp.		16,752
	3,470		Horace Mann Educators Corp.		48,094
	1,399	1	OneBeacon Insurance Group Ltd.		25,322
	3,573	1	ProAssurance Corp.		174,863
	3,580		Selective Insurance Group, Inc.		77,328
	1,535		State Auto Financial Corp.		44,377
	2,616		United Fire & Casualty Co.		71,077
			TOTAL		546,984
			Psychiatric Centers--1.3%
	5,556	1	Psychiatric Solutions, Inc.		194,571
Shares					Value
			COMMON STOCKS--continued
			Railroad--0.0%
	1		Celadon Group, Inc.	$	13
			Recreational Goods--0.2%
	1,281	1	Steinway Musical Instruments		35,509
			Regional Bank--5.3%
	6,185		Cathay Bancorp, Inc.		98,589
	4,124		Central Pacific Financial Corp.		45,653
	6,021	1	Citizens Banking Corp.		20,170
	6,031		First Midwest Bancorp, Inc.		123,816
	437		FirstMerit Corp.		8,600
	5,332		Pacific Capital Bancorp		69,689
	3,625		PacWest Bancorp		67,497
	533		Park National Corp.		33,382
	2,611		Provident Bankshares Corp.		23,760
	1,198		Republic Bancorp, Inc.		37,066
	1,970		Santander BanCorp		21,631
	4,583		Trustmark Corp.		82,769
	2,635		UMB Financial Corp.		145,109
	919		Whitney Holding Corp.		18,895
	966		Wintrust Financial Corp.		19,948
			TOTAL		816,574
			Restaurant--3.3%
	1,265	1	Buffalo Wild Wings, Inc.		41,656
	2,224		CBRL Group, Inc.		53,754
	5,891	1	CEC Entertainment, Inc.		205,360
	2,821		CKE Restaurants, Inc.		34,614
	1,256	1	Green Mountain Coffee, Inc.		45,656
	1,130	1	Panera Bread Co.		56,613
	3,036	1	Red Robin Gourmet Burgers		75,384
			TOTAL		513,037
			Savings and Loan--1.8%
	1,953		Dime Community Bancorp, Inc.		32,674
	1,690		Flushing Financial Corp.		29,795
	1,716		Northwest Bancorp, Inc.		44,530
	555		WSFS Financial Corp.		30,220
	7,141		Webster Financial Corp. Waterbury		141,820
			TOTAL		279,039
Shares					Value
			COMMON STOCKS--continued
			Securities Brokerage--2.4%
	6,025	1	Fcstone Group, Inc.	$	116,041
	8,942	1	Interactive Brokers Group, Inc., Class A		250,913
			TOTAL		366,954
			Semiconductor Manufacturing Equipment--0.2%
	2,164	1	IXYS Corp.		26,487
			Shoes--3.0%
	2,383	1	Deckers Outdoor Corp.		269,303
	5,191	1	Genesco, Inc.		152,615
	2,097	1	Skechers USA, Inc., Class A		39,633
			TOTAL		461,551
			Software Packaged/Custom--1.3%
	1,253	1	Advent Software, Inc.		54,556
	3,115	1	CSG Systems International, Inc.		55,260
	913	1	Websense, Inc.		19,054
	5,586	1	Wind River Systems, Inc.		65,524
			TOTAL		194,394
			Specialty Chemicals--1.5%
	3,434		Koppers Holdings, Inc.		148,383
	2,502	1	OM Group, Inc.		84,067
			TOTAL		232,450
			Specialty Machinery--1.1%
	1,752		Cascade Corp.		76,878
	2,028	1	Gardner Denver, Inc.		92,477
			TOTAL		169,355
			Specialty Retailing--0.8%
	1,733		Asbury Automotive Group, Inc.		17,174
	3,502	1	Jo-Ann Stores, Inc.		76,939
	1,467		Lithia Motors, Inc., Class A		6,822
	1,805	1	Rush Enterprises, Inc.		20,378
	758		Sonic Automotive, Inc.		7,633
			TOTAL		128,946
			Telecommunication Equipment & Services--1.2%
	6,818	1	ADC Telecommunications, Inc.		64,498
	1,884	1	Echostar Holding Corp.		60,269
	2,412	1	ViaSat, Inc.		55,548
			TOTAL		180,315
Shares					Value
			COMMON STOCKS--continued
			Toys & Games--0.9%
	6,124	1	JAKKS Pacific, Inc.	$	134,606
			Trucking--0.5%
	4,204	1	YRC Worldwide, Inc.		71,048
			Undesignated Consumer Cyclicals--4.1%
	603	1	American Public Education, Inc.		27,394
	1,197	1	CoStar Group, Inc.		59,718
	4,990	1	Navigant Consulting, Inc.		92,215
	2,937	1	Parexel International Corp.		85,848
	10,959	1	Rent-A-Center, Inc.		232,331
	2,957		Speedway Motorsports, Inc.		57,100
	4,107	1	Sykes Enterprises, Inc.		72,530
			TOTAL		627,136
			Undesignated Consumer Staples--0.2%
	821	1	USANA, Inc.		27,988
			Undesignated Health--0.6%
	5,124	1	Healthspring, Inc.		99,662
			Uniforms--0.6%
	2,134		Unifirst Corp.		95,539
			TOTAL COMMON STOCKS (IDENTIFIED COST $16,431,537)		15,328,165
			MUTUAL FUND--1.2%
	180,688	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)		180,688
			TOTAL INVESTMENTS--100.4% (IDENTIFIED COST $16,612,225) 4		15,508,853
			OTHER ASSETS AND LIABILITIES - NET--(0.4)% 5		(62,627	)
			TOTAL NET ASSETS--100%	$	15,446,226

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $16,711,173.

5 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $180,688 of investments in an affiliated issuer (Note 5) (identified cost $16,612,225)			$	15,508,853
Income receivable				7,742
Receivable for investments sold				110,821
Receivable for shares sold				14,456
TOTAL ASSETS				15,641,872
Liabilities:
Payable for investments purchased	$	117,657
Payable for shares redeemed		5,402
Payable for auditing fees		21,200
Payable for legal fees		5,525
Payable for portfolio accounting fees		5,342
Payable for share registration costs		26,883
Payable for distribution services fee (Note 5)		2,286
Payable for shareholder services fee (Note 5)		1,952
Accrued expenses		9,399
TOTAL LIABILITIES				195,646
Net assets for 1,511,767 shares outstanding			$	15,446,226
Net Assets Consist of:
Paid-in capital			$	17,577,599
Net unrealized depreciation of investments				(1,103,372	)
Accumulated net realized loss on investments				(1,028,001	)
TOTAL NET ASSETS			$	15,446,226
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($10,064,212 ÷ 978,822 shares outstanding), no par value, unlimited shares authorized				$10.28
Offering price per share				$10.28
Redemption proceeds per share				$10.28
Class A Shares:
Net asset value per share ($2,623,170 ÷ 256,918 shares outstanding), no par value, unlimited shares authorized				$10.21
Offering price per share (100/94.50 of $10.21) 1				$10.80
Redemption proceeds per share				$10.21
Class C Shares:
Net asset value per share ($2,758,844 ÷ 276,027 shares outstanding), no par value, unlimited shares authorized				$9.99
Offering price per share				$9.99
Redemption proceeds per share (99.00/100 of $9.99) 1				$9.89

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $9,815 received from an affiliated issuer (Note 5))							$	140,226
Expenses:
Investment adviser fee (Note 5)				$	150,469
Administrative personnel and services fee (Note 5)					230,000
Custodian fees					21,586
Transfer and dividend disbursing agent fees and expenses					52,502
Directors'/Trustees' fees					1,608
Auditing fees					26,700
Legal fees					17,490
Portfolio accounting fees					76,830
Distribution services fee--Class C Shares (Note 5)					23,020
Shareholder services fee--Class A Shares (Note 5)					6,670
Shareholder services fee--Class C Shares (Note 5)					6,599
Share registration costs					59,259
Printing and postage					35,092
Insurance premiums					4,723
Miscellaneous					3,260
TOTAL EXPENSES					715,808
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee	$	(150,469	)
Waiver of administrative personnel and services fee		(44,869	)
Reimbursement of other operating expenses		(287,827	)
TOTAL WAIVERS AND REIMBURSEMENTS					(483,165	)
Net expenses								232,643
Net investment income (loss)								(92,417	)
Realized and Unrealized Loss on Investments:
Net realized loss on investments								(968,490	)
Net change in unrealized appreciation of investments								(1,160,449	)
Net realized and unrealized loss on investments								(2,128,939	)
Change in net assets resulting from operations							$	(2,221,356	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(92,417	)	$	(55,417	)
Net realized gain (loss) on investments		(968,490	)		658,018
Net change in unrealized appreciation/depreciation of investments		(1,160,449	)		108,637
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(2,221,356	)		711,238
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(217,102	)		- --
Class A Shares		(164,846	)		- --
Class C Shares		(186,389	)		- --
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(568,337	)		- --
Share Transactions:
Proceeds from sale of shares		11,231,271			7,293,553
Net asset value of shares issued to shareholders in payment of distributions declared		289,237			- --
Cost of shares redeemed		(2,591,978	)		(1,310,780	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		8,928,530			5,982,773
Change in net assets		6,138,837			6,694,011
Net Assets:
Beginning of period		9,307,389			2,613,378
End of period	$	15,446,226		$	9,307,389

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine portfolios. The financial statements included herein are only those of Federated MDT Small Cap Core Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Class A Shares and Class C Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The Financial Highlights of the Class A Shares and Class C Shares are presented separately. The primary investment objective of the Fund is long-term capital appreciation.

MDT Small Cap Core Fund (the "Predecessor Fund") was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced operations on September 15, 2005.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the "Trustees").
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	775,627		$	8,473,003		261,010		$	3,371,221
Shares issued to shareholders in payment of distributions declared	5,282			62,326		- --			- --
Shares redeemed	(72,893	)		(839,798	)	(60,527	)		(814,585	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	708,016		$	7,695,531		200,483		$	2,556,636
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	127,938		$	1,534,598		169,060		$	2,127,392
Shares issued to shareholders in payment of distributions declared	12,340			144,868		- --			- --
Shares redeemed	(65,972	)		(737,190	)	(15,640	)		(196,596	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	74,306		$	942,276		153,420		$	1,930,796
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	103,368		$	1,223,670		141,475		$	1,794,940
Shares issued to shareholders in payment of distributions declared	7,110			82,043		- --			- --
Shares redeemed	(87,328	)		(1,014,990	)	(24,800	)		(299,599	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	23,150		$	290,723		116,675		$	1,495,341
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	805,472		$	8,928,530		470,578		$	5,982,773

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due in part to differing treatments for net operating loss.

For the year ended July 31, 2008, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gain (Loss)
$(71,841)	$92,417	$(20,576)

Net investment income (loss), net realized gains (losses) and net assets were not affected by this reclassification.

The tax character of distributions as reported on the Statement of Changes in Net Assets for the year ended July 31, 2008, was as follows:

Ordinary income 1	$508,584
Long-term capital gains	$ 59,753

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Net unrealized depreciation	$	(1,202,320)
Capital loss deferrals	$	(929,053)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $16,711,173. The net unrealized depreciation of investments for federal tax purposes was $1,202,320. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $1,037,940 and net unrealized depreciation from investments for those securities having an excess of cost over value of $2,240,260.

Under current tax regulations, capital losses on securities transactions realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post October losses of $929,053 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 1.15% of the Fund's average daily net assets. Prior to December 8, 2006, the Adviser received an annual investment adviser fee equal to 1.25% of the Fund's average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for each Class of the Fund based on average daily net assets:

Share Class Name	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.80%
Class A Shares	2.05%
Class C Shares	2.80%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment and subject to the terms described in the Expense Limitation note, the Adviser may also voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the year ended July 31, 2008, the Adviser waived $150,261 of its fee and reimbursed $287,827 of other operating expenses.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement (the "Agreement"), provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. During the period from July 15, 2006 through December 8, 2006, the administrator contractually agreed to waive a portion of its fee which it would otherwise be entitled to receive from the Fund under the Agreement. The level of fees payable by the Fund to FAS for the period did not exceed the level of fees which the Fund would have paid during the period to its previous service provider under the previous administrative services contract. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the net fee paid to FAS was 1.415% of average daily net assets of the Fund. FAS waived $44,869 of its fee. The Fund currently accrues the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act which became effective on December 11, 2006. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares and Class C Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets
Class A Shares	0.25%
Class C Shares	1.00%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $8,245 of fees paid by the Fund. For the year ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

For the year ended July 31, 2008, FSC retained $1,666 in sales charges from the sale of Class A Shares. FSC also retained $520 of contingent deferred sales charges relating to redemptions of Class C Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares, to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the year ended July 31, 2008, FSSC received $165 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.49%, 1.74% and 2.49%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $208. Transactions with the affiliated company during the year ended July 31, 2008 were as follows:

Affiliate	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	166,831	9,856,539	9,842,682	180,688	$180,688	$9,815

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	39,589,382
Sales	$	31,353,585

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds, and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2008, the amount of long-term capital gains designated by the Fund was $59,753.

For the fiscal year ended July 31, 2008, 9.61% of total ordinary income (including short-term capital gain) distributions made by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended July 31, 2008, 9.92% qualify for the dividend received deduction available to corporate shareholders.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND SHAREHOLDERS OF FEDERATED MDT SMALL CAP CORE FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Small Cap Core Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Small Cap Core Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; and Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT SMALL CAP CORE FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For the one-year period ending December 31, 2007, the Fund's performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same period, the Fund outperformed its benchmark index for the one-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT Small CapCore Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R783

37322 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Small Cap
Growth Fund

Established 2005

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Class A Shares
Class B Shares
Class C Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$12.95		$10.59		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.14	) 3	(0.14	) 3	(0.17	) 3
Net realized and unrealized gain (loss) on investments and foreign currency transactions	(1.17	)	2.50		0.76
TOTAL FROM INVESTMENT OPERATIONS	(1.31	)	2.36		0.59
Less Distributions:
Distributions from net realized gain on investments	(0.07	)	- --		- --
Net Asset Value, End of Period	$11.57		$12.95		$10.59
Total Return 4	(10.20	)%	22.29	%	5.90	%
Ratios to Average Net Assets:
Net expenses	1.75	%	1.75	%	2.02	% 5
Net investment income (loss)	(1.20	)%	(1.16	)%	(1.50	)% 5
Expense waiver/reimbursement 6	1.05	%	25.97	%	22.65	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$31,874		$532		$157
Portfolio turnover	212	%	157	%	157	%

1 MDT Small Cap Growth Fund (the "Predecessor Fund") was reorganized into Federated MDT Small Cap Growth Fund (the "Fund") as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class B Shares

(For a Share Outstanding Throughout the Period)

Period Ended July 31	2008	1
Net Asset Value, Beginning of Period	$11.26
Income From Investment Operations:
Net investment income (loss)	(0.09	) 2
Net realized and unrealized gain on investments and foreign currency transactions	0.44
TOTAL FROM INVESTMENT OPERATIONS	0.35
Net Asset Value, End of Period	$11.61
Total Return 3	3.11	%
Ratios to Average Net Assets:
Net expenses	2.50	% 4
Net investment income (loss)	(1.96	)% 4
Expense waiver/reimbursement 5	1.05	% 4
Supplemental Data:
Net assets, end of period (000 omitted)	$9,811
Portfolio turnover	212	% 6

1 Reflects operations for the period from March 13, 2008 (date of initial investment) to July 31, 2008.

2 Per share numbers have been calculated using the average shares method.

3 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

4 Computed on an annualized basis.

5 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

6 Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended July 31, 2008.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$12.77		$10.52		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.22	) 3	(0.23	) 3	(0.26	) 3
Net realized and unrealized gain (loss) on investments and foreign currency transactions	(1.16	)	2.48		0.78
TOTAL FROM INVESTMENT OPERATIONS	(1.38	)	2.25		0.52
Less Distributions:
Distributions from net realized gain on investments	(0.07	)	- --		- --
Net Asset Value, End of Period	$11.32		$12.77		$10.52
Total Return 4	(10.89	)%	21.39	%	5.20	%
Ratios to Average Net Assets:
Net expenses	2.47	%	2.50	%	2.77	% 5
Net investment income (loss)	(1.93	)%	(1.92	)%	(2.25	)% 5
Expense waiver/reimbursement 6	1.07	%	27.07	%	25.65	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$6,450		$702		$348
Portfolio turnover	212	%	157	%	157	%

1 The Predecessor Fund was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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, such as sales charges (loads) on purchase or redemption payments. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual:
Class A Shares	$1,000	$ 979.70	$ 8.61
Class B Shares	$1,000	$1,031.10	$ 9.78
Class C Shares	$1,000	$ 975.90	$12.13
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,016.16	$ 8.77
Class B Shares	$1,000	$1,012.43	$12.51
Class C Shares	$1,000	$1,012.58	$12.36

1 "Actual" expense information for the Fund's Class B Shares is for the period from March 13, 2008 (date of initial investment) to July 31, 2008. Actual expenses are equal to the annualized net expense ratio of the Fund's Class B Shares, multiplied by 141/366 (to reflect the period from initial public investment to July 31, 2008). "Hypothetical" expense information for Class A Shares, Class B Shares and Class C Shares is presented on the basis of the full one-half-year period to enable comparison to other funds. It is based on assuming the same net expense ratio and average account value over the period, but it is multiplied by 182/366 (to reflect the full half-year period). The annualized net expense ratios are as follows:

Class A Shares	1.75%
Class B Shares	2.50%
Class C Shares	2.47%

Management's Discussion of Fund Performance

The fund's total return, based on net asset value, for the fiscal year ended July 31, 2008 was (10.20)% for Class A Shares and (10.89)% for Class C Shares. ¹ The total return for the period from March 13, 2008 (date of initial investment) to July 31, 2008 was 3.11% for the Class B Shares. The total return of the Russell 2000 ^® Growth Index ² was (3.76)% and the total return of the Lipper Small-Cap Growth Funds Index ³ was (11.20)% for the same period. The fund's total return for the fiscal year reflected actual cash flows, transaction costs and other expenses which were not reflected in the total return of the Russell Index.

1 The fund is the successor to the MDT Small Cap Growth Fund pursuant to a reorganization that took place on December 8, 2006. Prior to that date, the fund had no investment operations. Accordingly, the performance information provided is historical information of the MDT Small Cap Growth Fund. Small company stocks may be less liquid and subject to greater price volatility than large capitalization stocks.

2 The Russell 2000® Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. The index is unmanaged and investments can not be made directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

MARKET OVERVIEW

Over the 12-month period ending July 31, 2008 domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® Index, ⁴ which represents the performance of the 3,000 largest U.S. companies by market capitalization, finished the period down 10.32%. Small cap stocks had the best relative results as demonstrated by the (6.71)% return of the Russell 2000 ^® Index, ⁵ which exceeded the (10.10)% and (11.81)% results for the Russell Mid-Cap ^® Index ⁶ and the Russell Top 200 ^® Index, 7 respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000 ^® Growth Index ⁸ returning (6.11)% as compared to (14.75)% for the Russell 3000 Value ^® Index. ⁹

4 The Russell 3000 ^® Index offers investors access to the broad U.S. equity universe representing approximately 98% of the U.S. market. The Russell 3000 is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The index is unmanaged and investments cannot be made directly in an index.

5 The Russell 2000 ^® Index measures the performance of the 2,000 smallest companies in the Russell 3000 ^® Index, which represents approximately 10% of the total market capitalization of the Russell 3000 ^® Index. The index is unmanaged and investments cannot be made directly in an index.

6 The Russell Midcap ^® Index measures the performance of the 800 smallest companies in the Russell 1000 ^® Index, which represent approximately 31% of the total market capitalization of the Russell 1000 ^® Index. The index is unmanaged and investments cannot be made directly in an index.

7 Russell Top 200 ^® Index measures the performance of the 200 largest companies in the Russell 1000 ^® Index, which represents approximately 69% of the total market capitalization of the Russell 1000 ^® Index. The index is unmanaged and investments cannot be made directly in an index.

8 The Russell 3000 ® Growth Index measures the performance of those Russell 3000® Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000 ^® Growth or the Russell 2000 ^® Growth indexes. The index is unmanaged and investments cannot be made directly in an index.

9 The Russell 3000 ^® Value Index measures the performance of those Russell 3000® Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000 ^® Value or the Russell 2000 ^® Value indexes. The index is unmanaged and investments cannot be made directly in an index.

The best performing sectors during the period as measured by the Russell ^® 3000 Index were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

Fund Performance

The most significant positive factor in the fund's performance relative to the Russell 2000 ^® Growth Index was its stock selection in the Consumer Discretionary sector. Additionally, the fund's stock selection in the Materials sector and overweight in the Industrials sector contributed modestly to relative performance. The most significant negative factor in the fund's performance relative to the Russell 2000 ^® Growth Index was its stock selection in the Industrials, Health Care and Financials sectors. The fund's underweight relative to the benchmark in the Health Care sector also detracted significantly from relative performance.

Individual stocks contributing to the fund's performance relative to the Russell 2000 ^® Growth Index included: Compass Minerals International , Lindsay Corporation , a manufacturer of agricultural irrigation systems, Perrigo Company , a pharmaceuticals distributor, Blue Coat Systems, Inc. , a software services company and Tupperware Corporation ..

Individual stocks detracting from the fund's performance relative to the Russell 2000 ^® Growth Index included: Perini Corporation , a general contracting and construction firm, FCStone Group, Inc. , an integrated commodity risk management company, Crocs, Inc. , Apogee Enterprises , a designer of glass building materials and Bucyrus International Inc. , a mining equipment manufacturer.

GROWTH OF A $10,000 INVESTMENT - CLASS A SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Small Cap Growth Fund (Class A Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 2000 ^® Growth Index (Russell 2000 ^® Growth) ² and the Lipper Small-Cap Growth Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(15.11	)%
Start of Performance (9/15/2005)	3.34	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum sales charge of 5.50%.

1 Represents a hypothetical investment of $10,000 in the fund after deducting the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge = $9,450). The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 2000 ^® Growth and the Lipper Small-Cap Growth Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 2000 ^® Growth is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

GROWTH OF A $10,000 INVESTMENT - CLASS B SHARES

The Fund's Class B Shares commenced operation on March 13, 2008. The Fund offers three other classes of shares: Institutional Shares, Class A Shares and Class C Shares. For the period prior to commencement of operations of Class B Shares, the performance information shown is for the Fund's Institutional Shares, adjusted to reflect the expenses of Class B Shares. The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Small Cap Growth Fund (Class B Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 2000 ^® Growth Index (Russell 2000 ^® Growth) ² and the Lipper Small-Cap Growth Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(15.84	)%
Start of Performance (9/15/2005)	3.31	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum contingent deferred sales charge (CDSC) of 5.50%, as applicable.

1 Represents a hypothetical investment of $10,000 in the fund. The maximum CDSC is 5.50% on any redemption less than one year from the purchase date. The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 1000 ^® Growth and the Lipper Small-Cap Growth Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 2000 ^® Growth is not adjusted to reflect sales charges, expenses, or other fees that the SEC requires to be reflected in the fund's performance. The index is unmanaged and, unlike the Fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

GROWTH OF A $10,000 INVESTMENT - CLASS C SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Small Cap Growth Fund (Class C Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 2000 ^® Growth Index (Russell 2000 ^® Growth) ² and the Lipper Small-Cap Growth Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(11.78	)%
Start of Performance (9/15/2005)	4.59	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum contingent deferred sales charge (CDSC) of 1.00%, as applicable.

1 Represents a hypothetical investment of $10,000 in the fund. The maximum CDSC is 1.00% on any redemption less than one year from the purchase date. The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 2000® Growth and the Lipper Small-Cap Growth Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 2000® Growth is not adjusted to reflect sales charges, expenses, or other fees that the SEC requires to be reflected in the fund's performance. The index is unmanaged and, unlike the Fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund's industry composition ¹ was as follows:

Industry	Percentage of Total Net Assets
Undesignated Consumer Cyclicals	7.6	%
Software Packaged/Custom	5.6	%
Clothing Stores	4.8	%
Electrical Equipment	3.8	%
Restaurant	3.7	%
Electronic Instruments	3.0	%
Oil Well Supply	3.0	%
Oil Service, Explore & Drill	2.9	%
Internet Services	2.8	%
Defense Aerospace	2.7	%
Specialty Chemicals	2.6	%
Auto Original Equipment Manufacturers	2.4	%
Shoes	2.3	%
Medical Supplies	2.0	%
Apparel	2.0	%
Securities Brokerage	1.9	%
Services to Medical Professionals	1.8	%
Metal Fabrication	1.8	%
Miscellaneous Machinery	1.7	%
Personal Loans	1.7	%
Specialty Machinery	1.6	%
Industrial Machinery	1.6	%
Electrical Test/Measuring Equipment	1.5	%
Medical Technology	1.5	%
Home Health Care	1.4	%
Printed Circuit Boards	1.4	%
Agricultural Machinery	1.3	%
Home Products	1.3	%
Generic Drugs	1.3	%
Other Communications Equipment	1.3	%
Personnel Agency	1.3	%
Industry	Percentage of Total Net Assets
Multi-Industry Transportation	1.2	%
Maritime	1.2	%
Machine Tools	1.1	%
Psychiatric Centers	1.1	%
Defense Electronics	1.1	%
Metal Containers	1.1	%
Telecommunications Equipment & Services	1.0	%
Other 2	15.6	%
Cash Equivalents 3	1.2	%
Other Assets and Liabilities--Net 4	(0.2	)%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's total net assets have been aggregated under the designation "Other."

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares				Value
		COMMON STOCKS--99.0%
		Agricultural Machinery--1.3%
16,130		Lindsay Manufacturing Co.	$	1,488,315
		Aluminum--0.5%
10,358		Kaiser Aluminum Corp.		546,384
		Apparel--2.0%
21,356	1	G-III Apparel Group Ltd.		342,337
34,266	1	Maidenform Brands, Inc.		524,612
44,664	1	True Religion Apparel, Inc.		1,154,118
9,193	1	Volcom, Inc.		164,922
		TOTAL		2,185,989
		Auto Original Equipment Manufacturers--2.4%
35,556	1	Fuel Systems Solutions, Inc.		1,330,506
32,689		Sun Hydraulics Corp.		1,346,787
		TOTAL		2,677,293
		Baking--0.5%
19,960		Flowers Foods, Inc.		600,197
		Beer--0.1%
4,530		Diamond Foods, Inc.		110,170
		Biotechnology--0.9%
25,740	1	Martek Biosciences Corp.		968,081
		Building Materials--0.8%
50,968		Apogee Enterprises, Inc.		880,727
		Cement--0.2%
5,717	1	Astec Industries, Inc.		182,487
		Clothing Stores--4.8%
847	1	Aeropostale, Inc.		27,316
27,105		Buckle, Inc.		1,395,094
50,316		Cato Corp., Class A		900,153
12,971	1	Children's Place Retail Stores, Inc.		493,547
14,826	1	Citi Trends, Inc.		342,925
40,042	1	Fossil, Inc.		1,072,325
29,964	1	Gymboree Corp.		1,120,654
		TOTAL		5,352,014
Shares				Value
		COMMON STOCKS--continued
		Commodity Chemicals--0.8%
11,523		Compass Minerals International, Inc.	$	871,139
		Computer Networking--0.1%
10,902	1	Radiant Systems, Inc.		124,392
		Computer Services--0.9%
22,077	1	Manhattan Associates, Inc.		541,770
14,846		Syntel, Inc.		489,176
		TOTAL		1,030,946
		Construction Machinery--0.1%
2,495		Manitowoc, Inc.		65,768
		Contracting--0.8%
31,131	1	Perini Corp.		851,744
		Cosmetics & Toiletries--0.9%
45,093		Inter Parfums, Inc.		675,493
49,875	1	Sally Beauty Holdings, Inc.		369,075
		TOTAL		1,044,568
		Defense Aerospace--2.7%
22,833	1	Teledyne Technologies, Inc.		1,436,196
29,872	1	TransDigm Group, Inc.		1,099,588
7,847		Triumph Group, Inc.		415,577
		TOTAL		2,951,361
		Defense Electronics--1.1%
24,252	1	FLIR Systems, Inc.		988,026
13,014	1	La Barge, Inc.		192,347
		TOTAL		1,180,373
		Diversified Leisure--0.8%
29,329	1	Bally Technologies, Inc.		932,369
		Drug Stores--0.1%
1,644		Longs Drug Stores Corp.		76,857
		Electric & Electrical Original Equipment Manufacturers--0.1%
963	1	Energy Conversion Devices, Inc.		67,343
		Electrical Equipment--3.8%
53,304	1	GrafTech International Ltd.		1,249,979
21,840		Houston Wire & Cable Co.		429,811
21,215	1	Powell Industries, Inc.		1,113,787
27,238		Robbins & Myers, Inc.		1,382,873
		TOTAL		4,176,450
Shares				Value
		COMMON STOCKS--continued
		Electrical Test/Measuring Equipment--1.5%
25,880		Badger Meter, Inc.	$	1,457,820
5,756		MTS Systems Corp.		241,119
		TOTAL		1,698,939
		Electronic Components--0.6%
39,544	1	Volterra Semiconductor Corp.		648,522
		Electronic Instruments--3.0%
9,016		Analogic Corp.		659,791
20,915	1	Axsys Technologies, Inc.		1,535,998
90,704	1	Cogent, Inc.		919,739
4,661	1	OYO Geospace Corp.		219,160
		TOTAL		3,334,688
		Ethical Drugs--0.4%
11,645	1	Matrixx Initiatives, Inc.		214,734
12,691	1	Sciele Pharma, Inc.		236,687
2,710	1	Sucampo Pharmaceuticals, Inc., Class A		32,520
		TOTAL		483,941
		Financial Services--0.1%
9,926	1	Cardtronics, Inc.		85,364
		Food Wholesaling--0.8%
21,413		Nash Finch Co.		845,171
		Furniture--0.1%
3,606		Aaron Rents, Inc.		99,057
		Generic Drugs--1.3%
40,676		Perrigo Co.		1,433,015
		Home Health Care--1.4%
22,458	1	Amedisys, Inc.		1,440,007
3,551	1	LHC Group, Inc.		99,499
		TOTAL		1,539,506
		Home Products--1.3%
38,129		Tupperware Brands Corp.		1,487,031
		Industrial Machinery--1.6%
7,905		Gorman Rupp Co.		352,089
12,737		Valmont Industries, Inc.		1,361,713
		TOTAL		1,713,802
Shares				Value
		COMMON STOCKS--continued
		Internet Services--2.8%
31,813	1	Bidz.com, Inc.	$	291,089
14,871	1	NetFlix, Inc.		459,365
24,728	1	Overstock.com, Inc.		439,169
9,554	1	Priceline.com, Inc.		1,098,232
120,469	1	RealNetworks, Inc.		827,622
		TOTAL		3,115,477
		Leasing--0.4%
25,898	1	CAI International, Inc.		472,897
		Machine Tools--1.1%
26,863	1	AZZ, Inc.		1,229,520
		Maritime--1.2%
50,359		TAL International Group, Inc.		1,274,083
		Medical Supplies--2.0%
22,839	1	Kensey Nash Corp.		793,198
35,648	1	Merit Medical Systems, Inc.		720,446
46,683	1	PetMed Express, Inc.		676,903
		TOTAL		2,190,547
		Medical Technology--1.5%
33,888	1	Cyberonics, Inc.		935,987
4,663	1	Synovis Life Technologies, Inc.		96,244
28,076	1	Vnus Medical Technologies, Inc.		571,627
1,072	1	Zoll Medical Corp.		33,768
		TOTAL		1,637,626
		Metal Containers--1.1%
17,068		Greif, Inc., Class A		1,038,417
2,658		Silgan Holdings, Inc.		140,396
		TOTAL		1,178,813
		Metal Fabrication--1.8%
21,367		Barnes Group, Inc.		482,681
23,285		CIRCOR International, Inc.		1,386,855
5,885		NN, Inc.		78,388
		TOTAL		1,947,924
		Miscellaneous Communications--0.8%
39,268		NTELOS Holdings Corp.		938,898
Shares				Value
		COMMON STOCKS--continued
		Miscellaneous Food Products--0.6%
13,588	1	Overhill Farms, Inc.	$	130,173
12,411		The Anderson's, Inc.		564,080
		TOTAL		694,253
		Miscellaneous Machinery--1.7%
10,472		Graham Corp.		932,008
12,657		Nordson Corp.		894,344
869		Regal Beloit Corp.		36,281
		TOTAL		1,862,633
		Multi-Industry Transportation--1.2%
55,475		Pacer International, Inc.		1,316,976
		Natural Gas Production--0.3%
14,981	1	Natural Gas Services Group, Inc.		384,412
		Oil Service, Explore & Drill--2.9%
38,807	1	Complete Production Services, Inc.		1,235,615
12,820	1	Dawson Geophysical Co.		841,377
12,301	1	Gulfmark Offshore, Inc.		617,264
7,455	1	T-3 Energy Services, Inc.		511,189
		TOTAL		3,205,445
		Oil Well Supply--3.0%
30,555		Gulf Island Fabrication, Inc.		1,355,114
7,078		Lufkin Industries, Inc.		631,358
23,337	1	Oil States International, Inc.		1,280,735
		TOTAL		3,267,207
		Other Communications Equipment--1.3%
87,654	1	Syniverse Holdings, Inc.		1,419,995
		Personal Loans--1.7%
5,586		Cash America International, Inc.		235,506
29,327	1	Ezcorp, Inc., Class A		527,299
33,398	1	World Acceptance Corp.		1,094,118
		TOTAL		1,856,923
		Personnel Agency--1.3%
20,987	1	Aecom Technology Corp.		597,500
43,888	1	Kenexa Corp.		820,267
		TOTAL		1,417,767
Shares				Value
		COMMON STOCKS--continued
		Photo-Optical Computer-Equipment--0.2%
14,803		Cognex Corp.	$	279,037
		Printed Circuit Boards--1.4%
164,220	1	PMC-Sierra, Inc.		1,188,953
30,496	1	TTM Technologies		343,080
		TOTAL		1,532,033
		Printing--0.5%
17,123	1	Consolidated Graphics, Inc.		573,620
		Psychiatric Centers--1.1%
34,658	1	Psychiatric Solutions, Inc.		1,213,723
		Railroad--0.4%
8,014		Wabtec Corp.		444,777
		Recreational Vehicles--0.7%
17,630		Polaris Industries, Inc., Class A		754,564
		Restaurant--3.7%
94	1	Buffalo Wild Wings, Inc.		3,095
42,652	1	CEC Entertainment, Inc.		1,486,849
18,080		CKE Restaurants, Inc.		221,842
51,968	1	California Pizza Kitchen, Inc.		678,182
9,357	1	Green Mountain Coffee, Inc.		340,127
27,659	1	Panera Bread Co.		1,385,716
		TOTAL		4,115,811
		Savings and Loan--0.4%
28,626	1	Investors Bancorp, Inc.		435,401
		Securities Brokerage--1.9%
34,539	1	Fcstone Group, Inc.		665,221
49,314	1	Interactive Brokers Group, Inc., Class A		1,383,751
		TOTAL		2,048,972
		Semiconductor Manufacturing--0.8%
42,095		Micrel, Inc.		400,744
5,048	1	NVE Corp.		144,373
9,275	1	NetLogic Microsystems, Inc.		296,893
		TOTAL		842,010
		Semiconductor Manufacturing Equipment--0.5%
39,099	1	Ultratech, Inc.		576,319
Shares				Value
		COMMON STOCKS--continued
		Services to Medical Professionals--1.8%
27,903	1	Athenahealth, Inc.	$	842,671
6,216	1	Centene Corp.		138,679
70,809	1	eResearch Technology, Inc.		1,030,979
		TOTAL		2,012,329
		Shoes--2.3%
9,579	1	Deckers Outdoor Corp.		1,082,523
46,391	1	Skechers USA, Inc., Class A		876,790
21,957		Wolverine World Wide, Inc.		586,911
		TOTAL		2,546,224
		Software Packaged/Custom--5.6%
4,099	1	Advent Software, Inc.		178,470
28,171	1	IGATE Capital Corp.		277,484
26,051	1	PC-Tel, Inc.		271,712
12,160	1	Progress Software Corp.		357,869
36,521	1	S1 Corp.		296,551
19,009	1	SPSS, Inc.		628,247
47,291	1	Solera Holdings, Inc.		1,370,966
71,672	1	Websense, Inc.		1,495,795
109,113	1	Wind River Systems, Inc.		1,279,895
		TOTAL		6,156,989
		Specialty Chemicals--2.6%
32,543		Koppers Holdings, Inc.		1,406,183
22,330		Minerals Technologies, Inc.		1,440,508
		TOTAL		2,846,691
		Specialty Machinery--1.6%
7,678		Sauer-Danfoss, Inc.		225,349
33,278		Woodward Governor Co.		1,497,510
		TOTAL		1,722,859
		Specialty Retailing--0.1%
5,215	1	Lumber Liquidators, Inc.		78,121
		Telecommunications Equipment & Services--1.0%
4,867	1	Neutral Tandem, Inc.		84,102
70,347	1	Premiere Global Services, Inc.		1,062,943
		TOTAL		1,147,045
Shares				Value
		COMMON STOCKS--continued
		Telephone Utility--0.1%
40,968	1	Cincinnati Bell, Inc.	$	159,775
		Undesignated Consumer Cyclicals--7.6%
2,980	1	American Public Education, Inc.		135,381
27,820	1	CoStar Group, Inc.		1,387,940
41,944	1	Corinthian Colleges, Inc.		660,618
26,533	1	Exponent, Inc.		810,318
25,318	1	Hackett Group, Inc.		161,529
69,821	1	Navigant Consulting, Inc.		1,290,292
38,508		Nu Skin Enterprises, Inc., Class A		622,289
35,209	1	Parexel International Corp.		1,029,159
819		Strayer Education, Inc.		182,391
65,906	1	Sykes Enterprises, Inc.		1,163,900
16,337		Watson Wyatt & Co. Holdings		946,566
		TOTAL		8,390,383
		Undesignated Technology--0.2%
7,525	1	American Reprographics Co.		120,475
6,508	1	RightNow Technologies, Inc.		104,714
		TOTAL		225,189
		TOTAL COMMON STOCKS (IDENTIFIED COST $105,358,375)		109,247,271
		MUTUAL FUND--1.2%
1,320,459	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)		1,320,459
		TOTAL INVESTMENTS--100.2% (IDENTIFIED COST $106,678,834) 4		110,567,730
		OTHER ASSETS AND LIABILITIES - NET--(0.2)% 5		(224,039	)
		TOTAL NET ASSETS--100%	$	110,343,691

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $107,177,572.

5 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $1,320,459 of investments in an affiliated issuer (Note 5) (identified cost $106,678,834)			$	110,567,730
Cash				30,561
Income receivable				15,184
Receivable for investments sold				2,373,411
Receivable for shares sold				1,037,712
TOTAL ASSETS				114,024,598
Liabilities:
Payable for investments purchased	$	3,058,988
Payable for shares redeemed		439,291
Payable for distribution services fee (Note 5)		10,500
Payable for shareholder services fee (Note 5)		23,867
Accrued expenses		148,261
TOTAL LIABILITIES				3,680,907
Net assets for 9,506,364 shares outstanding			$	110,343,691
Net Assets Consist of:
Paid-in capital			$	180,553,606
Net unrealized appreciation of investments and translation of assets and liabilities in foreign currency				3,889,239
Accumulated net realized loss on investments				(74,098,140	)
Accumulated net investment income (loss)				(1,014	)
TOTAL NET ASSETS			$	110,343,691
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($62,208,790 ÷ 5,336,651 shares outstanding), no par value, unlimited shares authorized				$11.66
Offering price per share				$11.66
Redemption proceeds per share				$11.66
Class A Shares:
Net asset value per share ($31,874,470 ÷ 2,755,032 shares outstanding), no par value, unlimited shares authorized				$11.57
Offering price per share (100/94.50 of $11.57) 1				$12.24
Redemption proceeds per share				$11.57
Class B Shares:
Net asset value per share ($9,810,509 ÷ 845,020 shares outstanding), no par value, unlimited shares authorized				$11.61
Offering price per share				$11.61
Redemption proceeds per share (94.50/100 of $11.61) 1				$10.97
Class C Shares:
Net asset value per share ($6,449,922 ÷ 569,661 shares outstanding), no par value, unlimited shares authorized				$11.32
Offering price per share				$11.32
Redemption proceeds per share (99.00/100 of $11.32) 1				$11.21

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $40,996 received from an affiliated issuer (Note 5))							$	316,578
Interest								6,810
TOTAL INCOME								323,388
Expenses:
Investment adviser fee (Note 5)				$	645,822
Administrative personnel and services fee (Note 5)					245,410
Custodian fees					28,138
Transfer and dividend disbursing agent fees and expenses					270,590
Directors'/Trustees' fees					1,381
Auditing fees					29,700
Legal fees					17,137
Portfolio accounting fees					85,618
Distribution services fee--Class B Shares (Note 5)					37,285
Distribution services fee--Class C Shares (Note 5)					23,135
Shareholder services fee--Class A Shares (Note 5)					30,146
Shareholder services fee--Class B Shares (Note 5)					12,429
Shareholder services fee--Class C Shares (Note 5)					6,703
Account administration fee--Class A Shares					123
Account administration fee--Class C Shares					104
Share registration costs					78,349
Printing and postage					36,808
Insurance premiums					4,759
Miscellaneous					3,486
TOTAL EXPENSES					1,557,123
Waivers and Reimbursement (Note 5):
Waiver/reimbursement of investment adviser fee	$	(556,522	)
Waiver of administrative personnel and services fee		(48,290	)
TOTAL WAIVERS AND REIMBURSEMENT					(604,812	)
Net expenses								952,311
Net investment income (loss)								(628,923	)
Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions:
Net realized loss on investments								(11,971,658	)
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign currency								9,435,934
Net realized and unrealized loss on investments and foreign currency transactions								(2,535,724	)
Change in net assets resulting from operations							$	(3,164,647	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(628,923	)	$	(58,015	)
Net realized gain (loss) on investments		(11,971,658	)		239,622
Net change in unrealized appreciation/depreciation of investments and translation of assets and liabilities in foreign currency		9,435,934			617,453
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(3,164,647	)		799,060
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(155,811	)		- --
Class A Shares		(11,057	)		- --
Class C Shares		(6,609	)		- --
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(173,477	)		- --
Share Transactions:
Proceeds from sale of shares		73,388,956			16,603,113
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Technology Fund		44,263,203			- --
Net asset value of shares issued to shareholders in payment of distributions declared		146,644			- --
Cost of shares redeemed		(21,595,763	)		(655,023	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		96,203,040			15,948,090
Change in net assets		92,864,916			16,747,150
Net Assets:
Beginning of period		17,478,775			731,625
End of period (including accumulated net investment income (loss) of $(1,014) and $0, respectively)	$	110,343,691		$	17,478,775

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine portfolios. The financial statements included herein are only those of Federated MDT Small Cap Growth Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Institutional Shares, Class A Shares, Class B Shares and Class C Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The financial highlights of the Institutional Shares are presented separately. The primary investment objective of the Fund is long-term capital appreciation.

MDT Small Cap Growth Fund (the "Predecessor Fund") was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced operations on September 15, 2005.

Effective March 13, 2008, the Fund began offering Class B Shares.

On March 14, 2008, the Fund received assets from Federated Technology Fund as the result of a tax-free reorganization, as follows:

Shares of the Fund Issued	Federated Technology Fund Net Assets Received	Unrealized Depreciation 1		Net Assets of the Fund Immediately Prior to Combination	Net Assets of Federated Technology Fund Immediately Prior to Combination	Net Assets of the Fund Immediately After Combination
3,954,962	$44,263,203	$(6,136,744	)	$40,850,828	$44,263,203	$85,114,031

1 Unrealized Depreciation is included in the Federated Technology Fund Net Assets Received amount shown above.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the "Trustees").
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conduct its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses,and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as account administration, distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Foreign Currency Translation

The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies (FCs) are translated into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. 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.

Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	4,827,064		$	59,077,425		1,263,095		$	15,852,998
Shares issued to shareholders in payment of distributions declared	10,017			133,229		- --			- --
Shares redeemed	(747,875	)		(8,924,748	)	(37,007	)		(478,571	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	4,089,206		$	50,285,906		1,226,088		$	15,374,427
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	1,014,861		$	12,172,465		38,516		$	455,091
Shares issued in connection with tax-free transfer of assets from Federated Technology Fund	1,965,099			21,986,533		- --			- --
Shares issued to shareholders in payment of distributions declared	766			10,117		- --			- --
Shares redeemed	(266,794	)		(3,116,808	)	(12,243	)		(147,029	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	2,713,932		$	31,052,307		26,273		$	308,062
	Period Ended 7/31/2008 1					Year Ended 7/31/2007
Class B Shares:	Shares			Amount		Shares			Amount
Shares sold	12,136		$	147,178		- --		$	- --
Shares issued in connection with tax-free transfer of assets from Federated Technology Fund	1,540,719			17,345,297		- --			- --
Shares redeemed	(707,835	)		(8,399,050	)	- --			- --
NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS	845,020		$	9,093,425		- --		$	- --
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	164,693		$	1,991,888		24,628		$	295,024
Shares issued in connection with tax-free transfer of assets from Federated Technology Fund	449,144			4,931,373		- --			- --
Shares issued to shareholders in payment of distributions declared	254			3,298		- --			- --
Shares redeemed	(99,359	)		(1,155,157	)	(2,775	)		(29,423	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	514,732		$	5,771,402		21,853		$	265,601
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	8,162,890		$	96,203,040		1,274,214		$	15,948,090

1 Reflects operations for the period from March 13, 2008 (date of initial investment) to July 31, 2008.

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due in part to differing treatments for expiration of capital loss carryforwards, net operating loss, merger wash sale loss deferrals and capital loss carryforwards acquired in merger.

For the year ended July 31, 2008, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gain (Loss)
$61,485,578	$627,909	$(62,113,487	)

Net investment income (loss), net realized gains (losses) and net assets were not affected by this reclassification.

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2008 and 2007, was as follows:

	2008	2007
Ordinary income 1	$149,972	$--
Long-term capital gains	$ 23,505	$--

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Net unrealized appreciation	$	3,390,501
Capital loss carryforwards and deferrals	$	(73,600,416	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $107,177,572. The net unrealized appreciation of investments for federal tax purposes excluding net unrealized appreciation from foreign currency transactions was $3,390,158. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $8,181,863 and net unrealized depreciation from investments for those securities having an excess of cost over value of $4,791,705.

At July 31, 2008, the Fund had a capital loss carryforward of $62,019,299 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the 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. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year	Expiration Amount
2009	$59,356,831
2010	$ 2,459,915
2016	$ 202,553

As a result of the tax-free transfer of assets from Federated Technology Fund, the use of certain capital loss carryforwards listed above may be limited.

Capital loss carryforwards of $436,150,066 expired during the year ended July 31, 2008.

Under current tax regulations, capital losses on securities transactions and foreign currency losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post October losses of $11,580,103 and $1,014 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 1.15% of the Fund's average daily net assets. Prior to December 8, 2006, the Adviser received an annual investment adviser fee equal to 1.25% of the Fund's average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for each Class of the Fund based on average daily net assets:

Share Class Name	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.80%
Class A Shares	2.05%
Class C Shares	2.80%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment and subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any additional portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the Adviser waived $555,381 of its fee.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement (the "Agreement"), provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. During the period from July 15, 2006 through December 8, 2006, the administrator contractually agreed to waive a portion of its fee which it would otherwise be entitled to receive from the Fund under the Agreement. The level of fees payable by the Fund to FAS for the period will not exceed the level of fees which the Fund would have paid during the period to its previous service provider under its pervious administrative services contract. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the net fee paid to FAS was 0.351% of average daily net assets of the Fund. The Fund currently accrues the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above. FAS waived $48,290 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act which became effective on December 11, 2006. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class B Shares	0.75%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

Subject to terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $7,029 of fees paid by the Fund. For the year ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

For the year ended July 31, 2008, FSC retained $4,203 in sales charges from the sale of Class A Shares. FSC also retained $1,779 of contingent deferred sales charges relating to redemptions of Class C. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the year ended July 31, 2008, FSSC received $1,329 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares, Class B Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.50%, 1.75%, 2.50% and 2.50%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain of the Officers and Trustees of the Fund are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $1,141. Transactions with the affiliated company during the year ended July 31, 2008 were as follows:

Affiliate	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	317,904	57,405,067	56,402,512	1,320,459	$1,320,459	$40,996

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	195,725,294
Sales	$	118,959,234

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds, and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2008, the amount of long-term capital gains designated by the Fund was $23,505.

For the fiscal year ended July 31, 2008, 11.83% of total ordinary dividends paid by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended July 31, 2008, 12.50% qualify for the dividend received deduction available to corporate shareholders.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND
SHAREHOLDERS OF FEDERATED MDT SMALL CAP GROWTH FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Small Cap Growth Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Small Cap Growth Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc.; (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of FederatedServices Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory Contract - May 2008

FEDERATED MDT SMALL CAP GROWTH FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds ( e.g. , institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For the one-year period ending December 31, 2007, the Fund's performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same period, the Fund outperformed its benchmark index for the one-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT Small CapGrowth Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R775
Cusip 31421R767
Cusip 31421R676

37313 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Small Cap Growth Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$13.02		$10.61		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.11	) 3	(0.13	) 3	(0.13	) 3
Net realized and unrealized gain (loss) on investments and foreign currency transactions	(1.18	)	2.54		0.74
TOTAL FROM INVESTMENT OPERATIONS	(1.29	)	2.41		0.61
Less Distributions:
Distributions from net realized gain on investments	(0.07	)	- --		- --
Net Asset Value, End of Period	$11.66		$13.02		$10.61
Total Return 4	(9.99	)%	22.71	%	6.10	%
Ratios to Average Net Assets:
Net expenses	1.50	%	1.50	%	1.77	% 5
Net investment income (loss)	(0.91	)%	(1.03	)%	(1.25	)% 5
Expense waiver/reimbursement 6	1.09	%	5.58	%	25.65	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$62,209		$16,245		$227
Portfolio turnover	212	%	157	%	157	%

1 MDT Small Cap Growth Fund (the "Predecessor Fund") was reorganized into Federated MDT Small Cap Growth Fund (the "Fund") as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual	$1,000	$ 981.50	$7.39
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,017.40	$7.52

1 Expenses are equal to the Fund's annualized net expense ratio of 1.50%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half-year period).

Management's Discussion of Fund Performance

The fund's total return, at net asset value, for the fiscal year ended July 31, 2008 was (9.99)% for Institutional Shares. ¹ The total return of the Russell 2000 ^® Growth Index ² was (3.76)% and the total return of the Lipper Small-Cap Growth Funds Index ³ was (11.20)% for the same period. The fund's total return for the fiscal year reflected actual cash flows, transaction costs and other expenses which were not reflected in the total return of the Russell index.

1 The fund is the successor to the MDT Small Cap Growth Fund pursuant to a reorganization that took place on December 8, 2006. Prior to that date, the fund had no investment operations. Accordingly, the performance information provided is historical information of the MDT Small Cap Growth Fund. Small company stocks may be less liquid and subject to greater price volatility than large capitalization stocks.

2 The Russell 2000® Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. The index is unmanaged and investments cannot be made directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

MARKET OVERVIEW

Over the 12-month period ending July 31, 2008 domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® Index, ⁴ which represents the performance of the 3,000 largest U.S. companies by market capitalization, finished the period down 10.32%. Small cap stocks had the best relative results as demonstrated by the (6.71)% return on the Russell 2000 ^® Index, ⁵ which exceeded the (10.10)% and (11.81)% results for the Russell Midcap ^® Index ⁶ and the Russell Top 200 ^® Index, ⁷ respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000 ^® Growth Index ⁸ returning (6.11)% as compared to (14.75)% for the Russell 3000 Value ^® Index. ⁹

The best performing sectors during the period as measured by the Russell 3000 ^® Index were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

4 The Russell 3000® Index offers investors access to the broad U.S. equity universe representing approximately 98% of the U.S. market. The Russell 3000 is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. The index is unmanaged and investments cannot be made directly in an index.

5 The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index, which represents approximately 10% of the total market capitalization of the Russell 3000® Index. The index is unmanaged and investments cannot be made directly in an index.

6 The Russell Midcap® Index measures the performance of the 800 smallest companies in the Russell 1000® Index, which represent approximately 31% of the total market capitalization of the Russell 1000® Index. The index is unmanaged and investments cannot be made directly in an index.

7 Russell Top 200® Index measures the performance of the 200 largest companies in the Russell 1000® Index, which represents approximately 69% of the total market capitalization of the Russell 1000® Index. The index is unmanaged and investments cannot be made directly in an index.

8 The Russell 3000® Growth Index measures the performance of those Russell 3000® Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000® Growth or the Russell 2000® Growth indexes. The index is unmanaged and investments cannot be made directly in an index.

9 The Russell 3000® Value Index measures the performance of those Russell 3000® Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000® Value or the Russell 2000® Value indexes. The index is unmanaged and investments cannot be made directly in an index.

FUND PERFORMANCE

The most significant positive factor in the fund's performance relative to the Russell 2000 ^® Growth Index was its stock selection in the Consumer Discretionary sector. Additionally, the fund's stock selection in the Materials sector and overweight in the Industrials sector contributed modestly to relative performance. The most significant negative factor in the fund's performance relative to the Russell 2000 ^® Growth Index was its stock selection in the Industrials, Health Care and Financials sectors. The fund's underweight relative to the benchmark in the Health Care sector also detracted significantly from relative performance.

Individual stocks contributing to the fund's performance relative to the Russell 2000 ^® Growth Index included: Compass Minerals International, Lindsay Corporation, a manufacturer of agricultural irrigation systems, Perrigo Company, a pharmaceuticals distributor, Blue Coat Systems, Inc., a software services company and Tupperware Corporation.

Individual stocks detracting from the fund's performance relative to the Russell 2000 ^® Growth Index included: Perini Corporation, a general contracting and construction firm, FCStone, Group Inc., an integrated commodity risk management company, Crocs Inc., Apogee Enterprises, a designer of glass building materials and Bucyrus International, Inc., a mining equipment manufacturer.

GROWTH OF A $25,000 INVESTMENT - INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000 ¹ in the Federated MDT Small Cap Growth Fund (Institutional Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 2000 ^® Growth Index (Russell 2000 ^® Growth) ² and the Lipper Small-Cap Growth Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(9.99	)%
Start of Performance (9/15/2005)	5.67	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 Represents a hypothetical investment of $25,000 in the Fund. The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 2000® Growth and the Lipper Small-Cap Growth Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 2000® Growth is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund's industry composition ¹ was as follows:

Industry	Percentage of Total Net Assets
Undesignated Consumer Cyclicals	7.6	%
Software Packaged/Custom	5.6	%
Clothing Stores	4.8	%
Electrical Equipment	3.8	%
Restaurant	3.7	%
Electronic Instruments	3.0	%
Oil Well Supply	3.0	%
Oil Service, Explore & Drill	2.9	%
Internet Services	2.8	%
Defense Aerospace	2.7	%
Specialty Chemicals	2.6	%
Auto Original Equipment Manufacturers	2.4	%
Shoes	2.3	%
Medical Supplies	2.0	%
Apparel	2.0	%
Securities Brokerage	1.9	%
Services to Medical Professionals	1.8	%
Metal Fabrication	1.8	%
Miscellaneous Machinery	1.7	%
Personal Loans	1.7	%
Specialty Machinery	1.6	%
Industrial Machinery	1.6	%
Electrical Test/Measuring Equipment	1.5	%
Medical Technology	1.5	%
Home Health Care	1.4	%
Printed Circuit Boards	1.4	%
Agricultural Machinery	1.3	%
Home Products	1.3	%
Generic Drugs	1.3	%
Other Communications Equipment	1.3	%
Personnel Agency	1.3	%
Industry	Percentage of Total Net Assets
Multi-Industry Transportation	1.2	%
Maritime	1.2	%
Machine Tools	1.1	%
Psychiatric Centers	1.1	%
Defense Electronics	1.1	%
Metal Containers	1.1	%
Telecommunications Equipment & Services	1.0	%
Other 2	15.6	%
Cash Equivalents 3	1.2	%
Other Assets and Liabilities--Net 4	(0.2	)%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's total net assets have been aggregated under the designation "Other."

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares				Value
		COMMON STOCKS--99.0%
		Agricultural Machinery--1.3%
16,130		Lindsay Manufacturing Co.	$	1,488,315
		Aluminum--0.5%
10,358		Kaiser Aluminum Corp.		546,384
		Apparel--2.0%
21,356	1	G-III Apparel Group Ltd.		342,337
34,266	1	Maidenform Brands, Inc.		524,612
44,664	1	True Religion Apparel, Inc.		1,154,118
9,193	1	Volcom, Inc.		164,922
		TOTAL		2,185,989
		Auto Original Equipment Manufacturers--2.4%
35,556	1	Fuel Systems Solutions, Inc.		1,330,506
32,689		Sun Hydraulics Corp.		1,346,787
		TOTAL		2,677,293
		Baking--0.5%
19,960		Flowers Foods, Inc.		600,197
		Beer--0.1%
4,530		Diamond Foods, Inc.		110,170
		Biotechnology--0.9%
25,740	1	Martek Biosciences Corp.		968,081
		Building Materials--0.8%
50,968		Apogee Enterprises, Inc.		880,727
		Cement--0.2%
5,717	1	Astec Industries, Inc.		182,487
		Clothing Stores--4.8%
847	1	Aeropostale, Inc.		27,316
27,105		Buckle, Inc.		1,395,094
50,316		Cato Corp., Class A		900,153
12,971	1	Children's Place Retail Stores, Inc.		493,547
14,826	1	Citi Trends, Inc.		342,925
40,042	1	Fossil, Inc.		1,072,325
29,964	1	Gymboree Corp.		1,120,654
		TOTAL		5,352,014
Shares				Value
		COMMON STOCKS--continued
		Commodity Chemicals--0.8%
11,523		Compass Minerals International, Inc.	$	871,139
		Computer Networking--0.1%
10,902	1	Radiant Systems, Inc.		124,392
		Computer Services--0.9%
22,077	1	Manhattan Associates, Inc.		541,770
14,846		Syntel, Inc.		489,176
		TOTAL		1,030,946
		Construction Machinery--0.1%
2,495		Manitowoc, Inc.		65,768
		Contracting--0.8%
31,131	1	Perini Corp.		851,744
		Cosmetics & Toiletries--0.9%
45,093		Inter Parfums, Inc.		675,493
49,875	1	Sally Beauty Holdings, Inc.		369,075
		TOTAL		1,044,568
		Defense Aerospace--2.7%
22,833	1	Teledyne Technologies, Inc.		1,436,196
29,872	1	TransDigm Group, Inc.		1,099,588
7,847		Triumph Group, Inc.		415,577
		TOTAL		2,951,361
		Defense Electronics--1.1%
24,252	1	FLIR Systems, Inc.		988,026
13,014	1	La Barge, Inc.		192,347
		TOTAL		1,180,373
		Diversified Leisure--0.8%
29,329	1	Bally Technologies, Inc.		932,369
		Drug Stores--0.1%
1,644		Longs Drug Stores Corp.		76,857
		Electric & Electrical Original Equipment Manufacturers--0.1%
963	1	Energy Conversion Devices, Inc.		67,343
		Electrical Equipment--3.8%
53,304	1	GrafTech International Ltd.		1,249,979
21,840		Houston Wire & Cable Co.		429,811
21,215	1	Powell Industries, Inc.		1,113,787
27,238		Robbins & Myers, Inc.		1,382,873
		TOTAL		4,176,450
Shares				Value
		COMMON STOCKS--continued
		Electrical Test/Measuring Equipment--1.5%
25,880		Badger Meter, Inc.	$	1,457,820
5,756		MTS Systems Corp.		241,119
		TOTAL		1,698,939
		Electronic Components--0.6%
39,544	1	Volterra Semiconductor Corp.		648,522
		Electronic Instruments--3.0%
9,016		Analogic Corp.		659,791
20,915	1	Axsys Technologies, Inc.		1,535,998
90,704	1	Cogent, Inc.		919,739
4,661	1	OYO Geospace Corp.		219,160
		TOTAL		3,334,688
		Ethical Drugs--0.4%
11,645	1	Matrixx Initiatives, Inc.		214,734
12,691	1	Sciele Pharma, Inc.		236,687
2,710	1	Sucampo Pharmaceuticals, Inc., Class A		32,520
		TOTAL		483,941
		Financial Services--0.1%
9,926	1	Cardtronics, Inc.		85,364
		Food Wholesaling--0.8%
21,413		Nash Finch Co.		845,171
		Furniture--0.1%
3,606		Aaron Rents, Inc.		99,057
		Generic Drugs--1.3%
40,676		Perrigo Co.		1,433,015
		Home Health Care--1.4%
22,458	1	Amedisys, Inc.		1,440,007
3,551	1	LHC Group, Inc.		99,499
		TOTAL		1,539,506
		Home Products--1.3%
38,129		Tupperware Brands Corp.		1,487,031
		Industrial Machinery--1.6%
7,905		Gorman Rupp Co.		352,089
12,737		Valmont Industries, Inc.		1,361,713
		TOTAL		1,713,802
Shares				Value
		COMMON STOCKS--continued
		Internet Services--2.8%
31,813	1	Bidz.com, Inc.	$	291,089
14,871	1	NetFlix, Inc.		459,365
24,728	1	Overstock.com, Inc.		439,169
9,554	1	Priceline.com, Inc.		1,098,232
120,469	1	RealNetworks, Inc.		827,622
		TOTAL		3,115,477
		Leasing--0.4%
25,898	1	CAI International, Inc.		472,897
		Machine Tools--1.1%
26,863	1	AZZ, Inc.		1,229,520
		Maritime--1.2%
50,359		TAL International Group, Inc.		1,274,083
		Medical Supplies--2.0%
22,839	1	Kensey Nash Corp.		793,198
35,648	1	Merit Medical Systems, Inc.		720,446
46,683	1	PetMed Express, Inc.		676,903
		TOTAL		2,190,547
		Medical Technology--1.5%
33,888	1	Cyberonics, Inc.		935,987
4,663	1	Synovis Life Technologies, Inc.		96,244
28,076	1	Vnus Medical Technologies, Inc.		571,627
1,072	1	Zoll Medical Corp.		33,768
		TOTAL		1,637,626
		Metal Containers--1.1%
17,068		Greif, Inc., Class A		1,038,417
2,658		Silgan Holdings, Inc.		140,396
		TOTAL		1,178,813
		Metal Fabrication--1.8%
21,367		Barnes Group, Inc.		482,681
23,285		CIRCOR International, Inc.		1,386,855
5,885		NN, Inc.		78,388
		TOTAL		1,947,924
		Miscellaneous Communications--0.8%
39,268		NTELOS Holdings Corp.		938,898
Shares				Value
		COMMON STOCKS--continued
		Miscellaneous Food Products--0.6%
13,588	1	Overhill Farms, Inc.	$	130,173
12,411		The Anderson's, Inc.		564,080
		TOTAL		694,253
		Miscellaneous Machinery--1.7%
10,472		Graham Corp.		932,008
12,657		Nordson Corp.		894,344
869		Regal Beloit Corp.		36,281
		TOTAL		1,862,633
		Multi-Industry Transportation--1.2%
55,475		Pacer International, Inc.		1,316,976
		Natural Gas Production--0.3%
14,981	1	Natural Gas Services Group, Inc.		384,412
		Oil Service, Explore & Drill--2.9%
38,807	1	Complete Production Services, Inc.		1,235,615
12,820	1	Dawson Geophysical Co.		841,377
12,301	1	Gulfmark Offshore, Inc.		617,264
7,455	1	T-3 Energy Services, Inc.		511,189
		TOTAL		3,205,445
		Oil Well Supply--3.0%
30,555		Gulf Island Fabrication, Inc.		1,355,114
7,078		Lufkin Industries, Inc.		631,358
23,337	1	Oil States International, Inc.		1,280,735
		TOTAL		3,267,207
		Other Communications Equipment--1.3%
87,654	1	Syniverse Holdings, Inc.		1,419,995
		Personal Loans--1.7%
5,586		Cash America International, Inc.		235,506
29,327	1	Ezcorp, Inc., Class A		527,299
33,398	1	World Acceptance Corp.		1,094,118
		TOTAL		1,856,923
		Personnel Agency--1.3%
20,987	1	Aecom Technology Corp.		597,500
43,888	1	Kenexa Corp.		820,267
		TOTAL		1,417,767
Shares				Value
		COMMON STOCKS--continued
		Photo-Optical Computer-Equipment--0.2%
14,803		Cognex Corp.	$	279,037
		Printed Circuit Boards--1.4%
164,220	1	PMC-Sierra, Inc.		1,188,953
30,496	1	TTM Technologies		343,080
		TOTAL		1,532,033
		Printing--0.5%
17,123	1	Consolidated Graphics, Inc.		573,620
		Psychiatric Centers--1.1%
34,658	1	Psychiatric Solutions, Inc.		1,213,723
		Railroad--0.4%
8,014		Wabtec Corp.		444,777
		Recreational Vehicles--0.7%
17,630		Polaris Industries, Inc., Class A		754,564
		Restaurant--3.7%
94	1	Buffalo Wild Wings, Inc.		3,095
42,652	1	CEC Entertainment, Inc.		1,486,849
18,080		CKE Restaurants, Inc.		221,842
51,968	1	California Pizza Kitchen, Inc.		678,182
9,357	1	Green Mountain Coffee, Inc.		340,127
27,659	1	Panera Bread Co.		1,385,716
		TOTAL		4,115,811
		Savings and Loan--0.4%
28,626	1	Investors Bancorp, Inc.		435,401
		Securities Brokerage--1.9%
34,539	1	Fcstone Group, Inc.		665,221
49,314	1	Interactive Brokers Group, Inc., Class A		1,383,751
		TOTAL		2,048,972
		Semiconductor Manufacturing--0.8%
42,095		Micrel, Inc.		400,744
5,048	1	NVE Corp.		144,373
9,275	1	NetLogic Microsystems, Inc.		296,893
		TOTAL		842,010
		Semiconductor Manufacturing Equipment--0.5%
39,099	1	Ultratech, Inc.		576,319
Shares				Value
		COMMON STOCKS--continued
		Services to Medical Professionals--1.8%
27,903	1	Athenahealth, Inc.	$	842,671
6,216	1	Centene Corp.		138,679
70,809	1	eResearch Technology, Inc.		1,030,979
		TOTAL		2,012,329
		Shoes--2.3%
9,579	1	Deckers Outdoor Corp.		1,082,523
46,391	1	Skechers USA, Inc., Class A		876,790
21,957		Wolverine World Wide, Inc.		586,911
		TOTAL		2,546,224
		Software Packaged/Custom--5.6%
4,099	1	Advent Software, Inc.		178,470
28,171	1	IGATE Capital Corp.		277,484
26,051	1	PC-Tel, Inc.		271,712
12,160	1	Progress Software Corp.		357,869
36,521	1	S1 Corp.		296,551
19,009	1	SPSS, Inc.		628,247
47,291	1	Solera Holdings, Inc.		1,370,966
71,672	1	Websense, Inc.		1,495,795
109,113	1	Wind River Systems, Inc.		1,279,895
		TOTAL		6,156,989
		Specialty Chemicals--2.6%
32,543		Koppers Holdings, Inc.		1,406,183
22,330		Minerals Technologies, Inc.		1,440,508
		TOTAL		2,846,691
		Specialty Machinery--1.6%
7,678		Sauer-Danfoss, Inc.		225,349
33,278		Woodward Governor Co.		1,497,510
		TOTAL		1,722,859
		Specialty Retailing--0.1%
5,215	1	Lumber Liquidators, Inc.		78,121
		Telecommunications Equipment & Services--1.0%
4,867	1	Neutral Tandem, Inc.		84,102
70,347	1	Premiere Global Services, Inc.		1,062,943
		TOTAL		1,147,045
Shares				Value
		COMMON STOCKS--continued
		Telephone Utility--0.1%
40,968	1	Cincinnati Bell, Inc.	$	159,775
		Undesignated Consumer Cyclicals--7.6%
2,980	1	American Public Education, Inc.		135,381
27,820	1	CoStar Group, Inc.		1,387,940
41,944	1	Corinthian Colleges, Inc.		660,618
26,533	1	Exponent, Inc.		810,318
25,318	1	Hackett Group, Inc.		161,529
69,821	1	Navigant Consulting, Inc.		1,290,292
38,508		Nu Skin Enterprises, Inc., Class A		622,289
35,209	1	Parexel International Corp.		1,029,159
819		Strayer Education, Inc.		182,391
65,906	1	Sykes Enterprises, Inc.		1,163,900
16,337		Watson Wyatt & Co. Holdings		946,566
		TOTAL		8,390,383
		Undesignated Technology--0.2%
7,525	1	American Reprographics Co.		120,475
6,508	1	RightNow Technologies, Inc.		104,714
		TOTAL		225,189
		TOTAL COMMON STOCKS (IDENTIFIED COST $105,358,375)		109,247,271
		MUTUAL FUND--1.2%
1,320,459	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)		1,320,459
		TOTAL INVESTMENTS--100.2% (IDENTIFIED COST $106,678,834) 4		110,567,730
		OTHER ASSETS AND LIABILITIES - NET--(0.2)% 5		(224,039	)
		TOTAL NET ASSETS--100%	$	110,343,691

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $107,177,572.

5 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $1,320,459 of investments in an affiliated issuer (Note 5) (identified cost $106,678,834)			$	110,567,730
Cash				30,561
Income receivable				15,184
Receivable for investments sold				2,373,411
Receivable for shares sold				1,037,712
TOTAL ASSETS				114,024,598
Liabilities:
Payable for investments purchased	$	3,058,988
Payable for shares redeemed		439,291
Payable for distribution services fee (Note 5)		10,500
Payable for shareholder services fee (Note 5)		23,867
Accrued expenses		148,261
TOTAL LIABILITIES				3,680,907
Net assets for 9,506,364 shares outstanding			$	110,343,691
Net Assets Consist of:
Paid-in capital			$	180,553,606
Net unrealized appreciation of investments and translation of assets and liabilities in foreign currency				3,889,239
Accumulated net realized loss on investments				(74,098,140	)
Accumulated net investment income (loss)				(1,014	)
TOTAL NET ASSETS			$	110,343,691
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($62,208,790 ÷ 5,336,651 shares outstanding), no par value, unlimited shares authorized				$11.66
Offering price per share				$11.66
Redemption proceeds per share				$11.66
Class A Shares:
Net asset value per share ($31,874,470 ÷ 2,755,032 shares outstanding), no par value, unlimited shares authorized				$11.57
Offering price per share (100/94.50 of $11.57) 1				$12.24
Redemption proceeds per share				$11.57
Class B Shares:
Net asset value per share ($9,810,509 ÷ 845,020 shares outstanding), no par value, unlimited shares authorized				$11.61
Offering price per share				$11.61
Redemption proceeds per share (94.50/100 of $11.61) 1				$10.97
Class C Shares:
Net asset value per share ($6,449,922 ÷ 569,661 shares outstanding), no par value, unlimited shares authorized				$11.32
Offering price per share				$11.32
Redemption proceeds per share (99.00/100 of $11.32) 1				$11.21

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $40,996 received from an affiliated issuer) (Note 5)							$	316,578
Interest								6,810
TOTAL INCOME								323,388
Expenses:
Investment adviser fee (Note 5)				$	645,822
Administrative personnel and services fee (Note 5)					245,410
Custodian fees					28,138
Transfer and dividend disbursing agent fees and expenses					270,590
Directors'/Trustees' fees					1,381
Auditing fees					29,700
Legal fees					17,137
Portfolio accounting fees					85,618
Distribution services fee--Class B Shares (Note 5)					37,285
Distribution services fee--Class C Shares (Note 5)					23,135
Shareholder services fee--Class A Shares (Note 5)					30,146
Shareholder services fee--Class B Shares (Note 5)					12,429
Shareholder services fee--Class C Shares (Note 5)					6,703
Account administration fee--Class A Shares					123
Account administration fee--Class C Shares					104
Share registration costs					78,349
Printing and postage					36,808
Insurance premiums					4,759
Miscellaneous					3,486
TOTAL EXPENSES					1,557,123
Waivers and Reimbursement (Note 5):
Waiver/reimbursement of investment adviser fee	$	(556,522	)
Waiver of administrative personnel and services fee		(48,290	)
TOTAL WAIVERS AND REIMBURSEMENT					(604,812	)
Net expenses								952,311
Net investment income (loss)								(628,923	)
Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions:
Net realized loss on investments								(11,971,658	)
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign currency								9,435,934
Net realized and unrealized loss on investments and foreign currency transactions								(2,535,724	)
Change in net assets resulting from operations							$	(3,164,647	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(628,923	)	$	(58,015	)
Net realized gain (loss) on investments		(11,971,658	)		239,622
Net change in unrealized appreciation/depreciation of investments and translation of assets and liabilities in foreign currency		9,435,934			617,453
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(3,164,647	)		799,060
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(155,811	)		- --
Class A Shares		(11,057	)		- --
Class C Shares		(6,609	)		- --
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(173,477	)		- --
Share Transactions:
Proceeds from sale of shares		73,388,956			16,603,113
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Technology Fund		44,263,203			- --
Net asset value of shares issued to shareholders in payment of distributions declared		146,644			- --
Cost of shares redeemed		(21,595,763	)		(655,023	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		96,203,040			15,948,090
Change in net assets		92,864,916			16,747,150
Net Assets:
Beginning of period		17,478,775			731,625
End of period (including accumulated net investment income (loss) of $(1,014) and $0, respectively)	$	110,343,691		$	17,478,775

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine portfolios. The financial statements included herein are only those of Federated MDT Small Cap Growth Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Institutional Shares, Class A Shares, Class B Shares and Class C Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The financial highlights of the Class A Shares, Class B Shares and Class C Shares are presented separately. The primary investment objective of the Fund is long-term capital appreciation.

MDT Small Cap Growth Fund (the "Predecessor Fund") was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced operations on September 15, 2005.

Effective March 13, 2008, the Fund began offering Class B Shares.

On March 14, 2008, the Fund received assets from Federated Technology Fund as the result of a tax-free reorganization, as follows:

Shares of the Fund Issued	Federated Technology Fund Net Assets Received	Unrealized Depreciation 1		Net Assets of the Fund Immediately Prior to Combination	Net Assets of Federated Technology Fund Immediately Prior to Combination	Net Assets of the Fund Immediately After Combination
3,954,962	$44,263,203	$(6,136,744	)	$40,850,828	$44,263,203	$85,114,031

1 Unrealized Depreciation is included in the Federated Technology Fund Net Assets Received amount shown above.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the "Trustees").
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conduct its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as account administration, distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Foreign Currency Translation

The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies (FCs) are translated into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. 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.

Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	4,827,064		$	59,077,425		1,263,095		$	15,852,998
Shares issued to shareholders in payment of distributions declared	10,017			133,229		- --			- --
Shares redeemed	(747,875	)		(8,924,748	)	(37,007	)		(478,571	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	4,089,206		$	50,285,906		1,226,088		$	15,374,427
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	1,014,861		$	12,172,465		38,516		$	455,091
Shares issued in connection with tax-free transfer of assets from Federated Technology Fund	1,965,099			21,986,533		- --			- --
Shares issued to shareholders in payment of distributions declared	766			10,117		- --			- --
Shares redeemed	(266,794	)		(3,116,808	)	(12,243	)		(147,029	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	2,713,932		$	31,052,307		26,273		$	308,062
	Period Ended 7/31/2008 1					Year Ended 7/31/2007
Class B Shares:	Shares			Amount		Shares			Amount
Shares sold	12,136		$	147,178		- --		$	- --
Shares issued in connection with tax-free transfer of assets from Federated Technology Fund	1,540,719			17,345,297		- --			- --
Shares redeemed	(707,835	)		(8,399,050	)	- --			- --
NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS	845,020		$	9,093,425		- --		$	- --
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	164,693		$	1,991,888		24,628		$	295,024
Shares issued in connection with tax-free transfer of assets from Federated Technology Fund	449,144			4,931,373		- --			- --
Shares issued to shareholders in payment of distributions declared	254			3,298		- --			- --
Shares redeemed	(99,359	)		(1,155,157	)	(2,775	)		(29,423	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	514,732		$	5,771,402		21,853		$	265,601
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	8,162,890		$	96,203,040		1,274,214		$	15,948,090

1 Reflects operations for the period from March 13, 2008 (date of initial investment) to July 31, 2008.

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due in part to differing treatments for expiration of capital loss carryforwards, net operating loss, merger wash sale loss deferrals and capital loss carryforwards acquired in merger.

For the year ended July 31, 2008, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gain (Loss)
$61,485,578	$627,909	$(62,113,487)

Net investment income (loss), net realized gains (losses) and net assets were not affected by this reclassification.

The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended July 31, 2008 and 2007, was as follows:

	2008	2007
Ordinary income 1	$149,972	$--
Long-term capital gains	$ 23,505	$--

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Net unrealized appreciation	$	3,390,501
Capital loss carryforwards and deferrals	$	(73,600,416	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $107,177,572. The net unrealized appreciation of investments for federal tax purposes excluding net unrealized appreciation from foreign currency transactions was $3,390,158. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $8,181,863 and net unrealized depreciation from investments for those securities having an excess of cost over value of $4,791,705.

At July 31, 2008, the Fund had a capital loss carryforward of $62,019,299 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the 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. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year	Expiration Amount
2009	$59,356,831
2010	$ 2,459,915
2016	$ 202,553

As a result of the tax-free transfer of assets from Federated Technology Fund, the use of certain capital loss carryforwards listed above may be limited.

Capital loss carryforwards of $436,150,066 expired during the year ended July 31, 2008.

Under current tax regulations, capital losses on securities transactions and foreign currency losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post October losses of $11,580,103 and $1,014 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 1.15% of the Fund's average daily net assets. Prior to December 8, 2006, the Adviser received an annual investment adviser fee equal to 1.25% of the Fund's average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for each Class of the Fund based on average daily net assets:

Share Class Name	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.80%
Class A Shares	2.05%
Class C Shares	2.80%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment and subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any additional portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the Adviser waived $555,381 of its fee.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement (the "Agreement"), provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. During the period from July 15, 2006 through December 8, 2006, the administrator contractually agreed to waive a portion of its fee which it would otherwise be entitled to receive from the Fund under the Agreement. The level of fees payable by the Fund to FAS for the period will not exceed the level of fees which the Fund would have paid during the period to its previous service provider under its pervious administrative services contract. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the net fee paid to FAS was 0.351% of average daily net assets of the Fund. The Fund currently accrues the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above. FAS waived $48,290 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act which became effective on December 11, 2006. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class B Shares	0.75%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

Subject to terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $7,029 of fees paid by the Fund. For the year ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

For the year ended July 31, 2008, FSC retained $4,203 in sales charges from the sale of Class A Shares. FSC also retained $1,779 of contingent deferred sales charges relating to redemptions of Class C. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the year ended July 31, 2008, FSSC received $1,329 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares, Class B Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.50%, 1.75%, 2.50% and 2.50%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain of the Officers and Trustees of the Fund are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $1,141. Transactions with the affiliated company during the year ended July 31, 2008 were as follows:

Affiliate	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	��	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	317,904	57,405,067	56,402,512	1,320,459		$1,320,459	$40,996

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	195,725,294
Sales	$	118,959,234

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds, and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2008, the amount of long-term capital gains designated by the Fund was $23,505.

For the fiscal year ended July 31, 2008, 11.83% of total ordinary dividends paid by the Fund are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended July 31, 2008, 12.50% qualify for the dividend received deduction available to corporate shareholders.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND SHAREHOLDERS OF FEDERATED MDT SMALL CAP GROWTH FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Small Cap Growth Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Small Cap Growth Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc.; (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory Contract - May 2008

FEDERATED MDT SMALL CAP GROWTH FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For the one-year period ending December 31, 2007, the Fund's performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same period, the Fund outperformed its benchmark index for the one-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT Small Cap Growth Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R759

37315 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Small Cap Value Fund

Established 2005

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Class A Shares
Class C Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$11.37		$10.61		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.04	) 3	(0.05	) 3	(0.07	) 3
Net realized and unrealized gain (loss) on investments	(0.24	)	0.81		0.68
TOTAL FROM INVESTMENT OPERATIONS	(0.28	)	0.76		0.61
Less Distributions:
Distributions from net realized gain on investments	(0.76	)	- --		- --
Net Asset Value, End of Period	$10.33		$11.37		$10.61
Total Return 4	(2.69	)%	7.16	%	6.10	%
Ratios to Average Net Assets:
Net expenses	1.75	%	1.75	%	2.00	% 5
Net investment income (loss)	(0.32	)%	(0.44	)%	(0.59	)% 5
Expense waiver/reimbursement 6	3.05	%	4.45	%	34.07	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$3,179		$2,950		$699
Portfolio turnover	245	%	240	%	124	%

1 MDT Small Cap Value Fund (the "Predecessor Fund") was reorganized into Federated MDT Small Cap Value Fund (the "Fund") as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to
July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$11.21		$10.54		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.12	) 3	(0.14	) 3	(0.15	) 3
Net realized and unrealized gain (loss) on investments	(0.23	)	0.81		0.69
TOTAL FROM INVESTMENT OPERATIONS	(0.35	)	0.67		0.54
Less Distributions:
Distributions from net realized gain on investments	(0.76	)	- --		- --
Net Asset Value, End of Period	$10.10		$11.21		$10.54
Total Return 4	(3.38	)%	6.36	%	5.40	%
Ratios to Average Net Assets:
Net expenses	2.50	%	2.50	%	2.75	% 5
Net investment income (loss)	(1.11	)%	(1.20	)%	(1.34	)% 5
Expense waiver/reimbursement 6	2.73	%	4.06	%	34.07	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$3,195		$951		$51
Portfolio turnover	245	%	240	%	124	%

1 The Predecessor Fund was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to
July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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, such as sales charges (loads) on purchase or redemption payments. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual:
Class A Shares	$1,000	$1,021.80	$ 8.80
Class C Shares	$1,000	$1,018.10	$12.54
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,016.16	$ 8.77
Class C Shares	$1,000	$1,012.43	$12.51

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

Class A Shares	1.75%
Class C Shares	2.50%

Management's Discussion of Fund Performance

The fund's Class A Shares and Class C Shares total returns for the fiscal year ended July 31, 2008 were (2.69)% and (3.38)%, respectively, based on net asset value. ¹ The total return of the Russell 2000 ^® Value Index ² (Russell 2000 ^® Value) was (9.95)% and the total return of the Lipper Small-Cap Value Funds Index ³ was (12.36)% for the same period. The fund's Class A Shares and Class C Shares total returns for the fiscal year reflected actual cash flows, transaction costs and other expenses which were not reflected in the total return of the Russell 2000 ^® Value.

1 The fund is the successor to the MDT Small Cap Value Fund pursuant to a reorganization that took place on December 8, 2006. Prior to that date, the fund had no investment operations. Accordingly, the performance information provided is historical information of the MDT Small Cap Value Fund. Small Company stocks may be less liquid and subject to greater price volatility than large capitalization stocks.

2 The Russell 2000® Value Index offers investors access to the small-cap value segment of the U.S. equity universe. The Russell 2000 Value is constructed to provide a comprehensive and unbiased barometer of the small-cap value market. Based on ongoing empirical research of investment manager behavior, the methodology used to determine value probability approximates the aggregate small-cap value manager's opportunity set.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

MARKET OVERVIEW

Over the 12-month period ending July 31, 2008, domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® Index, ⁴ which represents the performance of the 3,000 largest U.S. companies by market capitalization, finished the period down (10.32)%. Small-cap stocks had the best relative results as demonstrated by the (6.71)% return of the Russell 2000 ^® Index, ⁵ which exceeded the (10.10)% and (10.81)% results for the Russell Midcap ^® Index ⁶ and the Russell Top 200 ^® Index, ⁷ respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000 ^® Growth Index ⁸ returning (6.11)% as compared to (14.75)% for the Russell 3000 Value ^® Index. ⁹

4 The Russell 3000® Index offers investors access to the broad U.S. equity universe representing approximately 98% of the U.S. market. The Russell 3000 is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected.

5 The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index. The index is unmanaged and investments cannot be made directly in an index.

6 The Russell Midcap® Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 31% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

7 Russell Top 200® Index measures the performance of the 200 largest companies in the Russell 1000 Index, which represents approximately 69% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

8 The Russell 3000® Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000 Growth or the Russell 2000 Growth indexes. The index is unmanaged and investments cannot be made directly in an index.

9 The Russell 3000® Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000 Value or the Russell 2000 Value indexes. The index is unmanaged and investments cannot be made directly in an index.

The best performing sectors during the period as measured by the Russell 3000 ^® Index were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

FUND PERFORMANCE

The most significant positive factor in the fund's performance relative to the Russell 2000 ^® Value Index was its relative underweight and stock selection in the Financials sector. The fund's stock selection in the Consumer Discretionary, Industrials and Materials sectors also provided significant contributions. Additionally, the fund's overweight in the Energy sector provided a significant contribution to relative performance. The most significant negative factor in the fund's performance relative to the Russell 2000 ^® Value Index was its underweight in the Health Care sector which detracted modestly.

Individual stocks contributing to the fund's performance relative to the Russell 2000 Value Index included: Terra Industries, Inc., an agricultural and industrial chemical producer, Encore Acquisition Company, Whiting Petroleum Corporation and Stone Energy Corporation, all oil and natural gas production companies, and Compass Minerals International, Inc., a mineral producer.

Individual stocks detracting from the fund's performance relative to the Russell 2000 Value Index included: CF Industries Holdings Inc., a fertilizer manufacturer, Petrohawk Energy Corporation, an oil and natural gas producer, USA Mobility Inc., Speedway Motorsports, Inc. and OM Group Inc., a specialty chemicals producer.

GROWTH OF A $10,000 INVESTMENT - CLASS A SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Small Cap Value Fund (Class A Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 2000 Value Index (Russell 2000 Value) ² and the Lipper Small-Cap Value Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(8.03	)%
Start of Performance (9/15/2005)	1.57	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum sales charge of 5.50%.

1 Represents a hypothetical investment of $10,000 in the fund after deducting the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge = $9,450). The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 2000 Value and the Lipper Small-Cap Value Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 2000 Value Index is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

GROWTH OF A $10,000 INVESTMENT - CLASS C SHARES

The graph below illustrates the hypothetical investment of $10,000 ¹ in the Federated MDT Small Cap Value Fund (Class C Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 2000 Value Index (Russell 2000 Value) ² and the Lipper Small-Cap Value Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(4.28	)%
Start of Performance (9/15/2005)	2.81	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum contingent deferred sales charge (CDSC) of 1.00%, as applicable.

1 Represents a hypothetical investment of $10,000 in the fund. The maximum CDSC is 1.00% on any redemptions less than one year from the purchase date. The fund's performance assumes the reinvestment of all dividends and distributions. The Russell 2000 Value and the Lipper Small-Cap Value Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 2000 Value is not adjusted to reflect sales charges, expenses or other fees that the SEC requires to be reflected in the fund's performance. The index is unmanaged and, unlike the fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund's industry composition ¹ was as follows:

Industry	Percentage of Total Net Assets
Crude Oil & Gas Production	8.2	%
Regional Bank	7.1	%
Property Liability Insurance	5.6	%
Multi Line Insurance	5.2	%
Electric Utility	4.1	%
Maritime	3.2	%
Savings and Loan	2.9	%
Metal Fabrication	2.8	%
Financial Services	2.6	%
Oil Service, Explore & Drill	2.5	%
Miscellaneous Food Products	2.3	%
Food Wholesaling	2.1	%
Other Communications Equipment	2.0	%
Multi Industry Basic	2.0	%
Computer Services	2.0	%
Apparel	1.6	%
Agricultural Chemicals	1.6	%
Shoes	1.6	%
Specialty Retailing	1.4	%
Insurance Brokerage	1.4	%
Electrical Equipment	1.4	%
Software Packaged/Custom	1.3	%
Computer Networking	1.3	%
Securities Brokerage	1.3	%
Miscellaneous Metals	1.2	%
Commodity Chemicals	1.2	%
Poultry Products	1.1	%
Restaurant	1.1	%
Construction Machinery	1.1	%
Contracting	1.0	%
Leasing	1.0	%
Integrated Domestic Oil	1.0	%
Other 2	23.0	%
Cash Equivalents 3	1.4	%
Other Assets and Liabilities--Net 4	(0.6	)%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's total net assets have been aggregated under the designation "Other."

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares					Value
			COMMON STOCKS--99.2%
			Agricultural Chemicals--1.6%
	392		CF Industries Holdings, Inc.	$	64,076
	7,019	1	Terra Industries, Inc.		379,026
			TOTAL		443,102
			Agricultural Machinery--0.8%
	9,006		Alamo Group, Inc.		194,980
	313		Lindsay Manufacturing Co.		28,881
			TOTAL		223,861
			Aluminum--0.7%
	3,722		Kaiser Aluminum Corp.		196,335
			Apparel--1.6%
	1,420		Columbia Sportswear Co.		52,980
	31,555	1	Quiksilver, Inc.		242,027
	3,840	1	Warnaco Group, Inc.		161,088
			TOTAL		456,095
			Auto Part Replacement--0.5%
	13,716		Standard Motor Products, Inc.		128,793
			Beer--0.3%
	1,241	1	Central European Distribution Corp.		90,543
			Book Publishing--0.3%
	3,776		Scholastic Corp.		97,383
			Broadcasting--0.4%
	17,223		Entercom Communication Corp.		105,577
			Building Materials--0.9%
	678		Ameron, Inc.		87,659
	9,308		Insteel Industries, Inc.		164,472
			TOTAL		252,131
			Clothing Stores--0.7%
	1,742	1	Children's Place Retail Stores, Inc.		66,283
	5,825	1	Jos A. Bank Clothiers, Inc.		130,480
			TOTAL		196,763
Shares					Value
			COMMON STOCKS--continued
			Cogeneration--0.3%
	13,134	1	Aventine Renewable Energy Holdings, Inc.	$	89,311
			Commercial Services--0.1%
	773	1	SAIC, Inc.		14,602
			Commodity Chemicals--1.2%
	979		Compass Minerals International, Inc.		74,012
	8,125		Innophos Holdings, Inc.		238,631
	109		Newmarket Corp.		6,732
			TOTAL		319,375
			Computer Networking--1.3%
	15,331	1	Avocent Corp.		364,571
			Computer Peripherals--0.5%
	1,475		Bel Fuse, Inc.		41,831
	5,601		Imation Corp.		106,755
			TOTAL		148,586
			Computer Services--2.0%
	2,786	1	CACI International, Inc., Class A		125,259
	17,824	1	Synnex Corp.		416,369
			TOTAL		541,628
			Computer Stores--0.9%
	9,473	1	PC Connections, Inc.		67,921
	5,066	1	Tech Data Corp.		176,651
			TOTAL		244,572
			Construction Machinery--1.1%
	7,808	1	NCI Building System, Inc.		292,488
			Contracting--1.0%
	13,486		Comfort Systems USA, Inc.		178,824
	2,428	1	Emcor Group, Inc.		73,131
	1,098		Granite Construction, Inc.		34,730
			TOTAL		286,685
			Crude Oil & Gas Production--8.2%
	8,267		Berry Petroleum Co., Class A		355,812
	1,941	1	Bill Barrett Corp.		79,853
	1,672	1	EXCO Resources, Inc.		43,556
Shares					Value
			COMMON STOCKS--continued
			Crude Oil & Gas Production--continued
	3,122	1	Encore Acquisition Co.	$	193,158
	10,783	1	Energy Partners Ltd.		128,102
	928	1	GMX Resources, Inc.		54,474
	8,518	1	Gulfport Energy Corp.		122,830
	1,193		Penn Virginia Corp.		72,475
	2	1	Petroleum Development Corp.		111
	5,483	1	RAM Energy Resources, Inc.		25,551
	16,462	1	Rosetta Resources, Inc.		388,832
	5,709	1	Stone Energy Corp.		291,273
	7,170	1	Swift Energy Co.		364,379
	7,753	1	TXCO Resources, Inc.		72,878
	834	1	Whiting Petroleum Corp.		78,121
			TOTAL		2,271,405
			Defense Aerospace--0.7%
	5,439	1	AAR Corp.		93,496
	2,160	1	Esterline Technologies Corp.		105,365
			TOTAL		198,861
			Discount Department Stores--0.3%
	6,299		Freds, Inc.		81,005
			Diversified Leisure--0.3%
	2,273	1	Coinstar, Inc.		78,396
			Drug Stores--0.1%
	315		Longs Drug Stores Corp.		14,726
			Electric & Electronic Original Equipment Manufacturers--0.3%
	4,726		CTS Corp.		60,776
	286	1	Rogers Corp.		11,815
			TOTAL		72,591
			Electric Test/Measuring Equipment--0.1%
	1,471	1	Multi-Fineline Electronix, Inc.		39,246
			Electric Utility--4.1%
	3,019		Avista Corp.		68,290
	7,258		Cleco Corp.		182,394
	10,742	1	El Paso Electric Co.		221,930
	3,467		Empire Distribution Electric Co.		70,761
Shares					Value
			COMMON STOCKS--continued
			Electric Utility--continued
	5,243		Idacorp, Inc.	$	156,294
	7,217		PNM Resources, Inc.		84,511
	14,837		Portland General Electric Co.		348,521
			TOTAL		1,132,701
			Electrical Equipment--1.4%
	7,120		Encore Wire Corp.		129,798
	4,150	1	EnerSys, Inc.		133,962
	1,518	1	Littelfuse, Inc.		48,515
	1,262		Robbins & Myers, Inc.		64,072
			TOTAL		376,347
			Electronic Components--0.2%
	4,549	1	Eagle Test Systems, Inc.		56,408
			Electronic Instruments--0.3%
	654		Analogic Corp.		47,860
	326	1	Axsys Technologies, Inc.		23,941
			TOTAL		71,801
			Financial Services--2.6%
	9,154	1	America's Car-Mart, Inc.		182,348
	6,015		Blackrock Kelso Capital Corp.		58,706
	11,032	1	Encore Capital Group, Inc.		135,142
	8,786	1	MBIA Insurance Corp.		52,101
	11,859		MainSource Financial Group, Inc.		211,683
	7,952		Medallion Financial Corp.		78,566
			TOTAL		718,546
			Food Wholesaling--2.1%
	10,635		Nash Finch Co.		419,763
	10,239	1	Omega Protein Corp.		160,138
			TOTAL		579,901
			Furniture--0.3%
	3,183		Aaron Rents, Inc.		87,437
			Gas Distributor--0.5%
	4,639		Southwest Gas Corp.		134,067
			Generic Drugs--0.2%
	1,586		Perrigo Co.		55,875
Shares					Value
			COMMON STOCKS--continued
			Grocery Chain--0.5%
	4,062		Casey's General Stores, Inc.	$	99,925
	2,757	1	Great Atlantic & Pacific Tea Co., Inc.		43,864
			TOTAL		143,789
			Home Products--0.1%
	388		Tupperware Brands Corp.		15,132
			Hotels and Motels--0.1%
	9,657	1	Interstate Hotels & Resorts, Inc.		25,591
			Industrial Machinery--0.3%
	608	1	Chart Industries, Inc.		32,175
	1,005		Gorman Rupp Co.		44,763
			TOTAL		76,938
			Insurance Brokerage--1.4%
	22,457		AmTrust Financial Services, Inc.		327,198
	3,291	1	Texas Capital Bancshares, Inc.		53,150
			TOTAL		380,348
			Integrated Domestic Oil--1.0%
	11,593	1	Callon Petroleum Corp.		266,523
			Jewelry Stores--0.3%
	3,522		Movado Group, Inc.		75,723
			Leasing--1.0%
	8,343	1	CAI International, Inc.		152,343
	5,762		Financial Federal Corp.		132,814
			TOTAL		285,157
			Life Insurance--0.7%
	12,056		American Equity Investment Life Holding Co.		105,369
	7,819	1	Universal American Financial Corp.		82,021
			TOTAL		187,390
			Long-Term Care Centers--0.2%
	1,819	1	Kindred Healthcare, Inc.		49,058
			Major Steel Producer--0.3%
	2,436	1	Universal Stainless & Alloy		92,958
Shares					Value
			COMMON STOCKS--continued
			Maritime--3.2%
	5,206		Genco Shipping & Trading Ltd.	$	354,945
	3,432		General Maritime Corp.		92,458
	17,152		TAL International Group, Inc.		433,946
			TOTAL		881,349
			Metal Fabrication--2.8%
	2,433		CIRCOR International, Inc.		144,909
	3,826		Mueller Industries, Inc.		98,213
	1,813		Olympic Steel, Inc.		92,191
	24,442		Worthington Industries, Inc.		433,601
			TOTAL		768,914
			Mini-Mill Producer--0.2%
	572		Schnitzer Steel Industries, Inc., Class A		51,617
			Miscellaneous Food Products--2.3%
	8,732	1	Fresh Del Monte Produce, Inc.		184,071
	10,264		The Anderson's, Inc.		466,499
			TOTAL		650,570
			Miscellaneous Machinery--0.5%
	764		Curtiss Wright Corp.		40,217
	1,310		Nordson Corp.		92,565
			TOTAL		132,782
			Miscellaneous Metals--1.2%
	4,066	1	Brush Engineered Materials, Inc.		97,299
	2,161		Matthews International Corp., Class A		107,856
	24,609	1	USEC, Inc.		128,459
			TOTAL		333,614
			Money Center Bank--0.1%
	1,476	1	Pennsylvania Commerce Bancorp, Inc.		36,221
			Multi Industry Basic--2.0%
	18,468		Olin Corp.		549,238
			Multi Industry Capital Good--0.8%
	3,618	1	Ceradyne, Inc.		167,694
	5,583	1	Gerber Scientific, Inc.		66,270
			TOTAL		233,964
Shares					Value
			COMMON STOCKS--continued
			Multi Line Insurance--5.2%
	15,457	1	Amerisafe, Inc.	$	280,854
	4,408		EMC Insurance Group, Inc.		107,908
	6,924	1	FPIC Insurance Group, Inc.		345,854
	6,754		Harleysville Group, Inc.		240,645
	5,098	1	Navigators Group, Inc.		242,461
	3,463		Safety Insurance Group, Inc.		147,074
	2,270		Zenith National Insurance Corp.		78,111
			TOTAL		1,442,907
			Natural Gas Production--0.6%
	870	1	Natural Gas Services Group, Inc.		22,324
	22,971	1	VAALCO Energy, Inc.		150,460
			TOTAL		172,784
			Offshore Driller--0.7%
	960	1	Hornbeck Offshore Services, Inc.		42,797
	9,855	1	Pioneer Drilling Co.		156,596
			TOTAL		199,393
			Oil Service, Explore & Drill--2.5%
	7,228	1	Gulfmark Offshore, Inc.		362,701
	13,042	1	Parker Drilling Co.		105,249
	10,966	1	PetroQuest Energy, Inc.		228,860
			TOTAL		696,810
			Oil Well Supply--0.3%
	1,015		Lufkin Industries, Inc.		90,538
			Other Communications Equipment--2.0%
	28,058	1	Skyworks Solutions, Inc.		265,429
	18,388	1	Syniverse Holdings, Inc.		297,886
			TOTAL		563,315
			Packaged Foods--0.1%
	552	1	Ralcorp Holdings, Inc.		29,786
			Paper Products--0.6%
	7,999	1	Buckeye Technologies, Inc.		77,990
	6,490		Glatfelter (P.H.) Co.		94,884
			TOTAL		172,874
Shares					Value
			COMMON STOCKS--continued
			Personnel Agency--0.2%
	1,636	1	Aecom Technology Corp.	$	46,577
	77		CDI Corp.		1,585
			TOTAL		48,162
			Plastic--0.3%
	4,081		Schulman (A.), Inc.		94,802
			Poultry Products--1.1%
	7,847		Sanderson Farms, Inc.		311,840
			Printed Circuit Boards--0.5%
	10,222	1	Benchmark Electronics, Inc.		149,650
			Printing--0.8%
	16,264		Bowne & Co., Inc.		210,294
			Property Liability Insurance--5.6%
	2,249	1	AmCOMP, Inc.		23,165
	6,809		American Physicians Capital, Inc.		338,952
	3,757		American Physicians Service Group, Inc.		77,958
	7,408	1	CNA Surety Corp.		96,230
	6,508	1	First Mercury Financial Corp.		104,128
	8,653		Meadowbrook Insurance Group, Inc.		55,466
	8,054	1	ProAssurance Corp.		394,163
	4,800		RLI Corp.		262,176
	10,170	1	Seabright Insurance Holdings, Inc.		116,955
	4,586		Selective Insurance Group, Inc.		99,058
			TOTAL		1,568,251
			Railroad--0.5%
	3,722	1	Genesee & Wyoming, Inc., Class A		150,629
			Regional Bank--7.1%
	1,885		Bancorpsouth, Inc.		40,151
	3,193		Bank of the Ozarks, Inc.		65,457
	1,764		Center Financial Corp.		19,404
	2,791		Chemical Financial Corp.		74,157
	3,278		Columbia Banking Systems, Inc.		49,531
	1,855		Community Trust Bancorp, Inc.		57,171
	304		Farmers Capital Bank Corp.		9,178
Shares					Value
			COMMON STOCKS--continued
			Regional Bank--continued
	28,542		First BanCorp	$	249,743
	1,971		First Merchants Corp.		41,391
	3,786		FirstMerit Corp.		74,508
	5,159		Lakeland Bancorp, Inc.		59,380
	12,856		Oriental Financial Group		223,309
	9,818		Pacific Capital Bancorp		128,321
	142		Park National Corp.		8,893
	7,234		Republic Bancorp, Inc.		223,820
	15,113		Santander BanCorp		165,941
	9,156		Southside Bancshares, Inc.		181,563
	8,111		Susquehanna Bankshares, Inc.		116,150
	1,412		UMB Financial Corp.		77,759
	1,997		Wesbanco, Inc.		45,512
	5,367		Wilshire Bancorp, Inc.		66,121
			TOTAL		1,977,460
			Restaurant--1.1%
	3,389		Bob Evans Farms, Inc.		97,061
	6,029	1	CEC Entertainment, Inc.		210,171
			TOTAL		307,232
			Savings and Loan--2.9%
	669		Dime Community Bancorp, Inc.		11,192
	4,234		First Financial Holdings, Inc.		84,595
	16,507		Flushing Financial Corp.		291,018
	1,322		Glacier Bancorp, Inc.		28,648
	2,046	1	Investors Bancorp, Inc.		31,120
	5,205		Newalliance Bancshares, Inc.		67,561
	2,638		OceanFirst Financial Corp.		47,721
	22,593	1	Ocwen Financial Corp.		136,462
	1,861		WSFS Financial Corp.		101,331
			TOTAL		799,648
Shares					Value
			COMMON STOCKS--continued
			Securities Brokerage--1.3%
	5,371	1	Interactive Brokers Group, Inc., Class A	$	150,710
	4,483	1	Knight Capital Group, Inc., Class A		73,476
	7,226		SWS Group, Inc.		136,716
			TOTAL		360,902
			Semiconductor Manufacturing--0.1%
	1,468	1	Plexus Corp.		41,838
			Shoes--1.6%
	148	1	Deckers Outdoor Corp.		16,725
	6,760	1	Genesco, Inc.		198,744
	11,532	1	Skechers USA, Inc., Class A		217,955
	212	1	Steven Madden Ltd.		4,768
			Total		438,192
			Software Packaged/Custom--1.3%
	6,059	1	Electronics for Imaging, Inc.		84,887
	2,568	1	S1 Corp.		20,852
	8,878	1	TNS, Inc.		202,418
	7,586	1	Tibco Software, Inc.		62,281
			TOTAL		370,438
			Specialty Chemicals--0.7%
	1,220		Minerals Technologies, Inc.		78,702
	3,610		Quaker Chemical Corp.		107,867
			TOTAL		186,569
			Specialty Machinery--0.3%
	1,962		Woodward Governor Co.		88,290
			Specialty Retailing--1.4%
	2,564		Barnes & Noble, Inc.		60,664
	17,584	1	Cabela's, Inc., Class A		204,326
	3,508	1	Conn's, Inc.		55,076
	1,292		Finish Line, Inc., Class A		14,018
	4,383		Stage Stores, Inc.		64,956
			TOTAL		399,040
Shares					Value
			COMMON STOCKS--continued
			Telecommunication Equipment & Services--0.1%
	2,195	1	ADC Telecommunications, Inc.	$	20,765
	1,077	1	Tekelec, Inc.		16,790
			TOTAL		37,555
			Toys & Games--0.3%
	4,140	1	JAKKS Pacific, Inc.		90,997
			Truck Manufacturing--0.3%
	14,400		Spartan Motors, Inc.		78,048
			Trucking--0.3%
	2,065		Arkansas Best Corp.		76,694
			Undesignated Consumer Cyclicals--0.9%
	4,714	1	LECG Corp.		39,079
	10,375		Speedway Motorsports, Inc.		200,341
			TOTAL		239,420
			Undesignated Health--0.8%
	11,218	1	Healthspring, Inc.		218,190
			Uniforms--0.8%
	4,791		Unifirst Corp.		214,493
			TOTAL COMMON STOCKS (IDENTIFIED COST $27,208,725)		27,525,631
			MUTUAL FUND--1.4%
	382,184	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)		382,184
			TOTAL INVESTMENTS--100.6% (IDENTIFIED COST $27,590,909) 4		27,907,815
			OTHER ASSETS AND LIABILITIES - NET--(0.6)% 5		(152,960	)
			TOTAL NET ASSETS--100%	$	27,754,855

1 Non-income-producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $27,873,140.

5 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $382,184 of investments in an affiliated issuer (Note 5) (identified cost $27,590,909)			$	27,907,815
Income receivable				13,898
Receivable for investments sold				276,209
Receivable for shares sold				71,332
TOTAL ASSETS				28,269,254
Liabilities:
Payable for investments purchased	$	438,037
Payable for shares redeemed		57
Payable for auditing fees		21,200
Payable for share registration costs		27,369
Payable for distribution services fee (Note 5)		1,908
Payable for shareholder services fee (Note 5)		3,476
Accrued expenses		22,352
TOTAL LIABILITIES				514,399
Net assets for 2,677,001 shares outstanding			$	27,754,855
Net Assets Consist of:
Paid-in capital			$	29,566,408
Net unrealized appreciation of investments				316,906
Accumulated net realized loss on investments				(2,128,459	)
TOTAL NET ASSETS			$	27,754,855
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($21,380,815 ÷ 2,052,925 shares outstanding), no par value, unlimited shares authorized				$10.41
Offering price per share				$10.41
Redemption proceeds per share				$10.41
Class A Shares:
Net asset value per share ($3,179,043 ÷ 307,688 shares outstanding), no par value, unlimited shares authorized				$10.33
Offering price per share (100/94.50 of $10.33) 1				$10.93
Redemption proceeds per share				$10.33
Class C Shares:
Net asset value per share ($3,194,997 ÷ 316,388 shares outstanding), no par value, unlimited shares authorized				$10.10
Offering price per share				$10.10
Redemption proceeds per share (99.00/100 of $10.10) 1				$10.00

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $11,557 received from an affiliated issuer (Note 5) and net of foreign taxes withheld of $457)							$	236,376
Expenses:
Investment adviser fee (Note 5)				$	191,240
Administrative personnel and services fee (Note 5)					230,000
Custodian fees					32,292
Transfer and dividend disbursing agent fees and expenses					45,400
Directors'/Trustees' fees					1,205
Auditing fees					26,700
Legal fees					19,013
Portfolio accounting fees					75,978
Distribution services fee--Class C Shares (Note 5)					10,829
Shareholder services fee--Class A Shares (Note 5)					7,278
Shareholder services fee--Class C Shares (Note 5)					3,547
Share registration costs					56,704
Printing and postage					32,951
Insurance premiums					4,648
Interest expense					1,306
Miscellaneous					3,830
TOTAL EXPENSES					742,921
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee	$	(191,240	)
Waiver of administrative personnel and services fee		(44,833	)
Waiver of distribution services fee--Class C Shares		(88	)
Reimbursement of other operating expenses		(235,568	)
TOTAL WAIVERS AND REIMBURSEMENTS					(471,729	)
Net expenses								271,192
Net investment income (loss)								(34,816	)
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments								(2,063,606	)
Net change in unrealized depreciation of investments								950,455
Net realized and unrealized loss on investments								(1,113,151	)
Change in net assets resulting from operations							$	(1,147,967	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(34,816	)	$	(32,233	)
Net realized gain (loss) on investments		(2,063,606	)		875,788
Net change in unrealized appreciation/depreciation of investments		950,455			(619,049	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(1,147,967	)		224,506
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(638,272	)		- --
Class A Shares		(198,621	)		- --
Class C Shares		(63,763	)		- --
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(900,656	)		- --
Share Transactions:
Proceeds from sale of shares		21,054,023			16,884,477
Net asset value of shares issued to shareholders in payment of distributions declared		316,054			- --
Cost of shares redeemed		(6,659,980	)		(3,364,195	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		14,710,097			13,520,282
Redemption fees		- --			39
Change in net assets		12,661,474			13,744,827
Net Assets:
Beginning of period		15,093,381			1,348,554
End of period	$	27,754,855		$	15,093,381

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine portfolios. The financial statements included herein are only those of Federated MDT Small Cap Value Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Class A Shares and Class C Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The Financial Highlights of the Institutional Shares are presented separately. The primary investment objective of the Fund is long-term capital appreciation.

MDT Small Cap Value Fund (the "Predecessor Fund") was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced operations on September 15, 2005.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the "Trustees").
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers, and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

Withholding taxes and where appropriate, deferred withholding taxes on foreign interest, dividends and capital gains have been provided for in accordance with the applicable country's tax rules and rates.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	1,548,526		$	16,894,234		1,140,726		$	12,999,804
Shares issued to shareholders in payment of distributions declared	7,094			75,830		- --			--
Shares redeemed	(482,513	)		(5,241,402	)	(217,235	)		(2,529,781	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	1,073,107		$	11,728,662		923,491		$	10,470,023
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	134,417		$	1,472,044		257,303		$	2,904,620
Shares issued to shareholders in payment of distributions declared	17,137			182,165		--			--
Shares redeemed	(103,407	)		(1,103,930	)	(63,571	)		(756,151	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	48,147		$	550,279		193,732		$	2,148,469
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	256,136		$	2,687,745		86,450		$	980,053
Shares issued to shareholders in payment of distributions declared	5,566			58,059		--			--
Shares redeemed	(30,126	)		(314,648	)	(6,463	)		(78,263	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	231,576		$	2,431,156		79,987		$	901,790
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	1,352,830		$	14,710,097		1,197,210		$	13,520,282

Redemption Fees

Prior to December 11, 2006, the Predecessor Fund imposed a 2.00% redemption fee to shareholders of the Fund's Institutional Shares, Class A Shares and Class C Shares who redeemed shares held for 30 days or less. Shares acquired by reinvestment of dividends or distributions of the Fund, or purchased pursuant to the Systematic Investment Program or withdrawn pursuant to the Systematic Withdrawal Program, were not subject to the redemption fee. All redemption fees were recorded by the Fund as additions to paid-in capital. For the year ended July 31, 2007, the Predecessor Fund incurred redemption fees for Institutional Shares, Class A Shares and Class C Shares amounted to $23, $13 and $3, respectively.

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due to differing treatments for net operating loss.

For the year ended July 31, 2008, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gain (Loss)
$(35,041)	$34,816	$225

Net investment income (loss), net realized gains (losses) and net assets were not affected by this reclassification.

The tax character of distributions as reported on the Statement of Changes in Net Assets for the year ended July 31, 2008, was as follows:

	2008
Ordinary income 1	$885,746
Long-term capital gains	$ 14,910

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Net unrealized appreciation	$	34,675
Capital loss carryforwards and deferrals	$	(1,846,228	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $27,873,140. The net unrealized appreciation of investments for federal tax purposes was $34,675. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $1,640,113 and net unrealized depreciation from investments for those securities having an excess of cost over value of $1,605,438.

At July 31, 2008, the Fund had a capital loss carryforward of $176,370 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the 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. Pursuant to the Code, such capital loss carryforward will expire in 2016.

Under current tax regulations, capital losses on securities transactions realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post October losses of $1,669,858 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and Adviser provides for an annual fee equal to 1.15% of the Fund's average daily net assets. Prior to December 8, 2006, the Adviser received an annual investment adviser fee equal to 1.25% of the Fund's average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or portion of the advisory fee and/or reimburse certain operating expenses excluding (interest, taxes and brokerage commissions) to no more than the following annual percentages for each Class of the Fund based on average daily net assets:

Share Class	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.80%
Class A Shares	2.05%
Class C Shares	2.80%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment and subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any additional portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the year ended July 31, 2008, the Adviser waived $190,942 of its fee and reimbursed $235,568 of other operating expenses.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. During the period from July 15, 2006 through December 8, 2006, the administrator contractually agreed to waive a portion of its fee which it would otherwise be entitled to receive from the Fund under the Agreement. The level of fees payable by the Fund to FAS for the period will not exceed the level of fees which the Fund would have paid during the period to its previous service provider under its previous administrative services contract. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2008, the net fee paid to FAS was 1.113% of average daily net assets of the Fund. The Fund currently accrues the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above. FAS waived $44,833 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act which became effective December 11, 2006. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares and Class C Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC:

Share Class	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

Subject to terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $6,523 of fees paid by the Fund. For the year ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee. On November 15, 2007, the Fund's Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008. For the year ended July 31, 2008, FSC waived $88 of its fee.

Sales Charges

For the year ended July 31, 2008, FSC retained $1,434 in sales charges from the sale of Class A Shares. FSC also retained $1,312 of contingent deferred sales charges relating to redemptions of Class C Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

Effective December 11, 2006, the Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. For the year ended July 31, 2008, FSSC did not receive any fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.50%, 1.75% and 2.50%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $298. Transactions with the affiliated company during the year ended July 31, 2008 were as follows:

Affiliate	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	160,179	19,769,346	19,547,341	382,184	$382,184	$11,557

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	55,559,109
Sales	$	41,875,958

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds, and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2008, the amount of long-term capital gains designated by the Fund was $14,910.

For the fiscal year ended July 31, 2008, 14.12% of total ordinary income (including short-term capital gain) distributions made by the Trust are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended July 31, 2008, 13.02% qualify for the dividend received deduction available to corporate shareholders.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND SHAREHOLDERS OF FEDERATED MDT SMALL CAP VALUE FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Small Cap Value Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Small Cap Value Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc.; (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT SMALL CAP VALUE FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For the one-year period ending December 31, 2007, the Fund's performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same period, the Fund outperformed its benchmark index for the one-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT Small Cap Value Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R742
Cusip 31421R734

37334 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Small Cap Value Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended
	2008		2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$11.42		$10.64		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.01	) 3	(0.02	) 3	(0.03	) 3
Net realized and unrealized gain (loss) on investments	(0.24	)	0.80		0.67
TOTAL FROM INVESTMENT OPERATIONS	(0.25	)	0.78		0.64
Less Distributions:
Distributions from net realized gain on investments	(0.76	)	- --		- --
Net Asset Value, End of Period	$10.41		$11.42		$10.64
Total Return 4	(2.41	)%	7.33	%	6.40	%
Ratios to Average Net Assets:
Net expenses	1.50	%	1.50	%	1.75	% 5
Net investment income (loss)	(0.08	)%	(0.17	)%	(0.34	)% 5
Expense waiver/reimbursement 6	2.80	%	3.75	%	34.07	% 5
Supplemental Data:
Net assets, end of period (000 omitted)	$21,381		$11,192		$599
Portfolio turnover	245	%	240	%	124	%

1 MDT Small Cap Value Fund (the "Predecessor Fund") was reorganized into the Federated MDT Small Cap Value Fund (the "Fund") as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund's operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period 1
Actual	$1,000	$1,023.60	$7.55
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,017.40	$7.52

1 Expenses are equal to the Fund's annualized net expense ratio of 1.50%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half-year period).

Management's Discussion of Fund Performance

The fund's Institutional Shares total return for the fiscal year ended July 31, 2008 was (2.41)%. ¹ The total return of the Russell 2000 ^® Value Index ² (Russell 2000 ^® Value) was (9.95)% and the total return of the Lipper Small-Cap Value Funds Index ³ was (12.36)% for the same period. The Institutional Shares total return for the fiscal year reflected actual cash flows, transaction costs and other expenses which were not reflected in the total return of the Russell 2000 ^® Value.

1 The fund is the successor to the MDT Small Cap Value Fund pursuant to a reorganization that took place on December 8, 2006. Prior to that date, the fund had no investment operations. Accordingly, the performance information provided is historical information of the MDT Small Cap Value Fund. Small Company stocks may be less liquid and subject to greater price volatility than large capitalization stocks.

2 The Russell 2000® Value Index offers investors access to the small-cap value segment of the U.S. equity universe. The Russell 2000 Value is constructed to provide a comprehensive and unbiased barometer of the small-cap value market. Based on ongoing empirical research of investment manager behavior, the methodology used to determine value probability approximates the aggregate small-cap value manager's opportunity set.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

Market Overview

Over the 12-month period ending July 31, 2008, domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000 ^® Index, ⁴ which represents the performance of the 3,000 largest U.S. companies by market capitalization, finished the period down 10.32%. Small cap stocks had the best relative results as demonstrated by the (6.71)% return of the Russell 2000 ^® Index, ⁵ which exceeded the (10.10)% and (10.81)% results for the Russell Midcap ^® Index ⁶ and the Russell Top 200 ^® Index, ⁷ respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000 ^® Growth Index ⁸ returning (6.11)% as compared to (14.75)% for the Russell 3000 Value ^® Index. ⁹

The best performing sectors during the period as measured by the Russell 3000 ^® Index were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

4 The Russell 3000® Index offers investors access to the broad U.S. equity universe representing approximately 98% of the U.S. market. The Russell 3000 is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected.

5 The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index. The index is unmanaged and investments cannot be made directly in an index.

6 The Russell Midcap® Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 31% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

7 Russell Top 200® Index measures the performance of the 200 largest companies in the Russell 1000 Index, which represents approximately 69% of the total market capitalization of the Russell 1000 Index. The index is unmanaged and investments cannot be made directly in an index.

8 The Russell 3000® Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000 Growth or the Russell 2000 Growth indexes. The index is unmanaged and investments cannot be made directly in an index.

9 The Russell 3000® Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000 Value or the Russell 2000 Value indexes. The index is unmanaged and investments cannot be made directly in an index.

Fund Performance

The most significant positive factor in the fund's performance relative to the Russell 2000 ^® Value Index was its relative underweight and stock selection in the Financials sector. The fund's stock selection in the Consumer Discretionary, Industrials and Materials sectors also provided significant contributions. Additionally, the fund's overweight in the Energy sector provided a significant contribution to relative performance. The most significant negative factor in the fund's performance relative to the Russell 2000 ^® Value Index was its underweight in the Health Care sector which detracted modestly.

Individual stocks contributing to the fund's performance relative to the Russell 2000 Value Index included: Terra Industries, Inc., an agricultural and industrial chemical producer, Encore Acquisition Company, Whiting Petroleum Corporation and Stone Energy Corporation, all oil and natural gas production companies and Compass Minerals International, Inc., a mineral producer.

Individual stocks detracting from the fund's performance relative to the Russell 2000 Value Index included: CF Industries Holdings Inc., a fertilizer manufacturer, Petrohawk Energy Corporation, an oil and natural gas producer, USA Mobility Inc., Speedway Motorsports, Inc. and OM Group Inc., a specialty chemicals producer.

GROWTH OF A $25,000 INVESTMENT - INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000 ¹ in the Federated MDT Small Cap Value Fund (Institutional Shares) (the "Fund") from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 2000 Value Index (Russell 2000 Value) ² and the Lipper Small-Cap Value Funds Index. ³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(2.41	)%
Start of Performance (9/15/2005)	3.84	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 The Fund's performance assumes the reinvestment of all dividends and distributions. The Russell 2000 Value and the Lipper Small-Cap Value Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 2000 Value Index is not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in the Fund's performance. The index is unmanaged and, unlike the Fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper Indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund's industry composition ¹ was as follows:

Industry	Percentage of Total Net Assets
Crude Oil & Gas Production	8.2	%
Regional Bank	7.1	%
Property Liability Insurance	5.6	%
Multi Line Insurance	5.2	%
Electric Utility	4.1	%
Maritime	3.2	%
Savings and Loan	2.9	%
Metal Fabrication	2.8	%
Financial Services	2.6	%
Oil Service, Explore & Drill	2.5	%
Miscellaneous Food Products	2.3	%
Food Wholesaling	2.1	%
Other Communications Equipment	2.0	%
Multi Industry Basic	2.0	%
Computer Services	2.0	%
Apparel	1.6	%
Agricultural Chemicals	1.6	%
Shoes	1.6	%
Specialty Retailing	1.4	%
Insurance Brokerage	1.4	%
Electrical Equipment	1.4	%
Software Packaged/Custom	1.3	%
Computer Networking	1.3	%
Securities Brokerage	1.3	%
Miscellaneous Metals	1.2	%
Commodity Chemicals	1.2	%
Poultry Products	1.1	%
Restaurant	1.1	%
Construction Machinery	1.1	%
Contracting	1.0	%
Leasing	1.0	%
Integrated Domestic Oil	1.0	%
Other 2	23.0	%
Cash Equivalents 3	1.4	%
Other Assets and Liabilities--Net 4	(0.6	)%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund's total net assets have been aggregated under the designation "Other."

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares					Value
			COMMON STOCKS--99.2%
			Agricultural Chemicals--1.6%
	392		CF Industries Holdings, Inc.	$	64,076
	7,019	1	Terra Industries, Inc.		379,026
			TOTAL		443,102
			Agricultural Machinery--0.8%
	9,006		Alamo Group, Inc.		194,980
	313		Lindsay Manufacturing Co.		28,881
			TOTAL		223,861
			Aluminum--0.7%
	3,722		Kaiser Aluminum Corp.		196,335
			Apparel--1.6%
	1,420		Columbia Sportswear Co.		52,980
	31,555	1	Quiksilver, Inc.		242,027
	3,840	1	Warnaco Group, Inc.		161,088
			TOTAL		456,095
			Auto Part Replacement--0.5%
	13,716		Standard Motor Products, Inc.		128,793
			Beer--0.3%
	1,241	1	Central European Distribution Corp.		90,543
			Book Publishing--0.3%
	3,776		Scholastic Corp.		97,383
			Broadcasting--0.4%
	17,223		Entercom Communication Corp.		105,577
			Building Materials--0.9%
	678		Ameron, Inc.		87,659
	9,308		Insteel Industries, Inc.		164,472
			TOTAL		252,131
			Clothing Stores--0.7%
	1,742	1	Children's Place Retail Stores, Inc.		66,283
	5,825	1	Jos A. Bank Clothiers, Inc.		130,480
			TOTAL		196,763
Shares					Value
			COMMON STOCKS--continued
			Cogeneration--0.3%
	13,134	1	Aventine Renewable Energy Holdings, Inc.	$	89,311
			Commercial Services--0.1%
	773	1	SAIC, Inc.		14,602
			Commodity Chemicals--1.2%
	979		Compass Minerals International, Inc.		74,012
	8,125		Innophos Holdings, Inc.		238,631
	109		Newmarket Corp.		6,732
			TOTAL		319,375
			Computer Networking--1.3%
	15,331	1	Avocent Corp.		364,571
			Computer Peripherals--0.5%
	1,475		Bel Fuse, Inc.		41,831
	5,601		Imation Corp.		106,755
			TOTAL		148,586
			Computer Services--2.0%
	2,786	1	CACI International, Inc., Class A		125,259
	17,824	1	Synnex Corp.		416,369
			TOTAL		541,628
			Computer Stores--0.9%
	9,473	1	PC Connections, Inc.		67,921
	5,066	1	Tech Data Corp.		176,651
			TOTAL		244,572
			Construction Machinery--1.1%
	7,808	1	NCI Building System, Inc.		292,488
			Contracting--1.0%
	13,486		Comfort Systems USA, Inc.		178,824
	2,428	1	Emcor Group, Inc.		73,131
	1,098		Granite Construction, Inc.		34,730
			TOTAL		286,685
			Crude Oil & Gas Production--8.2%
	8,267		Berry Petroleum Co., Class A		355,812
	1,941	1	Bill Barrett Corp.		79,853
	1,672	1	EXCO Resources, Inc.		43,556
Shares					Value
			COMMON STOCKS--continued
			Crude Oil & Gas Production--continued
	3,122	1	Encore Acquisition Co.	$	193,158
	10,783	1	Energy Partners Ltd.		128,102
	928	1	GMX Resources, Inc.		54,474
	8,518	1	Gulfport Energy Corp.		122,830
	1,193		Penn Virginia Corp.		72,475
	2	1	Petroleum Development Corp.		111
	5,483	1	RAM Energy Resources, Inc.		25,551
	16,462	1	Rosetta Resources, Inc.		388,832
	5,709	1	Stone Energy Corp.		291,273
	7,170	1	Swift Energy Co.		364,379
	7,753	1	TXCO Resources, Inc.		72,878
	834	1	Whiting Petroleum Corp.		78,121
			TOTAL		2,271,405
			Defense Aerospace--0.7%
	5,439	1	AAR Corp.		93,496
	2,160	1	Esterline Technologies Corp.		105,365
			TOTAL		198,861
			Discount Department Stores--0.3%
	6,299		Freds, Inc.		81,005
			Diversified Leisure--0.3%
	2,273	1	Coinstar, Inc.		78,396
			Drug Stores--0.1%
	315		Longs Drug Stores Corp.		14,726
			Electric & Electronic Original Equipment Manufacturers--0.3%
	4,726		CTS Corp.		60,776
	286	1	Rogers Corp.		11,815
			TOTAL		72,591
			Electric Test/Measuring Equipment--0.1%
	1,471	1	Multi-Fineline Electronix, Inc.		39,246
			Electric Utility--4.1%
	3,019		Avista Corp.		68,290
	7,258		Cleco Corp.		182,394
	10,742	1	El Paso Electric Co.		221,930
	3,467		Empire Distribution Electric Co.		70,761
Shares					Value
			COMMON STOCKS--continued
			Electric Utility--continued
	5,243		Idacorp, Inc.	$	156,294
	7,217		PNM Resources, Inc.		84,511
	14,837		Portland General Electric Co.		348,521
			TOTAL		1,132,701
			Electrical Equipment--1.4%
	7,120		Encore Wire Corp.		129,798
	4,150	1	EnerSys, Inc.		133,962
	1,518	1	Littelfuse, Inc.		48,515
	1,262		Robbins & Myers, Inc.		64,072
			TOTAL		376,347
			Electronic Components--0.2%
	4,549	1	Eagle Test Systems, Inc.		56,408
			Electronic Instruments--0.3%
	654		Analogic Corp.		47,860
	326	1	Axsys Technologies, Inc.		23,941
			TOTAL		71,801
			Financial Services--2.6%
	9,154	1	America's Car-Mart, Inc.		182,348
	6,015		Blackrock Kelso Capital Corp.		58,706
	11,032	1	Encore Capital Group, Inc.		135,142
	8,786	1	MBIA Insurance Corp.		52,101
	11,859		MainSource Financial Group, Inc.		211,683
	7,952		Medallion Financial Corp.		78,566
			TOTAL		718,546
			Food Wholesaling--2.1%
	10,635		Nash Finch Co.		419,763
	10,239	1	Omega Protein Corp.		160,138
			TOTAL		579,901
			Furniture--0.3%
	3,183		Aaron Rents, Inc.		87,437
			Gas Distributor--0.5%
	4,639		Southwest Gas Corp.		134,067
			Generic Drugs--0.2%
	1,586		Perrigo Co.		55,875
Shares					Value
			COMMON STOCKS--continued
			Grocery Chain--0.5%
	4,062		Casey's General Stores, Inc.	$	99,925
	2,757	1	Great Atlantic & Pacific Tea Co., Inc.		43,864
			TOTAL		143,789
			Home Products--0.1%
	388		Tupperware Brands Corp.		15,132
			Hotels and Motels--0.1%
	9,657	1	Interstate Hotels & Resorts, Inc.		25,591
			Industrial Machinery--0.3%
	608	1	Chart Industries, Inc.		32,175
	1,005		Gorman Rupp Co.		44,763
			TOTAL		76,938
			Insurance Brokerage--1.4%
	22,457		AmTrust Financial Services, Inc.		327,198
	3,291	1	Texas Capital Bancshares, Inc.		53,150
			TOTAL		380,348
			Integrated Domestic Oil--1.0%
	11,593	1	Callon Petroleum Corp.		266,523
			Jewelry Stores--0.3%
	3,522		Movado Group, Inc.		75,723
			Leasing--1.0%
	8,343	1	CAI International, Inc.		152,343
	5,762		Financial Federal Corp.		132,814
			TOTAL		285,157
			Life Insurance--0.7%
	12,056		American Equity Investment Life Holding Co.		105,369
	7,819	1	Universal American Financial Corp.		82,021
			TOTAL		187,390
			Long-Term Care Centers--0.2%
	1,819	1	Kindred Healthcare, Inc.		49,058
			Major Steel Producer--0.3%
	2,436	1	Universal Stainless & Alloy		92,958
Shares					Value
			COMMON STOCKS--continued
			Maritime--3.2%
	5,206		Genco Shipping & Trading Ltd.	$	354,945
	3,432		General Maritime Corp.		92,458
	17,152		TAL International Group, Inc.		433,946
			TOTAL		881,349
			Metal Fabrication--2.8%
	2,433		CIRCOR International, Inc.		144,909
	3,826		Mueller Industries, Inc.		98,213
	1,813		Olympic Steel, Inc.		92,191
	24,442		Worthington Industries, Inc.		433,601
			TOTAL		768,914
			Mini-Mill Producer--0.2%
	572		Schnitzer Steel Industries, Inc., Class A		51,617
			Miscellaneous Food Products--2.3%
	8,732	1	Fresh Del Monte Produce, Inc.		184,071
	10,264		The Anderson's, Inc.		466,499
			TOTAL		650,570
			Miscellaneous Machinery--0.5%
	764		Curtiss Wright Corp.		40,217
	1,310		Nordson Corp.		92,565
			TOTAL		132,782
			Miscellaneous Metals--1.2%
	4,066	1	Brush Engineered Materials, Inc.		97,299
	2,161		Matthews International Corp., Class A		107,856
	24,609	1	USEC, Inc.		128,459
			TOTAL		333,614
			Money Center Bank--0.1%
	1,476	1	Pennsylvania Commerce Bancorp, Inc.		36,221
			Multi Industry Basic--2.0%
	18,468		Olin Corp.		549,238
			Multi Industry Capital Good--0.8%
	3,618	1	Ceradyne, Inc.		167,694
	5,583	1	Gerber Scientific, Inc.		66,270
			TOTAL		233,964
Shares					Value
			COMMON STOCKS--continued
			Multi Line Insurance--5.2%
	15,457	1	Amerisafe, Inc.	$	280,854
	4,408		EMC Insurance Group, Inc.		107,908
	6,924	1	FPIC Insurance Group, Inc.		345,854
	6,754		Harleysville Group, Inc.		240,645
	5,098	1	Navigators Group, Inc.		242,461
	3,463		Safety Insurance Group, Inc.		147,074
	2,270		Zenith National Insurance Corp.		78,111
			TOTAL		1,442,907
			Natural Gas Production--0.6%
	870	1	Natural Gas Services Group, Inc.		22,324
	22,971	1	VAALCO Energy, Inc.		150,460
			TOTAL		172,784
			Offshore Driller--0.7%
	960	1	Hornbeck Offshore Services, Inc.		42,797
	9,855	1	Pioneer Drilling Co.		156,596
			TOTAL		199,393
			Oil Service, Explore & Drill--2.5%
	7,228	1	Gulfmark Offshore, Inc.		362,701
	13,042	1	Parker Drilling Co.		105,249
	10,966	1	PetroQuest Energy, Inc.		228,860
			TOTAL		696,810
			Oil Well Supply--0.3%
	1,015		Lufkin Industries, Inc.		90,538
			Other Communications Equipment--2.0%
	28,058	1	Skyworks Solutions, Inc.		265,429
	18,388	1	Syniverse Holdings, Inc.		297,886
			TOTAL		563,315
			Packaged Foods--0.1%
	552	1	Ralcorp Holdings, Inc.		29,786
			Paper Products--0.6%
	7,999	1	Buckeye Technologies, Inc.		77,990
	6,490		Glatfelter (P.H.) Co.		94,884
			TOTAL		172,874
Shares					Value
			COMMON STOCKS--continued
			Personnel Agency--0.2%
	1,636	1	Aecom Technology Corp.	$	46,577
	77		CDI Corp.		1,585
			TOTAL		48,162
			Plastic--0.3%
	4,081		Schulman (A.), Inc.		94,802
			Poultry Products--1.1%
	7,847		Sanderson Farms, Inc.		311,840
			Printed Circuit Boards--0.5%
	10,222	1	Benchmark Electronics, Inc.		149,650
			Printing--0.8%
	16,264		Bowne & Co., Inc.		210,294
			Property Liability Insurance--5.6%
	2,249	1	AmCOMP, Inc.		23,165
	6,809		American Physicians Capital, Inc.		338,952
	3,757		American Physicians Service Group, Inc.		77,958
	7,408	1	CNA Surety Corp.		96,230
	6,508	1	First Mercury Financial Corp.		104,128
	8,653		Meadowbrook Insurance Group, Inc.		55,466
	8,054	1	ProAssurance Corp.		394,163
	4,800		RLI Corp.		262,176
	10,170	1	Seabright Insurance Holdings, Inc.		116,955
	4,586		Selective Insurance Group, Inc.		99,058
			TOTAL		1,568,251
			Railroad--0.5%
	3,722	1	Genesee & Wyoming, Inc., Class A		150,629
			Regional Bank--7.1%
	1,885		Bancorpsouth, Inc.		40,151
	3,193		Bank of the Ozarks, Inc.		65,457
	1,764		Center Financial Corp.		19,404
	2,791		Chemical Financial Corp.		74,157
	3,278		Columbia Banking Systems, Inc.		49,531
	1,855		Community Trust Bancorp, Inc.		57,171
	304		Farmers Capital Bank Corp.		9,178
Shares					Value
			COMMON STOCKS--continued
			Regional Bank--continued
	28,542		First BanCorp	$	249,743
	1,971		First Merchants Corp.		41,391
	3,786		FirstMerit Corp.		74,508
	5,159		Lakeland Bancorp, Inc.		59,380
	12,856		Oriental Financial Group		223,309
	9,818		Pacific Capital Bancorp		128,321
	142		Park National Corp.		8,893
	7,234		Republic Bancorp, Inc.		223,820
	15,113		Santander BanCorp		165,941
	9,156		Southside Bancshares, Inc.		181,563
	8,111		Susquehanna Bankshares, Inc.		116,150
	1,412		UMB Financial Corp.		77,759
	1,997		Wesbanco, Inc.		45,512
	5,367		Wilshire Bancorp, Inc.		66,121
			TOTAL		1,977,460
			Restaurant--1.1%
	3,389		Bob Evans Farms, Inc.		97,061
	6,029	1	CEC Entertainment, Inc.		210,171
			TOTAL		307,232
			Savings and Loan--2.9%
	669		Dime Community Bancorp, Inc.		11,192
	4,234		First Financial Holdings, Inc.		84,595
	16,507		Flushing Financial Corp.		291,018
	1,322		Glacier Bancorp, Inc.		28,648
	2,046	1	Investors Bancorp, Inc.		31,120
	5,205		Newalliance Bancshares, Inc.		67,561
	2,638		OceanFirst Financial Corp.		47,721
	22,593	1	Ocwen Financial Corp.		136,462
	1,861		WSFS Financial Corp.		101,331
			TOTAL		799,648
Shares					Value
			COMMON STOCKS--continued
			Securities Brokerage--1.3%
	5,371	1	Interactive Brokers Group, Inc., Class A	$	150,710
	4,483	1	Knight Capital Group, Inc., Class A		73,476
	7,226		SWS Group, Inc.		136,716
			TOTAL		360,902
			Semiconductor Manufacturing--0.1%
	1,468	1	Plexus Corp.		41,838
			Shoes--1.6%
	148	1	Deckers Outdoor Corp.		16,725
	6,760	1	Genesco, Inc.		198,744
	11,532	1	Skechers USA, Inc., Class A		217,955
	212	1	Steven Madden Ltd.		4,768
			Total		438,192
			Software Packaged/Custom--1.3%
	6,059	1	Electronics for Imaging, Inc.		84,887
	2,568	1	S1 Corp.		20,852
	8,878	1	TNS, Inc.		202,418
	7,586	1	Tibco Software, Inc.		62,281
			TOTAL		370,438
			Specialty Chemicals--0.7%
	1,220		Minerals Technologies, Inc.		78,702
	3,610		Quaker Chemical Corp.		107,867
			TOTAL		186,569
			Specialty Machinery--0.3%
	1,962		Woodward Governor Co.		88,290
			Specialty Retailing--1.4%
	2,564		Barnes & Noble, Inc.		60,664
	17,584	1	Cabela's, Inc., Class A		204,326
	3,508	1	Conn's, Inc.		55,076
	1,292		Finish Line, Inc., Class A		14,018
	4,383		Stage Stores, Inc.		64,956
			TOTAL		399,040
Shares					Value
			COMMON STOCKS--continued
			Telecommunication Equipment & Services--0.1%
	2,195	1	ADC Telecommunications, Inc.	$	20,765
	1,077	1	Tekelec, Inc.		16,790
			TOTAL		37,555
			Toys & Games--0.3%
	4,140	1	JAKKS Pacific, Inc.		90,997
			Truck Manufacturing--0.3%
	14,400		Spartan Motors, Inc.		78,048
			Trucking--0.3%
	2,065		Arkansas Best Corp.		76,694
			Undesignated Consumer Cyclicals--0.9%
	4,714	1	LECG Corp.		39,079
	10,375		Speedway Motorsports, Inc.		200,341
			TOTAL		239,420
			Undesignated Health--0.8%
	11,218	1	Healthspring, Inc.		218,190
			Uniforms--0.8%
	4,791		Unifirst Corp.		214,493
			TOTAL COMMON STOCKS (IDENTIFIED COST $27,208,725)		27,525,631
			MUTUAL FUND--1.4%
	382,184	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)		382,184
			TOTAL INVESTMENTS--100.6% (IDENTIFIED COST $27,590,909) 4		27,907,815
			OTHER ASSETS AND LIABILITIES - NET--(0.6)% 5		(152,960	)
			TOTAL NET ASSETS--100%	$	27,754,855

1 Non-income-producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $27,873,140.

5 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $382,184 of investments in an affiliated issuer (Note 5) (identified cost $27,590,909)			$	27,907,815
Income receivable				13,898
Receivable for investments sold				276,209
Receivable for shares sold				71,332
TOTAL ASSETS				28,269,254
Liabilities:
Payable for investments purchased	$	438,037
Payable for shares redeemed		57
Payable for auditing fees		21,200
Payable for share registration costs		27,369
Payable for distribution services fee (Note 5)		1,908
Payable for shareholder services fee (Note 5)		3,476
Accrued expenses		22,352
TOTAL LIABILITIES				514,399
Net assets for 2,677,001 shares outstanding			$	27,754,855
Net Assets Consist of:
Paid-in capital			$	29,566,408
Net unrealized appreciation of investments				316,906
Accumulated net realized loss on investments				(2,128,459	)
TOTAL NET ASSETS			$	27,754,855
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($21,380,815 ÷ 2,052,925 shares outstanding), no par value, unlimited shares authorized				$10.41
Offering price per share				$10.41
Redemption proceeds per share				$10.41
Class A Shares:
Net asset value per share ($3,179,043 ÷ 307,688 shares outstanding), no par value, unlimited shares authorized				$10.33
Offering price per share (100/94.50 of $10.33) 1				$10.93
Redemption proceeds per share				$10.33
Class C Shares:
Net asset value per share ($3,194,997 ÷ 316,388 shares outstanding), no par value, unlimited shares authorized				$10.10
Offering price per share				$10.10
Redemption proceeds per share (99.00/100 of $10.10) 1				$10.00

1 See "What Do Shares Cost?" in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $11,557 received from an affiliated issuer (Note 5) and net of foreign taxes withheld of $457)							$	236,376
Expenses:
Investment adviser fee (Note 5)				$	191,240
Administrative personnel and services fee (Note 5)					230,000
Custodian fees					32,292
Transfer and dividend disbursing agent fees and expenses					45,400
Directors'/Trustees' fees					1,205
Auditing fees					26,700
Legal fees					19,013
Portfolio accounting fees					75,978
Distribution services fee--Class C Shares (Note 5)					10,829
Shareholder services fee--Class A Shares (Note 5)					7,278
Shareholder services fee--Class C Shares (Note 5)					3,547
Share registration costs					56,704
Printing and postage					32,951
Insurance premiums					4,648
Interest expense					1,306
Miscellaneous					3,830
TOTAL EXPENSES					742,921
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee	$	(191,240	)
Waiver of administrative personnel and services fee		(44,833	)
Waiver of distribution services fee--Class C Shares		(88	)
Reimbursement of other operating expenses		(235,568	)
TOTAL WAIVERS AND REIMBURSEMENTS					(471,729	)
Net expenses								271,192
Net investment income (loss)								(34,816	)
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments								(2,063,606	)
Net change in unrealized depreciation of investments								950,455
Net realized and unrealized loss on investments								(1,113,151	)
Change in net assets resulting from operations							$	(1,147,967	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(34,816	)	$	(32,233	)
Net realized gain (loss) on investments		(2,063,606	)		875,788
Net change in unrealized appreciation/depreciation of investments		950,455			(619,049	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(1,147,967	)		224,506
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(638,272	)		- --
Class A Shares		(198,621	)		- --
Class C Shares		(63,763	)		- --
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(900,656	)		- --
Share Transactions:
Proceeds from sale of shares		21,054,023			16,884,477
Net asset value of shares issued to shareholders in payment of distributions declared		316,054			- --
Cost of shares redeemed		(6,659,980	)		(3,364,195	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		14,710,097			13,520,282
Redemption fees		- --			39
Change in net assets		12,661,474			13,744,827
Net Assets:
Beginning of period		15,093,381			1,348,554
End of period	$	27,754,855		$	15,093,381

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine portfolios. The financial statements included herein are only those of Federated MDT Small Cap Value Fund (the "Fund"), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Class A Shares and Class C Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The Financial Highlights of the Class A Shares and Class C Shares are presented separately. The primary investment objective of the Fund is long-term capital appreciation.

MDT Small Cap Value Fund (the "Predecessor Fund") was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced operations on September 15, 2005.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the "Trustees").
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund's NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers, and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a "bid" evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a "mid" evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment's value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer's operations or regulatory changes or market developments affecting the issuer's industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund's custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a "securities entitlement" and exercises "control" as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund's Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

Withholding taxes and where appropriate, deferred withholding taxes on foreign interest, dividends and capital gains have been provided for in accordance with the applicable country's tax rules and rates.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	1,548,526		$	16,894,234		1,140,726		$	12,999,804
Shares issued to shareholders in payment of distributions declared	7,094			75,830		- --			--
Shares redeemed	(482,513	)		(5,241,402	)	(217,235	)		(2,529,781	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	1,073,107		$	11,728,662		923,491		$	10,470,023
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	134,417		$	1,472,044		257,303		$	2,904,620
Shares issued to shareholders in payment of distributions declared	17,137			182,165		--			--
Shares redeemed	(103,407	)		(1,103,930	)	(63,571	)		(756,151	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	48,147		$	550,279		193,732		$	2,148,469
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	256,136		$	2,687,745		86,450		$	980,053
Shares issued to shareholders in payment of distributions declared	5,566			58,059		--			--
Shares redeemed	(30,126	)		(314,648	)	(6,463	)		(78,263	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	231,576		$	2,431,156		79,987		$	901,790
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	1,352,830		$	14,710,097		1,197,210		$	13,520,282

Redemption Fees

Prior to December 11, 2006, the Predecessor Fund imposed a 2.00% redemption fee to shareholders of the Fund's Institutional Shares, Class A Shares and Class C Shares who redeemed shares held for 30 days or less. Shares acquired by reinvestment of dividends or distributions of the Fund, or purchased pursuant to the Systematic Investment Program or withdrawn pursuant to the Systematic Withdrawal Program, were not subject to the redemption fee. All redemption fees were recorded by the Fund as additions to paid-in capital. For the year ended July 31, 2007, the Predecessor Fund incurred redemption fees for Institutional Shares, Class A Shares and Class C Shares amounted to $23, $13 and $3, respectively.

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due to differing treatments for net operating loss.

For the year ended July 31, 2008, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gain (Loss)
$(35,041)	$34,816	$225

Net investment income (loss), net realized gains (losses) and net assets were not affected by this reclassification.

The tax character of distributions as reported on the Statement of Changes in Net Assets for the year ended July 31, 2008, was as follows:

	2008
Ordinary income 1	$885,746
Long-term capital gains	$ 14,910

1 For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Net unrealized appreciation	$	34,675
Capital loss carryforwards and deferrals	$	(1,846,228	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $27,873,140. The net unrealized appreciation of investments for federal tax purposes was $34,675. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $1,640,113 and net unrealized depreciation from investments for those securities having an excess of cost over value of $1,605,438.

At July 31, 2008, the Fund had a capital loss carryforward of $176,370 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the 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. Pursuant to the Code, such capital loss carryforward will expire in 2016.

Under current tax regulations, capital losses on securities transactions realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post October losses of $1,669,858 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and Adviser provides for an annual fee equal to 1.15% of the Fund's average daily net assets. Prior to December 8, 2006, the Adviser received an annual investment adviser fee equal to 1.25% of the Fund's average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or portion of the advisory fee and/or reimburse certain operating expenses excluding (interest, taxes and brokerage commissions) to no more than the following annual percentages for each Class of the Fund based on average daily net assets:

Share Class	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.80%
Class A Shares	2.05%
Class C Shares	2.80%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment and subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any additional portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the year ended July 31, 2008, the Adviser waived $190,942 of its fee and reimbursed $235,568 of other operating expenses.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. During the period from July 15, 2006 through December 8, 2006, the administrator contractually agreed to waive a portion of its fee which it would otherwise be entitled to receive from the Fund under the Agreement. The level of fees payable by the Fund to FAS for the period will not exceed the level of fees which the Fund would have paid during the period to its previous service provider under its previous administrative services contract. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2008, the net fee paid to FAS was 1.113% of average daily net assets of the Fund. The Fund currently accrues the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above. FAS waived $44,833 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act which became effective December 11, 2006. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares and Class C Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class Name	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC:

Share Class	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

Subject to terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $6,523 of fees paid by the Fund. For the year ended July 31, 2008, the Fund's Class A Shares did not incur a distribution services fee. On November 15, 2007, the Fund's Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008. For the year ended July 31, 2008, the FSC waived $88 of its fee.

Sales Charges

For the year ended July 31, 2008, FSC retained $1,434 in sales charges from the sale of Class A Shares. FSC also retained $1,312 of contingent deferred sales charges relating to redemptions of Class C Shares. See "What Do Shares Cost?" in the Prospectus.

Shareholder Services Fee

Effective December 11, 2006, the Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. For the year ended July 31, 2008, FSSC did not receive any fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.50%, 1.75% and 2.50%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $298. Transactions with the affiliated company during the year ended July 31, 2008 were as follows:

Affiliate	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	160,179	19,769,346	19,547,341	382,184	$382,184	$11,557

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	55,559,109
Sales	$	41,875,958

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds, and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund's net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2008, the amount of long-term capital gains designated by the Fund was $14,910.

For the fiscal year ended July 31, 2008, 14.12% of total ordinary income (including short-term capital gain) distributions made by the Trust are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.

Of the ordinary income (including short-term capital gain) distributions made by the Fund during the year ended July 31, 2008, 13.02% qualify for the dividend received deduction available to corporate shareholders.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND SHAREHOLDERS OF FEDERATED MDT SMALL CAP VALUE FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Small Cap Value Fund (the "Fund") (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Small Cap Value Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex's Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company; Chairman and Director, Federated Investment Counseling.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc.; (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O'Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children's Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT SMALL CAP VALUE FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For the one-year period ending December 31, 2007, the Fund's performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same period, the Fund outperformed its benchmark index for the one-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated
World-Class Investment Manager

Federated MDT Small Cap Value Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R726

37325 (9/08)

Federated is a registered mark of Federated Investors, Inc. 2008 (c)Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT Tax Aware/All Cap Core Fund

Established 2005

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Class A Shares
Class C Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Financial Highlights--Class A Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended 7/31/2006	2
	2008		2007	1
Net Asset Value, Beginning of Period	$11.65		$10.35		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.00	)3,4	(0.02	)3	(0.05	)3
Net realized and unrealized gain (loss) on investments	(0.81	)	1.32		0.40
TOTAL FROM INVESTMENT OPERATIONS	(0.81	)	1.30		0.35
Net Asset Value, End of Period	$10.84		$11.65		$10.35
Total Return5	(6.95	)%	12.56	%	3.50	%
Ratios to Average Net Assets:
Net expenses	1.65	%	1.65	%	2.01	%6
Net investment income (loss)	(0.02	)%	(0.14	)%	(0.50	)%6
Expense waiver/reimbursement7	3.12	%	5.81	%	3.71	%6
Supplemental Data:
Net assets, end of period (000 omitted)	$6,862		$3,903		$2,061
Portfolio turnover	183	%	154	%	182	%

1 MDT Tax Aware/All Cap Core Fund (the “Predecessor Fund”) was reorganized into the Federated MDT Tax Aware/All Cap Core Fund (the “Fund”) as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund’s operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to
July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Represents less than $0.01.

5 Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

6 Computed on an annualized basis.

7 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Financial Highlights--Class C Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,				Period Ended 7/31/2006
	2008		2007	1		2
Net Asset Value, Beginning of Period	$11.47		$10.27		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.08	)3	(0.10	)3	(0.13	)3
Net realized and unrealized gain (loss) on investments	(0.79	)	1.30		0.40
TOTAL FROM INVESTMENT OPERATIONS	(0.87	)	1.20		0.27
Net Asset Value, End of Period	$10.60		$11.47		$10.27
Total Return4	(7.59	)%	11.68	%	2.70	%
Ratios to Average Net Assets:
Net expenses	2.37	%	2.40	%	2.76	%5
Net investment income (loss)	(0.73	)%	(0.89	)%	(1.25	)%5
Expense waiver/reimbursement6	3.19	%	5.70	%	3.71	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$3,587		$3,007		$1,329
Portfolio turnover	183	%	154	%	182	%

1 The Predecessor Fund was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund’s operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to
July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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, such as sales charges (loads) on purchase or redemption payments. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period1
Actual:
Class A Shares	$1,000	$937.70	$7.95
Class C Shares	$1,000	$934.70	$11.26
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,016.66	$8.27
Class C Shares	$1,000	$1,013.23	$11.71

1 Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). The annualized net expense ratios are as follows:

Class A Shares	1.65%
Class C Shares	2.34%

Management’s Discussion of Fund Performance

The fund’s total return, based on net asset value, for the fiscal year ended July 31, 2008 was (6.95)% for Class A Shares and (7.59)% for Class C Shares.¹ The total return of the Russell 3000^® Index² (Russell 3000^®) was (10.32)% and the total return of the Lipper Multi-Cap Core Funds Index³ was (11.11)% for the same period. The fund’s total return for the fiscal year reflected actual cash flows, transaction costs, and other expenses which were not reflected in the total return of the Russell Index.

MARKET OVERVIEW

Over the 12-month period ending July 31, 2008 domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000^® Index, which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period down 10.32%. Small cap stocks had the best relative results as demonstrated by the (6.71)% return on the Russell 2000^® Index,⁴ which exceeded the (10.10)% and (10.81)% results for the Russell

1 The fund is the successor to the MDT Tax Aware/All Cap Core Fund pursuant to a reorganization that took place on December 8, 2006. Prior to that date, the fund had no investment operations. Accordingly, the performance information provided is historical information of the MDT Tax Aware/All Cap Core Fund.

2 Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. The index is unmanaged and investments cannot be made in an index.

3 Lipper indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

4 Russell 2000^® Index measures the performance of the 2,000 smallest companies in the Russell 3000^® Index, which represents approximately 10% of the total market capitalization of the Russell 3000^® Index. The index is unmanaged and investments cannot be made in an index.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

Midcap^® Index⁵ and the Russell Top 200^® Index,⁶ respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000^® Growth Index⁷ returning (6.11)% as compared to (14.75)% for the Russell 3000 Value^® Index.⁸

The best performing sectors during the period as measured by the Russell 3000^® were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

FUND PERFORMANCE

The most significant positive factor in the fund’s performance relative to the Russell 3000^® Index was stock selection in the Materials sector. Additionally, the fund’s overweight in the Energy sector provided a significant contribution to relative performance. The most significant negative factor in the fund’s performance relative to the Russell 3000^® Index was its overweight in the Financials sector. Additionally, an underweight in the Consumer Staples sector detracted moderately from relative performance.

Individual stocks contributing to the fund’s performance relative to the Russell 3000^® Index included: Monsanto Company, Apple Computer Inc., United States Steel Company, General Electric Company, and Chevron Corporation.

Individual stocks detracting from the fund’s performance relative to the Russell 3000^® Index included: JP Morgan Chase & Company, Regions Financial Corporation, Bank of America Corporation, MBIA Inc., and Metlife Inc.

5 Russell Midcap^® Index measures the performance of the 800 smallest companies in the Russell 1000^® Index, which represent approximately 35% of the total market capitalization of the Russell 1000^® Index. The index is unmanaged and investments cannot be made in an index.

6 Russell Top 200^® Index measures the performance of the 200 largest companies in the Russell 1000^® Index, which represents approximately 65% of the total market capitalization of the Russell 1000^® Index. The index is unmanaged and investments cannot be made in an index.

7 Russell 3000^® Growth Index measures the performance of those Russell 3000^® Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000^® Growth or the Russell 2000^® Growth indexes. The index is unmanaged and investments cannot be made in an index.

8 Russell 3000^® Value Index measures the performance of those Russell 3000^® Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000^® Value or the Russell 2000^® Value indexes. The index is unmanaged and investments cannot be made in an index.

GROWTH OF A $10,000 INVESTMENT - CLASS A SHARES

The graph below illustrates the hypothetical investment of $10,000¹ in the Federated MDT Tax Aware/All Cap Core Fund (Class A Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 3000 Index (Russell 3000)² and the Lipper Multi-Cap Core Funds Index.³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(12.08	)%
Start of Performance (9/15/2005)	0.85	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum sales charge of 5.50%.

1 Represents a hypothetical investment of $10,000 in the Fund after deducting the maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge = $9,450). The Fund’s performance assumes the reinvestment of all dividends and distributions. The Russell 3000^® and the Lipper Multi-Cap Core Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 3000 is not adjusted to reflect sales charges, expenses, or other fees that the Securities and Exchange Commission (SEC) requires to be reflected in the Fund’s performance. The index is unmanaged and, unlike the Fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

GROWTH OF A $10,000 INVESTMENT - CLASS C SHARES

The graph below illustrates the hypothetical investment of $10,000¹ in the Federated MDT Tax Aware/All Cap Core Fund (Class C Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 3000 Index (Russell 3000)² and the Lipper Multi-Cap Core Funds Index.³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(8.51	)%
Start of Performance (9/15/2005)	2.05	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured. Total returns shown include the maximum contingent deferred sales charge (CDSC) of 1.00% as applicable.

1 Represents a hypothetical investment of $10,000 in the Fund. The maximum CDSC is 1.00% on any redemption less than one year from the purchase date. The Fund’s performance assumes the reinvestment of all dividends and distributions. The Russell 3000 and the Lipper Multi-Cap Core Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 3000 is not adjusted to reflect sales charges, expenses, or other fees that the SEC requires to be reflected in the Fund’s performance. The index is unmanaged and, unlike the Fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Crude Oil & Gas Production	5.7	%
Agricultural Chemicals	4.9	%
Integrated International Oil	4.9	%
Multi-Line Insurance	4.8	%
Property Liability Insurance	4.8	%
Integrated Domestic Oil	4.3	%
Money Center Bank	3.4	%
Telecomm Equipment & Services	3.3	%
Oil Well Supply	3.3	%
Truck Manufacturing	3.3	%
Major Steel Producer	3.2	%
Oil Service, Explore & Drill	3.0	%
Commodity Chemicals	2.9	%
Life Insurance	2.7	%
Regional Bank	2.7	%
Electric Utility	2.3	%
Computers -- Low End	2.2	%
Ethical Drugs	2.1	%
Diversified Oil	2.1	%
Software Packaged/Custom	1.6	%
Cogeneration	1.5	%
Railroad	1.5	%
Airline - Regional	1.4	%
Undesignated Consumer Cyclicals	1.4	%
Clothing Stores	1.4	%
Miscellaneous Components	1.3	%
Services to Medical Professionals	1.3	%
Internet Services	1.1	%
Home Building	1.1	%
Savings and Loan	1.1	%
Computer Peripherals	1.0	%
Medical Technology	1.0	%
Department Stores	1.0	%
Other2	16.0	%
Cash Equivalents3	1.5	%
Other Assets and Liabilities--Net4	(1.1	)%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund’s total net assets have been aggregated under the designation “Other”.

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares				Value
		COMMON STOCKS--99.6%
		Agricultural Chemicals--4.9%
26		Bunge Ltd.	$	2,572
6,335		Monsanto Co.		754,562
		TOTAL		757,134
		Agricultural Machinery--0.1%
94		Lindsay Manufacturing Co.		8,673
		Airline - Regional--1.4%
14,265		Southwest Airlines Co.		222,391
		Aluminum--0.1%
196		Kaiser Aluminum Corp.		10,339
		Apparel--0.6%
59		Columbia Sportswear Co.		2,201
89		Guess ?, Inc.		2,819
1,999	1	Warnaco Group, Inc.		83,858
		TOTAL		88,878
		AT&T Divestiture--0.6%
2,980		AT&T, Inc.		91,814
		Auto Original Equipment Manufacturer--0.2%
389		Johnson Controls, Inc.		11,732
284		Sun Hydraulics Corp.		11,701
309		Superior Industries International, Inc.		5,219
		TOTAL		28,652
		Biotechnology--0.9%
158	1	Affymetrix, Inc.		1,245
1,400	1	Amgen, Inc.		87,682
414	1	Genzyme Corp.		31,733
358	1	Martek Biosciences Corp.		13,464
		TOTAL		134,124
		Bituminous Coal--0.3%
652		Massey Energy Co.		48,411
		Broadcasting--0.5%
1,882	1	American Tower Systems Corp.		78,856
		COMMON STOCKS--continued
		Building Materials--0.2%
1,041	1	Owens Corning, Inc.	$	27,076
163		Universal Forest Products, Inc.		4,401
		TOTAL		31,477
		Building Supply Stores--0.2%
1,562		Lowe’s Cos., Inc.		31,740
		Cable TV--0.1%
373	1	Viacom, Inc., Class B		10,418
		Cement--0.1%
285	1	Astec Industries, Inc.		9,097
		Clothing Stores--1.4%
467	1	Aeropostale, Inc.		15,061
294	1	AnnTaylor Stores Corp.		6,630
303	1	Children’s Place Retail Stores, Inc.		11,529
233	1	Hanesbrands, Inc.		4,996
255	1	Jos A. Bank Clothiers, Inc.		5,712
5,152	1	Urban Outfitters, Inc.		170,068
		TOTAL		213,996
		Cogeneration--1.5%
7,559	1	Mirant Corp.		231,381
		Commodity Chemicals--2.9%
12,805		Dow Chemical Co.		426,535
224		PPG Industries, Inc.		13,583
		TOTAL		440,118
		Computer Peripherals--1.0%
2,349	1	Lexmark International Group, Class A		82,403
3,875	1	Sandisk Corp.		54,638
723	1	Western Digital Corp.		20,815
		TOTAL		157,856
		Computer Services--0.2%
658	1	Synnex Corp.		15,371
330		Syntel, Inc.		10,874
		TOTAL		26,245
		Computer Stores--0.0%
155	1	Tech Data Corp.		5,405
		Computers - Low End--2.2%
2,138	1	Apple, Inc.		339,835
		Construction Machinery--0.2%
370		Joy Global, Inc.		26,721
		COMMON STOCKS--continued
		Copper--0.0%
171	1	Southern Copper Corp.	$	4,750
		Crude Oil & Gas Production--5.7%
1,275		Anadarko Petroleum Corp.		73,835
4,937		Apache Corp.		553,783
1,447		Cimarex Energy Co.		75,403
177		Devon Energy Corp.		16,796
571	1	Newfield Exploration Co.		27,968
681		Pioneer Natural Resources, Inc.		40,485
528	1	Stone Energy Corp.		26,939
920	1	Swift Energy Co.		46,754
324		W&T Offshore, Inc.		14,340
		TOTAL		876,303
		Defense Aerospace--0.6%
949		Boeing Co.		57,993
497	1	Spirit Aerosystems Holdings, Inc., Class A		10,765
422		Triumph Group, Inc.		22,349
		TOTAL		91,107
		Defense Electronics--0.1%
434	1	FLIR Systems, Inc.		17,681
		Department Stores--1.0%
789		Dillards, Inc., Class A		7,977
245	1	Saks, Inc.		2,497
1,756	1	Sears Holdings Corp.		142,236
		TOTAL		152,710
		Discount Department Stores--0.4%
781	1	BJ’s Wholesale Club, Inc.		29,311
729	1	Dollar Tree, Inc.		27,338
340		Family Dollar Stores, Inc.		7,922
		TOTAL		64,571
		Diversified Leisure--0.2%
848	1	Gaylord Entertainment Co.		25,474
		Diversified Oil--2.1%
128		Murphy Oil Corp.		10,205
3,909		Occidental Petroleum Corp.		308,146
		TOTAL		318,351
		Electric & Electrical Original Equipment Manufacturers--0.0%
16	1	Energy Conversion Devices, Inc.		1,119
		COMMON STOCKS--continued
		Electric Utility--2.3%
396		Avista Corp.	$	8,957
1,476		CMS Energy Corp.		19,926
1,636		DTE Energy Co.		67,043
3,870		Edison International		187,076
390		Hawaiian Electric Industries, Inc.		9,649
392		OGE Energy Corp.		12,826
515		Pepco Holdings, Inc.		12,844
293		Portland General Electric Co.		6,883
448		SCANA Corp.		16,213
242		Sempra Energy		13,591
		TOTAL		355,008
		Electrical Equipment--0.2%
2,339		Xerox Corp.		31,904
		Electronic Instruments--0.1%
74		Analogic Corp.		5,415
87	1	Axsys Technologies, Inc.		6,389
292	1	Trimble Navigation Ltd.		9,694
		TOTAL		21,498
		Ethical Drugs--2.1%
3,651	1	Forest Laboratories, Inc., Class A		129,647
5,430	1	King Pharmaceuticals, Inc.		62,499
7,015		Pfizer, Inc.		130,970
		TOTAL		323,116
		Financial Services--0.5%
1,492		Ameriprise Financial, Inc.		63,410
1,442		Fulton Financial Corp.		15,199
		TOTAL		78,609
		Gas Distributor--0.1%
298		WGL Holdings, Inc.		10,290
		Grocery Chain--0.5%
2,522		Safeway, Inc.		67,388
140		Weis Markets, Inc.		5,319
		TOTAL		72,707
		Home Building--1.1%
504		Centex Corp.		7,399
2,086		D. R. Horton, Inc.		23,196
1,021		KB HOME		17,959
936		M.D.C. Holdings, Inc.		38,863
		COMMON STOCKS--continued
		Home Building--continued
32	1	NVR, Inc.	$	17,674
2,536		Pulte Homes, Inc.		30,965
115		Ryland Group, Inc.		2,368
1,193	1	Toll Brothers, Inc.		23,967
		TOTAL		162,391
		Home Health Care--0.0%
293	1	Amerigroup Corp.		7,442
		Household Appliances--0.0%
85		Whirlpool Corp.		6,435
		Industrial Machinery--0.2%
441	1	Terex Corp.		20,873
64		Valmont Industries, Inc.		6,842
		TOTAL		27,715
		Insurance Brokerage--0.1%
691		AmTrust Financial Services, Inc.		10,068
290		Odyssey Re Holdings Corp.		11,330
		TOTAL		21,398
		Integrated Domestic Oil--4.3%
8,046		ConocoPhillips		656,715
		Integrated International Oil--4.9%
8,821		Chevron Corp.		745,904
		Internet Services--1.1%
45	1	NetFlix, Inc.		1,390
1,245	1	Priceline.com, Inc.		143,113
1,132	1	eBay, Inc.		28,492
		TOTAL		172,995
		Jewelry Stores--0.1%
430		Tiffany & Co.		16,250
		Leasing--0.2%
685		GATX Corp.		31,147
		Life Insurance--2.7%
3,624		MetLife, Inc.		183,990
787		Principal Financial Group		33,455
1,515		Protective Life Corp.		54,479
517		StanCorp Financial Group, Inc.		25,535
2,097		Torchmark Corp.		121,731
		TOTAL		419,190
		COMMON STOCKS--continued
		Long-Term Care Centers--0.1%
325	1	Kindred Healthcare, Inc.	$	8,765
		Lumber Products--0.0%
733		Louisiana-Pacific Corp.		6,201
		Major Steel Producer--3.2%
3,021		United States Steel Corp.		484,448
		Maritime--0.9%
1,063	1	Kirby Corp.		50,726
1,122		Overseas Shipholding Group, Inc.		88,358
		TOTAL		139,084
		Medical Supplies--0.1%
138	1	Kensey Nash Corp.		4,793
290	1	Merit Medical Systems, Inc.		5,861
72		Steris Corp.		2,460
		TOTAL		13,114
		Medical Technology--1.0%
307	1	Intuitive Surgical, Inc.		95,566
868	1	Masimo Corp.		32,784
397		Stryker Corp.		25,483
		TOTAL		153,833
		Metal Fabrication--0.7%
606		Mueller Industries, Inc.		15,556
261		Olympic Steel, Inc.		13,272
2,057		Timken Co.		67,922
454		Worthington Industries, Inc.		8,054
		TOTAL		104,804
		Mini-Mill Producer--0.7%
2,759		Commercial Metals Corp.		82,356
130		Nucor Corp.		7,439
149		Schnitzer Steel Industries, Inc., Class A		13,446
66		Steel Dynamics, Inc.		2,091
		TOTAL		105,332
		Miscellaneous Communications--0.0%
211		NTELOS Holdings Corp.		5,045
		Miscellaneous Components--1.3%
4,121		Amphenol Corp., Class A		196,448
		COMMON STOCKS--continued
		Miscellaneous Food Products--0.2%
143		Corn Products International, Inc.	$	6,651
602		The Anderson’s, Inc.		27,361
		TOTAL		34,012
		Miscellaneous Machinery--0.3%
723		Nordson Corp.		51,087
		Money Center Bank--3.4%
7,442		Bank of America Corp.		244,842
6,731		J.P. Morgan Chase & Co.		273,481
		TOTAL		518,323
		Multi-Industry Capital Goods--0.3%
493	1	Ceradyne, Inc.		22,851
225		KBR, Inc.		6,413
167	1	Tecumseh Products Co., Class A		5,469
181		Textron, Inc.		7,868
		TOTAL		42,601
		Multi-Line Insurance--4.8%
5,207		Allstate Corp.		240,667
3,304		Assurant, Inc.		198,636
634		Cincinnati Financial Corp.		17,651
1,152		Hanover Insurance Group, Inc.		49,444
190		Harleysville Group, Inc.		6,770
157		Infinity Property & Casualty		6,996
9,097		UNUMProvident Corp.		219,784
		TOTAL		739,948
		Offshore Driller--0.6%
701		ENSCO International, Inc.		48,467
816	1	Hornbeck Offshore Services, Inc.		36,377
245		Tidewater, Inc.		14,685
		TOTAL		99,529
		Oil Service, Explore & Drill--3.0%
80	1	Continental Resources, Inc.		4,570
688	1	Gulfmark Offshore, Inc.		34,524
2,441		Helmerich & Payne, Inc.		144,336
1,398	1	Mariner Energy, Inc.		36,991
430		Patterson-UTI Energy, Inc.		12,221
3,191	1	Pride International, Inc.		123,683
1,564	1	Unit Corp.		105,648
		TOTAL		461,973
		COMMON STOCKS--continued
		Oil Well Supply--3.3%
832		Baker Hughes, Inc.	$	68,981
3,955	1	FMC Technologies, Inc.		244,340
1,542	1	Oil States International, Inc.		84,625
2,320	1	Superior Energy Services, Inc.		110,038
		TOTAL		507,984
		Other Communications Equipment--0.1%
459	1	Superior Essex, Inc.		20,664
		Paint & Related Materials--0.1%
177		Sherwin-Williams Co.		9,425
		Paper Products--0.2%
1,313		MeadWestvaco Corp.		35,202
		Personal Loans--0.1%
250	1	World Acceptance Corp.		8,190
		Poultry Products--0.2%
624		Sanderson Farms, Inc.		24,798
		Printed Circuit Boards--0.3%
439	1	Benchmark Electronics, Inc.		6,427
3,151	1	Marvell Technology Group Ltd.		46,603
		TOTAL		53,030
		Property Liability Insurance--4.8%
3,065		American Financial Group, Inc.		88,793
9,298		Chubb Corp.		446,676
4,481		The Travelers Cos., Inc.		197,702
		TOTAL		733,171
		Psychiatric Centers--0.2%
734	1	Psychiatric Solutions, Inc.		25,705
		Railroad--1.5%
2,111		CSX Corp.		142,661
1,168		Norfolk Southern Corp.		84,003
		TOTAL		226,664
		Recreational Vehicles--0.0%
153		Harley Davidson, Inc.		5,790
		Regional Bank--2.7%
12,722		BB&T Corp.		356,470
967		Bancorpsouth, Inc.		20,597
237		City National Corp.		11,644
484		Oriental Financial Group		8,407
94		PNC Financial Services Group		6,701
		COMMON STOCKS--continued
		Regional Bank--continued
591		TCF Financial Corp.	$	7,535
207		Whitney Holding Corp.		4,256
		TOTAL		415,610
		Restaurant--0.1%
76	1	Buffalo Wild Wings, Inc.		2,503
227	1	Panera Bread Co.		11,373
		TOTAL		13,876
		Roofing & Wallboard--0.3%
1,382	1	USG Corp.		39,663
		Savings & Loan--1.1%
950		Federal Home Loan Mortgage Corp.		7,762
5,794		Hudson City Bancorp, Inc.		105,798
1,275		Newalliance Bancshares, Inc.		16,550
1,176		Washington Federal, Inc.		21,874
468		Webster Financial Corp. Waterbury		9,294
		TOTAL		161,278
		Securities Brokerage--0.5%
419	1	Interactive Brokers Group, Inc., Class A		11,757
389	1	KBW, Inc.		10,277
893	1	Knight Capital Group, Inc., Class A		14,636
954		Raymond James Financial, Inc.		27,571
391		SWS Group, Inc.		7,398
		TOTAL		71,639
		Semiconductor Manufacturing--0.7%
3,332	1	Broadcom Corp.		80,934
513		National Semiconductor Corp.		10,747
417	1	Plexus Corp.		11,885
191	1	Silicon Laboratories, Inc.		6,248
		TOTAL		109,814
		Semiconductor Manufacturing Equipment--0.2%
1,564	1	Novellus Systems, Inc.		31,859
		Services to Medical Professionals--1.3%
286	1	Athenahealth, Inc.		8,637
984	1	Centene Corp.		21,953
1,967	1	Express Scripts, Inc., Class A		138,752
329	1	Molina Healthcare, Inc.		9,817
318	1	Wellpoint, Inc.		16,679
		TOTAL		195,838
		COMMON STOCKS--continued
		Shoes--0.2%
156	1	Deckers Outdoor Corp.	$	17,630
558	1	Skechers USA, Inc., Class A		10,546
		TOTAL		28,176
		Software Packaged/Custom--1.6%
1,342	1	Activision Blizzard, Inc.		48,285
3,432	1	Computer Sciences Corp.		162,574
1,162		Electronic Data Systems Corp.		28,829
426	1	Wind River Systems, Inc.		4,997
		TOTAL		244,685
		Specialty Chemicals--0.1%
228		Minerals Technologies, Inc.		14,708
113	1	Polypore International, Inc.		2,955
		TOTAL		17,663
		Specialty Retailing--0.5%
996	1	Big Lots, Inc.		30,338
1,017	1	Cabela’s, Inc., Class A		11,817
401		Costco Wholesale Corp.		25,135
255	1	Tractor Supply Co.		9,693
312	1	Zale Corp.		6,901
		TOTAL		83,884
		Telecomm Equipment & Services--3.3%
2,444	1	ADC Telecommunications, Inc.		23,120
24,338		Corning, Inc.		487,003
		TOTAL		510,123
		Toys & Games--0.2%
1,027	1	JAKKS Pacific, Inc.		22,573
		Truck Manufacturing--3.3%
6,862		Cummins, Inc.		455,225
1,156		PACCAR, Inc.		48,621
		TOTAL		503,846
		Trucking--0.5%
289		Arkansas Best Corp.		10,733
790		Ryder System, Inc.		52,108
590		Werner Enterprises, Inc.		14,048
		TOTAL		76,889
		COMMON STOCKS--continued
		Undesignated Consumer Cyclicals--1.4%
347	1	CoStar Group, Inc.	$	17,312
81	1	Covance, Inc.		7,436
2,798		DeVRY, Inc.		158,954
220	1	Parexel International Corp.		6,431
576		Pharmaceutical Product Development, Inc.		21,969
271		Speedway Motorsports, Inc.		5,233
		TOTAL		217,335
		TOTAL COMMON STOCKS (IDENTIFIED COST $14,179,932)		15,266,262
		MUTUAL FUND--1.5%
240,412	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)		240,412
		TOTAL INVESTMENTS--101.1% (IDENTIFIED COST $14,420,344)4		15,506,674
		OTHER ASSETS AND LIABILITIES - NET--(1.1)%5		(174,631	)
		TOTAL NET ASSETS--100%	$	15,332,043

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $14,459,480.

5 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at
July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $240,412 of investments in an affiliated issuer (Note 5) (identified cost $14,420,344)			$	15,506,674
Cash				20,633
Income receivable				9,471
Receivable for investments sold				353,540
Receivable for shares sold				3,122
TOTAL ASSETS				15,893,440
Liabilities:
Payable for investments purchased	$	381,146
Payable for shares redeemed		99,907
Payable for auditing fees		21,200
Payable for share registration costs		27,572
Payable for distribution services fee (Note 5)		3,060
Payable for shareholder services fee (Note 5)		4,766
Accrued expenses		23,746
TOTAL LIABILITIES				561,397
Net assets for 1,419,514 shares outstanding			$	15,332,043
Net Assets Consist of:
Paid-in capital			$	15,929,869
Net unrealized appreciation of investments				1,086,330
Accumulated net realized loss on investments				(1,684,156	)
TOTAL NET ASSETS			$	15,332,043
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($4,882,515 ÷ 447,981 shares outstanding), no par value, unlimited shares authorized				$10.90
Offering price per share				$10.90
Redemption proceeds per share				$10.90
Class A Shares:
Net asset value per share ($6,862,118 ÷ 633,042 shares outstanding), no par value, unlimited shares authorized				$10.84
Offering price per share (100/94.50 of $10.84)1				$11.47
Redemption proceeds per share				$10.84
Class C Shares:
Net asset value per share ($3,587,410 ÷ 338,491 shares outstanding), no par value, unlimited shares authorized				$10.60
Offering price per share				$10.60
Redemption proceeds per share (99.00/100 of $10.60)1				$10.49

1 See “What Do Shares Cost?” in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $9,756 received from an affiliated issuer (Note 5) and net of foreign taxes withheld of $16)							$	239,175
Expenses:
Investment adviser fee (Note 5)				$	130,664
Administrative personnel and services fee (Note 5)					230,000
Custodian fees					31,130
Transfer and dividend disbursing agent fees and expenses					42,305
Directors’/Trustees’ fees					1,018
Auditing fees					26,700
Legal fees					18,295
Portfolio accounting fees					75,691
Distribution services fee--Class C Shares (Note 5)					25,820
Shareholder services fee--Class A Shares (Note 5)					13,368
Shareholder services fee--Class C Shares (Note 5)					7,481
Share registration costs					57,207
Printing and postage					32,802
Insurance premiums					4,726
Miscellaneous					3,549
TOTAL EXPENSES					700,756
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee	$	(130,664	)
Waiver of administrative personnel and services fee		(44,855	)
Reimbursement of other operating expenses		(275,311	)
TOTAL WAIVERS AND REIMBURSEMENTS					(450,830	)
Net expenses								249,926
Net investment income (loss)								(10,751	)
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments								(1,609,068	)
Net change in unrealized appreciation of investments								260,269
Net realized and unrealized loss on investments								(1,348,799	)
Change in net assets resulting from operations							$	(1,359,550	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(10,751	)	$	(19,783	)
Net realized gain (loss) on investments		(1,609,068	)		222,906
Net change in unrealized appreciation/depreciation of investments		260,269			531,414
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(1,359,550	)		734,537
Share Transactions:
Proceeds from sale of shares		11,846,604			6,651,420
Cost of shares redeemed		(5,710,298	)		(1,606,158	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		6,136,306			5,045,262
Redemption fees		--			1,870
Change in net assets		4,776,756			5,781,669
Net Assets:
Beginning of period		10,555,287			4,773,618
End of period	$	15,332,043		$	10,555,287

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of nine portfolios. The financial statements included herein are only those of Federated MDT Tax Aware/All Cap Core Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Class A Shares and Class C Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The financial highlights of the Institutional Shares are presented separately. The primary investment objective of the Fund is long-term capital appreciation while seeking to minimize the impact of taxes.

MDT Tax Aware/All Cap Core Fund (the “Predecessor Fund”) was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced operations on September 15, 2005.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the “Trustees”).
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund’s NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers, and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer’s operations or regulatory changes or market developments affecting the issuer’s industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes,” on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2006 through 2008 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

Withholding taxes and where appropriate, deferred withholding taxes on foreign interest, dividends and capital gains have been provided for in accordance with the applicable country’s tax rules and rates.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	549,863		$	6,491,359		259,278		$	2,871,927
Shares redeemed	(413,746	)		(4,792,720	)	(80,930	)		(876,653	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	136,117		$	1,698,639		178,348		$	1,995,274
Year Ended July 31	2008					2007
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	353,832		$	4,174,842		187,148		$	2,138,258
Shares redeemed	(55,720	)		(639,826	)	(51,271	)		(591,818	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	298,112		$	3,535,016		135,877		$	1,546,440
Year Ended July 31	2008					2007
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	100,386		$	1,180,403		144,501		$	1,641,235
Shares redeemed	(23,958	)		(277,752	)	(11,851	)		(137,687	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	76,428		$	902,651		132,650		$	1,503,548
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	510,657		$	6,136,306		446,875		$	5,045,262

Redemption Fees

Prior to December 11, 2006, the Fund imposed a 2.00% redemption fee to shareholders of the Fund’s Institutional Shares, Class A Shares and Class C Shares who redeemed shares held for 30 days or less. Shares acquired by reinvestment of dividends or distributions of the Fund, or purchased pursuant to the Systematic Investment Program or withdrawn pursuant to the Systematic Withdrawal Program, were not subject to the redemption fee. All redemption fees were recorded by the Fund as additions to paid-in capital. For the period from August 1, 2006 through December 10, 2006, redemption fees for Institutional Shares, Class A Shares and Class C Shares amounted to $652, $712 and $506, respectively.

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due to differing treatments for net operating loss.

For the year ended July 31, 2008, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income (Loss)
$(10,751)	$10,751

Net investment income (loss), net realized gains (losses), and net assets were not affected by this reclassification.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Net unrealized appreciation	$	1,047,194
Capital loss carryforwards and deferrals	$	(1,645,020	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $14,459,480. The net unrealized appreciation of investments for federal tax purposes was $1,047,194. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $1,464,301 and net unrealized depreciation from investments for those securities having an excess of cost over value of $417,107.

At July 31, 2008, the Fund had a capital loss carryforward of $10,826 which will reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the 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. Pursuant to the Code, such capital loss carryforward will expire in 2015.

The Fund used capital loss carryforwards of $60,962 to offset taxable capital gains realized during the year ended July 31, 2008.

Under current tax regulations, capital losses on securities transactions realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post October losses of $1,634,194 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund’s investment adviser (the “Adviser”). The advisory agreement between the Fund and Adviser provides for an annual fee equal to 0.90% of the Fund’s average daily net assets. Prior to December 8, 2006, the Adviser received an annual investment adviser fee equal to 1.00% of the Fund’s average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund’s aggregate annual operating expenses to no more than the following annual percentages for each class of the Fund based on average daily net assets:

Share Class	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.80%
Class A Shares	2.05%
Class C Shares	2.80%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment and subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the year ended July 31, 2008, the Adviser waived $130,442 of its fee and reimbursed $275,311 of other operating expenses.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. During the period from July 15, 2006 through December 8, 2006, the administrator contractually agreed to waive the portion of its fee which it would otherwise be entitled to receive from the Fund under the Agreement. The level of fees payable by the Fund to FAS for the period will not exceed the level of fees which the Fund would have paid during the period to its previous service provider under its previous administrative services contract. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the net fee paid to FAS was 1.275% of average daily net assets of the Fund. The Fund currently accrues the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above. FAS waived $44,855 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act which became effective on December 11, 2006. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund’s Class A Shares and Class C Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC.

Share Class	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

Subject to terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $6,409 of fees paid by the Fund. For the year ended July 31, 2008, the Fund’s Class A Shares did not incur a distribution services fee. On November 15, 2007, the Fund’s Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund’s Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

For the year ended July 31, 2008, FSC retained $5,134 in sales charges from the sale of Class A Shares. FSC also retained $335 of contingent deferred sales charges relating to redemptions of Class C Shares. See “What Do Shares Cost?” in the Prospectus.

Shareholder Services Fee

Effective December 11, 2006, the Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund’s Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the year ended July 31, 2008, FSSC received $982 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund’s Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.40%, 1.65% and 2.40%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements until after September 30, 2009.

General

Certain of the Officers and Trustees of the Fund are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $222. Transactions with the affiliated company during the year ended July 31, 2008 were as follows:

Affiliate	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	189,358	8,682,590	8,631,536	240,412	$240,412	$9,756

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and
short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	32,538,323
Sales	$	26,393,177

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, “Federated”) and various Federated funds (“Federated Funds”) have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated’s first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General (“NYAG”) and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys’ fees and expenses, and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, “Fair Value Measurements” (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund’s net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND SHAREHOLDERS OF FEDERATED MDT TAX AWARE/ALL CAP CORE FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Tax Aware/All Cap Core Fund (the “Fund”) (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Tax Aware/All Cap Core Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are “interested persons” of the Fund (i.e., “Interested” Board members) and those who are not (i.e., “Independent” Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex’s Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company and Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (Investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children’s Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Thomas M. O’Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children’s Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; and Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/ Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; and Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory
Contract--May 2008

FEDERATED MDT TAX AWARE/ALL CAP CORE FUND (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contract at meetings held in May 2008. The Board’s decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds’ Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser’s fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser’s cost of providing the services; the extent to which the Adviser may realize “economies of scale” as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser’s relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser’s services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund’s advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer’s evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board’s formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board’s consideration of the advisory contract included review of the Senior Officer’s evaluation, accompanying data and additional reports covering such matters as: the Adviser’s investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund’s short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or “peer group” funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund’s investment objectives; the Fund’s expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund’s relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated’s responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board’s evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund’s performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund’s investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund’s ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund’s investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser’s investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated’s fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund’s investment program is of such a type.

For the one-year period ending December 31, 2007, the Fund’s performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same period, the Fund outperformed its benchmark index for the one-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated’s subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds’ administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated’s profit margins did not appear to be excessive and the Board agreed.

The Senior Officer’s evaluation also discussed the notion of possible realization of “economies of scale” as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer’s evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with “breakpoints” that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated’s fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund’s most recently completed fiscal year, the Fund’s investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer’s evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund’s advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser’s industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board’s approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board’s decision to approve the contract reflects its determination that Federated’s performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated’s website at FederatedInvestors.com. To access this information from the “Products” section of the website, click on the “Prospectuses and Regulatory Reports” link under “Related Information,” then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund’s page, click on the “Prospectuses and Regulatory Reports” link. Form N-PX filings are also available at the SEC’s website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on “Form N-Q.” These filings are available on the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the “Products” section of Federated’s website at FederatedInvestors.com by clicking on “Portfolio
Holdings” under “Related Information,” then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund’s page, click on the “Portfolio Holdings” link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated Investors
World-Class Investment Manager

Trust for U.S. Treasury Obligations
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R403
Cusip 31421R502

37337 (9/08)

Federated is a registered mark of Federated Investors, Inc.
2008 ©Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT Tax Aware/
All Cap Core Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2008

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE
PORTFOLIO OF INVESTMENTS SUMMARY TABLE
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BOARD OF TRUSTEES AND TRUST OFFICERS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights

(For a Share Outstanding Throughout Each Period)

	Year Ended July 31,					Period Ended
	2008			2007	1	7/31/2006	2
Net Asset Value, Beginning of Period	$11.69			$10.36		$10.00
Income From Investment Operations:
Net investment income (loss)	0.03	3		0.01	3	(0.03	)3
Net realized and unrealized gain (loss) on investments	(0.82	)		1.32		0.39
TOTAL FROM INVESTMENT OPERATIONS	(0.79	)		1.33		0.36
Net Asset Value, End of Period	$10.90			$11.69		$10.36
Total Return4	(6.76	)%		12.84	%	3.60	%
Ratios to Average Net Assets:
Net expenses	1.40	%		1.40	%	1.76	%5
Net investment income (loss)	0.27	%		0.12	%	(0.25	)%5
Expense waiver/reimbursement6	3.03	%		5.47	%	3.71	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$4,883		$3,645			$1,383
Portfolio turnover	183	%		154	%	182	%

1 MDT Tax Aware/All Cap Core Fund (the “Predecessor Fund”) was reorganized into the Federated MDT Tax Aware/All Cap Core Fund (the “Fund”) as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund. The performance information and financial information presented incorporates the operations of the Predecessor Fund, which, as a result of the reorganization, are the Fund’s operations.

2 Reflects operations for the period from September 15, 2005 (date of initial public investment) to July 31, 2006.

3 Per share numbers have been calculated using the average shares method.

4 Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. Total returns for periods of less than one year are not annualized.

5 Computed on an annualized basis.

6 This expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to 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. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from February 1, 2008 to July 31, 2008.

ACTUAL EXPENSES

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second section 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. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with 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. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

	Beginning Account Value 2/1/2008	Ending Account Value 7/31/2008	Expenses Paid During Period1
Actual	$1,000	$938.80	$6.75
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,017.90	$7.02

1 Expenses are equal to the Fund’s annualized net expense ratio of 1.40%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

Management’s Discussion of Fund Performance

The fund’s total return, based on net asset value, for the fiscal year ended July 31, 2008 was (6.76)% for the Institutional Shares.¹ The total return of the Russell 3000^® Index² (Russell 3000^®) was (10.32)% and the total return of the Lipper Multi-Cap Core Funds Index³ was (11.11)% for the same period. The fund’s total return for the fiscal year reflected actual cash flows, transaction costs, and other expenses which were not reflected in the total return of the Russell Index.

MARKET OVERVIEW

Over the 12-month period ending July 31, 2008 domestic equity markets performed poorly in response to ongoing housing market deterioration, credit market distress and general economic weakness. The Russell 3000^® Index, which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period down 10.32%. Small cap stocks had the best relative results as demonstrated by the (6.71)% return on the Russell 2000^® Index,⁴

1 The fund is the successor to the MDT Tax Aware/All Cap Core Fund pursuant to a reorganization that took place on December 8, 2006. Prior to that date, the fund had no investment operations. Accordingly, the performance information provided is historical information of the MDT Tax Aware/All Cap Core Fund.

2 Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. The index is unmanaged and investments cannot be made in an index.

3 Lipper indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

4 Russell 2000^® Index measures the performance of the 2,000 smallest companies in the Russell 3000^® Index, which represents approximately 10% of the total market capitalization of the Russell 3000^® Index. The index is unmanaged and investments cannot be made in an index.

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investors shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400.

which exceeded the (10.10)% and (10.81)% results for the Russell Midcap^® Index⁵ and the Russell Top 200^® Index,⁶ respectively. Growth stocks significantly outperformed value stocks during the year, with the Russell 3000^® Growth Index⁷ returning (6.11)% as compared to (14.75)% for the Russell 3000 Value^® Index.⁸

The best performing sectors during the period as measured by the Russell 3000^® were Energy (up 9.40%), Materials (up 6.75%) and Consumer Staples (up 5.15%). Underperforming sectors included Financials (down 29.29%), Consumer Discretionary (down 23.98%) and Telecommunication Services (down 22.81%).

FUND PERFORMANCE

The most significant positive factor in the fund’s performance relative to the Russell 3000^® Index was stock selection in the Materials sector. Additionally, the fund’s overweight in the Energy sector provided a significant contribution to relative performance. The most significant negative factor in the fund’s performance relative to the Russell 3000^® Index was its overweight in the Financials sector. Additionally, an underweight in the Consumer Staples sector detracted moderately from relative performance.

Individual stocks contributing to the fund’s performance relative to the Russell 3000^® Index included: Monsanto Company, Apple Computer Inc., United States Steel Company, General Electric Company, and Chevron Corporation.

Individual stocks detracting from the fund’s performance relative to the Russell 3000^® Index included: JP Morgan Chase & Company, Regions Financial Corporation, Bank of America Corporation, MBIA Inc., and Metlife Inc.

5 Russell Midcap^® Index measures the performance of the 800 smallest companies in the Russell 1000^® Index, which represent approximately 35% of the total market capitalization of the Russell 1000^® Index. The index is unmanaged and investments cannot be made in an index.

6 Russell Top 200^® Index measures the performance of the 200 largest companies in the Russell 1000^® Index, which represents approximately 65% of the total market capitalization of the Russell 1000^® Index. The index is unmanaged and investments cannot be made in an index.

7 Russell 3000^® Growth Index measures the performance of those Russell 3000^® Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000^® Growth or the Russell 2000^® Growth indexes. The index is unmanaged and investments cannot be made in an index.

8 Russell 3000^® Value Index measures the performance of those Russell 3000^® Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000^® Value or the Russell 2000^® Value indexes. The index is unmanaged and investments cannot be made in an index.

GROWTH OF A $25,000 INVESTMENT -- INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000¹ in the Federated MDT Tax Aware/All Cap Core Fund (Institutional Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2008, compared to the Russell 3000 Index (Russell 3000)² and the Lipper Multi-Cap Core Funds Index.³

Average Annual Total Returns for the Period Ended 7/31/2008
1 Year	(6.76	)%
Start of Performance (9/15/2005)	3.04	%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Mutual fund performance changes over time and current performance may be lower or higher than what is stated. For current to the most recent month-end performance and after-tax returns, visit FederatedInvestors.com or call 1-800-341-7400. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Mutual funds are not obligations of or guaranteed by any bank and are not federally insured.

1 The Fund’s performance assumes the reinvestment of all dividends and distributions. The Russell 3000 and the Lipper Multi-Cap Core Funds Index have been adjusted to reflect reinvestment of dividends on securities in the indexes.

2 The Russell 3000 is not adjusted to reflect sales charges, expenses, or other fees that the Securities and Exchange Commission requires to be reflected in the Fund’s performance. The index is unmanaged and, unlike the Fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper indices are equally weighted indices of the largest mutual funds within their respective investment objectives. Returns are adjusted for the reinvestment of capital gains distributions and income dividends.

Portfolio of Investments Summary Table

At July 31, 2008, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Crude Oil & Gas Production	5.7%
Agricultural Chemicals	4.9%
Integrated International Oil	4.9%
Multi-Line Insurance	4.8%
Property Liability Insurance	4.8%
Integrated Domestic Oil	4.3%
Money Center Bank	3.4%
Telecomm Equipment & Services	3.3%
Oil Well Supply	3.3%
Truck Manufacturing	3.3%
Major Steel Producer	3.2%
Oil Service, Explore & Drill	3.0%
Commodity Chemicals	2.9%
Life Insurance	2.7%
Regional Bank	2.7%
Electric Utility	2.3%
Computers -- Low End	2.2%
Ethical Drugs	2.1%
Diversified Oil	2.1%
Software Packaged/Custom	1.6%
Cogeneration	1.5%
Railroad	1.5%
Airline - Regional	1.4%
Undesignated Consumer Cyclicals	1.4%
Clothing Stores	1.4%
Miscellaneous Components	1.3%
Services to Medical Professionals	1.3%
Internet Services	1.1%
Home Building	1.1%
Savings and Loan	1.1%
Computer Peripherals	1.0%
Medical Technology	1.0%
Department Stores	1.0%
Other2	16.0%
Cash Equivalents3	1.5%
Other Assets and Liabilities--Net4	(1.1)%
TOTAL	100.0%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual portfolio securities are assigned to, the classifications of the Global Industry Classification Standard (GICS) except that the adviser assigns a classification to securities not classified by the GICS and to securities for which the adviser does not have access to the classification made by the GICS.

2 For purposes of this table, industry classifications which constitute less than 1.0% of the Fund’s total net assets have been aggregated under the designation “Other”.

3 Cash Equivalents include any investments in money market mutual funds and/or overnight repurchase agreements.

4 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Portfolio of Investments

July 31, 2008

Shares				Value
		COMMON STOCKS--99.6%
		Agricultural Chemicals--4.9%
26		Bunge Ltd.	$	2,572
6,335		Monsanto Co.		754,562
		TOTAL		757,134
		Agricultural Machinery--0.1%
94		Lindsay Manufacturing Co.		8,673
		Airline - Regional--1.4%
14,265		Southwest Airlines Co.		222,391
		Aluminum--0.1%
196		Kaiser Aluminum Corp.		10,339
		Apparel--0.6%
59		Columbia Sportswear Co.		2,201
89		Guess ?, Inc.		2,819
1,999	1	Warnaco Group, Inc.		83,858
		TOTAL		88,878
		AT&T Divestiture--0.6%
2,980		AT&T, Inc.		91,814
		Auto Original Equipment Manufacturer--0.2%
389		Johnson Controls, Inc.		11,732
284		Sun Hydraulics Corp.		11,701
309		Superior Industries International, Inc.		5,219
		TOTAL		28,652
		Biotechnology--0.9%
158	1	Affymetrix, Inc.		1,245
1,400	1	Amgen, Inc.		87,682
414	1	Genzyme Corp.		31,733
358	1	Martek Biosciences Corp.		13,464
		TOTAL		134,124
		Bituminous Coal--0.3%
652		Massey Energy Co.		48,411
		Broadcasting--0.5%
1,882	1	American Tower Systems Corp.		78,856
		Building Materials--0.2%
1,041	1	Owens Corning, Inc.		27,076
163		Universal Forest Products, Inc.		4,401
		TOTAL		31,477
		COMMON STOCKS--continued
		Building Supply Stores--0.2%
1,562		Lowe’s Cos., Inc.	$	31,740
		Cable TV--0.1%
373	1	Viacom, Inc., Class B		10,418
		Cement--0.1%
285	1	Astec Industries, Inc.		9,097
		Clothing Stores--1.4%
467	1	Aeropostale, Inc.		15,061
294	1	AnnTaylor Stores Corp.		6,630
303	1	Children’s Place Retail Stores, Inc.		11,529
233	1	Hanesbrands, Inc.		4,996
255	1	Jos A. Bank Clothiers, Inc.		5,712
5,152	1	Urban Outfitters, Inc.		170,068
		TOTAL		213,996
		Cogeneration--1.5%
7,559	1	Mirant Corp.		231,381
		Commodity Chemicals--2.9%
12,805		Dow Chemical Co.		426,535
224		PPG Industries, Inc.		13,583
		TOTAL		440,118
		Computer Peripherals--1.0%
2,349	1	Lexmark International Group, Class A		82,403
3,875	1	Sandisk Corp.		54,638
723	1	Western Digital Corp.		20,815
		TOTAL		157,856
		Computer Services--0.2%
658	1	Synnex Corp.		15,371
330		Syntel, Inc.		10,874
		TOTAL		26,245
		Computer Stores--0.0%
155	1	Tech Data Corp.		5,405
		Computers - Low End--2.2%
2,138	1	Apple, Inc.		339,835
		Construction Machinery--0.2%
370		Joy Global, Inc.		26,721
		Copper--0.0%
171	1	Southern Copper Corp.		4,750
		COMMON STOCKS--continued
		Crude Oil & Gas Production--5.7%
1,275		Anadarko Petroleum Corp.	$	73,835
4,937		Apache Corp.		553,783
1,447		Cimarex Energy Co.		75,403
177		Devon Energy Corp.		16,796
571	1	Newfield Exploration Co.		27,968
681		Pioneer Natural Resources, Inc.		40,485
528	1	Stone Energy Corp.		26,939
920	1	Swift Energy Co.		46,754
324		W&T Offshore, Inc.		14,340
		TOTAL		876,303
		Defense Aerospace--0.6%
949		Boeing Co.		57,993
497	1	Spirit Aerosystems Holdings, Inc., Class A		10,765
422		Triumph Group, Inc.		22,349
		TOTAL		91,107
		Defense Electronics--0.1%
434	1	FLIR Systems, Inc.		17,681
		Department Stores--1.0%
789		Dillards, Inc., Class A		7,977
245	1	Saks, Inc.		2,497
1,756	1	Sears Holdings Corp.		142,236
		TOTAL		152,710
		Discount Department Stores--0.4%
781	1	BJ’s Wholesale Club, Inc.		29,311
729	1	Dollar Tree, Inc.		27,338
340		Family Dollar Stores, Inc.		7,922
		TOTAL		64,571
		Diversified Leisure--0.2%
848	1	Gaylord Entertainment Co.		25,474
		Diversified Oil--2.1%
128		Murphy Oil Corp.		10,205
3,909		Occidental Petroleum Corp.		308,146
		TOTAL		318,351
		Electric & Electrical Original Equipment Manufacturers--0.0%
16	1	Energy Conversion Devices, Inc.		1,119
		COMMON STOCKS--continued
		Electric Utility--2.3%
396		Avista Corp.	$	8,957
1,476		CMS Energy Corp.		19,926
1,636		DTE Energy Co.		67,043
3,870		Edison International		187,076
390		Hawaiian Electric Industries, Inc.		9,649
392		OGE Energy Corp.		12,826
515		Pepco Holdings, Inc.		12,844
293		Portland General Electric Co.		6,883
448		SCANA Corp.		16,213
242		Sempra Energy		13,591
		TOTAL		355,008
		Electrical Equipment--0.2%
2,339		Xerox Corp.		31,904
		Electronic Instruments--0.1%
74		Analogic Corp.		5,415
87	1	Axsys Technologies, Inc.		6,389
292	1	Trimble Navigation Ltd.		9,694
		TOTAL		21,498
		Ethical Drugs--2.1%
3,651	1	Forest Laboratories, Inc., Class A		129,647
5,430	1	King Pharmaceuticals, Inc.		62,499
7,015		Pfizer, Inc.		130,970
		TOTAL		323,116
		Financial Services--0.5%
1,492		Ameriprise Financial, Inc.		63,410
1,442		Fulton Financial Corp.		15,199
		TOTAL		78,609
		Gas Distributor--0.1%
298		WGL Holdings, Inc.		10,290
		Grocery Chain--0.5%
2,522		Safeway, Inc.		67,388
140		Weis Markets, Inc.		5,319
		TOTAL		72,707
		COMMON STOCKS--continued
		Home Building--1.1%
504		Centex Corp.	$	7,399
2,086		D. R. Horton, Inc.		23,196
1,021		KB HOME		17,959
936		M.D.C. Holdings, Inc.		38,863
32	1	NVR, Inc.		17,674
2,536		Pulte Homes, Inc.		30,965
115		Ryland Group, Inc.		2,368
1,193	1	Toll Brothers, Inc.		23,967
		TOTAL		162,391
		Home Health Care--0.0%
293	1	Amerigroup Corp.		7,442
		Household Appliances--0.0%
85		Whirlpool Corp.		6,435
		Industrial Machinery--0.2%
441	1	Terex Corp.		20,873
64		Valmont Industries, Inc.		6,842
		TOTAL		27,715
		Insurance Brokerage--0.1%
691		AmTrust Financial Services, Inc.		10,068
290		Odyssey Re Holdings Corp.		11,330
		TOTAL		21,398
		Integrated Domestic Oil--4.3%
8,046		ConocoPhillips		656,715
		Integrated International Oil--4.9%
8,821		Chevron Corp.		745,904
		Internet Services--1.1%
45	1	NetFlix, Inc.		1,390
1,245	1	Priceline.com, Inc.		143,113
1,132	1	eBay, Inc.		28,492
		TOTAL		172,995
		Jewelry Stores--0.1%
430		Tiffany & Co.		16,250
		Leasing--0.2%
685		GATX Corp.		31,147
		COMMON STOCKS--continued
		Life Insurance--2.7%
3,624		MetLife, Inc.	$	183,990
787		Principal Financial Group		33,455
1,515		Protective Life Corp.		54,479
517		StanCorp Financial Group, Inc.		25,535
2,097		Torchmark Corp.		121,731
		TOTAL		419,190
		Long-Term Care Centers--0.1%
325	1	Kindred Healthcare, Inc.		8,765
		Lumber Products--0.0%
733		Louisiana-Pacific Corp.		6,201
		Major Steel Producer--3.2%
3,021		United States Steel Corp.		484,448
		Maritime--0.9%
1,063	1	Kirby Corp.		50,726
1,122		Overseas Shipholding Group, Inc.		88,358
		TOTAL		139,084
		Medical Supplies--0.1%
138	1	Kensey Nash Corp.		4,793
290	1	Merit Medical Systems, Inc.		5,861
72		Steris Corp.		2,460
		TOTAL		13,114
		Medical Technology--1.0%
307	1	Intuitive Surgical, Inc.		95,566
868	1	Masimo Corp.		32,784
397		Stryker Corp.		25,483
		TOTAL		153,833
		Metal Fabrication--0.7%
606		Mueller Industries, Inc.		15,556
261		Olympic Steel, Inc.		13,272
2,057		Timken Co.		67,922
454		Worthington Industries, Inc.		8,054
		TOTAL		104,804
		Mini-Mill Producer--0.7%
2,759		Commercial Metals Corp.		82,356
130		Nucor Corp.		7,439
149		Schnitzer Steel Industries, Inc., Class A		13,446
66		Steel Dynamics, Inc.		2,091
		TOTAL		105,332
		COMMON STOCKS--continued
		Miscellaneous Communications--0.0%
211		NTELOS Holdings Corp.	$	5,045
		Miscellaneous Components--1.3%
4,121		Amphenol Corp., Class A		196,448
		Miscellaneous Food Products--0.2%
143		Corn Products International, Inc.		6,651
602		The Anderson’s, Inc.		27,361
		TOTAL		34,012
		Miscellaneous Machinery--0.3%
723		Nordson Corp.		51,087
		Money Center Bank--3.4%
7,442		Bank of America Corp.		244,842
6,731		J.P. Morgan Chase & Co.		273,481
		TOTAL		518,323
		Multi-Industry Capital Goods--0.3%
493	1	Ceradyne, Inc.		22,851
225		KBR, Inc.		6,413
167	1	Tecumseh Products Co., Class A		5,469
181		Textron, Inc.		7,868
		TOTAL		42,601
		Multi-Line Insurance--4.8%
5,207		Allstate Corp.		240,667
3,304		Assurant, Inc.		198,636
634		Cincinnati Financial Corp.		17,651
1,152		Hanover Insurance Group, Inc.		49,444
190		Harleysville Group, Inc.		6,770
157		Infinity Property & Casualty		6,996
9,097		UNUMProvident Corp.		219,784
		TOTAL		739,948
		Offshore Driller--0.6%
701		ENSCO International, Inc.		48,467
816	1	Hornbeck Offshore Services, Inc.		36,377
245		Tidewater, Inc.		14,685
		TOTAL		99,529
		COMMON STOCKS--continued
		Oil Service, Explore & Drill--3.0%
80	1	Continental Resources, Inc.	$	4,570
688	1	Gulfmark Offshore, Inc.		34,524
2,441		Helmerich & Payne, Inc.		144,336
1,398	1	Mariner Energy, Inc.		36,991
430		Patterson-UTI Energy, Inc.		12,221
3,191	1	Pride International, Inc.		123,683
1,564	1	Unit Corp.		105,648
		TOTAL		461,973
		Oil Well Supply--3.3%
832		Baker Hughes, Inc.		68,981
3,955	1	FMC Technologies, Inc.		244,340
1,542	1	Oil States International, Inc.		84,625
2,320	1	Superior Energy Services, Inc.		110,038
		TOTAL		507,984
		Other Communications Equipment--0.1%
459	1	Superior Essex, Inc.		20,664
		Paint & Related Materials--0.1%
177		Sherwin-Williams Co.		9,425
		Paper Products--0.2%
1,313		MeadWestvaco Corp.		35,202
		Personal Loans--0.1%
250	1	World Acceptance Corp.		8,190
		Poultry Products--0.2%
624		Sanderson Farms, Inc.		24,798
		Printed Circuit Boards--0.3%
439	1	Benchmark Electronics, Inc.		6,427
3,151	1	Marvell Technology Group Ltd.		46,603
		TOTAL		53,030
		Property Liability Insurance--4.8%
3,065		American Financial Group, Inc.		88,793
9,298		Chubb Corp.		446,676
4,481		The Travelers Cos., Inc.		197,702
		TOTAL		733,171
		Psychiatric Centers--0.2%
734	1	Psychiatric Solutions, Inc.		25,705
		COMMON STOCKS--continued
		Railroad--1.5%
2,111		CSX Corp.	$	142,661
1,168		Norfolk Southern Corp.		84,003
		TOTAL		226,664
		Recreational Vehicles--0.0%
153		Harley Davidson, Inc.		5,790
		Regional Bank--2.7%
12,722		BB&T Corp.		356,470
967		Bancorpsouth, Inc.		20,597
237		City National Corp.		11,644
484		Oriental Financial Group		8,407
94		PNC Financial Services Group		6,701
591		TCF Financial Corp.		7,535
207		Whitney Holding Corp.		4,256
		TOTAL		415,610
		Restaurant--0.1%
76	1	Buffalo Wild Wings, Inc.		2,503
227	1	Panera Bread Co.		11,373
		TOTAL		13,876
		Roofing & Wallboard--0.3%
1,382	1	USG Corp.		39,663
		Savings & Loan--1.1%
950		Federal Home Loan Mortgage Corp.		7,762
5,794		Hudson City Bancorp, Inc.		105,798
1,275		Newalliance Bancshares, Inc.		16,550
1,176		Washington Federal, Inc.		21,874
468		Webster Financial Corp. Waterbury		9,294
		TOTAL		161,278
		Securities Brokerage--0.5%
419	1	Interactive Brokers Group, Inc., Class A		11,757
389	1	KBW, Inc.		10,277
893	1	Knight Capital Group, Inc., Class A		14,636
954		Raymond James Financial, Inc.		27,571
391		SWS Group, Inc.		7,398
		TOTAL		71,639
		COMMON STOCKS--continued
		Semiconductor Manufacturing--0.7%
3,332	1	Broadcom Corp.	$	80,934
513		National Semiconductor Corp.		10,747
417	1	Plexus Corp.		11,885
191	1	Silicon Laboratories, Inc.		6,248
		TOTAL		109,814
		Semiconductor Manufacturing Equipment--0.2%
1,564	1	Novellus Systems, Inc.		31,859
		Services to Medical Professionals--1.3%
286	1	Athenahealth, Inc.		8,637
984	1	Centene Corp.		21,953
1,967	1	Express Scripts, Inc., Class A		138,752
329	1	Molina Healthcare, Inc.		9,817
318	1	Wellpoint, Inc.		16,679
		TOTAL		195,838
		Shoes--0.2%
156	1	Deckers Outdoor Corp.		17,630
558	1	Skechers USA, Inc., Class A		10,546
		TOTAL		28,176
		Software Packaged/Custom--1.6%
1,342	1	Activision Blizzard, Inc.		48,285
3,432	1	Computer Sciences Corp.		162,574
1,162		Electronic Data Systems Corp.		28,829
426	1	Wind River Systems, Inc.		4,997
		TOTAL		244,685
		Specialty Chemicals--0.1%
228		Minerals Technologies, Inc.		14,708
113	1	Polypore International, Inc.		2,955
		TOTAL		17,663
		Specialty Retailing--0.5%
996	1	Big Lots, Inc.		30,338
1,017	1	Cabela’s, Inc., Class A		11,817
401		Costco Wholesale Corp.		25,135
255	1	Tractor Supply Co.		9,693
312	1	Zale Corp.		6,901
		TOTAL		83,884
		COMMON STOCKS--continued
		Telecomm Equipment & Services--3.3%
2,444	1	ADC Telecommunications, Inc.	$	23,120
24,338		Corning, Inc.		487,003
		TOTAL		510,123
		Toys & Games--0.2%
1,027	1	JAKKS Pacific, Inc.		22,573
		Truck Manufacturing--3.3%
6,862		Cummins, Inc.		455,225
1,156		PACCAR, Inc.		48,621
		TOTAL		503,846
		Trucking--0.5%
289		Arkansas Best Corp.		10,733
790		Ryder System, Inc.		52,108
590		Werner Enterprises, Inc.		14,048
		TOTAL		76,889
		Undesignated Consumer Cyclicals--1.4%
347	1	CoStar Group, Inc.		17,312
81	1	Covance, Inc.		7,436
2,798		DeVRY, Inc.		158,954
220	1	Parexel International Corp.		6,431
576		Pharmaceutical Product Development, Inc.		21,969
271		Speedway Motorsports, Inc.		5,233
		TOTAL		217,335
		TOTAL COMMON STOCKS (IDENTIFIED COST $14,179,932)		15,266,262
		MUTUAL FUND--1.5%
240,412	2,3	Prime Value Obligations Fund, Institutional Shares, 2.58% (AT NET ASSET VALUE)		240,412
		TOTAL INVESTMENTS--101.1% (IDENTIFIED COST $14,420,344)4		15,506,674
		OTHER ASSETS AND LIABILITIES - NET--(1.1)%5		(174,631	)
		TOTAL NET ASSETS--100%	$	15,332,043

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $14,459,480.

5 Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2008.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2008

Assets:
Total investments in securities, at value including $240,412 of investments in an affiliated issuer (Note 5) (identified cost $14,420,344)			$	15,506,674
Cash				20,633
Income receivable				9,471
Receivable for investments sold				353,540
Receivable for shares sold				3,122
TOTAL ASSETS				15,893,440
Liabilities:
Payable for investments purchased	$	381,146
Payable for shares redeemed		99,907
Payable for auditing fees		21,200
Payable for share registration costs		27,572
Payable for distribution services fee (Note 5)		3,060
Payable for shareholder services fee (Note 5)		4,766
Accrued expenses		23,746
TOTAL LIABILITIES				561,397
Net assets for 1,419,514 shares outstanding			$	15,332,043
Net Assets Consist of:
Paid-in capital			$	15,929,869
Net unrealized appreciation of investments				1,086,330
Accumulated net realized loss on investments				(1,684,156	)
TOTAL NET ASSETS			$	15,332,043
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($4,882,515 ÷ 447,981 shares outstanding), no par value, unlimited shares authorized				$10.90
Offering price per share				$10.90
Redemption proceeds per share				$10.90
Class A Shares:
Net asset value per share ($6,862,118 ÷ 633,042 shares outstanding), no par value, unlimited shares authorized				$10.84
Offering price per share (100/94.50 of $10.84)1				$11.47
Redemption proceeds per share				$10.84
Class C Shares:
Net asset value per share ($3,587,410 ÷ 338,491 shares outstanding), no par value, unlimited shares authorized				$10.60
Offering price per share				$10.60
Redemption proceeds per share (99.00/100 of $10.60)1				$10.49

1 See “What Do Shares Cost?” in the Prospectus.

See Notes which are an integral part of the Financial Statements

Statement of Operations

Year Ended July 31, 2008

Investment Income:
Dividends (including $9,756 received from an affiliated issuer (Note 5) and net of foreign taxes withheld of $16)							$	239,175
Expenses:
Investment adviser fee (Note 5)				$	130,664
Administrative personnel and services fee (Note 5)					230,000
Custodian fees					31,130
Transfer and dividend disbursing agent fees and expenses					42,305
Directors’/Trustees’ fees					1,018
Auditing fees					26,700
Legal fees					18,295
Portfolio accounting fees					75,691
Distribution services fee--Class C Shares (Note 5)					25,820
Shareholder services fee--Class A Shares (Note 5)					13,368
Shareholder services fee--Class C Shares (Note 5)					7,481
Share registration costs					57,207
Printing and postage					32,802
Insurance premiums					4,726
Miscellaneous					3,549
TOTAL EXPENSES					700,756
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee	$	(130,664	)
Waiver of administrative personnel and services fee		(44,855	)
Reimbursement of other operating expenses		(275,311	)
TOTAL WAIVERS AND REIMBURSEMENTS					(450,830	)
Net expenses								249,926
Net investment income (loss)								(10,751	)
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments								(1,609,068	)
Net change in unrealized appreciation of investments								260,269
Net realized and unrealized loss on investments								(1,348,799	)
Change in net assets resulting from operations							$	(1,359,550	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2008			2007
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(10,751	)	$	(19,783	)
Net realized gain (loss) on investments		(1,609,068	)		222,906
Net change in unrealized appreciation/depreciation of investments		260,269			531,414
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(1,359,550	)		734,537
Share Transactions:
Proceeds from sale of shares		11,846,604			6,651,420
Cost of shares redeemed		(5,710,298	)		(1,606,158	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		6,136,306			5,045,262
Redemption fees		--			1,870
Change in net assets		4,776,756			5,781,669
Net Assets:
Beginning of period		10,555,287			4,773,618
End of period	$	15,332,043		$	10,555,287

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2008

1. ORGANIZATION

Federated MDT Series (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust consists of nine portfolios. The financial statements included herein are only those of Federated MDT Tax Aware/All Cap Core Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held. Each portfolio pays its own expenses. The Fund offers three classes of shares: Institutional Shares, Class A Shares and Class C Shares. All shares of the Fund have equal rights with respect to voting, except on class-specific matters. The financial highlights of the Class A Shares and Class C Shares are presented separately. The primary investment objective of the Fund is long-term capital appreciation while seeking to minimize the impact of taxes.

MDT Tax Aware/All Cap Core Fund (the “Predecessor Fund”) was reorganized into the Fund as of the close of business on December 8, 2006. Prior to the reorganization, the Fund had no investment operations. The Fund is the successor to the Predecessor Fund, which commenced operations on September 15, 2005.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles (GAAP) in the United States of America.

Investment Valuation

In calculating its net asset value (NAV), the Fund generally values investments as follows:

• Equity securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official closing price in their principal exchange or market.
• Shares of other mutual funds are valued based upon their reported NAVs.
• Fixed-income securities acquired with remaining maturities greater than 60 days are fair valued using price evaluations provided by a pricing service approved by the Board of Trustees (the “Trustees”).
• Fixed-income securities acquired with remaining maturities of 60 days or less are valued at their cost (adjusted for the accretion of any discount or amortization of any premium).
• Derivative contracts listed on exchanges are valued at their reported settlement or closing price.
• Over-the-counter (OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the Trustees.

If the Fund cannot obtain a price or price evaluation from a pricing service for an investment, the Fund may attempt to value the investment based upon the mean of bid and asked quotations or fair value the investment based on price evaluations, from one or more dealers. If any price, quotation, price evaluation or other pricing source is not readily available when the NAV is calculated, the Fund uses the fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund could purchase or sell an investment at the price used to calculate the Fund’s NAV.

Fair Valuation and Significant Events Procedures

The Trustees have authorized the use of pricing services to provide evaluations of the current fair value of certain investments for purposes of calculating the NAV. Factors considered by pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers, and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price between the prices bid and asked for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for U.S. Treasury and Agency securities, mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for other types of fixed-income securities and OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment, the fair value of the investment is determined in accordance with procedures adopted by the Trustees.

The Trustees also have adopted procedures requiring an investment to be priced at its fair value whenever the Adviser determines that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both an affirmative expectation that the investment’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value. Examples of significant events that may occur after the close of the principal market on which a security is traded, or after the time of a price evaluation provided by a pricing service or a dealer, include:

• With respect to securities traded in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities index futures or options contracts;
• With respect to price evaluations of fixed-income securities determined before the close of regular trading on the NYSE, actions by the Federal Reserve Open Market Committee and other significant trends in U.S. fixed-income markets;
• Political or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are traded; and
• Announcements concerning matters such as acquisitions, recapitalizations, litigation developments, a natural disaster affecting the issuer’s operations or regulatory changes or market developments affecting the issuer’s industry.

The Trustees have approved the use of a pricing service to determine the fair value of equity securities traded principally in foreign markets when the Adviser determines that there has been a significant trend in the U.S. equity markets or in index futures trading. For other significant events, the Fund may seek to obtain more current quotations or price evaluations from alternative pricing sources. If a reliable alternative pricing source is not available, the Fund will determine the fair value of the investment using another method approved by the Trustees.

Repurchase Agreements

It is the policy of the Fund to require the other party to a repurchase agreement to transfer to the Fund’s custodian or sub-custodian eligible securities or cash with a market value (after transaction costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control” as those terms are defined in the Uniform Commercial Code. The Fund has established procedures for monitoring the market value of the transferred securities and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase price or in exchange for other eligible securities of equivalent market value.

With respect to agreements to repurchase U.S. government securities and cash items, the Fund treats the repurchase agreement as an investment in the underlying securities and not as an obligation of the other party to the repurchase agreement. Other repurchase agreements are treated as obligations of the other party secured by the underlying securities. Nevertheless, the insolvency of the other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund in excess of the repurchase price and related transaction costs must be remitted to the other party.

The Fund may enter into repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund will participate on a pro rata basis with the other investment companies and clients in its share of the securities transferred under such repurchase agreements and in its share of proceeds from any repurchase or other disposition of such securities.

Investment Income, Gains and Losses, Expenses and Distributions

Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

All premiums and discounts on fixed-income securities are amortized/accreted for financial statement purposes.

Federal Taxes

It is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes,” on August 1, 2007. As of and during the year ended July 31, 2008, the Fund did not have a liability for any unrecognized tax expenses. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of July 31, 2008, tax years 2006 through 2008 remain subject to examination by the Fund’s major tax jurisdictions, which include the United States of America and the commonwealth of Massachusetts.

Withholding taxes and where appropriate, deferred withholding taxes on foreign interest, dividends and capital gains have been provided for in accordance with the applicable country’s tax rules and rates.

When-Issued and Delayed Delivery Transactions

The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.

Other

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

Year Ended July 31	2008					2007
Institutional Shares:	Shares		Amount			Shares		Amount
Shares sold	549,863		$	6,491,359		259,278		$	2,871,927
Shares redeemed	(413,746	)		(4,792,720	)	(80,930	)		(876,653	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	136,117		$	1,698,639		178,348		$	1,995,274
Year Ended July 31	2008					2007
Class A Shares:	Shares		Amount			Shares		Amount
Shares sold	353,832		$	4,174,842		187,148		$	2,138,258
Shares redeemed	(55,720	)		(639,826	)	(51,271	)		(591,818	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	298,112		$	3,535,016		135,877		$	1,546,440
Year Ended July 31	2008					2007
Class C Shares:	Shares		Amount			Shares		Amount
Shares sold	100,386		$	1,180,403		144,501		$	1,641,235
Shares redeemed	(23,958	)		(277,752	)	(11,851	)		(137,687	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	76,428		$	902,651		132,650		$	1,503,548
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	510,657		$	6,136,306		446,875		$	5,045,262

Redemption Fees

Prior to December 11, 2006, the Predecessor Fund imposed a 2.00% redemption fee to shareholders of the Fund’s Institutional Shares, Class A Shares and Class C Shares who redeemed shares held for 30 days or less. Shares acquired by reinvestment of dividends or distributions of the Fund, or purchased pursuant to the Systematic Investment Program or withdrawn pursuant to the Systematic Withdrawal Program, were not subject to the redemption fee. All redemption fees were recorded by the Fund as additions to paid-in capital. For the year ended July 31, 2007, the Predecessor Fund incurred redemption fees for Institutional Shares, Class A Shares and Class C Shares amounted to $652, $712 and $506, respectively.

4. FEDERAL TAX INFORMATION

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due to differing treatments for net operating loss.

For the year ended July 31, 2008, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income (Loss)
$(10,751)	$10,751

Net investment income (loss), net realized gains (losses), and net assets were not affected by this reclassification.

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

Net unrealized appreciation	$	1,047,194
Capital loss carryforwards and deferrals	$	(1,645,020	)

The difference between book-basis and tax-basis net unrealized appreciation/depreciation is attributable to differing treatments for the deferral of losses on wash sales.

At July 31, 2008, the cost of investments for federal tax purposes was $14,459,480. The net unrealized appreciation of investments for federal tax purposes was $1,047,194. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $1,464,301 and net unrealized depreciation from investments for those securities having an excess of cost over value of $417,107.

At July 31, 2008, the Fund had a capital loss carryforward of $10,826 which will reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the 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. Pursuant to the Code, such capital loss carryforward will expire in 2015.

The Fund used capital loss carryforwards of $60,962 to offset taxable capital gains realized during the year ended July 31, 2008.

Under current tax regulations, capital losses on securities transactions realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of July 31, 2008, for federal income tax purposes, post October losses of $1,634,194 were deferred to August 1, 2008.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund’s investment adviser (the “Adviser”). The advisory agreement between the Fund and Adviser provides for an annual fee equal to 0.90% of the Fund’s average daily net assets. Prior to December 8, 2006, the Adviser received an annual investment adviser fee equal to 1.00% of the Fund’s average daily net assets. Under the investment advisory contract, which is subject to annual review by the Trustees, the Adviser will waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund’s aggregate annual operating expenses to no more than the following annual percentages for each class of the Fund based on average daily net assets:

Share Class	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.80%
Class A Shares	2.05%
Class C Shares	2.80%

The Adviser agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment and subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the year ended July 31, 2008, the Adviser waived $130,442 of its fee and reimbursed $275,311 of other operating expenses.

Administrative Fee

Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:

Administrative Fee	Average Aggregate Daily Net Assets of the Federated Funds
0.150%	on the first $5 billion
0.125%	on the next $5 billion
0.100%	on the next $10 billion
0.075%	on assets in excess of $20 billion

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. During the period from July 15, 2006 through December 8, 2006, the administrator contractually agreed to waive the portion of its fee which it would otherwise be entitled to receive from the Fund under the Agreement. The level of fees payable by the Fund to FAS for the period will not exceed the level of fees which the Fund would have paid during the period to its previous service provider under its previous administrative services contract. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the year ended July 31, 2008, the net fee paid to FAS was 1.275% of average daily net assets of the Fund. The Fund currently accrues the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above. FAS waived $44,855 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act which became effective on December 11, 2006. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund’s Class A Shares and Class C Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:

Share Class	Percentage of Average Daily Net Assets of Class
Class A Shares	0.05%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribution expenses according to the following schedule annually, to compensate FSC.

Share Class	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

Subject to terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended July 31, 2008, FSC retained $6,409 of fees paid by the Fund. For the year ended July 31, 2008, the Fund’s Class A Shares did not incur a distribution services fee. On November 15, 2007, the Fund’s Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund’s Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

For the year ended July 31, 2008, FSC retained $5,134 in sales charges from the sale of Class A Shares. FSC also retained $335 of contingent deferred sales charges relating to redemptions of Class C Shares. See “What Do Shares Cost?” in the Prospectus.

Shareholder Services Fee

Effective December 11, 2006, the Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund’s Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the year ended July 31, 2008, FSSC received $982 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund’s Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.40%, 1.65% and 2.40%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements until after September 30, 2009.

General

Certain of the Officers and Trustees of the Fund are Officers and Directors or Trustees of the above companies.

Transactions with Affiliated Companies

Affiliated holdings are mutual funds which are managed by the Adviser or an affiliate of the Adviser. The Adviser has agreed to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated mutual funds. For the year ended July 31, 2008, the Adviser reimbursed $222. Transactions with the affiliated company during the year ended July 31, 2008 were as follows:

Affiliate	Balance of Shares Held 7/31/2007	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2008	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	189,358	8,682,590	8,631,536	240,412	$240,412	$9,756

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the year ended July 31, 2008, were as follows:

Purchases	$	32,538,323
Sales	$	26,393,177

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the Fund did not utilize the LOC.

8. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from other participating affiliated funds. As of July 31, 2008, there were no outstanding loans. During the year ended July 31, 2008, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, “Federated”) and various Federated funds (“Federated Funds”) have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated’s first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General (“NYAG”) and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys’ fees and expenses, and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB released Statement on Financial Accounting Standards No. 157, “Fair Value Measurements” (FAS 157), which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has concluded that the adoption of FAS 157 is not expected to have a material impact on the Fund’s net assets or results of operations.

In addition, in March 2008, FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of adopting FAS 161 and its impact on the financial statements and the accompanying notes.

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF TRUSTEES OF FEDERATED MDT SERIES AND
SHAREHOLDERS OF FEDERATED MDT TAX AWARE/ALL CAP CORE FUND:

We have audited the accompanying statement of assets and liabilities of Federated MDT Tax Aware/All Cap Core Fund (the “Fund”) (one of the portfolios constituting Federated MDT Series), including the portfolio of investments, as of July 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Federated MDT Tax Aware/All Cap Core Fund, a portfolio of Federated MDT Series, at July 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
September 17, 2008

Board of Trustees and Trust Officers

The Board is responsible for managing the Trust’s business affairs and for exercising all the Trust’s powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are “interested persons” of the Fund (i.e., “Interested” Board members) and those who are not (i.e., “Independent” Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222. The address of all Independent Board members listed is 5800 Corporate Drive, Pittsburgh, PA 15237-7000; Attention: Mutual Fund Board. As of December 31, 2007, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 40 investment companies (comprising 148 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex and serves for an indefinite term. The Fund’s Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
John F. Donahue* Birth Date: July 28, 1924 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.; Chairman of the Federated Fund Complex’s Executive Committee. Previous Positions: Chairman of the Federated Fund Complex; Trustee, Federated Investment Management Company and Chairman and Director, Federated Investment Counseling.
J. Christopher Donahue* Birth Date: April 11, 1949 PRESIDENT AND TRUSTEE Began serving: August 2006	Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Federated Equity Management Company of Pennsylvania and Passport Research, Ltd. (Investment advisory subsidiary of Federated); Trustee, Federated Shareholder Services Company; Director, Federated Services Company. Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to their beneficial ownership of shares of Federated Investors, Inc. and the positions they hold with Federated and its subsidiaries.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas G. Bigley Birth Date: February 3, 1934 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director, Member of Executive Committee, Children’s Hospital of Pittsburgh; Director, University of Pittsburgh. Previous Position: Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr. Birth Date: June 23, 1937 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida; Assistant Professor in Theology at Barry University and Blessed Edmund Rice School for Pastoral Ministry. Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
Nicholas P. Constantakis Birth Date: September 3, 1939 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Chairman of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
John F. Cunningham Birth Date: March 5, 1943 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: Director, QSGI, Inc. (technology services company); Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Peter E. Madden Birth Date: March 16, 1942 TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Board of Overseers, Babson College. Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange.
Charles F. Mansfield, Jr. Birth Date: April 10, 1945 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University; Executive Vice President DVC Group, Inc. (marketing, communications and technology).
John E. Murray, Jr., J.D., S.J.D. Birth Date: December 20, 1932 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee, and Chairman of the Board of Directors or Trustees, of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue & Lannis. Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services). Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law.
R. James Nicholson Birth Date: February 4, 1938 TRUSTEE Began serving: January 2008	Principal Occupations: Director or Trustee of the Federated Fund Complex; Senior Counsel, Brownstein Hyatt Farber Schrek, P.C.; Former Secretary of the U.S. Dept. of Veterans Affairs; Former U.S. Ambassador to the Holy See; Former Chairman of the Republican National Committee. Other Directorships Held: Director, Horatio Alger Association. Previous Positions: Colonel, U.S. Army Reserve; Partner, Calkins, Kramer, Grimshaw and Harring, P.C.; General Counsel, Colorado Association of Housing and Building; Chairman and CEO, Nicholson Enterprises, Inc. (real estate holding company); Chairman and CEO, Renaissance Homes of Colorado.
Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Thomas M. O’Neill Birth Date: June 14, 1951 TRUSTEE Began serving: October 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Managing Director and Partner, Navigator Management Company, L.P. (investment and strategic consulting). Other Directorships Held: Board of Overseers, Children’s Hospital of Boston; Visiting Committee on Athletics, Harvard College. Previous Positions: Chief Executive Officer and President, Managing Director and Chief Investment Officer, Fleet Investment Advisors; President and Chief Executive Officer, Aeltus Investment Management, Inc.; General Partner, Hellman, Jordan Management Co., Boston, MA; Chief Investment Officer, The Putnam Companies, Boston, MA; and Credit Analyst and Lending Officer, Fleet Bank.
Marjorie P. Smuts Birth Date: June 21, 1935 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Public Relations/Marketing Consultant/Conference Coordinator. Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc. Previous Position: Vice President, Walsh & Kelly, Inc.
James F. Will Birth Date: October 12, 1938 TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; formerly, Vice Chancellor and President, Saint Vincent College. Other Directorships Held: Trustee, Saint Vincent College; Alleghany Corporation. Previous Positions: Chairman, President and Chief Executive Officer, Armco, Inc.; President and Chief Executive Officer, Cyclops Industries; President and Chief Operating Officer, Kaiser Steel Corporation.

OFFICERS

Name Birth Date Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years and Previous Position(s)
John W. McGonigle Birth Date: October 26, 1938 SECRETARY Began serving: August 2006	Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Vice Chairman, Executive Vice President, Secretary and Director, Federated Investors, Inc. Previous Positions: Trustee, Federated Investment Management Company and Federated Investment Counseling; Director, Federated Global Investment Management Corp., Federated Services Company and Federated Securities Corp.
Richard A. Novak Birth Date: December 25, 1963 TREASURER Began serving: August 2006	Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services; Financial and Operations Principal for Federated Securities Corp., Edgewood Services, Inc. and Southpointe Distribution Services, Inc. Previous Positions: Controller of Federated Investors, Inc.; Vice President, Finance of Federated Services Company; held various financial management positions within The Mercy Hospital of Pittsburgh; Auditor, Arthur Andersen & Co.
Brian P. Bouda Birth Date: February 28, 1947 SENIOR VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER Began serving: August 2006	Principal Occupations: Senior Vice President and Chief Compliance Officer of the Federated Fund Complex; Vice President and Chief Compliance Officer of Federated Investors, Inc.; and Chief Compliance Officer of its subsidiaries. Mr. Bouda joined Federated in 1999 and is a member of the American Bar Association and the State Bar Association of Wisconsin.

Evaluation and Approval of Advisory
Contract--May 2008

FEDERATED MDT TAX AWARE/ALL CAP CORE FUND (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contract at meetings held in May 2008. The Board’s decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds’ Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser’s fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser’s cost of providing the services; the extent to which the Adviser may realize “economies of scale” as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser’s relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser’s services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund’s advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer’s evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board’s formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board’s consideration of the advisory contract included review of the Senior Officer’s evaluation, accompanying data and additional reports covering such matters as: the Adviser’s investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund’s short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or “peer group” funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund’s investment objectives; the Fund’s expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund’s portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund’s relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated’s responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board’s evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund’s performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund’s investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund’s ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund’s investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser’s investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated’s fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund’s quantitative investment program is of such a type.

For the one-year period ending December 31, 2007, the Fund’s performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same period, the Fund outperformed its benchmark index for the one-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated’s subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds’ administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated’s profit margins did not appear to be excessive and the Board agreed.

The Senior Officer’s evaluation also discussed the notion of possible realization of “economies of scale” as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer’s evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with “breakpoints” that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated’s fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund’s most recently completed fiscal year, the Fund’s investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer’s evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund’s advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser’s industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board’s approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board’s decision to approve the contract reflects its determination that Federated’s performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund’s portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated’s website at FederatedInvestors.com. To access this information from the “Products” section of the website, click on the “Prospectuses and Regulatory Reports” link under “Related Information,” then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund’s page, click on the “Prospectuses and Regulatory Reports” link. Form N-PX filings are also available at the SEC’s website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on “Form N-Q.” These filings are available on the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the “Products” section of Federated’s website at FederatedInvestors.com by clicking on “Portfolio Holdings” under “Related Information,” then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund’s page, click on the “Portfolio Holdings” link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund’s prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

Federated Investors
World-Class Investment Manager

Federated MDT Tax Aware/All Cap Core Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000

Contact us at FederatedInvestors.com
or call 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R601

37321 (9/08)

Federated is a registered mark of Federated Investors, Inc.
2008 © Federated Investors, Inc.

Item 2.                      Code of Ethics

(a) As of the end of the period covered by this report, the registrant has adopted a code of ethics (the "Section 406 Standards for Investment Companies - Ethical Standards for Principal Executive and Financial Officers") that applies to the registrant's Principal Executive Officer and Principal Financial Officer; the registrant's Principal Financial Officer also serves as the Principal Accounting Officer.

(c) Not Applicable

(d) Not Applicable

(e) Not Applicable

(f)(3) The registrant hereby undertakes to provide any person, without charge, upon request, a copy of the code of ethics.  To request a copy of the code of ethics, contact the registrant at 1-800-341-7400, and ask for a copy of the Section 406 Standards for Investment Companies - Ethical Standards for Principal Executive and Financial Officers.

Item 3. Audit Committee Financial Expert

The registrant's Board has determined that each of the following members of the Board's Audit Committee is an “audit committee financial expert,” and is "independent," for purposes of this Item:   Thomas G. Bigley, Nicholas P. Constantakis and Charles F. Mansfield, Jr. 

Item 4.                      Principal Accountant Fees and Services

(a)           Audit Fees billed to the registrant for the two most recent fiscal years:

Fiscal year ended 2008 - $184,500

Fiscal year ended 2007 – $165,700

(b)                      Audit-Related Fees billed to the registrant for the two most recent fiscal years:

Fiscal year ended 2008 - $3,000

Fiscal year ended 2007 – $0

Consent for registration statement.

Amount requiring approval of the registrant’s audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $5,478 and $5,676 respectively.  Fiscal year ended 2008- Audit consents issued for N-14 business combination.  Fiscal year ended 2007- Audit consents issued for N-14 business combination and N-1A filing.

(c)                       Tax Fees billed to the registrant for the two most recent fiscal years:

Fiscal year ended 2008 - $0

Fiscal year ended 2007 - $0

Amount requiring approval of the registrant’s audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $0, respectively.

(d)                      All Other Fees billed to the registrant for the two most recent fiscal years:

Fiscal year ended 2008 - $0

Fiscal year ended 2007 - $0

Amount requiring approval of the registrant’s audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $8,342 and $15,205, respectively.  Fiscal year ended 2008- Due diligence analysis and discussions related to accounting for swaps.  Fiscal year ended 2007- Due diligence analysis.

(e)(1)                      Audit Committee Policies regarding Pre-approval of Services.

The Audit Committee is required to pre-approve audit and non-audit services performed by the independent auditor in order to assure that the provision of such services do not impair the auditor’s independence.  Unless a type of service to be provided by the independent auditor has received general pre-approval, it will require specific pre-approval by the Audit Committee.  Any proposed services exceeding pre-approved cost levels will require specific pre-approval by the Audit Committee.

Certain services have the general pre-approval of the Audit Committee.  The term of the general pre-approval is 12 months from the date of pre-approval, unless the Audit Committee specifically provides for a different period.  The Audit Committee will annually review the services that may be provided by the independent auditor without obtaining specific pre-approval from the Audit Committee and may grant general pre-approval for such services.  The Audit Committee will revise the list of general pre-approved services from time to time, based on subsequent determinations.  The Audit Committee will not delegate its responsibilities to pre-approve services performed by the independent auditor to management.

The Audit Committee has delegated pre-approval authority to its Chairman.  The Chairman will report any pre-approval decisions to the Audit Committee at its next scheduled meeting.  The Committee will designate another member with such pre-approval authority when the Chairman is unavailable.

AUDIT SERVICES

The annual Audit services engagement terms and fees will be subject to the specific pre-approval of the Audit Committee.  The Audit Committee must approve any changes in terms, conditions and fees resulting from changes in audit scope, registered investment company (RIC) structure or other matters.

In addition to the annual Audit services engagement specifically approved by the Audit Committee, the Audit Committee may grant general pre-approval for other Audit Services, which are those services that only the independent auditor reasonably can provide.  The Audit Committee has pre-approved certain Audit services, all other Audit services must be specifically pre-approved by the Audit Committee.

AUDIT-RELATED SERVICES

Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements or that are traditionally performed by the independent auditor.  The Audit Committee believes that the provision of Audit-related services does not impair the independence of the auditor, and has pre-approved certain Audit-related services, all other Audit-related services must be specifically pre-approved by the Audit Committee.

TAX SERVICES

The Audit Committee believes that the independent auditor can provide Tax services to the Company such as tax compliance, tax planning and tax advice without impairing the auditor’s independence.  However, the Audit Committee will not permit the retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations.  The Audit Committee has pre-approved certain Tax services, all Tax services involving large and complex transactions must be specifically pre-approved by the Audit Committee.

ALL OTHER SERVICES

With respect to the provision of services other than audit, review or attest services the pre-approval requirement is waived if:

(1)   The aggregate amount of all such services provided constitutes no more than five percent of the total amount of revenues paid by the registrant, the registrant’s adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant to its accountant during the fiscal year in which the services are provided;

(2)   Such services were not recognized by the registrant, the registrant’s adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant  at the time of the engagement to be non-audit services; and

(3)   Such services are promptly brought to the attention of the Audit Committee of the issuer and approved prior to the completion of the audit by the Audit Committee or by one or more members of the Audit Committee who are members of the board of directors to whom authority to grant such approvals has been delegated by the Audit Committee.

The Audit Committee may grant general pre-approval to those permissible non-audit services classified as All Other services that it believes are routine and recurring services, and would not impair the independence of the auditor.

The SEC’s rules and relevant guidance should be consulted to determine the precise definitions of prohibited non-audit services and the applicability of exceptions to certain of the prohibitions.

PRE-APPROVAL FEE LEVELS

Pre-approval fee levels for all services to be provided by the independent auditor will be established annually by the Audit Committee.  Any proposed services exceeding these levels will require specific pre-approval by the Audit Committee.

PROCEDURES

Requests or applications to provide services that require specific approval by the Audit Committee will be submitted to the Audit Committee by both the independent auditor and the Principal Accounting Officer and/or Internal Auditor, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC’s rules on auditor independence.

(e)(2)                      Percentage of services identified in items 4(b) through 4(d) that were approved by the registrants audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:

4(b)

Fiscal year ended 2008 – 0%

Fiscal year ended 2007 – 0%

Percentage of services provided to the registrants investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were approved by the registrants audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.

4(c)

Fiscal year ended 2008 – 0%

Fiscal year ended 2007 – 0%

Percentage of services provided to the registrants investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were approved by the registrants audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.

4(d)

Fiscal year ended 2008 – 0%

Fiscal year ended 2007 – 0%

Percentage of services provided to the registrants investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were approved by the registrants audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.

(f)   NA

(g)   Non-Audit Fees billed to the registrant, the registrant’s investment adviser, and certain entities controlling, controlled by or under common control with the investment adviser:

Fiscal year ended 2008 - $127,268

Fiscal year ended 2007 - $119,713

(h)                      The registrant’s Audit Committee has considered that the provision of non-audit services that were rendered to the registrant’s adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

Item 5.                      Audit Committee of Listed Registrants

Not Applicable

Item 6.                      Schedule of Investments

Not Applicable

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not Applicable

Item 8. Portfolio Managers of Closed-End Management Investment Companies

Not Applicable

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not Applicable

Item 10.                      Submission of Matters to a Vote of Security Holders

Not Applicable

Item 11.                      Controls and Procedures

(a) The registrant’s President and Treasurer have concluded that the

registrant’s disclosure controls and procedures (as defined in rule 30a-3(c) under the Act) are effective in design and operation and are sufficient to form the basis of the certifications required by Rule 30a-(2) under the Act, based on their evaluation of these disclosure controls and procedures within 90 days of the filing date of this report on Form N-CSR.

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in rule 30a-3(d) under the Act) during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12.                      Exhibits

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Registrant	Federated MDT Series
By	/S/ Richard A. Novak
	Richard A. Novak, Principal Financial Officer
Date	September 22, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By	/S/ J. Christopher Donahue
	J. Christopher Donahue, Principal Executive Officer
Date	September 22, 2008
By	/S/ Richard A. Novak
	Richard A. Novak, Principal Financial Officer
Date	September 22, 2008