FEDERATED MDT SERIES
                           Federated Investors Funds
                              5800 Corporate Drive
                      Pittsburgh, Pennsylvania 15237-7000

                               September 19, 2006

EDGAR Operations Branch
Securities and Exchange Commission
Division of Investment Management
450 Fifth Street, Northwest
Washington, DC  20549

     RE: FEDERATED MDT SERIES (the "Trust" or "Registrant")
            Federated MDT All Cap Core Fund
            Federated MDT Tax Aware/All Cap Core Fund
            Federated MDT Large Cap Growth Fund
            Federated MDT Mid Cap Growth Fund
            Federated MDT Balanced Fund
            Federated MDT Small Cap Core Fund
            Federated MDT Small Cap Growth Fund
            Federated MDT Small Cap Value Fund   (collectively, the "Funds")
           1933 Act File No. 333-136564
           1940 Act File No. 811-21904

Dear Sir or Madam:

      The  letter you referenced from Barry Miller dated October 2, 1998, states
that:

      "If a fund's fees in the fee table are subject to a contractual limitation
that requires  reimbursement  or waiver of expenses, a fund may add two lines to
the fee table: one line showing the amount of the reimbursement or waiver, and a
second  line  showing  the  fund's   net  expenses  after  subtracting  the  fee
reimbursement or expense waiver from the total fund operating expenses."

      The  Funds  are  subject  to  a  contractual   limitation  which  requires
reimbursement or waiver of expenses to the extent necessary  to  keep the Fund's
total operating expenses from exceeding a specified amount as specified  in  the
fee tables (the "Expense Cap").  See enclosed Exhibit 1.

      The  import of the footnote language in question is to make clear that one
or  more other  subsidiaries  of  Federated  Investors,  Inc.,  in  addition  to
Federated  MDTA LLC (the "Adviser"), could contribute toward meeting the Expense
Cap.

      Please  contact  me  at  412-288-2292  with  any  questions regarding this
filing.

                                                 Respectfully,

                                                 /s/ M. Cole Dolinger
                                                 M. Cole Dolinger
                                                 Senior Paralegal
Enclosures
                                                                       Exhibit 1
                          INVESTMENT ADVISORY CONTRACT
                                LETTER AGREEMENT

                                    MDTA LLC
                            125 Cambridge Park Drive
                              Cambridge, MA  02140

                                 July 14, 2006




MDT Funds
125 Cambridge Park Drive
Cambridge, MA  02140

Federated MDT Series
5800 Corporate Drive
Pittsburgh, PA 15237

Federated Income Securities Trust
5800 Corporate Drive
Pittsburgh, PA 18237

Ladies and Gentlemen:

      In connection with the proposed reorganization ("Proposed Reorganization")
of each portfolio (each, an "MDT Fund") of MDT Funds with and into a
corresponding portfolio of a mutual fund within the Federated family of mutual
funds (each a "Federated Fund"), MDTA LLC ("Advisor") hereby agrees to
contractually waive all or a portion of its investment advisory fee (based on
average daily net assets) which it is otherwise entitled to receive from each
Federated Fund, and/or reimburse operating expenses (excluding interest, taxes
and brokerage commissions) ("Operating Expenses") of each Federated Fund, in
order to limit each Federated Fund's Operating Expenses to not more than the
annual percentage of the Federated Fund's average daily net assets stated below,
for the two-year period commencing on the date that the Proposed Reorganization
of each MDT Fund with and into the corresponding Federated Fund is consummated.

                         Maximum Operating Expenses
 Fund                   Class A Class C Institutional
 All Cap Core Fund       1.50%   2.25%      1.25%
 Tax Aware/All Cap Fund  2.05%   2.80%      1.80%
 Large Cap Growth Fund   2.05%   2.80%      1.80%
 Mid Cap Growth Fund     2.05%   2.80%      1.80%
 Small Cap Core Fund     2.05%   2.80%      1.80%
 Small Cap Growth Fund   2.05%   2.80%      1.80%
 Small Cap Value Fund    2.05%   2.80%      1.80%
 Balanced Fund           1.50%   2.25%      1.25%
 Short-Term Bond Fund    1.20%    N/A       0.95%

      If the foregoing correctly sets forth the agreement between MDT Funds and
the Advisor, please so indicate by signing and returning to the Advisor the
enclosed copy hereof.  This may be executed in counterparts.






                                     Very truly yours,

                                     MDTA LLC

                                     By:  /s/ Gordon J. Cerisino
                                     Name:  Gordon J. Cerisino
                                     Title:  Chief Executive Officer

ACCEPTED:
MDT FUNDS
On behalf of each of its portfolios

By:  /s/ John C. Duane
Name:  John C. Duane
Title:  Treasurer


FEDERATED MDT SERIES
On behalf of its portfolios that are Federated Funds

By:  /s/ J. Christopher Donahue
Name:  J. Christopher Donahue
Title:  President


FEDERATED INCOME SECURITIES TRUST,
On behalf of the Federated Short-Term Income Fund

By:  /s/ J. Christopher Donahue
Name:  J. Christopher Donahue
Title:  President