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:  7/31/07


              Date of Reporting Period:  Fiscal year ended 7/31/07







ITEM 1.     REPORTS TO STOCKHOLDERS

Federated Investors
World-Class Investment Manager

Federated MDT All Cap
Core Fund

Established 2002

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2007

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

Financial Highlights--Class A Shares

(For a Share Outstanding Throughout Each Period)

Year Ended July 31	2007	1,2		2006	2		2005	2		2004	2		2003	2,3
Net Asset Value, Beginning of Period	$15.08			$15.26			$13.52			$11.75			$10.17
Income From Investment Operations:
Net investment income (loss)	0.02	4		0.00	4,5		(0.00	)4,5		0.01			0.00	5
Net realized and unrealized gain on investments	2.18			0.70			2.85			2.05			1.58
TOTAL FROM INVESTMENT OPERATIONS	2.20			0.70			2.85			2.06			1.58
Less Distributions:
Distributions from net investment income	--			(0.00	)5		(0.03	)		(0.02	)		--
Distributions from net realized gain on investments	(0.54	)		(0.88	)		(1.08	)		(0.27	)		--
TOTAL DISTRIBUTIONS	(0.54	)		(0.88	)		(1.11	)		(0.29	)		--
Net Asset Value, End of Period	$16.74			$15.08			$15.26			$13.52			$11.75
Total Return6	14.67	%		4.59	%		21.79	%		17.53	%		15.54	%
Ratios to Average Net Assets:
Net expenses	1.36	%		1.50	%		1.50	%		1.50	%		1.50	%7
Net investment income (loss)	0.13	%		0.03	%		(0.02	)%		0.05	%		0.21	%7
Expense waiver/reimbursement8	0.00	%9		0.05	%		0.04	%		0.15	%		0.84	%7
Supplemental Data:
Net assets, end of period (000 omitted)	$201,888		$101,723			$30,336			$9,628			$1,585
Portfolio turnover	225	%		212	%		204	%		96	%		172	%10

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 The years ended July 31, 2007 and July 31, 2006 and the period ended July 31, 2003 were audited by Ernst & Young LLP. The years ended July 31, 2005 and 2004 were audited by another independent registered public accounting firm.

3 Reflects operations for the period from February 12, 2003 (date of initial public investment) to July 31, 2003.

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

5 Represents less than $0.01.

6 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.

7 Computed on an annualized basis.

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

9 Represents less than 0.01%.

10 Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended July 31, 2003.

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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$14.99		$15.25
Income From Investment Operations:
Net investment income (loss)	(0.11	)3	(0.10	)3
Net realized and unrealized gain on investments	2.17		0.72
TOTAL FROM INVESTMENT OPERATIONS	2.06		0.62
Less Distributions:
Distributions from net realized gain on investments	(0.54	)	(0.88	)
Net Asset Value, End of Period	$16.51		$14.99
Total Return4	13.81	%	4.01	%
Ratios to Average Net Assets:
Net expenses	2.13	%	2.25	%5
Net investment income (loss)	(0.64	)%	(0.72	)%5
Expense waiver/reimbursement6	0.00	%7	0.05	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$104,957		$48,189
Portfolio turnover	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 an 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 the Period)

	Period Ended 7/31/2007	1
Net Asset Value, Beginning of Period	$16.82
Income From Investment Operations:
Net investment income (loss)	(0.03	)2
Net realized and unrealized gain on investments	0.61
TOTAL FROM INVESTMENT OPERATIONS	0.58
Less Distributions:
Distributions from net realized gain on investments	(0.54	)
Net Asset Value, End of Period	$16.86
Total Return3	3.52	%
Ratios to Average Net Assets:
Net expenses	1.80	%4
Net investment income	0.30	%4
Expense waiver/reimbursement5	0.02	%4
Supplemental Data:
Net assets, end of period (000 omitted)	$135
Portfolio turnover	225	%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 cost: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual:
Class A Shares	$1,000	$1,019.50	$6.56
Class C Shares	$1,000	$1,016.00	$10.50
Class K Shares	$1,000	$1,019.30	$8.86
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,018.30	$6.56
Class C Shares	$1,000	$1,014.38	$10.49
Class K Shares	$1,000	$1,016.02	$8.85

1 Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The annualized net expense ratios are as follows:

Class A Shares	1.31%
Class C Shares	2.10%
Class K Shares	1.77%

Management’s Discussion of Fund Performance

The fund’s total return for the fiscal year ended July 31, 2007 was 14.67% for Class A Shares, 13.81% for Class C Shares and 14.50% for Class K Shares.¹ The total return of the Russell 3000^® Index (Russell 3000^®)² was 16.08% 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 3000.^® The total return of the Lipper Multi-Cap Core Funds Index³ was 18.31% for the same period.

1 The fund is the successor to the MDT 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 All Cap Core Fund.

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 can not be made directly in an index.

3 Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. 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.

Market Overview

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000 Index, which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index⁴ which exceeded the 15.48% and 12.12% results for the Russell Top 200^® Index⁵ and the Russell 2000^® Index,⁶ respectively. Growth stocks outperformed value stocks by a wide margin during the year with the Russell 3000^® Growth Index⁷ returning 19.24% as compared to 12.97% for the Russell 3000 Value^® Index.⁸

The best performing sectors during the reporting period in the Russell 3000^® were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

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 can not 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 can not be made directly in an index.

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 can not 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 can not 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 can not be made directly in an index.

Fund Performance

The most significant positive factor in the fund’s performance relative to the Russell 3000^® Index was its overweight and stock selection in the Energy sector. Additionally, the fund’s stock selection in the Materials and Industrials sectors overcame the fund’s modest underweights in these well-performing sectors to provide modest contributions 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. Stock selection in the sector contributed to relative performance but was outpaced by the overweight in this sector which significantly underperformed the benchmark.

Individual stocks contributing to the fund’s performance relative to the Russell 3000^® included: Apple Computer Inc., Schlumberger Limited Ltd., Marathon Oil Corp., Chevron Corp., and Morgan Stanley.

Individual stocks detracting from the performance relative to the Russell 3000^® included: Exxon Mobil Corp., Merrill Lynch & Co., Inc., Genentech Inc., Cisco Systems Inc., and Ambac Financial Group.

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

The graph below illustrates the hypothetical investment of $10,000¹ in the Federated MDT All Cap Core Fund (Class A Shares) (the “Fund”) from October 1, 2002 (start of performance) to July 31, 2007, 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 7/31/2007
1 Year	8.37%
Start of Performance (10/1/2002)4	14.29%

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 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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as far as falling into the respected categories indicated. 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 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 $10,000¹ in the Federated MDT All Cap Core Fund (Class C Shares) (the “Fund”) from October 1, 2002 (start of performance) to July 31, 2007, 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 7/31/2007
1 Year	12.81%
Start of Performance (10/1/2002)4	14.78%

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 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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as far as falling into the respected categories indicated. 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 $10,000¹ in the Federated MDT All Cap Core Fund (Class K Shares) (the “Fund”) from October 1, 2002 (start of performance) to July 31, 2007, 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 7/31/2007
1 Year	14.50%
Start of Performance (10/1/2002)4	15.14%

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.

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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as far as falling into the respected categories indicated. 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 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.

Portfolio of Investments Summary Table

At July 31, 2007, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Money Center Bank	7.6%
Regional Bank	5.6%
Multi-Line Insurance	5.4%
Oil Well Supply	5.4%
Internet Services	5.3%
Securities Brokerage	5.3%
Computers -- Low End	4.7%
Integrated Domestic Oil	4.7%
Life Insurance	4.5%
Integrated International Oil	4.2%
Property Liability Insurance	4.2%
Building Supply Stores	4.0%
Agricultural Chemicals	3.8%
Financial Services	3.5%
Metal Fabrication	2.6%
Oil Refiner	2.3%
Home Building	1.8%
Railroad	1.7%
Biotechnology	1.6%
Electric Utility	1.6%
Crude Oil & Gas Production	1.4%
Diversified Oil	1.3%
Ethical Drugs	1.2%
Offshore Driller	1.2%
Miscellaneous Food Products	1.1%
Oil Service, Explore & Drill	1.0%
Undesignated Consumer Cyclicals	1.0%
Other2	10.4%
Cash Equivalents3	1.5%
Other Assets and Liabilities--Net4	0.1%
TOTAL	100.0%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual 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 any overnight repurchase agreements.

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

Portfolio of Investments

July 31, 2007

Shares				Value
		COMMON STOCKS--98.4%
		Agricultural Chemicals--3.8%
228,500		Monsanto Co.	$	14,726,825
		Apparel--0.2%
15,000		Guess ?, Inc.		712,350
		Auto Original Equipment Manufacturers--0.2%
11,200		American Axle & Manufacturing Holdings, Inc.		271,040
1,900		Johnson Controls, Inc.		214,985
4,350		Sun Hydraulics Corp.		129,282
6,400		Superior Industries International, Inc.		118,400
		TOTAL		733,707
		Biotechnology--1.6%
81,500	1	Genentech, Inc.		6,061,970
6,800	1	Martek Biosciences Corp.		174,216
		TOTAL		6,236,186
		Bituminous Coal--0.0%
6,100		Massey Energy Co.		130,235
		Book Publishing--0.0%
6,000	1	Scholastic Corp.		193,080
		Building Supply Stores--4.0%
333,200		Home Depot, Inc.		12,385,044
119,400		Lowe’s Cos., Inc.		3,344,394
		TOTAL		15,729,438
		Cement--0.1%
3,900		Martin Marietta Materials		534,300
		Clothing Stores--0.4%
30,800	1	Aeropostale, Inc.		1,172,864
800	1	Gymboree Corp.		34,440
8,300	1	Hanesbrands, Inc.		257,383
		TOTAL		1,464,687
		Computer Networking--0.2%
23,700	1	Juniper Networks, Inc.		710,052
		Computer Peripherals--0.0%
6,000	1	Hutchinson Technology, Inc.		120,360
		Computer Stores--0.1%
25,800	1	Ingram Micro, Inc., Class A		517,290
		COMMON STOCKS--continued
		Computers - Low End--4.7%
139,100	1	Apple, Inc.	$	18,327,816
		Construction Machinery--0.1%
3,600		Manitowoc, Inc.		279,612
		Cosmetics & Toiletries--0.0%
5,100	1	Bare Escentuals, Inc.		143,871
		Crude Oil & Gas Production--1.4%
37,800		Apache Corp.		3,055,752
13,400	1	Bill Barrett Corp.		459,888
14,200		Cimarex Energy Co.		537,470
18,500		Devon Energy Corp.		1,380,285
2,500		Pogo Producing Co.		133,150
		TOTAL		5,566,545
		Defense Aerospace--0.1%
9,100		Goodrich (B.F.) Co.		572,481
		Defense Electronics--0.2%
9,600	1	FLIR Systems, Inc.		419,040
2,500	1	First Solar, Inc.		281,425
		TOTAL		700,465
		Discount Department Stores--0.1%
26,700		Foot Locker, Inc.		495,552
		Diversified Leisure--0.2%
15,800		Carnival Corp.		700,098
		Diversified Oil--1.3%
86,700		Occidental Petroleum Corp.		4,917,624
		Drug Stores--0.1%
9,900		Longs Drug Stores Corp.		478,764
		Electric Utility--1.6%
36,100		Ameren Corp.		1,732,078
19,900		DTE Energy Co.		922,962
42,100		Edison International		2,226,669
13,900		Pepco Holdings, Inc.		376,273
7,100		Portland General Electric Co.		191,061
11,800		SCANA Corp.		441,084
5,100		Sempra Energy		268,872
4,600		Xcel Energy, Inc.		93,380
		TOTAL		6,252,379
		Electrical Equipment--0.1%
7,900	1	Houston Wire & Cable Co.		203,583
		COMMON STOCKS--continued
		Electronic Instruments--0.1%
3,000		Analogic Corp.	$	199,170
1,400	1	Dionex Corp.		95,214
		TOTAL		294,384
		Ethical Drugs--1.2%
12,200	1	King Pharmaceuticals, Inc.		207,522
128,100		Pfizer, Inc.		3,011,631
51,400		Schering Plough Corp.		1,466,956
2,300	1	Sciele Pharma, Inc.		53,337
		TOTAL		4,739,446
		Financial Services--3.5%
71,200		Ambac Financial Group, Inc.		4,781,080
31,500		Ameriprise Financial, Inc.		1,898,505
84,300		CIT Group, Inc.		3,471,474
100	1	CompuCredit Corp.		2,625
10,900		Janus Capital Group, Inc.		327,654
44,500		MBIA Insurance Corp.		2,496,450
5,400	1	Mastercard, Inc.		868,320
		TOTAL		13,846,108
		Gas Distributor--0.2%
8,600		AGL Resources, Inc.		324,220
9,900		MDU Resources Group, Inc.		269,874
5,900		NICOR, Inc.		232,519
		TOTAL		826,613
		Home Building--1.8%
51,500		Centex Corp.		1,921,465
19,000	1	Hovnanian Enterprises, Inc., Class A		251,560
30,300		KB HOME		963,843
42,700		Lennar Corp., Class A		1,309,182
15,300		M.D.C. Holdings, Inc.		703,800
600	1	NVR, Inc.		347,088
77,000		Pulte Homes, Inc.		1,489,180
		TOTAL		6,986,118
		Insurance Brokerage--0.1%
400	1	Markel Corp.		186,200
11,400		Odyssey Re Holdings Corp.		401,280
		TOTAL		587,480
		COMMON STOCKS--continued
		Integrated Domestic Oil--4.7%
215,800		ConocoPhillips	$	17,445,272
16,000		Marathon Oil Corp.		883,200
		TOTAL		18,328,472
		Integrated International Oil--4.2%
191,900		Chevron Corp.		16,361,394
		Internet Services--5.3%
82,300	1	Amazon.com, Inc.		6,463,842
419,800	1	eBay, Inc.		13,601,520
9,500	1	Priceline.com, Inc.		606,100
		TOTAL		20,671,462
		Leasing--0.0%
3,200		GATX Corp.		145,152
		Life Insurance--4.5%
2,500		Delphi Financial Group, Inc., Class A		100,425
145,400		MetLife, Inc.		8,755,988
10,000		Nationwide Financial Services, Inc., Class A		569,100
100		Principal Financial Group		5,639
6,500		Protective Life Corp.		279,630
80,100		Prudential Financial, Inc.		7,099,263
11,000		Torchmark Corp.		676,940
		TOTAL		17,486,985
		Lumber Products--0.1%
25,100		Louisiana-Pacific Corp.		464,852
		Mail Order--0.1%
16,100	1	Coldwater Creek, Inc.		317,009
		Major Steel Producer--0.1%
6,700		Ryerson, Inc.		215,003
		Maritime--0.4%
2,900	1	Kirby Corp.		117,479
17,100		Overseas Shipholding Group, Inc.		1,326,789
		TOTAL		1,444,268
		Medical Supplies--0.1%
4,200	1	Kyphon, Inc.		275,604
		Medical Technology--0.7%
11,900	1	Intuitive Surgical, Inc.		2,530,059
6,200		Stryker Corp.		387,066
		TOTAL		2,917,125
		COMMON STOCKS--continued
		Metal Fabrication--2.6%
2,900		Olympic Steel, Inc.	$	76,183
63,200		Precision Castparts Corp.		8,662,192
17,300		Timken Co.		577,820
35,200		Worthington Industries, Inc.		728,640
		TOTAL		10,044,835
		Mini-Mill Producer--0.3%
29,000		Commercial Metals Corp.		894,360
5,000		Schnitzer Steel Industries, Inc., Class A		270,950
		TOTAL		1,165,310
		Miscellaneous Food Products--1.1%
125,000		Archer-Daniels-Midland Co.		4,200,000
		Miscellaneous Metals--0.3%
2,500		Kennametal, Inc.		191,650
15,100		Metal Management, Inc.		634,351
28,000	1	USEC, Inc.		470,120
		TOTAL		1,296,121
		Miscellaneous Components--0.2%
4,800		Amphenol Corp., Class A		164,448
29,600	1	Vishay Intertechnology, Inc.		459,096
		TOTAL		623,544
		Money Center Bank--7.6%
174,400		Bank of America Corp.		8,270,048
44,900		Citigroup, Inc.		2,090,993
442,300		J.P. Morgan Chase & Co.		19,465,623
		TOTAL		29,826,664
		Mortgage and Title--0.2%
4,700		Countrywide Financial Corp.		132,399
6,200		LandAmerica Financial Group, Inc.		474,858
		TOTAL		607,257
		Multi-Industry Capital Goods--0.3%
500		Acuity Brands, Inc.		29,550
6,400	1	Ceradyne, Inc.		477,632
8,100	1	Shaw Group, Inc.		431,082
1,600		Textron Inc.		180,624
		TOTAL		1,118,888
		Multi-Industry Transportation--0.1%
11,400	1	Hub Group, Inc.		387,828
		COMMON STOCKS--continued
		Multi-Line Insurance--5.4%
29,150		Allstate Corp.	$	1,549,323
272,900		American International Group, Inc.		17,514,722
23,900		Assurant, Inc.		1,212,208
7,100		Hanover Insurance Group, Inc.		311,619
4,800		Hartford Financial Services Group, Inc.		440,976
		TOTAL		21,028,848
		Mutual Fund Adviser--0.2%
6,200		Franklin Resources, Inc.		789,694
		Newspaper Publishing--0.0%
3,700		Gannett Co., Inc.		184,630
		Offshore Driller--1.2%
9,400	1	Hornbeck Offshore Services, Inc.		404,670
15,100	1	Oceaneering International, Inc.		848,016
48,500		Tidewater, Inc.		3,318,370
		TOTAL		4,571,056
		Oil Refiner--2.3%
133,600		Valero Energy Corp.		8,952,536
		Oil Service, Explore & Drill--1.0%
66,300	1	Grant Prideco, Inc.		3,719,430
3,000	1	McDermott International, Inc.		248,820
		TOTAL		3,968,250
		Oil Well Supply--5.4%
18,800	1	FMC Technologies, Inc.		1,720,576
204,400		Schlumberger Ltd.		19,360,768
		TOTAL		21,081,344
		Other Communications Equipment--0.1%
4,600		Harris Corp.		252,448
		Personal Loans--0.0%
2,300		ASTA Funding, Inc.		82,984
3,750		Advanta Corp., Class B		96,225
		TOTAL		179,209
		Poultry Products--0.3%
24,300		Pilgrim’s Pride Corp.		818,424
12,800		Sanderson Farms, Inc.		510,336
		TOTAL		1,328,760
		COMMON STOCKS--continued
		Property Liability Insurance--4.2%
19,600		American Financial Group, Inc.	$	550,564
86,100		Chubb Corp.		4,340,301
9,700		Commerce Group, Inc.		278,681
17,500		HCC Insurance Holdings, Inc.		512,400
46,200		Loews Corp.		2,189,880
4,400		Mercury General Corp.		227,832
2,800	1	Philadelphia Consolidated Holding Corp.		101,192
11,200		Reinsurance Group of America		597,072
15,000		SAFECO Corp.		877,050
134,700		The Travelers Cos., Inc.		6,840,066
1,000		Transatlantic Holdings, Inc.		73,150
		TOTAL		16,588,188
		Railroad--1.7%
119,700		Norfolk Southern Corp.		6,437,466
		Recreational Goods--0.0%
10,400	1	Smith & Wesson Holding Corp.		195,520
		Regional Bank--5.6%
8,600		Associated Banc Corp.		247,164
27,700		BB&T Corp.		1,036,534
6,000		Central Pacific Financial Corp.		169,260
1,900		City National Corp.		134,501
62,400		Comerica, Inc.		3,285,984
48,300		Fifth Third Bancorp		1,781,787
8,400		FirstMerit Corp.		153,972
3,200		Huntington Bancshares, Inc.		61,440
162,513		KeyCorp		5,637,576
4,700		M & T Bank Corp.		499,563
4,700		Marshall & Ilsley Corp.		193,687
89,000		National City Corp.		2,615,710
52,300		SunTrust Banks, Inc.		4,095,090
23,500		UnionBanCal Corp.		1,298,610
3,800		United Bankshares, Inc.		105,830
10,000		Zions Bancorp		745,500
		TOTAL		22,062,208
		Restaurant--0.1%
12,400	1	Buffalo Wild Wings, Inc.		535,928
		COMMON STOCKS--continued
		Savings & Loan--0.3%
15,300		Newalliance Bancshares, Inc.	$	206,703
30,900		Washington Mutual Bank		1,159,677
		TOTAL		1,366,380
		Securities Brokerage--5.3%
5,600		Goldman Sachs Group, Inc.		1,054,704
74,300		Lehman Brothers Holdings, Inc.		4,606,600
106,500		Merrill Lynch & Co., Inc.		7,902,300
115,100		Morgan Stanley		7,351,437
		TOTAL		20,915,041
		Semiconductor Distribution--0.4%
40,000	1	Avnet, Inc.		1,515,200
		Semiconductor Manufacturing--0.7%
31,400		Intersil Holding Corp.		918,450
42,900		Linear Technology Corp.		1,529,385
22,700	1	Spansion, Inc.		240,847
		TOTAL		2,688,682
		Semiconductor Manufacturing Equipment--0.1%
15,700	1	Teradyne, Inc.		246,333
		Services to Medical Professionals--0.7%
44,600	1	Express Scripts, Inc., Class A		2,235,798
7,600	1	Humana, Inc.		487,084
3,700	1	Nighthawk Radiology Holdings, Inc.		76,331
		TOTAL		2,799,213
		Shoes--0.1%
8,600	1	Crocs, Inc.		510,152
		Software Packaged/Custom--0.6%
6,200	1	Blue Coat Systems, Inc.		302,126
30,800	1	Computer Sciences Corp.		1,714,944
3,300		National Instruments Corp.		106,755
5,900	1	SPSS, Inc.		242,136
1,200	1	ValueClick, Inc.		25,656
		TOTAL		2,391,617
		Specialty Chemicals--0.4%
8,100		Minerals Technologies, Inc.		523,827
18,500	1	OM Group, Inc.		896,140
1		Tronox Inc., Class B		12
		TOTAL		1,419,979
		COMMON STOCKS--continued
		Specialty Machinery--0.0%
400	1	Stratasys, Inc.	$	17,604
		Specialty Retailing--0.2%
6,900	1	Big Lots, Inc.		178,434
22,000		Borders Group, Inc.		359,920
4,200		Pep Boys-Manny Moe & Jack		71,106
		TOTAL		609,460
		Telecommunication Equipment & Services--0.3%
2,200	1	Anixter International, Inc.		181,830
6,100	1	C-COR Electronics, Inc.		82,045
42,100	1	Corning, Inc.		1,003,664
		TOTAL		1,267,539
		Telephone Utility--0.1%
9,400		Embarq Corp.		580,826
		Trucking--0.1%
4,300		Con-way, Inc.		212,377
		Undesignated Consumer Cyclicals--1.0%
23,900		DeVRY, Inc.		774,360
23,700	1	ITT Educational Services, Inc.		2,504,142
300		Strayer Education, Inc.		45,459
23,700	1	TeleTech Holdings, Inc.		695,121
		TOTAL		4,019,082
		Undesignated Consumer Staples--0.3%
23,200	1	Nutri/System, Inc.		1,292,704
		TOTAL COMMON STOCKS (IDENTIFIED COST $378,514,448)		385,633,496
		MUTUAL FUND--1.5%
5,916,667	2,3	Prime Value Obligations Fund, Institutional Shares, 5.25% (AT NET ASSET VALUE)		5,916,667
		TOTAL INVESTMENTS--99.9% (IDENTIFIED COST $384,431,115)4		391,550,163
		OTHER ASSETS AND LIABILITIES - NET--0.1%		557,319
		TOTAL NET ASSETS--100%	$	392,107,482

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $384,862,265.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2007.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2007

Assets:
Total investments in securities, at value including $5,916,667 of investments in an affiliated issuer (Note 5) (identified cost $384,431,115)			$	391,550,163
Income receivable				163,309
Receivable for investments sold				6,632,549
Receivable for shares sold				3,416,462
TOTAL ASSETS				401,762,483
Liabilities:
Payable for investments purchased	$	8,722,387
Payable for shares redeemed		534,127
Payable for administrative personnel and services fee (Note 5)		6,560
Payable for distribution services fee (Note 5)		66,673
Payable for shareholder services fee (Note 5)		186,542
Accrued expenses		138,712
TOTAL LIABILITIES				9,655,001
Net assets for 23,470,219 shares outstanding			$	392,107,482
Net Assets Consist of:
Paid-in capital			$	356,416,650
Net unrealized appreciation of investments				7,119,048
Accumulated net realized gain on investments				28,571,784
TOTAL NET ASSETS			$	392,107,482
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($85,127,958 ÷ 5,041,847 shares outstanding), no par value, unlimited shares authorized				$16.88
Offering price per share				$16.88
Redemption proceeds per share				$16.88
Class A Shares:
Net asset value per share ($201,887,612 ÷ 12,061,827 shares outstanding), no par value, unlimited shares authorized				$16.74
Offering price per share (100/94.50 of $16.74)1				$17.71
Redemption proceeds per share				$16.74

Statement of Assets and Liabilities--continued

Class C Shares:
Net asset value per share ($104,956,688 ÷ 6,358,526 shares outstanding), no par value, unlimited shares authorized	$16.51
Offering price per share	$16.51
Redemption proceeds per share (99.00/100 of $16.51)1	$16.34
Class K Shares:
Net asset value per share ($135,224 ÷ 8,019 shares outstanding), no par value, unlimited shares authorized	$16.86
Offering price per share	$16.86
Redemption proceeds per share	$16.86

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, 2007

Investment Income:
Dividends (including $49,497 received from an affiliated issuer (Note 5))							$	4,482,519
Interest								136,329
TOTAL INCOME								4,618,848
Expenses:
Investment adviser fee (Note 5)				$	2,335,497
Administrative personnel and services fee (Note 5)					271,823
Custodian fees					44,927
Transfer and dividend disbursing agent fees and expenses					276,248
Transfer and dividend disbursing agent recordkeeping fees-- Institutional Shares					2,977
Transfer and dividend disbursing agent recordkeeping fees--Class A Shares					63,274
Transfer and dividend disbursing agent recordkeeping fees--Class C Shares					50,407
Transfer and dividend disbursing agent recordkeeping fees--Class K Shares					53
Directors’/Trustees’ fees					4,274
Auditing fees					16,532
Legal fees					2,354
Portfolio accounting fees					163,837
Distribution services fee--Class A Shares (Note 5)					117,862
Distribution services fee--Class C Shares (Note 5)					673,589
Distribution services fee--Class K Shares (Note 5)					106
Shareholder services fee--Class A Shares (Note 5)					301,157
Shareholder services fee--Class C Shares (Note 5)					151,885
Share registration costs					111,152
Printing and postage					94,813
Insurance premiums					9,748
Miscellaneous					6,317
TOTAL EXPENSES					4,698,832
Reimbursement, Waivers and Expenses Recovered:
Reimbursement of investment adviser fee (Note 5)	$	(759	)
Waiver of administrative personnel and services fee (Note 5)		(23,220	)
Waiver of transfer and dividend disbursing agent fees and expenses		(13,607	)
Expenses recovered by the Adviser (Note 5)		23,533
NET REIMBURSEMENT, WAIVERS AND EXPENSES RECOVERED					(14,053	)
Net expenses								4,684,779
Net investment income (loss)								(65,931	)
Realized and Unrealized Gain on Investments:
Net realized gain on investments								29,303,764
Net change in unrealized appreciation of investments								5,456,660
Net realized and unrealized gain on investments								34,760,424
Change in net assets resulting from operations							$	34,694,493

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2007			2006
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(65,931	)	$	13,180
Net realized gain on investments		29,303,764			9,146,627
Net change in unrealized appreciation/depreciation of investments		5,456,660			(7,090,736	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		34,694,493			2,069,071
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares		--			(42,291	)
Class A Shares		--			(10,715	)
Class C Shares		--			--
Class K Shares		--			--
Distributions from net realized gain on investments
Institutional Shares		(1,675,959	)		(2,304,161	)
Class A Shares		(5,228,169	)		(2,312,213	)
Class C Shares		(2,497,031	)		(117,957	)
Class K Shares		(3	)		--
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(9,401,162	)		(4,787,337	)
Share Transactions:
Proceeds from sale of shares		235,142,870			135,990,595
Net asset value of shares issued to shareholders in payment of distributions declared		8,258,175			4,703,047
Cost of shares redeemed		(69,157,702	)		(19,541,548	)
Redemption fees1		3,869			14,883
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		174,247,212			121,166,977
Change in net assets		199,540,543			118,448,711
Net Assets:
Beginning of period		192,566,939			74,118,228
End of period	$	392,107,482		$	192,566,939

1 Redemption fees in 2006 have been reclassified to permit comparison.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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 primary 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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• for investments in other open-end regulated investment companies, based on net asset value (NAV);
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors; prices for interest rate swaps are furnished by an independent pricing service and are based upon a valuation model incorporating interest rates, yield curves and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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 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

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.

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 7/31/2007					Year Ended 7/31/2006
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	2,677,589		$	45,134,764		353,848		$	5,425,707
Shares issued to shareholders in payment of distributions declared	90,311			1,481,998		153,643			2,324,618
Shares redeemed	(537,678	)		(8,951,521	)	(553,530	)		(8,427,259	)
Redemption fees	--			508		--			--
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	2,230,222		$	37,665,749		(46,039	)	$	(676,934	)
	Year Ended 7/31/2007					Year Ended 7/31/2006
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	7,981,369		$	129,791,451		5,300,192		$	80,853,392
Shares issued to shareholders in payment of distributions declared	300,058			4,887,949		150,057			2,261,363
Shares redeemed	(2,963,223	)		(48,937,368	)	(694,341	)		(10,529,747	)
Redemption fees	--			2,298		--			10,020
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	5,318,204		$	85,744,330		4,755,908		$	72,595,028
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	3,709,500		$	60,072,675		3,245,159		$	49,711,496
Shares issued to shareholders in payment of distributions declared	116,918			1,888,228		7,778			117,066
Shares redeemed	(681,786	)		(11,263,611	)	(39,043	)		(584,542	)
Redemption fees	--			1,063		--			4,863
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	3,144,632		$	50,698,355		3,213,894		$	49,248,883
	Period Ended 7/31/20072					Year Ended 7/31/2006
Class K Shares:	Shares			Amount		Shares			Amount
Shares sold	8,309		$	143,980		--		$	--
Shares redeemed	(290	)		(5,202	)	--			--
NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS	8,019		$	138,778		--		$	--
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	10,701,077		$	174,247,212		7,923,763		$	121,166,977

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

2 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 Fund imposed a 2.00% redemption fee to shareholders of the Fund’s Institutional Shares, Class A Shares and Class C Shares who redeem 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.

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 ordinary losses netted to short-term capital gains.

For the year ended July 31, 2007, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Undistributed Net Investment Income	Accumulated Net Realized Gains
$65,931	$(65,931)

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, 2007 and 2006, was as follows:

	2007	2006
Ordinary income1	$4,625,312	$2,698,954
Long-term capital gains	$4,775,850	$2,088,383

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	21,533,887
Undistributed long-term capital gain	$	7,469,047
Net unrealized appreciation	$	6,687,898

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, 2007, the cost of investments for federal tax purposes was $384,862,265. The net unrealized appreciation of investments for federal tax purposes was $6,687,898. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $25,769,623 and net unrealized depreciation from investments for those securities having an excess of cost over value of $19,081,725.

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 adviser 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 has agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee.

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 can not be recovered by the Adviser after December 8, 2006.

For the year ended July 31, 2007, the Adviser recovered $23,533 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 previous administrative services contract. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 0.080% of average daily net assets of the Fund. FAS waived $23,220 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 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 of up to 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	0.25%
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%

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, 2007, FSC retained $549,412 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC, the principal distributor, retained $86,805 in sales charges from the sale of Class A Shares. FSC also retained $9,128 and $17,835 of contingent deferred sales charges relating to redemptions of Class A Shares and Class C Shares, respectively. 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, 2007, 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 (including the distribution (12b-1) fee) paid by the Fund’s Class A Shares (after the voluntary waivers and reimbursements) will not exceed 1.30% for the fiscal year ending July 31, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $759 in connection with the affiliated mutual fund listed below. Transactions with the affiliated company during the year ended July 31, 2007 are as follows:

Affiliate	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	--	22,219,032	16,302,365	5,916,667	$5,916,667	$49,497

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, 2007, were as follows:

Purchases	$	846,242,414
Sales	$	684,919,981

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2007, the amount of long-term capital gains designated by the Fund was $4,775,850.

For the fiscal year ended July 31, 2007, 30.95% 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, 2007, 31.67% 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, 2007, 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 financial highlights for each of the periods indicated therein for the years ended July 31, 2007, 2006 and 2003. 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein for the years ended July 31, 2007, 2006 and 2003, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 19, 2007

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. As of December 31, 2006, the Trust comprised eight portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by
calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

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 15 Old Timber Trail Pittsburgh, PA 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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 Began Serving	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

FEDERATED MDT ALL CAP CORE FUND (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contracts at meetings held in May 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

For the periods ending December 31, 2006, the Fund’s performance for the three year period was above the median of the relevant peer group, and the Fund’s performance fell below the median of the relevant peer group for the one year period. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.

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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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.

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. 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 his 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. For 2006, 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 in 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 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 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT All Cap Core Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2007

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	2007	1,2		2006	2		2005	2		2004	2		2003	2,3
Net Asset Value, Beginning of Period	$15.17			$15.32			$13.55			$11.76			$10.00
Income From Investment Operations:
Net investment income	0.07	4		0.05	4		0.03	4		0.04			0.03
Net realized and unrealized gain on investments	2.18			0.70			2.87			2.05			1.75
TOTAL FROM INVESTMENT OPERATIONS	2.25			0.75			2.90			2.09			1.78
Less Distributions:
Distributions from net investment income	--			(0.02	)		(0.05	)		(0.03	)		(0.01	)
Distributions from net realized gain on investments	(0.54	)		(0.88	)		(1.08	)		(0.27	)		(0.01	)
TOTAL DISTRIBUTIONS	(0.54	)		(0.90	)		(1.13	)		(0.30	)		(0.02	)
Net Asset Value, End of Period	$16.88			$15.17			$15.32			$13.55			$11.76
Total Return5	14.92	%		4.85	%		22.14	%		17.78	%		17.75	%
Ratios to Average Net Assets:
Net expenses	1.07	%		1.25	%		1.25	%		1.25	%		1.33	%6
Net investment income	0.40	%		0.28	%		0.23	%		0.30	%		0.37	%6
Expense waiver/reimbursement7	0.01	%		0.05	%		0.04	%		0.15	%		0.85	%6
Supplemental Data:
Net assets, end of period (000 omitted)	$85,128		$42,656			$43,782			$31,532			$23,455
Portfolio turnover	225	%		212	%		204	%		96	%		172	%8

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 The years ended July 31, 2007 and July 31, 2006 and the period ended July 31, 2003 were audited by Ernst & Young LLP. The years ended July 31, 2005 and 2004 were audited by another independent registered public accounting firm.

3 Reflects operations for the period from October 1, 2002 (date of initial public investment) to July 31, 2003.

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

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 ratios shown above.

8 Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended July 31, 2003.

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; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual	$1,000	$1,020.60	$5.06
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,019.79	$5.06

1 Expenses are equal to the Fund’s annualized net expense ratio of 1.01%, multiplied by the average account value over the period, multiplied by 181/365 (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, 2007 was 14.92% for Institutional Shares.¹ The total return of the Russell 3000^® Index (Russell 3000^®)² was 16.08% 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 3000.^® The total return of the Lipper Multi-Cap Core Funds Index³ was 18.31% for the same period.

1 The fund is the successor to the MDT 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 All Cap Core Fund.

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 can not be made directly in an index.

3 Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. 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.

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000 Index, which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index⁴ which exceeded the 15.48% and 12.12% results for the Russell Top 200^® Index⁵ and the Russell 2000^® Index,⁶ respectively. Growth stocks outperformed value stocks by a wide margin during the year with the Russell 3000^® Growth Index⁷ returning 19.24% as compared to 12.97% for the Russell 3000 Value^® Index.⁸

The best performing sectors during the reporting period in the Russell 3000^® were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

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 can not 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 can not be made directly in an index.

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 can not 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 can not 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 can not be made directly in an index.

FUND PERFORMANCE

The most significant positive factor in the fund’s performance relative to the Russell 3000^® Index was its overweight and stock selection in the Energy sector. Additionally, the fund’s stock selection in the Materials and Industrials sectors overcame the fund’s modest underweights in these well-performing sectors to provide modest contributions 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. Stock selection in the sector contributed to relative performance but was outpaced by the overweight in this sector which significantly underperformed the benchmark.

Individual stocks contributing to the fund’s performance relative to the Russell 3000^® included: Apple Computer Inc., Schlumberger Limited, Marathon Oil Corp., Chevron Corp., and Morgan Stanley.

Individual stocks detracting from the performance relative to the Russell 3000^® included: Exxon Mobil Corp., Merrill Lynch & Co., Genentech Inc., Cisco Systems Inc., and Ambac Financial Group.

GROWTH OF A $25,000 INVESTMENT -- INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000¹ in the Federated MDT All Cap Core Fund (Institutional Shares) (the “Fund”) from October 1, 2002 (start of performance) to July 31, 2007, 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 7/31/2007
1 Year	14.92%
Start of Performance (10/1/2002)	15.91%

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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as far as falling into the respected categories indicated. Lipper figures do not reflect sales charges.

Portfolio of Investments Summary Table

At July 31, 2007, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Money Center Bank	7.6%
Regional Bank	5.6%
Multi-Line Insurance	5.4%
Oil Well Supply	5.4%
Internet Services	5.3%
Securities Brokerage	5.3%
Computers -- Low End	4.7%
Integrated Domestic Oil	4.7%
Life Insurance	4.5%
Integrated International Oil	4.2%
Property Liability Insurance	4.2%
Building Supply Stores	4.0%
Agricultural Chemicals	3.8%
Financial Services	3.5%
Metal Fabrication	2.6%
Oil Refiner	2.3%
Home Building	1.8%
Railroad	1.7%
Biotechnology	1.6%
Electric Utility	1.6%
Crude Oil & Gas Production	1.4%
Diversified Oil	1.3%
Ethical Drugs	1.2%
Offshore Driller	1.2%
Miscellaneous Food Products	1.1%
Oil Service, Explore & Drill	1.0%
Undesignated Consumer Cyclicals	1.0%
Other2	10.4%
Cash Equivalents3	1.5%
Other Assets and Liabilities--Net4	0.1%
TOTAL	100.0%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual 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 any overnight repurchase agreements.

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

Portfolio of Investments

July 31, 2007

Shares				Value
		COMMON STOCKS--98.4%
		Agricultural Chemicals--3.8%
228,500		Monsanto Co.	$	14,726,825
		Apparel--0.2%
15,000		Guess ?, Inc.		712,350
		Auto Original Equipment Manufacturers--0.2%
11,200		American Axle & Manufacturing Holdings, Inc.		271,040
1,900		Johnson Controls, Inc.		214,985
4,350		Sun Hydraulics Corp.		129,282
6,400		Superior Industries International, Inc.		118,400
		TOTAL		733,707
		Biotechnology--1.6%
81,500	1	Genentech, Inc.		6,061,970
6,800	1	Martek Biosciences Corp.		174,216
		TOTAL		6,236,186
		Bituminous Coal--0.0%
6,100		Massey Energy Co.		130,235
		Book Publishing--0.0%
6,000	1	Scholastic Corp.		193,080
		Building Supply Stores--4.0%
333,200		Home Depot, Inc.		12,385,044
119,400		Lowe’s Cos., Inc.		3,344,394
		TOTAL		15,729,438
		Cement--0.1%
3,900		Martin Marietta Materials		534,300
		Clothing Stores--0.4%
30,800	1	Aeropostale, Inc.		1,172,864
800	1	Gymboree Corp.		34,440
8,300	1	Hanesbrands, Inc.		257,383
		TOTAL		1,464,687
		Computer Networking--0.2%
23,700	1	Juniper Networks, Inc.		710,052
		Computer Peripherals--0.0%
6,000	1	Hutchinson Technology, Inc.		120,360
		Computer Stores--0.1%
25,800	1	Ingram Micro, Inc., Class A		517,290
		COMMON STOCKS--continued
		Computers - Low End--4.7%
139,100	1	Apple, Inc.	$	18,327,816
		Construction Machinery--0.1%
3,600		Manitowoc, Inc.		279,612
		Cosmetics & Toiletries--0.0%
5,100	1	Bare Escentuals, Inc.		143,871
		Crude Oil & Gas Production--1.4%
37,800		Apache Corp.		3,055,752
13,400	1	Bill Barrett Corp.		459,888
14,200		Cimarex Energy Co.		537,470
18,500		Devon Energy Corp.		1,380,285
2,500		Pogo Producing Co.		133,150
		TOTAL		5,566,545
		Defense Aerospace--0.1%
9,100		Goodrich (B.F.) Co.		572,481
		Defense Electronics--0.2%
9,600	1	FLIR Systems, Inc.		419,040
2,500	1	First Solar, Inc.		281,425
		TOTAL		700,465
		Discount Department Stores--0.1%
26,700		Foot Locker, Inc.		495,552
		Diversified Leisure--0.2%
15,800		Carnival Corp.		700,098
		Diversified Oil--1.3%
86,700		Occidental Petroleum Corp.		4,917,624
		Drug Stores--0.1%
9,900		Longs Drug Stores Corp.		478,764
		Electric Utility--1.6%
36,100		Ameren Corp.		1,732,078
19,900		DTE Energy Co.		922,962
42,100		Edison International		2,226,669
13,900		Pepco Holdings, Inc.		376,273
7,100		Portland General Electric Co.		191,061
11,800		SCANA Corp.		441,084
5,100		Sempra Energy		268,872
4,600		Xcel Energy, Inc.		93,380
		TOTAL		6,252,379
		Electrical Equipment--0.1%
7,900	1	Houston Wire & Cable Co.		203,583
		COMMON STOCKS--continued
		Electronic Instruments--0.1%
3,000		Analogic Corp.	$	199,170
1,400	1	Dionex Corp.		95,214
		TOTAL		294,384
		Ethical Drugs--1.2%
12,200	1	King Pharmaceuticals, Inc.		207,522
128,100		Pfizer, Inc.		3,011,631
51,400		Schering Plough Corp.		1,466,956
2,300	1	Sciele Pharma, Inc.		53,337
		TOTAL		4,739,446
		Financial Services--3.5%
71,200		Ambac Financial Group, Inc.		4,781,080
31,500		Ameriprise Financial, Inc.		1,898,505
84,300		CIT Group, Inc.		3,471,474
100	1	CompuCredit Corp.		2,625
10,900		Janus Capital Group, Inc.		327,654
44,500		MBIA Insurance Corp.		2,496,450
5,400	1	Mastercard, Inc.		868,320
		TOTAL		13,846,108
		Gas Distributor--0.2%
8,600		AGL Resources, Inc.		324,220
9,900		MDU Resources Group, Inc.		269,874
5,900		NICOR, Inc.		232,519
		TOTAL		826,613
		Home Building--1.8%
51,500		Centex Corp.		1,921,465
19,000	1	Hovnanian Enterprises, Inc., Class A		251,560
30,300		KB HOME		963,843
42,700		Lennar Corp., Class A		1,309,182
15,300		M.D.C. Holdings, Inc.		703,800
600	1	NVR, Inc.		347,088
77,000		Pulte Homes, Inc.		1,489,180
		TOTAL		6,986,118
		Insurance Brokerage--0.1%
400	1	Markel Corp.		186,200
11,400		Odyssey Re Holdings Corp.		401,280
		TOTAL		587,480
		COMMON STOCKS--continued
		Integrated Domestic Oil--4.7%
215,800		ConocoPhillips	$	17,445,272
16,000		Marathon Oil Corp.		883,200
		TOTAL		18,328,472
		Integrated International Oil--4.2%
191,900		Chevron Corp.		16,361,394
		Internet Services--5.3%
82,300	1	Amazon.com, Inc.		6,463,842
419,800	1	eBay, Inc.		13,601,520
9,500	1	Priceline.com, Inc.		606,100
		TOTAL		20,671,462
		Leasing--0.0%
3,200		GATX Corp.		145,152
		Life Insurance--4.5%
2,500		Delphi Financial Group, Inc., Class A		100,425
145,400		MetLife, Inc.		8,755,988
10,000		Nationwide Financial Services, Inc., Class A		569,100
100		Principal Financial Group		5,639
6,500		Protective Life Corp.		279,630
80,100		Prudential Financial, Inc.		7,099,263
11,000		Torchmark Corp.		676,940
		TOTAL		17,486,985
		Lumber Products--0.1%
25,100		Louisiana-Pacific Corp.		464,852
		Mail Order--0.1%
16,100	1	Coldwater Creek, Inc.		317,009
		Major Steel Producer--0.1%
6,700		Ryerson, Inc.		215,003
		Maritime--0.4%
2,900	1	Kirby Corp.		117,479
17,100		Overseas Shipholding Group, Inc.		1,326,789
		TOTAL		1,444,268
		Medical Supplies--0.1%
4,200	1	Kyphon, Inc.		275,604
		Medical Technology--0.7%
11,900	1	Intuitive Surgical, Inc.		2,530,059
6,200		Stryker Corp.		387,066
		TOTAL		2,917,125
		COMMON STOCKS--continued
		Metal Fabrication--2.6%
2,900		Olympic Steel, Inc.	$	76,183
63,200		Precision Castparts Corp.		8,662,192
17,300		Timken Co.		577,820
35,200		Worthington Industries, Inc.		728,640
		TOTAL		10,044,835
		Mini-Mill Producer--0.3%
29,000		Commercial Metals Corp.		894,360
5,000		Schnitzer Steel Industries, Inc., Class A		270,950
		TOTAL		1,165,310
		Miscellaneous Food Products--1.1%
125,000		Archer-Daniels-Midland Co.		4,200,000
		Miscellaneous Metals--0.3%
2,500		Kennametal, Inc.		191,650
15,100		Metal Management, Inc.		634,351
28,000	1	USEC, Inc.		470,120
		TOTAL		1,296,121
		Miscellaneous Components--0.2%
4,800		Amphenol Corp., Class A		164,448
29,600	1	Vishay Intertechnology, Inc.		459,096
		TOTAL		623,544
		Money Center Bank--7.6%
174,400		Bank of America Corp.		8,270,048
44,900		Citigroup, Inc.		2,090,993
442,300		JPMorgan Chase & Co.		19,465,623
		TOTAL		29,826,664
		Mortgage and Title--0.2%
4,700		Countrywide Financial Corp.		132,399
6,200		LandAmerica Financial Group, Inc.		474,858
		TOTAL		607,257
		Multi-Industry Capital Goods--0.3%
500		Acuity Brands, Inc.		29,550
6,400	1	Ceradyne, Inc.		477,632
8,100	1	Shaw Group, Inc.		431,082
1,600		Textron Inc.		180,624
		TOTAL		1,118,888
		Multi-Industry Transportation--0.1%
11,400	1	Hub Group, Inc.		387,828
		COMMON STOCKS--continued
		Multi-Line Insurance--5.4%
29,150		Allstate Corp.	$	1,549,323
272,900		American International Group, Inc.		17,514,722
23,900		Assurant, Inc.		1,212,208
7,100		Hanover Insurance Group, Inc.		311,619
4,800		Hartford Financial Services Group, Inc.		440,976
		TOTAL		21,028,848
		Mutual Fund Adviser--0.2%
6,200		Franklin Resources, Inc.		789,694
		Newspaper Publishing--0.0%
3,700		Gannett Co., Inc.		184,630
		Offshore Driller--1.2%
9,400	1	Hornbeck Offshore Services, Inc.		404,670
15,100	1	Oceaneering International, Inc.		848,016
48,500		Tidewater, Inc.		3,318,370
		TOTAL		4,571,056
		Oil Refiner--2.3%
133,600		Valero Energy Corp.		8,952,536
		Oil Service, Explore & Drill--1.0%
66,300	1	Grant Prideco, Inc.		3,719,430
3,000	1	McDermott International, Inc.		248,820
		TOTAL		3,968,250
		Oil Well Supply--5.4%
18,800	1	FMC Technologies, Inc.		1,720,576
204,400		Schlumberger Ltd.		19,360,768
		TOTAL		21,081,344
		Other Communications Equipment--0.1%
4,600		Harris Corp.		252,448
		Personal Loans--0.0%
2,300		ASTA Funding, Inc.		82,984
3,750		Advanta Corp., Class B		96,225
		TOTAL		179,209
		Poultry Products--0.3%
24,300		Pilgrim’s Pride Corp.		818,424
12,800		Sanderson Farms, Inc.		510,336
		TOTAL		1,328,760
		COMMON STOCKS--continued
		Property Liability Insurance--4.2%
19,600		American Financial Group, Inc.	$	550,564
86,100		Chubb Corp.		4,340,301
9,700		Commerce Group, Inc.		278,681
17,500		HCC Insurance Holdings, Inc.		512,400
46,200		Loews Corp.		2,189,880
4,400		Mercury General Corp.		227,832
2,800	1	Philadelphia Consolidated Holding Corp.		101,192
11,200		Reinsurance Group of America		597,072
15,000		SAFECO Corp.		877,050
134,700		The Travelers Cos., Inc.		6,840,066
1,000		Transatlantic Holdings, Inc.		73,150
		TOTAL		16,588,188
		Railroad--1.7%
119,700		Norfolk Southern Corp.		6,437,466
		Recreational Goods--0.0%
10,400	1	Smith & Wesson Holding Corp.		195,520
		Regional Bank--5.6%
8,600		Associated Banc Corp.		247,164
27,700		BB&T Corp.		1,036,534
6,000		Central Pacific Financial Corp.		169,260
1,900		City National Corp.		134,501
62,400		Comerica, Inc.		3,285,984
48,300		Fifth Third Bancorp		1,781,787
8,400		FirstMerit Corp.		153,972
3,200		Huntington Bancshares, Inc.		61,440
162,513		KeyCorp		5,637,576
4,700		M & T Bank Corp.		499,563
4,700		Marshall & Ilsley Corp.		193,687
89,000		National City Corp.		2,615,710
52,300		SunTrust Banks, Inc.		4,095,090
23,500		UnionBanCal Corp.		1,298,610
3,800		United Bankshares, Inc.		105,830
10,000		Zions Bancorp		745,500
		TOTAL		22,062,208
		Restaurant--0.1%
12,400	1	Buffalo Wild Wings, Inc.		535,928
		COMMON STOCKS--continued
		Savings & Loan--0.3%
15,300		Newalliance Bancshares, Inc.	$	206,703
30,900		Washington Mutual Bank		1,159,677
		TOTAL		1,366,380
		Securities Brokerage--5.3%
5,600		Goldman Sachs Group, Inc.		1,054,704
74,300		Lehman Brothers Holdings, Inc.		4,606,600
106,500		Merrill Lynch & Co., Inc.		7,902,300
115,100		Morgan Stanley		7,351,437
		TOTAL		20,915,041
		Semiconductor Distribution--0.4%
40,000	1	Avnet, Inc.		1,515,200
		Semiconductor Manufacturing--0.7%
31,400		Intersil Holding Corp.		918,450
42,900		Linear Technology Corp.		1,529,385
22,700	1	Spansion, Inc.		240,847
		TOTAL		2,688,682
		Semiconductor Manufacturing Equipment--0.1%
15,700	1	Teradyne, Inc.		246,333
		Services to Medical Professionals--0.7%
44,600	1	Express Scripts, Inc., Class A		2,235,798
7,600	1	Humana, Inc.		487,084
3,700	1	Nighthawk Radiology Holdings, Inc.		76,331
		TOTAL		2,799,213
		Shoes--0.1%
8,600	1	Crocs, Inc.		510,152
		Software Packaged/Custom--0.6%
6,200	1	Blue Coat Systems, Inc.		302,126
30,800	1	Computer Sciences Corp.		1,714,944
3,300		National Instruments Corp.		106,755
5,900	1	SPSS, Inc.		242,136
1,200	1	ValueClick, Inc.		25,656
		TOTAL		2,391,617
		Specialty Chemicals--0.4%
8,100		Minerals Technologies, Inc.		523,827
18,500	1	OM Group, Inc.		896,140
1		Tronox Inc., Class B		12
		TOTAL		1,419,979
		COMMON STOCKS--continued
		Specialty Machinery--0.0%
400	1	Stratasys, Inc.	$	17,604
		Specialty Retailing--0.2%
6,900	1	Big Lots, Inc.		178,434
22,000		Borders Group, Inc.		359,920
4,200		Pep Boys-Manny Moe & Jack		71,106
		TOTAL		609,460
		Telecommunication Equipment & Services--0.3%
2,200	1	Anixter International, Inc.		181,830
6,100	1	C-COR Electronics, Inc.		82,045
42,100	1	Corning, Inc.		1,003,664
		TOTAL		1,267,539
		Telephone Utility--0.1%
9,400		Embarq Corp.		580,826
		Trucking--0.1%
4,300		Con-way, Inc.		212,377
		Undesignated Consumer Cyclicals--1.0%
23,900		DeVRY, Inc.		774,360
23,700	1	ITT Educational Services, Inc.		2,504,142
300		Strayer Education, Inc.		45,459
23,700	1	TeleTech Holdings, Inc.		695,121
		TOTAL		4,019,082
		Undesignated Consumer Staples--0.3%
23,200	1	Nutri/System, Inc.		1,292,704
		TOTAL COMMON STOCKS (IDENTIFIED COST $378,514,448)		385,633,496
		MUTUAL FUND--1.5%
5,916,667	2,3	Prime Value Obligations Fund, Institutional Shares, 5.25% (AT NET ASSET VALUE)		5,916,667
		TOTAL INVESTMENTS--99.9% (IDENTIFIED COST $384,431,115)4		391,550,163
		OTHER ASSETS AND LIABILITIES -- NET--0.1%		557,319
		TOTAL NET ASSETS--100%	$	392,107,482

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $384,862,265.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2007.

Statement of Assets and Liabilities

July 31, 2007

Assets:
Total investments in securities, at value including $5,916,667 of investments in an affiliated issuer (Note 5) (identified cost $384,431,115)			$	391,550,163
Income receivable				163,309
Receivable for investments sold				6,632,549
Receivable for shares sold				3,416,462
TOTAL ASSETS				401,762,483
Liabilities:
Payable for investments purchased	$	8,722,387
Payable for shares redeemed		534,127
Payable for administrative personnel and services fee (Note 5)		6,560
Payable for distribution services fee (Note 5)		66,673
Payable for shareholder services fee (Note 5)		186,542
Accrued expenses		138,712
TOTAL LIABILITIES				9,655,001
Net assets for 23,470,219 shares outstanding			$	392,107,482
Net Assets Consist of:
Paid-in capital			$	356,416,650
Net unrealized appreciation of investments				7,119,048
Accumulated net realized gain on investments				28,571,784
TOTAL NET ASSETS			$	392,107,482
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($85,127,958 ÷ 5,041,847 shares outstanding), no par value, unlimited shares authorized				$16.88
Offering price per share				$16.88
Redemption proceeds per share				$16.88
Class A Shares:
Net asset value per share ($201,887,612 ÷ 12,061,827 shares outstanding), no par value, unlimited shares authorized				$16.74
Offering price per share (100/94.50 of $16.74)1				$17.71
Redemption proceeds per share				$16.74
Class C Shares:
Net asset value per share ($104,956,688 ÷ 6,358,526 shares outstanding), no par value, unlimited shares authorized				$16.51
Offering price per share				$16.51
Redemption proceeds per share (99.00/100 of $16.51)1				$16.34
Class K Shares:
Net asset value per share ($135,224 ÷ 8,019 shares outstanding), no par value, unlimited shares authorized				$16.86
Offering price per share				$16.86
Redemption proceeds per share				$16.86

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, 2007

Investment Income:
Dividends (including $49,497 received from an affiliated issuer (Note 5))			$	4,482,519
Interest				136,329
TOTAL INCOME				4,618,848
Expenses:
Investment adviser fee (Note 5)	$	2,335,497
Administrative personnel and services fee (Note 5)		271,823
Custodian fees		44,927
Transfer and dividend disbursing agent fees and expenses		276,248
Transfer and dividend disbursing agent recordkeeping fees--Institutional Shares		2,977
Transfer and dividend disbursing agent recordkeeping fees--Class A Shares		63,274
Transfer and dividend disbursing agent recordkeeping fees--Class C Shares		50,407
Transfer and dividend disbursing agent recordkeeping fees--Class K Shares		53
Directors’/Trustees’ fees		4,274
Auditing fees		16,532
Legal fees		2,354
Portfolio accounting fees		163,837
Distribution services fee--Class A Shares (Note 5)		117,862
Distribution services fee--Class C Shares (Note 5)		673,589
Distribution services fee--Class K Shares (Note 5)		106
Shareholder services fee--Class A Shares (Note 5)		301,157
Shareholder services fee--Class C Shares (Note 5)		151,885
Share registration costs		111,152
Printing and postage		94,813
Insurance premiums		9,748
Miscellaneous		6,317
TOTAL EXPENSES		4,698,832

Statement of Operations--continued

Reimbursement, Waivers and Expenses Recovered:
Reimbursement of investment adviser fee (Note 5)	$	(759	)
Waiver of administrative personnel and services fee (Note 5)		(23,220	)
Waiver of transfer and dividend disbursing agent fees and expenses		(13,607	)
Expenses recovered by the Adviser (Note 5)		23,533
NET REIMBURSEMENT, WAIVERS AND EXPENSES RECOVERED				(14,053	)
Net expenses							4,684,779
Net investment income (loss)							(65,931	)
Realized and Unrealized Gain on Investments:
Net realized gain on investments							29,303,764
Net change in unrealized appreciation of investments							5,456,660
Net realized and unrealized gain on investments							34,760,424
Change in net assets resulting from operations						$	34,694,493

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2007			2006
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(65,931	)	$	13,180
Net realized gain on investments		29,303,764			9,146,627
Net change in unrealized appreciation/depreciation of investments		5,456,660			(7,090,736	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		34,694,493			2,069,071
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares		--			(42,291	)
Class A Shares		--			(10,715	)
Class C Shares		--			--
Class K Shares		--			--
Distributions from net realized gain on investments
Institutional Shares		(1,675,959	)		(2,304,161	)
Class A Shares		(5,228,169	)		(2,312,213	)
Class C Shares		(2,497,031	)		(117,957	)
Class K Shares		(3	)		--
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(9,401,162	)		(4,787,337	)
Share Transactions:
Proceeds from sale of shares		235,142,870			135,990,595
Net asset value of shares issued to shareholders in payment of distributions declared		8,258,175			4,703,047
Cost of shares redeemed		(69,157,702	)		(19,541,548	)
Redemption fees1		3,869			14,883
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		174,247,212			121,166,977
Change in net assets		199,540,543			118,448,711
Net Assets:
Beginning of period		192,566,939			74,118,228
End of period	$	392,107,482		$	192,566,939

1 Redemption fees in 2006 have been reclassified to permit comparison.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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 primary 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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• for investments in other open-end regulated investment companies, based on net asset value (NAV);
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors; prices for interest rate swaps are furnished by an independent pricing service and are based upon a valuation model incorporating interest rates, yield curves and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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 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

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.

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 7/31/2007					Year Ended 7/31/2006
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	2,677,589		$	45,134,764		353,848		$	5,425,707
Shares issued to shareholders in payment of distributions declared	90,311			1,481,998		153,643			2,324,618
Shares redeemed	(537,678	)		(8,951,521	)	(553,530	)		(8,427,259	)
Redemption fees	--			508		--			--
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	2,230,222		$	37,665,749		(46,039	)	$	(676,934	)
	Year Ended 7/31/2007					Year Ended 7/31/2006
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	7,981,369		$	129,791,451		5,300,192		$	80,853,392
Shares issued to shareholders in payment of distributions declared	300,058			4,887,949		150,057			2,261,363
Shares redeemed	(2,963,223	)		(48,937,368	)	(694,341	)		(10,529,747	)
Redemption fees	--			2,298		--			10,020
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	5,318,204		$	85,744,330		4,755,908		$	72,595,028
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	3,709,500		$	60,072,675		3,245,159		$	49,711,496
Shares issued to shareholders in payment of distributions declared	116,918			1,888,228		7,778			117,066
Shares redeemed	(681,786	)		(11,263,611	)	(39,043	)		(584,542	)
Redemption fees	--			1,063		--			4,863
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	3,144,632		$	50,698,355		3,213,894		$	49,248,883
	Period Ended 7/31/20072					Year Ended 7/31/2006
Class K Shares:	Shares			Amount		Shares			Amount
Shares sold	8,309		$	143,980		--		$	--
Shares redeemed	(290	)		(5,202	)	--			--
NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS	8,019		$	138,778		--		$	--
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	10,701,077		$	174,247,212		7,923,763		$	121,166,977

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

2 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 Fund imposed a 2.00% redemption fee to shareholders of the Fund’s Institutional Shares, Class A Shares and Class C Shares who redeem 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.

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 ordinary losses netted to short-term capital gains.

For the year ended July 31, 2007, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Undistributed Net Investment Income	Accumulated Net Realized Gains
$65,931	$(65,931)

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, 2007 and 2006, was as follows:

	2007	2006
Ordinary income1	$4,625,312	$2,698,954
Long-term capital gains	$4,775,850	$2,088,383

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	21,533,887
Undistributed long-term capital gain	$	7,469,047
Net unrealized appreciation	$	6,687,898

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, 2007, the cost of investments for federal tax purposes was $384,862,265. The net unrealized appreciation of investments for federal tax purposes was $6,687,898. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $25,769,623 and net unrealized depreciation from investments for those securities having an excess of cost over value of $19,081,725.

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 adviser 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 has agreed to keep these contractual limitations in place through December 8, 2008.

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee.

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 can not be recovered by the Adviser after December 8, 2006.

For the year ended July 31, 2007, the Adviser recovered $23,533 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 previous administrative services contract. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 0.080% of average daily net assets of the Fund. FAS waived $23,220 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 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 of up to 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	0.25%
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%

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, 2007, FSC retained $549,412 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC, the principal distributor, retained $86,805 in sales charges from the sale of Class A Shares. FSC also retained $9,128 and $17,835 of contingent deferred sales charges relating to redemptions of Class A Shares and Class C Shares, respectively. 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, 2007, 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 (including the distribution (12b-1) fee) paid by the Fund’s Class A Shares (after the voluntary waivers and reimbursements) will not exceed 1.30% for the fiscal year ending July 31, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $759 in connection with the affiliated mutual fund listed below. Transactions with the affiliated company during the year ended July 31, 2007, were as follows:

Affiliate	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	--	22,219,032	16,302,365	5,916,667	$5,916,667	$49,497

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, 2007, were as follows:

Purchases	$	846,242,414
Sales	$	684,919,981

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2007 the amount of long-term capital gains designated by the Fund was $4,775,850.

For the fiscal year ended July 31, 2007, 30.95% 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, 2007, 31.67% 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, 2007, 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 financial highlights for each of the periods indicated therein for the years ended July 31, 2007, 2006 and 2003. 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein for the years ended July 31, 2007, 2006 and 2003, in conformity with U.S. generally accepted accounting principles.

/s/Ernst & Young LLP

Boston, Massachusetts
September 19, 2007

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. As of December 31, 2006, the Trust comprised eight portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

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 15 Old Timber Trail Pittsburgh, PA 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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

FEDERATED MDT ALL CAP CORE FUND (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contracts at meetings held in May 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

For the periods ending December 31, 2006, the Fund’s performance for the three year period was above the median of the relevant peer group, and the Fund’s performance fell below the median of the relevant peer group for the one year period. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.

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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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.

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. 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 his 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. For 2006, 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 in 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 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 31421R304

37312 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT Balanced Fund

Established 2005

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2007

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

Financial Highlights--Class A Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$13.21		$13.67
Income From Investment Operations:
Net investment income	0.20	3	0.18	3
Net realized and unrealized gain on investments, futures contracts and foreign currency transactions	1.15		0.46
TOTAL FROM INVESTMENT OPERATIONS	1.35		0.64
Less Distributions:
Distributions from net investment income	(0.16	)	(0.17	)
Distributions from net realized gain on investments, futures contracts and foreign currency transactions	(0.65	)	(0.93	)
TOTAL DISTRIBUTIONS	(0.81	)	(1.10	)
Net Asset Value, End of Period	$13.75		$13.21
Total Return4	10.39	%	4.85	%
Ratios to Average Net Assets:
Net expenses	1.40	%	1.50	%5
Net investment income	1.42	%	1.60	%5
Expense waiver/reimbursement6	0.13	%	0.17	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$51,167		$1,962
Portfolio turnover	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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$13.13		$13.67
Income From Investment Operations:
Net investment income	0.09	3	0.10	3
Net realized and unrealized gain on investments, futures contracts and foreign currency transactions	1.14		0.44
TOTAL FROM INVESTMENT OPERATIONS	1.23		0.54
Less Distributions:
Distributions from net investment income	(0.11	)	(0.15	)
Distributions from net realized gain on investments, futures contracts and foreign currency transactions	(0.65	)	(0.93	)
TOTAL DISTRIBUTIONS	(0.76	)	(1.08	)
Net Asset Value, End of Period	$13.60		$13.13
Total Return4	9.50	%	4.04	%
Ratios to Average Net Assets:
Net expenses	2.15	%	2.25	%5
Net investment income	0.66	%	0.85	%5
Expense waiver/reimbursement6	0.16	%	0.17	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$15,775		$3,910
Portfolio turnover	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 the Period)

	Period Ended 7/31/2007	1
Net Asset Value, Beginning of Period	$14.28
Income From Investment Operations:
Net investment income	0.05	2
Net realized and unrealized gain on investments, futures contracts and foreign currency transactions	0.26
TOTAL FROM INVESTMENT OPERATIONS	0.31
Less Distributions:
Distributions from net investment income	(0.17	)
Distributions from net realized gain on investments, futures contracts and foreign currency transactions	(0.65	)
TOTAL DISTRIBUTIONS	(0.82	)
Net Asset Value, End of Period	$13.77
Total Return3	2.33	%
Ratios to Average Net Assets:
Net expenses	1.90	%4
Net investment income	0.60	%4
Expense waiver/reimbursement5	0.05	%4
Supplemental Data:
Net assets, end of period (000 omitted)	$18
Portfolio turnover	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; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual:
Class A Shares	$1,000	$1,013.30	$6.94
Class C Shares	$1,000	$1,009.70	$10.71
Class K Shares	$1,000	$1,012.50	$9.43
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,017.90	$6.95
Class C Shares	$1,000	$1,014.13	$10.74
Class K Shares	$1,000	$1,015.42	$9.44

1 Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The annualized net expense ratios are as follows:

Class A Shares	1.39%
Class C Shares	2.15%
Class K Shares	1.89%

Management’s Discussion of Fund Performance

For the reporting period ending July 31, 2007 the fund’s Class A, Class C and Class K Shares produced total returns of 10.39%, 9.50% and 10.18%, respectively, at net asset value.¹ The Standard & Poor’s 500 Index² and the Lehman Brothers Aggregate Bond Index³ returned 16.13% and 5.58%, respectively, while the Lipper Balanced Fund Index returned 12.90%.⁴

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000 Index,⁵ which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index,⁶ which exceeded the 15.48% and 12.12% results

1 The fund is the successor to the MDT Balanced 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 Balanced Fund.

2 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.

3 The Lehman Brother 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.

4 The Lipper Balanced Fund Index represents the total returns of the funds in the indicated category, as defined by Lipper, Inc. The index is unmanaged, and investments cannot be made in an index.

5 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.

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 can not be made directly in an index.

for the Russell Top 200^® Index⁷ and the Russell 2000^® Index,⁸ respectively. Growth stocks outperformed value stocks by a wide margin during the year with the Russell 3000^® Growth Index⁹ returning 19.24% as compared to 12.97% for the Russell 3000 Value^® Index.¹⁰

The best performing sectors during the reporting period in the Russell 3000^® were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

Real Estate Investment Trust (“REIT”) performance suffered late in the period as a combination of profit taking within the sector and uncertainty regarding the availability of credit -- a key ingredient to the merger and acquisition activity that has fueled property valuations -- led to a significant decline. The S&P REIT Index¹¹ finished the period up 0.99%.

International equities outperformed the domestic market, benefiting from strong international economic growth and a general decline in the U.S. dollar relative to other currencies. Developed markets, as represented by the MSCI EAFE Index,¹² performed well returning 23.91%, while emerging market returns were even better with the MSCI Emerging Markets Free Index¹³ up 50.26%.

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 can not be made directly in an index.

8 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.

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 can not 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 can not be made directly in an index.

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.

12 The MSCI EAFE Index measures international equity performance. It comprises 21 MSCI country indices, representing the developed markets outside of North America.

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.

In the bond market, volatility picked up considerably despite the Federal Reserve Board leaving interest rates unchanged. There has been a bit of a tug of war as the subprime-lending scare and worries of a credit crunch depressed U.S. interest rates. On the other hand, concerns about inflation and strong global economic growth and higher interest rates abroad put upward pressure on interest rates. There is considerable uncertainty as to the extent to which the troubles in the housing market will bleed over into other parts of the economy thus slowing the prospects for economic growth. Short-term interest rates were flat over the past 12 months while intermediate and longer-term rates fell modestly. The average yield of the Lehman Aggregate stood at 5.57% on July 31, 2007, virtually unchanged from 12 months earlier at 5.61%.

Asset Allocation

During the reporting period, equity investments accounted for an average of approximately 63% of the portfolio while fixed income and cash averaged 37%. Within the equity allocation, investments in REITs hurt relative results as the sector underperformed the broader equity market, while the allocation to international equities helped results as these investments outperformed the domestic markets.¹⁴ Fixed income performance trailed the equity allocation’s results, but provided a valuable element of stability during the equity market’s volatility late in the period.¹⁵

Equities

Domestic equity investments, which are managed under our proprietary Optimum Q -- All Cap Core Strategy, underperformed their benchmark, the Russell 3000 Index. Investments in the Energy sector provided the most significant positive contribution to relative performance. The most significant negative contributors to relative performance were an overweight to the Financial sector, which underperformed, and an underweight to companies in the Telecommunication Services sector, which outperformed.

International investments slightly underperformed the MSCI EAFE Index overall, largely because the allocation to this category was increased towards the second half of the period when performance was not quite as strong. A new allocation to emerging market equities late in the period contributed positively to relative performance.

14 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.

15 Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.

REIT investments did well relative to the S&P REIT Index, but trailed the broader market as the sector underperformed. The allocation to REITS was reduced beginning in late February as support for the sector was clearly deteriorating and uncertainty in credit markets was hurting valuations. The allocation was ultimately cut to slightly more than 2% of the portfolio, the smallest in the history of the fund. This change was fortuitous as REIT valuations declined significantly through the end of the period.

Fixed Income

The bond portion of the fund underperformed its benchmark (the Lehman Aggregate), however evaluating fixed income results in isolation can be misleading since this allocation is managed in the context of the broader fund. For example, fixed income performance was hurt by a short duration position (reduced exposure to interest rate risk) during the latter part of 2006. At this time the fund’s investments in financial stocks, which can carry significant interest rate exposure, rallied strongly. By reducing the interest rate exposure in the portfolio’s bond investments, we were comfortable maintaining a significant position in financials and the fund’s overall performance benefited. Through the first seven months of 2007 we managed the bond portion of the fund more traditionally and it has modestly outperformed its benchmark with security selection and duration positioning in particular contributing positively to relative performance.¹⁶

16 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.

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

The graph below illustrates the hypothetical investment of $10,000¹ in the Federated MDT Balanced Fund (Class A Shares) (the “Fund”) from October 1, 2002 (start of performance) to July 31, 2007, compared to the Standard and Poor’s 500 Index (S&P 500),² the Lipper Balanced Fund Index (LBFI)³ and the Lehman Brothers Aggregate Bond Index (LBAB).²

Average Total Returns for the Period Ended 7/31/2007
1 Year	4.31%
Start of Performance (10/1/2002)4	11.33%

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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. 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 $10,000¹ in the Federated MDT Balanced Fund (Class C Shares) (the “Fund”) from October 1, 2002 (start of performance) to July 31, 2007, compared to the Standard and Poor’s 500 Index (S&P 500),² the Lipper Balanced Fund Index (LBFI)³ and the Lehman Brothers Aggregate Bond Index (LBAB).²

Average Total Returns for the Period Ended 7/31/2007
1 Year	8.50%
Start of Performance (10/1/2002)4	11.76%

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 purchase date. 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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. 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 $10,000¹ in the Federated MDT Balanced Fund (Class K Shares) (the “Fund”) from October 1, 2002 (start of performance) to July 31, 2007, compared to the Standard and Poor’s 500 Index (S&P 500),² the Lipper Balanced Fund Index (LBFI)³ and the Lehman Brothers Aggregate Bond Index (LBAB).²

Average Annual Total Returns for the Period Ended 7/31/2007
1 Year	10.18%
Start of Performance (10/1/2002)4	12.15%

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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. 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 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.

Portfolio of Investments Summary Tables

At July 31, 2007, the Fund’s portfolio composition¹ was as follows:

Security Type	Percentage of Total Net Assets
Domestic Equity	50.2%
Foreign Stock ETF	14.3%
Mortgage-Backed Securities	10.0%
Corporate Debt Securities	8.1%
U.S. Treasury and Agency Securities2	5.2%
International Equity	2.6%
Collateralized Mortgage Obligations	2.4%
Asset-Backed Securities	1.1%
Foreign Debt Securities	1.1%
Adjustable Rate Mortgage Securities	0.7%
Cash Equivalents3	8.4%
Other Assets and Liabilities--Net4	(4.1)%
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 $2,318,458 held in U.S. Treasuries pledged as collateral to ensure the Fund is able to satisfy the obligations of its outstanding long futures contracts.

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.

At July 31, 2007, the Fund’s industry composition⁵ for its equity securities was as follows:

Industry	Percentage of Equity Securities
Money Center Bank	7.6%
Regional Bank	5.4%
Multi-Line Insurance	5.3%
Oil Well Supply	5.3%
Internet Services	5.2%
Securities Brokerage	5.2%
Property Liability Insurance	4.6%
Computers--Low End	4.4%
Life Insurance	4.4%
Real Estate Investment Trusts	4.4%
Integrated Domestic Oil	4.3%
Integrated International Oil	4.3%
Building Supply Stores	4.2%
Agricultural Chemicals	3.7%
Financial Services	3.3%
Metal Fabrication	2.4%
Oil Refiner	2.4%
Home Building	1.8%
Railroad	1.8%
Electric Utility	1.7%
Crude Oil & Gas Production	1.2%
Ethical Drugs	1.2%
Diversified Oil	1.1%
Miscellaneous Food Products	1.1%
Offshore Driller	1.1%
Oil Service, Explore & Drill	1.0%
Undesignated Consumer Cyclicals	1.0%
Other6	10.6%
TOTAL	100.0%

5 Industry classifications are based upon, and individual 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.

6 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”.

Portfolio of Investments

July 31, 2007

Shares					Value
			COMMON STOCKS--53.0%
			Agricultural Chemicals--2.0%
	800		Bunge Ltd.	$	72,488
	44,000		Monsanto Co.		2,835,800
			TOTAL		2,908,288
			Apparel--0.1%
	2,700		Guess ?, Inc.		128,223
			Auto Original Equipment Manufactures--0.1%
	2,200		American Axle & Manufacturing Holdings, Inc.		53,240
	600		Johnson Controls, Inc.		67,890
	900		Sun Hydraulics Inc		26,748
	1,900		Superior Industries International, Inc.		35,150
			TOTAL		183,028
			Biotechnology--0.5%
	9,100	1	Genentech, Inc.		676,858
	1,400	1	Martek Biosciences Corp.		35,868
			TOTAL		712,726
			Bituminous Coal--0.0%
	1,400		Massey Energy Co.		29,890
			Book Publishing--0.0%
	1,200	1	Scholastic Corp.		38,616
			Building Supply Stores--2.2%
	66,700		Home Depot, Inc.		2,479,239
	27,800		Lowe’s Cos., Inc.		778,678
			TOTAL		3,257,917
			Cement--0.1%
	1,000		Martin Marietta Materials		137,000
			Clothing Stores--0.2%
	6,100	1	Aeropostale, Inc.		232,288
	1,600	1	Hanesbrands Inc.		49,616
			TOTAL		281,904
			Computer Networking--0.1%
	4,500	1	Juniper Networks, Inc.		134,820
			Computer Peripherals--0.0%
	1,400	1	Hutchinson Technology, Inc.		28,084
Shares					Value
			COMMON STOCKS--continued
			Computer Stores--0.1%
	6,200	1	Ingram Micro, Inc., Class A	$	124,310
			Computers - Low End--2.3%
	26,300	1	Apple, Inc.		3,465,288
			Construction Machinery--0.0%
	400		Manitowoc, Inc.		31,068
			Cosmetics & Toiletries--0.0%
	1,100	1	Bare Escentuals, Inc.		31,031
			Crude Oil & Gas Production--0.6%
	6,800		Apache Corp.		549,712
	2,500	1	Bill Barrett Corp.		85,800
	1,600		Cimarex Energy Co.		60,560
	3,000		Devon Energy Corp.		223,830
	600		Pogo Producing Co.		31,956
			TOTAL		951,858
			Defense Aerospace--0.1%
	1,600		Goodrich (B.F.) Co.		100,656
			Defense Electronics--0.1%
	1,900	1	FLIR Systems, Inc.		82,935
	400	1	First Solar, Inc.		45,028
			TOTAL		127,963
			Discount Department Stores--0.1%
	6,000		Foot Locker, Inc.		111,360
			Diversified Leisure--0.1%
	3,000		Carnival Corp.		132,930
			Diversified Oil--0.6%
	15,000		Occidental Petroleum Corp.		850,800
			Drug Stores--0.1%
	1,900		Longs Drug Stores Corp.		91,884
			Electric Utility--0.9%
	7,000		Ameren Corp.		335,860
	3,600		DTE Energy Co.		166,968
	8,000		Edison International		423,120
	2,500		Pepco Holdings, Inc.		67,675
	1,300		Portland General Electric Co.		34,983
Shares					Value
			COMMON STOCKS--continued
			Electric Utility--continued
	1,100		Sempra Energy	$	57,992
	2,700		SCANA Corp.		100,926
	6,600		Xcel Energy, Inc.		133,980
			TOTAL		1,321,504
			Electrical Equipment--0.0%
	1,700	1	Houston Wire & Cable Co.		43,809
			Electronic Instruments--0.0%
	500		Analogic Corp.		33,195
			Ethical Drugs--0.6%
	2,600	1	King Pharmaceuticals, Inc.		44,226
	23,700		Pfizer, Inc.		557,187
	10,100		Schering Plough Corp.		288,254
	1,200	1	Sciele Pharma, Inc.		27,828
			TOTAL		917,495
			Financial Services--1.7%
	14,100		Ambac Financial Group, Inc.		946,815
	6,000		Ameriprise Financial, Inc.		361,620
	15,600		CIT Group, Inc.		642,408
	2,300		Janus Capital Group, Inc.		69,138
	7,700		MBIA, Inc.		431,970
	900	1	Mastercard, Inc. Class A		144,720
			TOTAL		2,596,671
			Gas Distributor--0.1%
	2,100		AGL Resources, Inc.		79,170
	1,800		MDU Resources Group, Inc.		49,068
	500		NICOR, Inc.		19,705
			TOTAL		147,943
			Home Building--1.0%
	10,600		Centex Corp.		395,486
	4,200	1	Hovnanian Enterprises, Inc., Class A		55,608
	4,800		KB Home		152,688
	8,000		Lennar Corp., Class A		245,280
	3,200		M.D.C. Holdings, Inc.		147,200
	200	1	NVR, Inc.		115,696
	15,600		Pulte Homes, Inc.		301,704
			TOTAL		1,413,662
Shares					Value
			COMMON STOCKS--continued
			Insurance Brokerage--0.1%
	100	1	Markel Corp.	$	46,550
	1,800		Odyssey Re Holdings Corp.		63,360
			TOTAL		109,910
			Integrated Domestic Oil--2.3%
	40,100		ConocoPhillips		3,241,684
	2,800		Marathon Oil Corp.		154,560
			TOTAL		3,396,244
			Integrated International Oil--2.3%
	39,300		Chevron Corp.		3,350,718
			Internet Services--2.7%
	16,500	1	Amazon.com, Inc.		1,295,910
	83,100	1	eBay, Inc.		2,692,440
	900	1	Priceline.com, Inc.		57,420
			TOTAL		4,045,770
			Leasing--0.0%
	700		GATX Corp.		31,752
			Life Insurance--2.3%
	500		Delphi Financial Group, Inc., Class A		20,085
	30,600		MetLife, Inc.		1,842,732
	2,200		Nationwide Financial Services, Inc., Class A		125,202
	1,300		Protective Life Corp.		55,926
	14,200		Prudential Financial		1,258,546
	2,000		Torchmark Corp.		123,080
			TOTAL		3,425,571
			Lumber Products--0.1%
	4,500		Louisiana-Pacific Corp.		83,340
			Mail Order--0.0%
	3,100	1	Coldwater Creek Inc.		61,039
			Major Steel Producer--0.0%
	1,000		Ryerson, Inc.		32,090
			Maritime--0.2%
	400	1	Kirby Corp.		16,204
	3,200		Overseas Shipholding Group, Inc.		248,288
			TOTAL		264,492
			Medical Supplies--0.0%
	800	1	Kyphon, Inc.		52,496
Shares					Value
			COMMON STOCKS--continued
			Medical Technology--0.4%
	2,300	1	Intuitive Surgical, Inc.	$	489,003
	1,300		Stryker Corp.		81,159
			TOTAL		570,162
			Metal Fabrication--1.3%
	700		Olympic Steel, Inc.		18,389
	12,200		Precision Castparts Corp.		1,672,132
	3,100		Timken Co.		103,540
	6,000		Worthington Industries, Inc.		124,200
			TOTAL		1,918,261
			Mini-Mill Producer--0.2%
	5,800		Commercial Metals Corp.		178,872
	1,100		Schnitzer Steel Industries, Inc., Class A		59,609
			TOTAL		238,481
			Miscellaneous Food Products--0.6%
	25,900		Archer-Daniels-Midland Co.		870,240
			Miscellaneous Metals--0.2%
	500		Kennametal, Inc.		38,330
	2,600		Metal Management, Inc.		109,226
	6,000	1	USEC, Inc.		100,740
			TOTAL		248,296
			Miscellaneous Components--0.1%
	5,100	1	Vishay Intertechnology, Inc.		79,101
			Money Center Bank--4.0%
	28,400		Bank of America Corp.		1,346,728
	24,100		Citigroup, Inc.		1,122,337
	79,900		J.P. Morgan Chase & Co.		3,516,399
			TOTAL		5,985,464
			Mortgage & Title--0.1%
	1,100		LandAmerica Financial Group, Inc.		84,249
			Multi-Industry Transportation--0.1%
	2,800	1	Hub Group, Inc.		95,256
			Multi-Industry Capital Goods--0.1%
	1,300	1	Ceradyne, Inc.		97,019
	1,600	1	Shaw Group, Inc.		85,152
			TOTAL		182,171
Shares					Value
			COMMON STOCKS--continued
			Multi-Line Insurance--2.8%
	6,550		Allstate Corp.	$	348,132
	51,800		American International Group, Inc.		3,324,524
	5,400		Assurant, Inc.		273,888
	1,200		Hanover Insurance Group, Inc.		52,668
	1,400		Hartford Financial Services Group, Inc.		128,618
			TOTAL		4,127,830
			Mutual Fund Adviser--0.0%
	100		Franklin Resources, Inc.		12,737
			Newspaper Publishing--0.0%
	700		Gannett Co., Inc.		34,930
			Office Furniture--0.0%
	700		Knoll, Inc.		13,867
			Offshore Driller--0.6%
	1,800	1	Hornbeck Offshore Services, Inc.		77,490
	3,200	1	Oceaneering International, Inc.		179,712
	9,400		Tidewater, Inc.		643,148
			TOTAL		900,350
			Oil Refiner--1.3%
	28,000		Valero Energy Corp.		1,876,280
			Oil Service, Explore & Drill--0.5%
	13,400	1	Grant Prideco, Inc.		751,740
	400	1	McDermott International, Inc.		33,176
			TOTAL		784,916
			Oil Well Supply--2.8%
	4,200	1	FMC Technologies, Inc.		384,384
	39,600		Schlumberger Ltd.		3,750,912
			TOTAL		4,135,296
			Other Communications Equipment--0.0%
	1,300		Harris Corp.		71,344
			Personal Loans--0.0%
	500		ASTA Funding, Inc.		18,040
	600		Advanta Corp., Class B		15,396
			TOTAL		33,436
Shares					Value
			COMMON STOCKS--continued
			Poultry Products--0.2%
	4,300		Pilgrims Pride Corp.	$	144,824
	2,600		Sanderson Farms, Inc.		103,662
			TOTAL		248,486
			Property Liability Insurance--2.4%
	4,050		American Financial Group, Inc. Ohio		113,764
	19,200		Chubb Corp.		967,872
	2,700		Commerce Group, Inc.		77,571
	3,700		HCC Insurance Holdings, Inc.		108,336
	9,800		Loews Corp.		464,520
	1,200		Mercury General Corp.		62,136
	1,100	1	Philadelphia Consolidated Holding Corp.		39,754
	2,400		Reinsurance Group of America		127,944
	3,600		Safeco Corp.		210,492
	27,900		The Travelers Cos, Inc.		1,416,762
	200		Transatlantic Holdings, Inc.		14,630
			TOTAL		3,603,781
			Railroad--0.9%
	25,800		Norfolk Southern Corp.		1,387,524
			Real Estate Investment Trusts--2.3%
	3,400		AMB Property Corp.		181,152
	1,800		Alexandria Real Estate Equities, Inc.		155,034
	3,150		Archstone-Smith Trust		180,841
	1,900		Avalonbay Communities, Inc.		205,143
	1,150		Boston Properties, Inc.		108,663
	3,550		Developers Diversified Realty		170,400
	3,300		Equity Residential Properties Trust		131,373
	2,000		Federal Realty Investment Trust		150,280
	1,900		General Growth Properties, Inc.		91,162
	3,800		Health Care Property Investors, Inc.		103,512
	13,000		Host Hotels & Resorts, Inc.		274,560
	3,000		Kimco Realty Corp.		111,990
	4,600	1	Prologis Trust		261,740
	2,100		Public Storage, Inc.		147,189
	7,000		Realty Income Corp.		164,290
	2,100		SL Green Realty Corp.		254,982
Shares					Value
			COMMON STOCKS--continued
			Real Estate Investment Trusts--continued
	3,100		Simon Property Group, Inc.	$	268,243
	4,400		Taubman Centers, Inc.		211,596
	2,450		Vornado Realty Trust		262,223
			TOTAL		3,434,373
			Recreational Goods--0.0%
	1,700	1	Smith & Wesson Holding Corp.		31,960
			Regional Bank--2.8%
	2,200		Associated Banc Corp.		63,228
	6,000		BB&T Corp.		224,520
	1,300		Central Pacific Financial Corp.		36,673
	12,300		Comerica, Inc.		647,718
	8,800		Fifth Third Bancorp		324,632
	1,400		FirstMerit Corp.		25,662
	700		Huntington Bancshares, Inc.		13,440
	31,657		KeyCorp		1,098,181
	700		M & T Bank Corp.		74,403
	17,200		National City Corp.		505,508
	10,300		SunTrust Banks, Inc.		806,490
	4,600		UnionBanCal Corp.		254,196
	1,000		United Bankshares, Inc.		27,850
	1,700		Zions Bancorp		126,735
			TOTAL		4,229,236
			Restaurant--0.1%
	2,600	1	Buffalo Wild Wings, Inc.		112,372
			Rubber--0.0%
	600		Cooper Tire & Rubber Co.		13,794
			Savings & Loan--0.2%
	3,200		Newalliance Bancshares, Inc.		43,232
	5,500		Washington Mutual, Inc.		206,415
			TOTAL		249,647
			Securities Brokerage--2.7%
	1,000		Goldman Sachs Group, Inc.		188,340
	12,900		Lehman Brothers Holdings, Inc.		799,800
	21,200		Merrill Lynch & Co., Inc.		1,573,040
	23,600		Morgan Stanley		1,507,332
			TOTAL		4,068,512
Shares					Value
			COMMON STOCKS--continued
			Semiconductor Distribution--0.2%
	8,400	1	Avnet, Inc.	$	318,192
			Semiconductor Manufacturing--0.4%
	5,800		Intersil Holding Corp.		169,650
	8,500		Linear Technology Corp.		303,025
	5,100	1	Spansion Inc. - Class A		54,111
			TOTAL		526,786
			Semiconductor Manufacturing Equipment--0.0%
	2,400	1	Teradyne, Inc.		37,656
			Services to Medical Professionals--0.3%
	8,000	1	Express Scripts, Inc., Class A		401,040
	400	1	Humana, Inc.		25,636
	600	1	Nighthawk Radiology Holdings		12,378
			TOTAL		439,054
			Shoes--0.1%
	1,600	1	Crocs, Inc.		94,912
			Software Packaged/Custom--0.3%
	1,300	1	Blue Coat Systems, Inc.		63,349
	6,400	1	Computer Sciences Corp.		356,352
	600		National Instruments Corp.		19,410
	1,400	1	SPSS, Inc.		57,456
			TOTAL		496,567
			Specialty Chemicals--0.2%
	1,800		Minerals Technologies, Inc.		116,406
	3,600	1	OM Group, Inc.		174,384
			TOTAL		290,790
			Specialty Retailing--0.1%
	1,200	1	Big Lots, Inc.		31,032
	4,800		Borders Group, Inc.		78,528
	1,400		Pep Boys-Manny Moe & Jack		23,702
			TOTAL		133,262
			Telecomm Equipment & Services--0.2%
	400	1	Anixter International, Inc.		33,060
	1,700	1	C-COR Electronics, Inc.		22,865
	7,300	1	Corning, Inc.		174,032
			TOTAL		229,957
Shares or Principal Amount					Value
			COMMON STOCKS--continued
			Telephone Utility--0.1%
	2,100		Embarq Corp.	$	129,759
			Trucking--0.0%
	100		Con-way, Inc.		4,939
			Undesignated Consumer Cyclicals--0.5%
	4,700		DeVRY, Inc.		152,280
	4,300	1	ITT Educational Services, Inc.		454,338
	4,700	1	TeleTech Holdings, Inc.		137,851
			TOTAL		744,469
			Undesignated Consumer Staples--0.2%
	4,500	1	Nutri/System, Inc.		250,740
			TOTAL COMMON STOCKS (IDENTIFIED COST $75,549,099)		78,526,780
			ASSET-BACKED SECURITIES--1.1%
$	400,000		Banc of America Commercial Mortgage, Inc. 2007-1 A2, 5.381%, 1/15/2049		395,781
	51,042		CS First Boston Mortgage Securities Corp. 2002-HE4 AF, 5.51%, 8/25/2032		50,894
	580,042		Community Program Loan Trust 1987-A A4, 4.50%, 10/01/2018		571,138
	140,000		Morgan Stanley Capital I 2006-IQ12 A4, 5.319%, 12/15/2043		133,473
	250,000		Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.331%, 03/12/2051		246,733
	250,000		Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.485%, 03/12/2051		240,674
			TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $1,677,017)		1,638,693
			COLLATERALIZED MORTGAGE OBLIGATIONS--0.7%
	5,190		Bear Stearns Mortgage Securities, Inc. 1997-6 1A, 6.67%, 3/25/2031		5,127
	410,000		Citigroup/Deutsche Bank Commercial Mortgage 2007-CD4 A3, 5.293%, 12/11/2049		399,189
	15,813		Federal Home Loan Mortgage Corp. REMIC 1311 K, 7.00%, 7/15/2022		15,813
	30,846		Federal Home Loan Mortgage Corp. REMIC 1384 D, 7.00%, 9/15/2022		30,846
	34,224		Federal Home Loan Mortgage Corp. REMIC 1595 D, 7.00%, 10/15/2013		34,735
	75,000		Federal Home Loan Mortgage Corp. REMIC 2497 JH, 6.00%, 9/15/2032		74,985
	73,921		Federal National Mortgage Association REMIC 1993-113 SB, 9.75%, 7/25/2023		80,761
	13,151		Federal National Mortgage Association REMIC 2001-37 GA, 8.00%, 7/25/2016		13,756
	19,002		Federal National Mortgage Association REMIC 2003-35 UC, 3.75%, 5/25/2033		17,257
	15,978		Government National Mortgage Association REMIC 1999-29 PB, 7.25%, 7/16/2028		16,192
Principal Amount					Value
			COLLATERALIZED MORTGAGE OBLIGATIONS--continued
$	55,344		Government National Mortgage Association REMIC 2002-17 B, 6.00%, 3/20/2032	$	55,540
	350,000		JP Morgan Chase Commercial Mortgage Securities 2007-CB19 A2, 5.478%, 2/12/2049		351,465
			TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (IDENTIFIED COST $1,114,652)		1,095,666
			CORPORATE BONDS--7.8%
			Basic Industry - Chemicals--0.0%
	75,000		Albemarle Corp., Sr. Note, 5.10%, 02/01/2015		67,999
			Basic Industry - Metals & Mining--0.1%
	35,000		Alcoa, Inc., Note, 5.55%, 02/01/2017		33,965
	100,000		BHP Finance (USA), Inc., Company Guarantee, 5.25%, 12/15/2015		94,411
	60,000		Newmont Mining Corp., Company Guarantee, 5.875%, 04/01/2035		53,782
			TOTAL		182,158
			Capital Goods - Aerospace & Defense--0.2%
	125,000		Boeing Co., Note, 5.125%, 02/15/2013		123,934
	200,000		Raytheon Co., Unsecd. Note, 5.375%, 04/01/2013		197,963
			TOTAL		321,897
			Capital Goods - Diversified Manufacturing--0.1%
	100,000		Emerson Electric Co., Unsecd. Note, 5.75%, 11/01/2011		102,315
	40,000	2,3	Textron Financial Corp., Jr. Sub. Note, 6.00%, 02/15/2067		37,917
			TOTAL		140,232
			Capital Goods - Environmental--0.1%
	100,000		Waste Management, Inc., 7.375%, 08/01/2010		105,530
			Capital Goods - Packaging--0.0%
	20,000		Pactiv Corp., 6.40%, 1/15/2018		20,528
			Communications - Media & Cable--0.1%
	100,000		Comcast Corp., Sr. Note, 7.125%, 06/15/2013		105,959
	75,000		Cox Communications, Inc., Unsecd. Note, 5.45%, 12/15/2014		71,745
	25,000	2,3	Time Warner Cable, Inc., Sr. Unsecd. Note, 5.85%, 05/01/2017		24,252
			TOTAL		201,956
			Communications - Media Noncable--0.2%
	100,000		British Sky Broadcasting Group PLC, 8.20%, 07/15/2009		105,509
	75,000		News America Holdings, Inc., Company Guarantee, 8.00%, 10/17/2016		84,890
	75,000		News America Holdings, Inc., Sr. Deb., 9.25%, 02/01/2013		86,770
			TOTAL		277,169
Principal Amount					Value
			CORPORATE BONDS--continued
			Communications - Telecom Wireless--0.4%
$	210,000		AT&T Wireless Services, Inc., Sr. Note, 8.75%, 03/01/2031	$	264,158
	100,000		Cingular Wireless LLC, Sr. Note, 6.50%, 12/15/2011		103,966
	50,000		Sprint Capital Corp., Company Guarantee, 8.75%, 03/15/2032		55,298
	100,000		Sprint Capital Corp., Note, 8.375%, 03/15/2012		109,334
	10,000		Vodafone Group PLC, 5.35%, 02/27/2012		9,808
	50,000		Vodafone Group PLC, Note, 5.625%, 2/27/2017		48,043
			TOTAL		590,607
			Communications - Telecom Wirelines--0.1%
	40,000		Telefonica SA, Company Guarantee, 7.045%, 06/20/2036		40,743
	50,000		Telefonica SA, Sr. Note, 5.855%, 02/04/2013		49,556
	100,000		Telefonos de Mexico, Note, 4.50%, 11/19/2008		98,050
			TOTAL		188,349
			Consumer Cyclical - Automotive--0.1%
	75,000		DaimlerChrysler North America, Sr. Note, 4.875%, 06/15/2010		73,467
	25,000		DaimlerChrysler North America Holding Corp., Sr. Note, 6.50%, 11/15/2013		25,680
			TOTAL		99,147
			Consumer Cyclical - Entertainment--0.1%
	75,000		Disney Co., Note, 5.70%, 07/15/2011		76,515
	100,000		Time Warner, Inc., 5.50%, 11/15/2011		99,303
			TOTAL		175,818
			Consumer Cyclical - Lodging--0.1%
	100,000		Wyndham Worldwide Corp., Sr. Unsecd. Note, 6.00%, 12/01/2016		96,795
			Consumer Cyclical - Retailers--0.1%
	40,000		CVS Caremark Corp., Sr. Unsecd. Note, 5.75%, 06/01/2017		38,394
	30,000		Costco Wholesale Corp., 5.30%, 03/15/2012		29,870
	10,000		JC Penney Corp., Inc., Sr. Unsecd. Note, 5.875%, 02/15/2018		9,607
	100,000		Target Corp., 5.875%, 03/01/2012		101,878
			TOTAL		179,749
			Consumer Non-Cyclical Food/Beverage--0.3%
	50,000		Anheuser-Busch Cos., Inc., Sr. Note, 5.60%, 03/01/2017		49,187
	100,000		Bottling Group LLC, Note, 5.50%, 04/01/2016		98,546
	40,000		General Mills, Inc., Note, 5.70%, 02/15/2017		39,787
	75,000		Kraft Foods, Inc., Note, 5.25%, 10/01/2013		72,499
	110,000		Kraft Foods, Inc., Note, 6.25%, 06/01/2012		112,390
			TOTAL		372,409
Principal Amount					Value
			CORPORATE BONDS--continued
			Consumer Non-Cyclical Health Care--0.1%
$	100,000		Medtronic, Inc., Note, Series B, 4.375%, 09/15/2010	$	96,313
	40,000		Quest Diagnostics, Inc., Sr. Unsecd. Note, 6.400%, 07/01/2017		40,837
			TOTAL		137,150
			Consumer Non-Cyclical Pharmaceuticals--0.4%
	75,000		Abbott Laboratories, 5.375%, 05/15/2009		75,269
	100,000		Genentech, Inc., Sr. Note, 4.75%, 07/15/2015		94,518
	60,000		Lilly (Eli) & Co., Bond, 5.20%, 03/15/2017		57,487
	125,000		Lilly (Eli) & Co., Unsecd. Note, 6.57%, 01/01/2016		133,341
	100,000		Pharmacia Corp., Sr. Deb., 6.50%, 12/01/2018		108,376
	35,000		Wyeth, 5.45%, 04/01/2017		34,168
	100,000		Wyeth, Unsecd. Note, 5.50%, 02/01/2014		99,179
			TOTAL		602,338
			Energy - Independent--0.2%
	55,000		Anadarko Petroleum Corp., Sr. Note, 5.95%, 09/15/2016		54,255
	50,000		Canadian Natural Resources, 4.90%, 12/01/2014		47,306
	150,000		Pemex Project Funding Master, Company Guarantee, 9.125%, 10/13/2010		162,457
	10,000		XTO Energy, Inc., 6.75%, 08/01/2037		10,213
	15,000		XTO Energy, Inc., Sr. Unsecd. Note, 6.25%, 08/01/2017		15,308
			TOTAL		289,539
			Energy - Integrated--0.2%
	75,000		Conoco Funding Co., Inc., 7.25%, 10/15/2031		83,886
	75,000		ConocoPhillips Australia, 5.50%, 04/15/2013		74,722
	100,000		Husky Oil Ltd., Deb., 7.55%, 11/15/2016		111,770
			TOTAL		270,378
			Energy - Oil Field Services--0.0%
	40,000		Enbridge, Inc., Sr. Note, 5.60%, 04/01/2017		38,545
			Energy - Refining--0.1%
	100,000		Valero Energy Corp., 6.875%, 04/15/2012		105,886
	40,000		Valero Energy Corp., 7.50%, 04/15/2032		43,893
	35,000		Valero Energy Corp., Note, 4.75%, 04/01/2014		32,546
			TOTAL		182,325
			Financial Institution - Banking--1.6%
	200,000		Bank of America Corp., Sr. Note, 5.375%, 06/15/2014		195,949
	120,000		Capital One Capital IV, 6.745%, 02/17/2037		104,711
	200,000		Citigroup, Inc., Note, 5.125%, 02/14/2011		197,716
	150,000		Credit Suisse First Boston, Sr. Note, 5.50%, 08/16/2011		150,523
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - Banking--continued
$	100,000		HSBC Finance Capital Trust, Note, 5.911%, 11/30/2035	$	197,482
	200,000		HSBC Finance Corp., 4.75%, 04/15/2010		97,231
	100,000		Household Finance Corp., Note, 7.00%, 05/15/2012		103,480
	150,000		J.P. Morgan Chase & Co., 5.75%, 01/02/2013		149,547
	100,000		Marshall & Ilsley Bank, Sr. Note, 4.40%, 03/15/2010		97,224
	200,000		Northern Trust Corp., Sr. Note, 5.30%, 08/29/2011		197,166
	50,000		PNC Funding Corp., Sub. Note, 5.625%, 02/01/2017		48,966
	100,000		PNC Funding Corp., Sub. Note, 7.50%, 11/01/2009		104,846
	100,000		Popular North America, 5.65%, 04/15/2009		100,496
	250,000		US BANK NA, Sub. Note, 4.95%, 10/30/2014		240,239
	250,000		Wachovia Bank N.A., 4.80%, 11/01/2014		234,496
	100,000		Wells Fargo Bank, N.A., Sub. Note, 6.45%, 02/01/2011		103,256
	75,000		Zions Bancorp, Sub. Note, 5.50%, 11/16/2015		72,042
			TOTAL		2,395,370
			Financial Institution - Brokerage--0.8%
	100,000		Bear Stearns Cos., Inc., Unsecd. Note, 3.25%, 03/25/2009		95,999
	150,000		Goldman Sachs Group, Inc., Note, 5.25%, 10/15/2013		144,970
	100,000		Invesco PLC, Note, 4.50%, 12/15/2009		97,294
	25,000		Janus Capital Group, Inc., Sr. Note, 6.25%, 06/15/2012		25,359
	30,000		Janus Capital Group, Inc., Sr. Note, 6.70%, 06/15/2017		30,421
	120,000		Lehman Brothers Holdings, 7.875%, 8/15/2010		127,784
	35,000		Lehman Brothers Holdings, Inc., Sub. Deb., 6.50%, 07/19/2017		34,564
	40,000		Lehman Brothers Holdings, Inc., Sub. Deb., 6.875%, 07/17/2037		39,212
	400,000		Merrill Lynch & Co., Inc., Sr. Unsub., Series CORE, 5.908%, 01/31/2008		397,990
	150,000		Merrill Lynch & Co., Inc., Unsecd. Note, 5.45%, 07/15/2014		145,242
	100,000		Morgan Stanley, Note, 4.00%, 01/15/2010		96,249
			TOTAL		1,235,084
			Financial Institution - Finance Noncaptive--0.6%
	100,000		American Express Co., Global Sr. Note, 4.75%, 06/17/2009		99,129
	100,000		American General Finance Corp., 4.00%, 03/15/2011		94,933
	150,000		Berkshire Hathaway, Inc., Company Guarantee, 4.85%, 01/15/2015		143,988
	90,000	2,3	Capmark Financial Group, Inc., Note, 6.30%, 05/10/2017		80,032
	100,000		General Electric Capital Corp., Note, 4.875%, 03/04/2015		96,082
	200,000	2,3	ILFC E-Capital Trust I, 5.90%, 12/21/2065		202,720
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - Finance Noncaptive--continued
$	100,000		International Lease Finance Corp., Note, 4.875%, 09/01/2010	$	98,218
	75,000		SLM Corp., Note, 4.00%, 01/15/2010		69,806
			TOTAL		884,908
			Financial Institution - Insurance - Health--0.0%
	75,000		Aetna US Healthcare, Sr. Note, 5.75%, 06/15/2011		75,700
			Financial Institution - Insurance - Life--0.1%
	100,000		AXA-UAP, Sub. Note, 8.60%, 12/15/2030		121,585
			Financial Institution - Insurance - P&C--0.4%
	41,000		ACE INA Holdings, Inc., Sr. Note, 5.70%, 02/15/2017		40,312
	100,000		The St. Paul Travelers Co., Inc., Sr. Unsecd. Note, 5.50%, 12/01/2015		97,372
	500,000	2,3	ZFS Finance USA Trust I, Jr. Sub. Note, 6.15%, 12/15/2065		502,215
			TOTAL		639,899
			Financial Institution - REITs--0.0%
	20,000	2,3	Equity One, Inc., 6.00%, 09/15/2017		19,772
			Foreign-Local-Gov’t--0.1%
	100,000		Ontario, Province of, Note, 4.50%, 02/03/2015		96,399
			Technology--0.2%
	75,000		Cisco Systems, Inc., Sr. Note, 5.25%, 02/22/2011		74,746
	10,000		Cisco Systems, Inc., Sr. Unsecd. Note, 5.50%, 02/22/2016		9,830
	100,000		Dell Computer Corp., Sr. Deb., 7.10%, 04/15/2028		105,256
	25,000		Hewlett-Packard Co., Note, 5.40%, 03/01/2017		24,196
	100,000		Oracle Corp., Sr. Unsecd. Note, Series WI, 5.00%, 01/15/2011		98,618
			TOTAL		312,646
			Transportation - Airlines--0.1%
	75,000		Southwest Airlines Co., 6.50%, 03/01/2012		77,520
	50,000		Southwest Airlines Co., Deb., 7.375%, 03/01/2027		52,926
			TOTAL		130,446
			Transportation - Railroads--0.2%
	75,000		Burlington Northern Santa Fe Corp., Sr. Note, 4.875%, 01/15/2015		70,023
	100,000		Norfolk Southern Corp., Sr. Note, 6.75%, 02/15/2011		103,881
	100,000		Union Pacific Corp., 4.875%, 01/15/2015		93,592
			TOTAL		267,496
			Transportation - Services--0.1%
	100,000		FedEx Corp., Note, 5.50%, 08/15/2009		100,088
Principal Amount or Shares					Value
			CORPORATE BONDS--continued
			Utility - Electric--0.5%
$	100,000		Cleveland Electric Illum, Sr. Unsecd. Note, 5.95%, 12/15/2036	$	91,822
	100,000		Consolidated Edison Co., Sr. Unsecd. Note, Series 2006 C, 5.50%, 09/15/2016		98,155
	100,000		Exelon Generation Co. LLC, Sr. Note, 5.35%, 01/15/2014		96,496
	100,000		FirstEnergy Corp., Note, Series B, 6.45%, 11/15/2011		103,409
	55,000	2,3	Great River Energy, 1st Mtg. Note, 5.829%, 07/01/2017		55,541
	100,000		PSEG Power LLC, Company Guarantee, 7.75%, 04/15/2011		107,924
	75,000		PSI Energy, Inc., Bond, 6.05%, 06/15/2016		75,687
	100,000		Pacific Gas & Electric Co., Unsecd. Note, 4.20%, 03/01/2011		96,692
			TOTAL		725,726
			Utility - Natural Gas Distributor--0.1%
	100,000		Atmos Energy Corp., Sr. Note, 4.00%, 10/15/2009		97,520
			TOTAL CORPORATE BONDS (IDENTIFIED COST $11,920,544)		11,643,257
			GOVERNMENT AGENCIES--1.7%
	1,000,000		Federal Home Loan Mortgage Corp., 4.125%, 7/12/2010		976,188
	500,000		Federal Home Loan Mortgage Corp., 5.250%, 7/18/2011		503,520
	1,000,000		Federal Home Loan Mortgage Corp., 5.500%, 7/18/2016		1,010,725
			TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $2,477,407)		2,490,433
			MORTGAGE-BACKED SECURITIES--0.0%
	22,076		Federal National Mortgage Association Pool 408761, 7.000%, 12/1/2012		22,649
	11,983		Federal National Mortgage Association Pool 512255, 7.500%, 9/1/2014		12,481
	34,121		Federal National Mortgage Association Pool 609554, 7.500%, 10/1/2016		35,668
			TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $70,393)		70,798
			U.S. TREASURY--2.8%
	523,735		U.S. Treasury Inflation Protected Note, 2.375%, 4/15/2011		521,279
	1,235,400		U.S. Treasury Inflation Protected Note, 2.500%, 7/15/2016		1,243,756
	2,400,000	4	United States Treasury Note, 3.875%, 2/15/2013		2,318,458
			TOTAL U.S. TREASURY (IDENTIFIED COST $4,106,667)		4,083,493
			EXCHANGE TRADED FUNDS--14.3%
	232,550		iShares MSCI EAFE Index Fund		18,359,822
	21,900		iShares MSCI Emerging Market Fund		2,903,283
			TOTAL EXCHANGE TRADED FUNDS (IDENTIFIED COST $18,017,306)		21,263,105
Shares					Value
		5	MUTUAL FUNDS--18.3%
	29,223		Emerging Markets Fixed-Income Core Fund	$	621,983
	1,720,828		Federated Mortgage Core Portfolio		16,709,234
	264,523		High Yield Bond Portfolio		1,745,851
	8,187,131	6	Prime Value Obligations Fund, Institutional Shares, 5.25%		8,187,131
			TOTAL MUTUAL FUNDS (IDENTIFIED COST $27,671,810)		27,264,199
			TOTAL INVESTMENTS--99.7% (IDENTIFIED COST $142,604,895)7		148,076,424
			OTHER ASSETS AND LIABILITIES -- NET--0.3%		517,470
			TOTAL NET ASSETS--100%	$	148,593,894

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, 2007, these restricted securities amounted to $922,449, which represented 0.6% 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. At July 31, 2007, these liquid restricted securities amounted to $922,449, which represented 0.6% of total net assets.

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

5 Affiliated companies.

6 7-Day net yield.

7 The cost of investments for federal tax purposes amounts to $142,664,681.

At July 31, 2007, the Fund had the following outstanding futures contracts:

	Description	Number of Contracts	Notional Value	Expiration Date	Unrealized Appreciation/ (Depreciation)
1	United States Treasury Notes 10-Year Long Futures	1	$107,422	September 2007	$12
1	United States Treasury Bond Short Futures	10	$1,100,625	September 2007	$(40,348	)
	TOTAL UNREALIZED DEPRECIATION ON FUTURES CONTRACTS				$(40,336	)

At July 31, 2007, the Fund had outstanding foreign exchange contracts as follows:

Settlement Date	Foreign Currency Units to Deliver/Receive	In Exchange For	Contracts at Value	Unrealized Appreciation
Contracts Purchased:
9/18/2007	120,925,000 Japanese Yen	$1,000,000	$1,000,000	$0
Contracts Sold:
9/18/2007	60,462,500 Japanese Yen	505,180	500,000	5,180
9/18/2007	60,462,500 Japanese Yen	510,021	500,000	10,021
NET UNREALIZED APPRECIATION ON FOREIGN EXCHANGE CONTRACTS				$15,201

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2007.

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, 2007

Assets:
Total investments in securities, at value including $27,264,199 of investments in affiliated issuers (Note 5) (identified cost $142,604,895)			$	148,076,424
Income receivable				278,878
Receivable for investments sold				1,843,152
Receivable for shares sold				361,145
Receivable for foreign exchange contracts				15,201
TOTAL ASSETS				150,574,800
Liabilities:
Payable for investments purchased	$	1,693,961
Payable for shares redeemed		152,712
Payable for Directors’/Trustees’ fees		1,444
Payable for daily variation margin		4,172
Payable for distribution services fee (Note 5)		9,999
Payable for shareholder services fee (Note 5)		35,732
Accrued expenses		82,886
TOTAL LIABILITIES				1,980,906
Net assets for 10,802,197 shares outstanding			$	148,593,894
Net Assets Consist of:
Paid-in capital			$	133,840,838
Net unrealized appreciation of investments, futures contracts and translation of assets and liabilities in foreign currency				5,446,394
Accumulated net realized gain on investments, futures contracts and foreign currency transactions				8,152,511
Undistributed net investment income				1,154,151
TOTAL NET ASSETS			$	148,593,894
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($81,633,772 ÷ 5,919,092 shares outstanding), no par value, unlimited shares authorized				$13.79
Offering price per share				$13.79
Redemption proceeds per share				$13.79
Class A Shares:
Net asset value per share ($51,166,663 ÷ 3,721,814 shares outstanding), no par value, unlimited shares authorized				$13.75
Offering price per share (100/94.50 of $13.75)1				$14.55
Redemption proceeds per share				$13.75
Class C Shares:
Net asset value per share ($15,775,097 ÷ 1,159,958 shares outstanding), no par value, unlimited shares authorized				$13.60
Offering price per share				$13.60
Redemption proceeds per share (99.00/100 of $13.60)1				$13.46
Class K Shares:
Net asset value per share ($18,362 ÷ 1,333 shares outstanding), no par value, unlimited shares authorized				$13.77
Offering price per share				$13.77
Redemption proceeds per share				$13.77

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, 2007

Investment Income:
Dividends (including $565,630 received from affiliated issuers (Note 5) and net foreign taxes withheld of $563)							$	1,909,242
Interest								1,749,383
Investment income allocated from affiliated partnership (Note 5)								34,199
TOTAL INCOME								3,692,824
Expenses:
Investment adviser fee (Note 5)				$	968,548
Administrative personnel and services fee (Note 5)					258,593
Custodian fees					40,700
Transfer and dividend disbursing agent fees and expenses					108,638
Transfer and dividend disbursing agent recordkeeping fees--Institutional Shares					131
Transfer and dividend disbursing agent recordkeeping fees-- Class A Shares					8,945
Transfer and dividend disbursing agent recordkeeping fees-- Class C Shares					4,847
Transfer and dividend disbursing agent recordkeeping fees-- Class K Shares					11
Auditing fees					17,448
Legal fees					7,143
Portfolio accounting fees					95,041
Distribution services fee--Class A Shares (Note 5)					18,948
Distribution services fee--Class C Shares (Note 5)					86,808
Distribution services fee--Class K Shares (Note 5)					22
Shareholder services fee--Class A Shares (Note 5)					76,333
Shareholder services fee--Class C Shares (Note 5)					20,868
Share registration costs					97,177
Printing and postage					50,784
Insurance premiums					8,572
Miscellaneous					8,812
EXPENSES BEFORE ALLOCATION					1,878,369
Expenses allocated from affiliated partnership					278
TOTAL EXPENSES					1,878,647
Waivers and Reimbursement:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(96,420	)
Waiver of administrative personnel and services fee (Note 5)		(85,184	)
Waiver of transfer and dividend disbursing agent fees and expenses		(4,786	)
Reimbursement of transfer and dividend disbursing agent recordkeeping fees--Institutional Shares (Note 5)		(18	)
Reimbursement of transfer and dividend disbursing agent recordkeeping fees--Class A Shares (Note 5)		(8,444	)
Reimbursement of transfer and dividend disbursing agent recordkeeping fees--Class C Shares (Note 5)		(4,032	)
TOTAL WAIVERS AND REIMBURSEMENT					(198,884	)
Net expenses								1,679,763
Net investment income								2,013,061
Realized and Unrealized Gain on Investments, Futures Contracts and Foreign Currency Transactions:
Net realized gain on investments and foreign currency transactions								8,446,655
Net realized gain on futures contracts								98,773
Net realized gain and foreign currency transactions allocated from affiliated partnership								27,060
Net change in unrealized appreciation of investments, and translation of assets and liabilities in foreign currency transactions								786,434
Net change in unrealized depreciation of futures contracts								(40,336	)
Net realized and unrealized gain on investments, futures contracts and foreign currency transactions								9,318,586
Change in net assets resulting from operations							$	11,331,647

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2007			2006
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	2,013,061		$	1,362,405
Net realized gain on investments including allocations from partnership and futures contracts		8,572,488			6,686,253
Net change in unrealized appreciation/depreciation of investments, futures contracts and translation of assets and liabilities in foreign currency		746,098			(3,917,876	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		11,331,647			4,130,782
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares		(966,746	)		(964,275	)
Class A Shares		(418,667	)		(12	)
Class C Shares		(75,923	)		(11	)
Class K Shares		(1	)		--
Distributions from net realized gain on investments, futures contracts and foreign currency transactions
Institutional Shares		(3,727,211	)		(4,964,729	)
Class A Shares		(1,712,874	)		(68	)
Class C Shares		(451,805	)		(68	)
Class K Shares		(4	)		--
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(7,353,231	)		(5,929,163	)
Share Transactions:
Proceeds from sale of shares		84,031,582			13,083,737
Net asset value of shares issued to shareholders in payment of distributions declared		7,010,766			5,924,802
Cost of shares redeemed		(26,053,811	)		(6,910,472	)
Redemption fees1		7,476			191
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		64,996,013			12,098,258
Change in net assets		68,974,429			10,299,877
Net Assets:
Beginning of period		79,619,465			69,319,588
End of period (including undistributed net investment income of $1,154,151 and $695,231, respectively)	$	148,593,894		$	79,619,465

1 Redemption fees in 2006 have been reclassified to permit comparison.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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 long-term growth through capital appreciation and current 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.

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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities including Exchange Traded Funds, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors; prices for interest rate swaps are furnished by an independent pricing service and are based upon a valuation model incorporating interest rates, yield curves and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for investments in other open-end registered investment companies, based on net asset value (NAV);
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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, 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 at 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, 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 at 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/deflation adjustments on Treasury Inflation-Protected Securities 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 each class may bear distribution services fees, shareholder services 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.

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.

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, 2007, the Fund had net realized gains on futures contracts of $98,773.

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.

Foreign exchange contracts outstanding at period end are listed after the Fund’s portfolio of investments.

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 Fund’s 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 7/31/2007					Year Ended 7/31/2006
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	603,137		$	8,390,088		533,396		$	7,149,815
Shares issued to shareholders in payment of distributions declared	346,321			4,668,405		457,148			5,924,643
Shares redeemed	(604,149	)		(8,303,830	)	(513,140	)		(6,866,506	)
Redemption fees	--			4,965		--			--
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	345,309		$	4,759,628		477,404		$	6,207,952
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	4,589,586		$	62,628,792		149,529		$	1,973,518
Shares issued to shareholders in payment of distributions declared	144,782			1,948,759		6			80
Shares redeemed	(1,161,046	)		(16,085,114	)	(1,043	)		(13,564	)
Redemption fees	--			1,978		--			76
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	3,573,322		$	48,494,415		148,492		$	1,960,110
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	954,270		$	12,994,037		300,157		$	3,960,404
Shares issued to shareholders in payment of distributions declared	29,439			393,602		6			79
Shares redeemed	(121,568	)		(1,664,768	)	(2,346	)		(30,402	)
Redemption fees	--			533		--			115
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	862,141		$	11,723,404		297,817		$	3,930,196
	Period Ended 7/31/20072					Year Ended 7/31/2006
Class K Shares:	Shares			Amount		Shares			Amount
Shares sold	1,340		$	18,665		--		$	--
Shares redeemed	(7	)		(99	)	--			--
NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS	1,333		$	18,566		--		$	--
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	4,782,105		$	64,996,013		923,713		$	12,098,258

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

2 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 Fund imposed a 2.00% redemption fee to shareholders of the Fund’s Institutional Shares, Class A Shares and Class C Shares who redeem 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.

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 REITS and partnership income.

For the year ended July 31, 2007, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income	Accumulated Net Realized Gains
$365	$(92,804)	$92,439

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, 2007 and 2006, was as follows:

	2007	2006
Ordinary income1	$3,667,344	$2,863,368
Long-term capital gains	$3,685,887	$3,065,795

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	5,960,881
Undistributed long-term capital gain	$	3,380,432
Net unrealized appreciation	$	5,411,743

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 and REIT adjustments and partnership investments.

At July 31, 2007, the cost of investments for federal tax purposes was $142,664,681. The net unrealized appreciation of investments for federal tax purposes was $5,411,743. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $9,766,020 and net unrealized depreciation from investments for those securities having an excess of cost over value of $4,354,277.

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

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

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. For the year ended July 31, 2007, the Adviser waived $95,564 of its fee. An affiliate of the Adviser reimbursed $12,494 of transfer and dividend disbursing agent recordkeeping fees.

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 previous administrative services contract. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 0.134% of average daily net assets of the Fund. FAS waived $85,184 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 of up to 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	0.25%
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%

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, 2007, FSC retained $74,254 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC retained $36,549 in sales charges from the sale of Class A Shares. FSC also retained $4,565 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. FSSC may voluntarily reimburse the Fund for shareholder services fees and/or other operating expenses of the Fund. For the year ended July 31, 2007, 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 (including the distribution (12b-1) fee) 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 1.15%, 1.40%, 2.15% and 1.90%, respectively, for the fiscal year ending July 31, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $856 in connection with the affiliated mutual funds listed below. Transactions with affiliated companies during the year ended July 31, 2007 are as follows:

Affiliates	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007		Value	Dividend Income/ Allocated Investment Income
Emerging Markets Fixed-Income Core Fund	--	42,893	13,670	29,223	$	621,983	$	34,199
Federated Mortgage Core Portfolio	--	1,720,828	--	1,720,828	$	16,709,234	$	420,748
High Yield Bond Portfolio	--	336,781	72,258	264,523	$	1,745,851	$	87,837
Prime Value Obligations Fund, Institutional Shares	--	13,260,871	5,073,740	8,187,131	$	8,187,131	$	57,045
TOTAL OF AFFILIATED TRANSACTIONS	--	15,361,373	5,159,668	10,201,705	$	27,264,199	$	599,829

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, 2007, were as follows:

Purchases	$	246,671,433
Sales	$	187,623,125

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2007, the amount of long-term capital gains designated by the Fund was $3,685,887.

For the fiscal year ended July 31, 2007, 20.35% 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, 2007, 18.35% 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, 2007, 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 financial highlights for each of the periods indicated therein for the years ended July 31, 2007, 2006 and 2003. 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein for the years ended July 31 2007, 2006 and 2003, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
September 19, 2007

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. As of December 31, 2006, the Trust comprised eight portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

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 15 Old Timber Trail Pittsburgh, PA 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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

FEDERATED MDT BALANCED FUND (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contract at meetings held in May 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

For the periods ending December 31, 2006, the Fund’s performance for the three year period was above the median of the relevant peer group, and the Fund’s performance fell below the median of the relevant peer group for the one year period. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.

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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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.

For the Fund’s most recently completed fiscal year, the Fund’s investment advisory fee after waivers and expense reimbursements, if any, was below 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.

The Senior Officer’s evaluation noted his belief that the information and observations contained in his evaluation supported his 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. For 2006, 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 in 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 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 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT Balanced Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2007

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 FUND 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
	2007	1,2		2006	2		2005	2		2004	2		7/31/2003	2,3
Net Asset Value, Beginning of Period	$13.23			$13.60			$12.82			$11.36			$10.00
Income From Investment Operations:
Net investment income	0.24	4		0.24	4		0.20			0.13			0.13
Net realized and unrealized gain on investments, futures contracts and foreign currency transactions	1.14			0.50			1.87			1.61			1.28
TOTAL FROM INVESTMENT OPERATIONS	1.38			0.74			2.07			1.74			1.41
Less Distributions:
Distributions from net investment income	(0.17	)		(0.18	)		(0.15	)		(0.15	)		(0.05	)
Distributions from net realized gain on investments, futures contracts and foreign currency transactions	(0.65	)		(0.93	)		(1.14	)		(0.13	)		(0.00	)5
TOTAL DISTRIBUTIONS	(0.82	)		(1.11	)		(1.29	)		(0.28	)		(0.05	)
Net Asset Value, End of Period	$13.79			$13.23			$13.60			$12.82			$11.36
Total Return6	10.61	%		5.62	%		16.81	%		15.37	%		14.18	%
Ratios to Average Net Assets:
Net expenses	1.14	%		1.25	%		1.19	%		1.17	%		1.47	%7
Net investment income	1.74	%		1.82	%		1.54	%		1.03	%		1.50	%7
Expense waiver/reimbursement8	0.17	%		0.14	%		--			--			--
Supplemental Data:
Net assets, end of period (000 omitted)	$81,634		$73,747			$69,320			$53,815			$41,474
Portfolio turnover	174	%		139	%		127	%		78	%		124	%

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 The years ended July 31, 2007 and July 31, 2006 and the period ended July 31, 2003 were audited by Ernst & Young LLP. The years ended July 31, 2005 and 2004 were audited by another independent registered public accounting firm.

3 Reflects operations for the period from October 1, 2002 (date of initial public investment) to July 31, 2003.

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

5 Represents less than $0.01.

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

7 Computed on an annualized basis.

8 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; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual	$1,000	$1,014.00	$5.69
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,019.14	$5.71

1 Expenses are equal to the Fund’s annualized net expense ratio of 1.14%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Management’s Discussion of Fund Performance

For the reporting period ending July 31, 2007 the fund’s Institutional Shares produced total returns of 10.61%, at net asset value.¹ The Standard & Poor’s 500 Index² and the Lehman Brothers Aggregate Bond Index³ returned 16.13% and 5.58%, respectively, while the Lipper Balanced Fund Index returned 12.90%.⁴

1 The fund is the successor to the MDT Balanced 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 Balanced Fund.

2 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.

3 The Lehman Brother 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.

4 The Lipper Balanced Fund Index represents the total returns of the funds in the indicated category, as defined by Lipper, Inc.

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.

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000 Index,⁵ which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index,⁶ which exceeded the 15.48% and 12.12% results for the Russell Top 200^® Index⁷ and the Russell 2000^® Index,⁸ respectively. Growth stocks outperformed value stocks by a wide margin during the year with the Russell 3000^® Growth Index⁹ returning 19.24% as compared to 12.97% for the Russell 3000 Value^® Index.¹⁰

The best performing sectors during the reporting period in the Russell 3000^® were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

5 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.

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 can not 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 can not be made directly in an index.

8 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.

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 can not 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 can not be made directly in an index.

Real Estate Investment Trust (“REIT”) performance suffered late in the period as a combination of profit taking within the sector and uncertainty regarding the availability of credit -- a key ingredient to the merger and acquisition activity that has fueled property valuations -- led to a significant decline. The S&P REIT Index¹¹ finished the period up 0.99%.

International equities outperformed the domestic market, benefiting from strong international economic growth and a general decline in the U.S. dollar relative to other currencies. Developed markets, as represented by the MSCI EAFE Index,¹² performed well returning 23.91%, while emerging market returns were even better with the MSCI Emerging Markets Free Index¹³ up 50.26%.

In the bond market, volatility picked up considerably despite the Federal Reserve Board leaving interest rates unchanged. There has been a bit of a tug of war as the subprime-lending scare and worries of a credit crunch depressed U.S. interest rates. On the other hand, concerns about inflation and strong global economic growth and higher interest rates abroad put upward pressure on interest rates. There is considerable uncertainty as to the extent to which the troubles in the housing market will bleed over into other parts of the economy thus slowing the prospects for economic growth. Short-term interest rates were flat over the past 12 months while intermediate and longer-term rates fell modestly. The average yield of the Lehman Aggregate stood at 5.57% on July 31, 2007, virtually unchanged from 12 months earlier at 5.61%.

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.

12 The MSCI EAFE Index measures international equity performance. It comprises 21 MSCI country indices, representing the developed markets outside of North America.

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.

ASSET ALLOCATION

During the reporting period, equity investments accounted for an average of approximately 63% of the portfolio while fixed income and cash averaged 37%. Within the equity allocation, investments in REITs hurt relative results as the sector underperformed the broader equity market, while the allocation to international equities helped results as these investments outperformed the domestic markets.¹⁴ Fixed income performance trailed the equity allocation’s results, but provided a valuable element of stability during the equity market’s volatility late in the period.¹⁵

Equities

Domestic equity investments, which are managed under our proprietary Optimum Q -- All Cap Core Strategy, underperformed their benchmark, the Russell 3000 Index. Investments in the Energy sector provided the most significant positive contribution to relative performance. The most significant negative contributors to relative performance were an overweight to the Financial sector, which underperformed, and an underweight to companies in the Telecommunication Services sector, which outperformed.

International investments slightly underperformed the MSCI EAFE Index overall, largely because the allocation to this category was increased towards the second half of the period when performance was not quite as strong. A new allocation to emerging market equities late in the period contributed positively to relative performance.

REIT investments did well relative to the S&P REIT Index, but trailed the broader market as the sector underperformed. The allocation to REITS was reduced beginning in late February as support for the sector was clearly deteriorating and uncertainty in credit markets was hurting valuations. The allocation was ultimately cut to slightly more than 2% of the portfolio, the smallest in the history of the fund. This change was fortuitous as REIT valuations declined significantly through the end of the period.

14 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.

15 Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.

Fixed Income

The bond portion of the fund underperformed its benchmark (the Lehman Aggregate), however evaluating fixed income results in isolation can be misleading since this allocation is managed in the context of the broader fund. For example, fixed income performance was hurt by a short duration position (reduced exposure to interest rate risk) during the latter part of 2006. At this time the fund’s investments in financial stocks, which can carry significant interest rate exposure, rallied strongly. By reducing the interest rate exposure in the portfolio’s bond investments, we were comfortable maintaining a significant position in financials and the fund’s overall performance benefited. Through the first seven months of 2007 we managed the bond portion of the fund more traditionally and it has modestly outperformed its benchmark with security selection and duration positioning in particular contributing positively to relative performance.¹⁶

16 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.

GROWTH OF A $25,000 INVESTMENT -- INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000¹ in the Federated MDT Balanced Fund (Institutional Shares) (the “Fund”) from October 1, 2002 (start of performance) to July 31, 2007, compared to the Standard and Poor’s 500 Index (S&P 500),² the Lipper Balanced Fund Index (LBFI)³ and the Lehman Brothers Aggregate Bond Index (LBAB).²

Average Total Returns for the Period Ended 7/31/2007
1 Year	10.61%
Start of Performance (10/1/2002)	12.90%

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 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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling in the respective categories indicated. Lipper figures do not reflect sales charges.

Portfolio of Investments Summary Tables

At July 31, 2007, the Fund’s portfolio composition¹ was as follows:

Security Type	Percentage of Total Net Assets
Domestic Equity	50.2%
Foreign Stock ETF	14.3%
Mortgage-Backed Securities	10.0%
Corporate Debt Securities	8.1%
U.S. Treasury and Agency Securities2	5.2%
International Equity	2.6%
Collateralized Mortgage Obligations	2.4%
Asset-Backed Securities	1.1%
Foreign Debt Securities	1.1%
Adjustable Rate Mortgage Securities	0.7%
Cash Equivalents3	8.4%
Other Assets and Liabilities--Net4	(4.1)%
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 $2,318,458 held in U.S. Treasuries pledged as collateral to ensure the Fund is able to satisfy the obligations of its outstanding long futures contracts.

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.

At July 31, 2007, the Fund’s industry composition⁵ for its equity securities was as follows:

Industry	Percentage of Equity Securities
Money Center Bank	7.6%
Regional Bank	5.4%
Multi-Line Insurance	5.3%
Oil Well Supply	5.3%
Internet Services	5.2%
Securities Brokerage	5.2%
Property Liability Insurance	4.6%
Computers - Low End	4.4%
Life Insurance	4.4%
Real Estate Investment Trusts	4.4%
Integrated Domestic Oil	4.3%
Integrated International Oil	4.3%
Building Supply Stores	4.2%
Agricultural Chemicals	3.7%
Financial Services	3.3%
Metal Fabrication	2.4%
Oil Refiner	2.4%
Home Building	1.8%
Railroad	1.8%
Electric Utility	1.7%
Crude Oil & Gas Production	1.2%
Ethical Drugs	1.2%
Diversified Oil	1.1%
Miscellaneous Food Products	1.1%
Offshore Driller	1.1%
Oil Service, Explore & Drill	1.0%
Undesignated Consumer Cyclicals	1.0%
Other6	10.6%
TOTAL	100.0%

5 Industry classifications are based upon, and individual 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.

6 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”.

Portfolio of Investments

July 31, 2007

Shares					Value
			COMMON STOCKS--53.0%
			Agricultural Chemicals--2.0%
	800		Bunge Ltd.	$	72,488
	44,000		Monsanto Co.		2,835,800
			TOTAL		2,908,288
			Apparel--0.1%
	2,700		Guess ?, Inc.		128,223
			Auto Original Equipment Manufactures--0.1%
	2,200		American Axle & Manufacturing Holdings, Inc.		53,240
	600		Johnson Controls, Inc.		67,890
	900		Sun Hydraulics Inc.		26,748
	1,900		Superior Industries International, Inc.		35,150
			TOTAL		183,028
			Biotechnology--0.5%
	9,100	1	Genentech, Inc.		676,858
	1,400	1	Martek Biosciences Corp.		35,868
			TOTAL		712,726
			Bituminous Coal--0.0%
	1,400		Massey Energy Co.		29,890
			Book Publishing--0.0%
	1,200	1	Scholastic Corp.		38,616
			Building Supply Stores--2.2%
	66,700		Home Depot, Inc.		2,479,239
	27,800		Lowe’s Cos., Inc.		778,678
			TOTAL		3,257,917
			Cement--0.1%
	1,000		Martin Marietta Materials		137,000
			Clothing Stores--0.2%
	6,100	1	Aeropostale, Inc.		232,288
	1,600	1	Hanesbrands Inc.		49,616
			TOTAL		281,904
			Computer Networking--0.1%
	4,500	1	Juniper Networks, Inc.		134,820
			Computer Peripherals--0.0%
	1,400	1	Hutchinson Technology, Inc.		28,084
			Computer Stores--0.1%
	6,200	1	Ingram Micro, Inc., Class A		124,310
			COMMON STOCKS--continued
			Computers - Low End--2.3%
	26,300	1	Apple, Inc.	$	3,465,288
			Construction Machinery--0.0%
	400		Manitowoc, Inc.		31,068
			Cosmetics & Toiletries--0.0%
	1,100	1	Bare Escentuals, Inc.		31,031
			Crude Oil & Gas Production--0.6%
	6,800		Apache Corp.		549,712
	2,500	1	Bill Barrett Corp.		85,800
	1,600		Cimarex Energy Co.		60,560
	3,000		Devon Energy Corp.		223,830
	600		Pogo Producing Co.		31,956
			TOTAL		951,858
			Defense Aerospace--0.1%
	1,600		Goodrich (B.F.) Co.		100,656
			Defense Electronics--0.1%
	1,900	1	FLIR Systems, Inc.		82,935
	400	1	First Solar, Inc.		45,028
			TOTAL		127,963
			Discount Department Stores--0.1%
	6,000		Foot Locker, Inc.		111,360
			Diversified Leisure--0.1%
	3,000		Carnival Corp.		132,930
			Diversified Oil--0.6%
	15,000		Occidental Petroleum Corp.		850,800
			Drug Stores--0.1%
	1,900		Longs Drug Stores Corp.		91,884
			Electric Utility--0.9%
	7,000		Ameren Corp.		335,860
	3,600		DTE Energy Co.		166,968
	8,000		Edison International		423,120
	2,500		Pepco Holdings, Inc.		67,675
	1,300		Portland General Electric Co.		34,983
	1,100		Sempra Energy		57,992
	2,700		SCANA Corp.		100,926
	6,600		Xcel Energy, Inc.		133,980
			TOTAL		1,321,504
			Electrical Equipment--0.0%
	1,700	1	Houston Wire & Cable Co.		43,809
			COMMON STOCKS--continued
			Electronic Instruments--0.0%
	500		Analogic Corp.	$	33,195
			Ethical Drugs--0.6%
	2,600	1	King Pharmaceuticals, Inc.		44,226
	23,700		Pfizer, Inc.		557,187
	10,100		Schering Plough Corp.		288,254
	1,200	1	Sciele Pharma, Inc.		27,828
			TOTAL		917,495
			Financial Services--1.7%
	14,100		Ambac Financial Group, Inc.		946,815
	6,000		Ameriprise Financial, Inc.		361,620
	15,600		CIT Group, Inc.		642,408
	2,300		Janus Capital Group, Inc.		69,138
	7,700		MBIA, Inc.		431,970
	900	1	Mastercard, Inc. Class A		144,720
			TOTAL		2,596,671
			Gas Distributor--0.1%
	2,100		AGL Resources, Inc.		79,170
	1,800		MDU Resources Group, Inc.		49,068
	500		NICOR, Inc.		19,705
			TOTAL		147,943
			Home Building--1.0%
	10,600		Centex Corp.		395,486
	4,200	1	Hovnanian Enterprises, Inc., Class A		55,608
	4,800		KB Home		152,688
	8,000		Lennar Corp., Class A		245,280
	3,200		M.D.C. Holdings, Inc.		147,200
	200	1	NVR, Inc.		115,696
	15,600		Pulte Homes, Inc.		301,704
			TOTAL		1,413,662
			Insurance Brokerage--0.1%
	100	1	Markel Corp.		46,550
	1,800		Odyssey Re Holdings Corp.		63,360
			TOTAL		109,910
			Integrated Domestic Oil--2.3%
	40,100		ConocoPhillips		3,241,684
	2,800		Marathon Oil Corp.		154,560
			TOTAL		3,396,244
			COMMON STOCKS--continued
			Integrated International Oil--2.3%
	39,300		Chevron Corp.	$	3,350,718
			Internet Services--2.7%
	16,500	1	Amazon.com, Inc.		1,295,910
	83,100	1	eBay, Inc.		2,692,440
	900	1	Priceline.com, Inc.		57,420
			TOTAL		4,045,770
			Leasing--0.0%
	700		GATX Corp.		31,752
			Life Insurance--2.3%
	500		Delphi Financial Group, Inc., Class A		20,085
	30,600		MetLife, Inc.		1,842,732
	2,200		Nationwide Financial Services, Inc., Class A		125,202
	1,300		Protective Life Corp.		55,926
	14,200		Prudential Financial		1,258,546
	2,000		Torchmark Corp.		123,080
			TOTAL		3,425,571
			Lumber Products--0.1%
	4,500		Louisiana-Pacific Corp.		83,340
			Mail Order--0.0%
	3,100	1	Coldwater Creek Inc.		61,039
			Major Steel Producer--0.0%
	1,000		Ryerson, Inc.		32,090
			Maritime--0.2%
	400	1	Kirby Corp.		16,204
	3,200		Overseas Shipholding Group, Inc.		248,288
			TOTAL		264,492
			Medical Supplies--0.0%
	800	1	Kyphon, Inc.		52,496
			Medical Technology--0.4%
	2,300	1	Intuitive Surgical, Inc.		489,003
	1,300		Stryker Corp.		81,159
			TOTAL		570,162
			Metal Fabrication--1.3%
	700		Olympic Steel, Inc.		18,389
	12,200		Precision Castparts Corp.		1,672,132
	3,100		Timken Co.		103,540
	6,000		Worthington Industries, Inc.		124,200
			TOTAL		1,918,261
			COMMON STOCKS--continued
			Mini-Mill Producer--0.2%
	5,800		Commercial Metals Corp.	$	178,872
	1,100		Schnitzer Steel Industries, Inc., Class A		59,609
			TOTAL		238,481
			Miscellaneous Food Products--0.6%
	25,900		Archer-Daniels-Midland Co.		870,240
			Miscellaneous Metals--0.2%
	500		Kennametal, Inc.		38,330
	2,600		Metal Management, Inc.		109,226
	6,000	1	USEC, Inc.		100,740
			TOTAL		248,296
			Miscellaneous Components--0.1%
	5,100	1	Vishay Intertechnology, Inc.		79,101
			Money Center Bank--4.0%
	28,400		Bank of America Corp.		1,346,728
	24,100		Citigroup, Inc.		1,122,337
	79,900		J.P. Morgan Chase & Co.		3,516,399
			TOTAL		5,985,464
			Mortgage & Title--0.1%
	1,100		LandAmerica Financial Group, Inc.		84,249
			Multi-Industry Transportation--0.1%
	2,800	1	Hub Group, Inc.		95,256
			Multi-Industry Capital Goods--0.1%
	1,300	1	Ceradyne, Inc.		97,019
	1,600	1	Shaw Group, Inc.		85,152
			TOTAL		182,171
			Multi-Line Insurance--2.8%
	6,550		Allstate Corp.		348,132
	51,800		American International Group, Inc.		3,324,524
	5,400		Assurant, Inc.		273,888
	1,200		Hanover Insurance Group, Inc.		52,668
	1,400		Hartford Financial Services Group, Inc.		128,618
			TOTAL		4,127,830
			Mutual Fund Adviser--0.0%
	100		Franklin Resources, Inc.		12,737
			Newspaper Publishing--0.0%
	700		Gannett Co., Inc.		34,930
			Office Furniture--0.0%
	700		Knoll, Inc.		13,867
			COMMON STOCKS--continued
			Offshore Driller--0.6%
	1,800	1	Hornbeck Offshore Services, Inc.	$	77,490
	3,200	1	Oceaneering International, Inc.		179,712
	9,400		Tidewater, Inc.		643,148
			TOTAL		900,350
			Oil Refiner--1.3%
	28,000		Valero Energy Corp.		1,876,280
			Oil Service, Explore & Drill--0.5%
	13,400	1	Grant Prideco, Inc.		751,740
	400	1	McDermott International, Inc.		33,176
			TOTAL		784,916
			Oil Well Supply--2.8%
	4,200	1	FMC Technologies, Inc.		384,384
	39,600		Schlumberger Ltd.		3,750,912
			TOTAL		4,135,296
			Other Communications Equipment--0.0%
	1,300		Harris Corp.		71,344
			Personal Loans--0.0%
	500		ASTA Funding, Inc.		18,040
	600		Advanta Corp., Class B		15,396
			TOTAL		33,436
			Poultry Products--0.2%
	4,300		Pilgrims Pride Corp.		144,824
	2,600		Sanderson Farms, Inc.		103,662
			TOTAL		248,486
			Property Liability Insurance--2.4%
	4,050		American Financial Group, Inc. Ohio		113,764
	19,200		Chubb Corp.		967,872
	2,700		Commerce Group, Inc.		77,571
	3,700		HCC Insurance Holdings, Inc.		108,336
	9,800		Loews Corp.		464,520
	1,200		Mercury General Corp.		62,136
	1,100	1	Philadelphia Consolidated Holding Corp.		39,754
	2,400		Reinsurance Group of America		127,944
	3,600		Safeco Corp.		210,492
	27,900		The Travelers Cos, Inc.		1,416,762
	200		Transatlantic Holdings, Inc.		14,630
			TOTAL		3,603,781
			COMMON STOCKS--continued
			Railroad--0.9%
	25,800		Norfolk Southern Corp.	$	1,387,524
			Real Estate Investment Trusts--2.3%
	3,400		AMB Property Corp.		181,152
	1,800		Alexandria Real Estate Equities, Inc.		155,034
	3,150		Archstone-Smith Trust		180,841
	1,900		Avalonbay Communities, Inc.		205,143
	1,150		Boston Properties, Inc.		108,663
	3,550		Developers Diversified Realty		170,400
	3,300		Equity Residential Properties Trust		131,373
	2,000		Federal Realty Investment Trust		150,280
	1,900		General Growth Properties, Inc.		91,162
	3,800		Health Care Property Investors, Inc.		103,512
	13,000		Host Hotels & Resorts, Inc.		274,560
	3,000		Kimco Realty Corp.		111,990
	4,600	1	Prologis Trust		261,740
	2,100		Public Storage, Inc.		147,189
	7,000		Realty Income Corp.		164,290
	2,100		SL Green Realty Corp.		254,982
	3,100		Simon Property Group, Inc.		268,243
	4,400		Taubman Centers, Inc.		211,596
	2,450		Vornado Realty Trust		262,223
			TOTAL		3,434,373
			Recreational Goods--0.0%
	1,700	1	Smith & Wesson Holding Corp.		31,960
			Regional Bank--2.8%
	2,200		Associated Banc Corp.		63,228
	6,000		BB&T Corp.		224,520
	1,300		Central Pacific Financial Corp.		36,673
	12,300		Comerica, Inc.		647,718
	8,800		Fifth Third Bancorp		324,632
	1,400		FirstMerit Corp.		25,662
	700		Huntington Bancshares, Inc.		13,440
	31,657		KeyCorp		1,098,181
	700		M & T Bank Corp.		74,403
	17,200		National City Corp.		505,508
	10,300		SunTrust Banks, Inc.		806,490
	4,600		UnionBanCal Corp.		254,196
			COMMON STOCKS--continued
			Regional Bank--continued
	1,000		United Bankshares, Inc.	$	27,850
	1,700		Zions Bancorp		126,735
			TOTAL		4,229,236
			Restaurant--0.1%
	2,600	1	Buffalo Wild Wings, Inc.		112,372
			Rubber--0.0%
	600		Cooper Tire & Rubber Co.		13,794
			Savings & Loan--0.2%
	3,200		Newalliance Bancshares, Inc.		43,232
	5,500		Washington Mutual, Inc.		206,415
			TOTAL		249,647
			Securities Brokerage--2.7%
	1,000		Goldman Sachs Group, Inc.		188,340
	12,900		Lehman Brothers Holdings, Inc.		799,800
	21,200		Merrill Lynch & Co., Inc.		1,573,040
	23,600		Morgan Stanley		1,507,332
			TOTAL		4,068,512
			Semiconductor Distribution--0.2%
	8,400	1	Avnet, Inc.		318,192
			Semiconductor Manufacturing--0.4%
	5,800		Intersil Holding Corp.		169,650
	8,500		Linear Technology Corp.		303,025
	5,100	1	Spansion Inc. - Class A		54,111
			TOTAL		526,786
			Semiconductor Manufacturing Equipment--0.0%
	2,400	1	Teradyne, Inc.		37,656
			Services to Medical Professionals--0.3%
	8,000	1	Express Scripts, Inc., Class A		401,040
	400	1	Humana, Inc.		25,636
	600	1	Nighthawk Radiology Holdings		12,378
			TOTAL		439,054
			Shoes--0.1%
	1,600	1	Crocs, Inc.		94,912
			Software Packaged/Custom--0.3%
	1,300	1	Blue Coat Systems, Inc.		63,349
	6,400	1	Computer Sciences Corp.		356,352

Shares or Principal Amount					Value
			COMMON STOCKS--continued
			Software Packaged/Custom--continued
	600		National Instruments Corp.	$	19,410
	1,400	1	SPSS, Inc.		57,456
			TOTAL		496,567
			Specialty Chemicals--0.2%
	1,800		Minerals Technologies, Inc.		116,406
	3,600	1	OM Group, Inc.		174,384
			TOTAL		290,790
			Specialty Retailing--0.1%
	1,200	1	Big Lots, Inc.		31,032
	4,800		Borders Group, Inc.		78,528
	1,400		Pep Boys-Manny Moe & Jack		23,702
			TOTAL		133,262
			Telecomm Equipment & Services--0.2%
	400	1	Anixter International, Inc.		33,060
	1,700	1	C-COR Electronics, Inc.		22,865
	7,300	1	Corning, Inc.		174,032
			TOTAL		229,957
			Telephone Utility--0.1%
	2,100		Embarq Corp.		129,759
			Trucking--0.0%
	100		Con-way, Inc.		4,939
			Undesignated Consumer Cyclicals--0.5%
	4,700		DeVRY, Inc.		152,280
	4,300	1	ITT Educational Services, Inc.		454,338
	4,700	1	TeleTech Holdings, Inc.		137,851
			TOTAL		744,469
			Undesignated Consumer Staples--0.2%
	4,500	1	Nutri/System, Inc.		250,740
			TOTAL COMMON STOCKS (IDENTIFIED COST $75,549,099)		78,526,780
			ASSET-BACKED SECURITIES--1.1%
$	400,000		Banc of America Commercial Mortgage, Inc. 2007-1 A2, 5.381%, 1/15/2049		395,781
	51,042		CS First Boston Mortgage Securities Corp. 2002-HE4 AF, 5.51%, 8/25/2032		50,894
	580,042		Community Program Loan Trust 1987-A A4, 4.50%, 10/01/2018		571,138
	140,000		Morgan Stanley Capital I 2006-IQ12 A4, 5.319%, 12/15/2043		133,473
Principal Amount					Value
			ASSET-BACKED SECURITIES--continued
$	250,000		Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.331%, 03/12/2051	$	246,733
	250,000		Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.485%, 03/12/2051		240,674
			TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $1,677,017)		1,638,693
			COLLATERALIZED MORTGAGE OBLIGATIONS--0.7%
	5,190		Bear Stearns Mortgage Securities, Inc. 1997-6 1A, 6.67%, 3/25/2031		5,127
	410,000		Citigroup/Deutsche Bank Commercial Mortgage 2007-CD4 A3, 5.293%, 12/11/2049		399,189
	15,813		Federal Home Loan Mortgage Corp. REMIC 1311 K, 7.00%, 7/15/2022		15,813
	30,846		Federal Home Loan Mortgage Corp. REMIC 1384 D, 7.00%, 9/15/2022		30,846
	34,224		Federal Home Loan Mortgage Corp. REMIC 1595 D, 7.00%, 10/15/2013		34,735
	75,000		Federal Home Loan Mortgage Corp. REMIC 2497 JH, 6.00%, 9/15/2032		74,985
	73,921		Federal National Mortgage Association REMIC 1993-113 SB, 9.75%, 7/25/2023		80,761
	13,151		Federal National Mortgage Association REMIC 2001-37 GA, 8.00%, 7/25/2016		13,756
	19,002		Federal National Mortgage Association REMIC 2003-35 UC, 3.75%, 5/25/2033		17,257
	15,978		Government National Mortgage Association REMIC 1999-29 PB, 7.25%, 7/16/2028		16,192
	55,344		Government National Mortgage Association REMIC 2002-17 B, 6.00%, 3/20/2032		55,540
	350,000		JP Morgan Chase Commercial Mortgage Securities 2007-CB19 A2, 5.478%, 2/12/2049		351,465
			TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (IDENTIFIED COST $1,114,652)		1,095,666
			CORPORATE BONDS--7.8%
			Basic Industry - Chemicals--0.0%
	75,000		Albemarle Corp., Sr. Note, 5.10%, 02/01/2015		67,999
			Basic Industry - Metals & Mining--0.1%
	35,000		Alcoa, Inc., Note, 5.55%, 02/01/2017		33,965
	100,000		BHP Finance (USA), Inc., Company Guarantee, 5.25%, 12/15/2015		94,411
	60,000		Newmont Mining Corp., Company Guarantee, 5.875%, 04/01/2035		53,782
			TOTAL		182,158
			Capital Goods - Aerospace & Defense--0.2%
	125,000		Boeing Co., Note, 5.125%, 02/15/2013		123,934
	200,000		Raytheon Co., Unsecd. Note, 5.375%, 04/01/2013		197,963
			TOTAL		321,897
			Capital Goods - Diversified Manufacturing--0.1%
	100,000		Emerson Electric Co., Unsecd. Note, 5.75%, 11/01/2011		102,315
	40,000	2,3	Textron Financial Corp., Jr. Sub. Note, 6.00%, 02/15/2067		37,917
			TOTAL		140,232
Principal Amount					Value
			CORPORATE BONDS--continued
			Capital Goods - Environmental--0.1%
$	100,000		Waste Management, Inc., 7.375%, 08/01/2010	$	105,530
			Capital Goods - Packaging--0.0%
	20,000		Pactiv Corp., 6.40%, 1/15/2018		20,528
			Communications - Media & Cable--0.1%
	100,000		Comcast Corp., Sr. Note, 7.125%, 06/15/2013		105,959
	75,000		Cox Communications, Inc., Unsecd. Note, 5.45%, 12/15/2014		71,745
	25,000	2,3	Time Warner Cable, Inc., Sr. Unsecd. Note, 5.85%, 05/01/2017		24,252
			TOTAL		201,956
			Communications - Media Noncable--0.2%
	100,000		British Sky Broadcasting Group PLC, 8.20%, 07/15/2009		105,509
	75,000		News America Holdings, Inc., Company Guarantee, 8.00%, 10/17/2016		84,890
	75,000		News America Holdings, Inc., Sr. Deb., 9.25%, 02/01/2013		86,770
			TOTAL		277,169
			Communications - Telecom Wireless--0.4%
	210,000		AT&T Wireless Services, Inc., Sr. Note, 8.75%, 03/01/2031		264,158
	100,000		Cingular Wireless LLC, Sr. Note, 6.50%, 12/15/2011		103,966
	50,000		Sprint Capital Corp., Company Guarantee, 8.75%, 03/15/2032		55,298
	100,000		Sprint Capital Corp., Note, 8.375%, 03/15/2012		109,334
	10,000		Vodafone Group PLC, 5.35%, 02/27/2012		9,808
	50,000		Vodafone Group PLC, Note, 5.625%, 2/27/2017		48,043
			TOTAL		590,607
			Communications - Telecom Wirelines--0.1%
	40,000		Telefonica SA, Company Guarantee, 7.045%, 06/20/2036		40,743
	50,000		Telefonica SA, Sr. Note, 5.855%, 02/04/2013		49,556
	100,000		Telefonos de Mexico, Note, 4.50%, 11/19/2008		98,050
			TOTAL		188,349
			Consumer Cyclical - Automotive--0.1%
	75,000		DaimlerChrysler North America, Sr. Note, 4.875%, 06/15/2010		73,467
	25,000		DaimlerChrysler North America Holding Corp., Sr. Note, 6.50%, 11/15/2013		25,680
			TOTAL		99,147
			Consumer Cyclical - Entertainment--0.1%
	75,000		Disney Co., Note, 5.70%, 07/15/2011		76,515
	100,000		Time Warner, Inc., 5.50%, 11/15/2011		99,303
			TOTAL		175,818
			Consumer Cyclical - Lodging--0.1%
	100,000		Wyndham Worldwide Corp., Sr. Unsecd. Note, 6.00%, 12/01/2016		96,795
Principal Amount					Value
			CORPORATE BONDS--continued
			Consumer Cyclical - Retailers--0.1%
$	40,000		CVS Caremark Corp., Sr. Unsecd. Note, 5.75%, 06/01/2017	$	38,394
	30,000		Costco Wholesale Corp., 5.30%, 03/15/2012		29,870
	10,000		JC Penney Corp., Inc., Sr. Unsecd. Note, 5.875%, 02/15/2018		9,607
	100,000		Target Corp., 5.875%, 03/01/2012		101,878
			TOTAL		179,749
			Consumer Non-Cyclical Food/Beverage--0.3%
	50,000		Anheuser-Busch Cos., Inc., Sr. Note, 5.60%, 03/01/2017		49,187
	100,000		Bottling Group LLC, Note, 5.50%, 04/01/2016		98,546
	40,000		General Mills, Inc., Note, 5.70%, 02/15/2017		39,787
	75,000		Kraft Foods, Inc., Note, 5.25%, 10/01/2013		72,499
	110,000		Kraft Foods, Inc., Note, 6.25%, 06/01/2012		112,390
			TOTAL		372,409
			Consumer Non-Cyclical Health Care--0.1%
	100,000		Medtronic, Inc., Note, Series B, 4.375%, 09/15/2010		96,313
	40,000		Quest Diagnostics, Inc., Sr. Unsecd. Note, 6.400%, 07/01/2017		40,837
			TOTAL		137,150
			Consumer Non-Cyclical Pharmaceuticals--0.4%
	75,000		Abbott Laboratories, 5.375%, 05/15/2009		75,269
	100,000		Genentech, Inc., Sr. Note, 4.75%, 07/15/2015		94,518
	60,000		Lilly (Eli) & Co., Bond, 5.20%, 03/15/2017		57,487
	125,000		Lilly (Eli) & Co., Unsecd. Note, 6.57%, 01/01/2016		133,341
	100,000		Pharmacia Corp., Sr. Deb., 6.50%, 12/01/2018		108,376
	35,000		Wyeth, 5.45%, 04/01/2017		34,168
	100,000		Wyeth, Unsecd. Note, 5.50%, 02/01/2014		99,179
			TOTAL		602,338
			Energy - Independent--0.2%
	55,000		Anadarko Petroleum Corp., Sr. Note, 5.95%, 09/15/2016		54,255
	50,000		Canadian Natural Resources, 4.90%, 12/01/2014		47,306
	150,000		Pemex Project Funding Master, Company Guarantee, 9.125%, 10/13/2010		162,457
	10,000		XTO Energy, Inc., 6.75%, 08/01/2037		10,213
	15,000		XTO Energy, Inc., Sr. Unsecd. Note, 6.25%, 08/01/2017		15,308
			TOTAL		289,539
			Energy - Integrated--0.2%
	75,000		Conoco Funding Co., Inc., 7.25%, 10/15/2031		83,886
	75,000		ConocoPhillips Australia, 5.50%, 04/15/2013		74,722
	100,000		Husky Oil Ltd., Deb., 7.55%, 11/15/2016		111,770
			TOTAL		270,378
Principal Amount					Value
			CORPORATE BONDS--continued
			Energy - Oil Field Services--0.0%
$	40,000		Enbridge, Inc., Sr. Note, 5.60%, 04/01/2017	$	38,545
			Energy - Refining--0.1%
	100,000		Valero Energy Corp., 6.875%, 04/15/2012		105,886
	40,000		Valero Energy Corp., 7.50%, 04/15/2032		43,893
	35,000		Valero Energy Corp., Note, 4.75%, 04/01/2014		32,546
			TOTAL		182,325
			Financial Institution - Banking--1.6%
	200,000		Bank of America Corp., Sr. Note, 5.375%, 06/15/2014		195,949
	120,000		Capital One Capital IV, 6.745%, 02/17/2037		104,711
	200,000		Citigroup, Inc., Note, 5.125%, 02/14/2011		197,716
	150,000		Credit Suisse First Boston, Sr. Note, 5.50%, 08/16/2011		150,523
	100,000		HSBC Finance Capital Trust, Note, 5.911%, 11/30/2035		197,482
	200,000		HSBC Finance Corp., 4.75%, 04/15/2010		97,231
	100,000		Household Finance Corp., Note, 7.00%, 05/15/2012		103,480
	150,000		J.P. Morgan Chase & Co., 5.75%, 01/02/2013		149,547
	100,000		Marshall & Ilsley Bank, Sr. Note, 4.40%, 03/15/2010		97,224
	200,000		Northern Trust Corp., Sr. Note, 5.30%, 08/29/2011		197,166
	50,000		PNC Funding Corp., Sub. Note, 5.625%, 02/01/2017		48,966
	100,000		PNC Funding Corp., Sub. Note, 7.50%, 11/01/2009		104,846
	100,000		Popular North America, 5.65%, 04/15/2009		100,496
	250,000		US BANK NA, Sub. Note, 4.95%, 10/30/2014		240,239
	250,000		Wachovia Bank N.A., 4.80%, 11/01/2014		234,496
	100,000		Wells Fargo Bank, N.A., Sub. Note, 6.45%, 02/01/2011		103,256
	75,000		Zions Bancorp, Sub. Note, 5.50%, 11/16/2015		72,042
			TOTAL		2,395,370
			Financial Institution - Brokerage--0.8%
	100,000		Bear Stearns Cos., Inc., Unsecd. Note, 3.25%, 03/25/2009		95,999
	150,000		Goldman Sachs Group, Inc., Note, 5.25%, 10/15/2013		144,970
	100,000		Invesco PLC, Note, 4.50%, 12/15/2009		97,294
	25,000		Janus Capital Group, Inc., Sr. Note, 6.25%, 06/15/2012		25,359
	30,000		Janus Capital Group, Inc., Sr. Note, 6.70%, 06/15/2017		30,421
	120,000		Lehman Brothers Holdings, 7.875%, 8/15/2010		127,784
	35,000		Lehman Brothers Holdings, Inc., Sub. Deb., 6.50%, 07/19/2017		34,564
	40,000		Lehman Brothers Holdings, Inc., Sub. Deb., 6.875%, 07/17/2037		39,212
	400,000		Merrill Lynch & Co., Inc., Sr. Unsub., Series CORE, 5.908%, 01/31/2008		397,990
Principal Amount					Value
			CORPORATE BONDS--continued
			Financial Institution - Brokerage--continued
$	150,000		Merrill Lynch & Co., Inc., Unsecd. Note, 5.45%, 07/15/2014	$	145,242
	100,000		Morgan Stanley, Note, 4.00%, 01/15/2010		96,249
			TOTAL		1,235,084
			Financial Institution - Finance Noncaptive--0.6%
	100,000		American Express Co., Global Sr. Note, 4.75%, 06/17/2009		99,129
	100,000		American General Finance Corp., 4.00%, 03/15/2011		94,933
	150,000		Berkshire Hathaway, Inc., Company Guarantee, 4.85%, 01/15/2015		143,988
	90,000	2,3	Capmark Financial Group, Inc., Note, 6.30%, 05/10/2017		80,032
	100,000		General Electric Capital Corp., Note, 4.875%, 03/04/2015		96,082
	200,000	2,3	ILFC E-Capital Trust I, 5.90%, 12/21/2065		202,720
	100,000		International Lease Finance Corp., Note, 4.875%, 09/01/2010		98,218
	75,000		SLM Corp., Note, 4.00%, 01/15/2010		69,806
			TOTAL		884,908
			Financial Institution - Insurance - Health--0.0%
	75,000		Aetna US Healthcare, Sr. Note, 5.75%, 06/15/2011		75,700
			Financial Institution - Insurance - Life--0.1%
	100,000		AXA-UAP, Sub. Note, 8.60%, 12/15/2030		121,585
			Financial Institution - Insurance - P&C--0.4%
	41,000		ACE INA Holdings, Inc., Sr. Note, 5.70%, 02/15/2017		40,312
	100,000		The St. Paul Travelers Co., Inc., Sr. Unsecd. Note, 5.50%, 12/01/2015		97,372
	500,000	2,3	ZFS Finance USA Trust I, Jr. Sub. Note, 6.15%, 12/15/2065		502,215
			TOTAL		639,899
			Financial Institution - REITs--0.0%
	20,000	2,3	Equity One, Inc., 6.00%, 09/15/2017		19,772
			Foreign - Local - Government--0.1%
	100,000		Ontario, Province of, Note, 4.50%, 02/03/2015		96,399
			Technology--0.2%
	75,000		Cisco Systems, Inc., Sr. Note, 5.25%, 02/22/2011		74,746
	10,000		Cisco Systems, Inc., Sr. Unsecd. Note, 5.50%, 02/22/2016		9,830
	100,000		Dell Computer Corp., Sr. Deb., 7.10%, 04/15/2028		105,256
	25,000		Hewlett-Packard Co., Note, 5.40%, 03/01/2017		24,196
	100,000		Oracle Corp., Sr. Unsecd. Note, Series WI, 5.00%, 01/15/2011		98,618
			TOTAL		312,646
			Transportation - Airlines--0.1%
	75,000		Southwest Airlines Co., 6.50%, 03/01/2012		77,520
	50,000		Southwest Airlines Co., Deb., 7.375%, 03/01/2027		52,926
			TOTAL		130,446
Principal Amount					Value
			CORPORATE BONDS--continued
			Transportation - Railroads--0.2%
$	75,000		Burlington Northern Santa Fe Corp., Sr. Note, 4.875%, 01/15/2015	$	70,023
	100,000		Norfolk Southern Corp., Sr. Note, 6.75%, 02/15/2011		103,881
	100,000		Union Pacific Corp., 4.875%, 01/15/2015		93,592
			TOTAL		267,496
			Transportation - Services--0.1%
	100,000		FedEx Corp., Note, 5.50%, 08/15/2009		100,088
			Utility - Electric--0.5%
	100,000		Cleveland Electric Illum, Sr. Unsecd. Note, 5.95%, 12/15/2036		91,822
	100,000		Consolidated Edison Co., Sr. Unsecd. Note, Series 2006 C, 5.50%, 09/15/2016		98,155
	100,000		Exelon Generation Co. LLC, Sr. Note, 5.35%, 01/15/2014		96,496
	100,000		FirstEnergy Corp., Note, Series B, 6.45%, 11/15/2011		103,409
	55,000	2,3	Great River Energy, 1st Mtg. Note, 5.829%, 07/01/2017		55,541
	100,000		PSEG Power LLC, Company Guarantee, 7.75%, 04/15/2011		107,924
	75,000		PSI Energy, Inc., Bond, 6.05%, 06/15/2016		75,687
	100,000		Pacific Gas & Electric Co., Unsecd. Note, 4.20%, 03/01/2011		96,692
			TOTAL		725,726
			Utility - Natural Gas Distributor--0.1%
	100,000		Atmos Energy Corp., Sr. Note, 4.00%, 10/15/2009		97,520
			TOTAL CORPORATE BONDS (IDENTIFIED COST $11,920,544)		11,643,257
			GOVERNMENT AGENCIES--1.7%
	1,000,000		Federal Home Loan Mortgage Corp., 4.125%, 7/12/2010		976,188
	500,000		Federal Home Loan Mortgage Corp., 5.250%, 7/18/2011		503,520
	1,000,000		Federal Home Loan Mortgage Corp., 5.500%, 7/18/2016		1,010,725
			TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $2,477,407)		2,490,433
			MORTGAGE-BACKED SECURITIES--0.0%
	22,076		Federal National Mortgage Association Pool 408761, 7.000%, 12/1/2012		22,649
	11,983		Federal National Mortgage Association Pool 512255, 7.500%, 9/1/2014		12,481
	34,121		Federal National Mortgage Association Pool 609554, 7.500%, 10/1/2016		35,668
			TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $70,393)		70,798
			U.S. TREASURY--2.8%
	523,735		U.S. Treasury Inflation Protected Note, 2.375%, 4/15/2011		521,279
	1,235,400		U.S. Treasury Inflation Protected Note, 2.500%, 7/15/2016		1,243,756
	2,400,000	4	United States Treasury Note, 3.875%, 2/15/2013		2,318,458
			TOTAL U.S. TREASURY (IDENTIFIED COST $4,106,667)		4,083,493

Shares					Value
			EXCHANGE TRADED FUNDS--14.3%
	232,550		iShares MSCI EAFE Index Fund	$	18,359,822
	21,900		iShares MSCI Emerging Market Fund		2,903,283
			TOTAL EXCHANGE TRADED FUNDS (IDENTIFIED COST $18,017,306)		21,263,105
		5	MUTUAL FUNDS--18.3%
	29,223		Emerging Markets Fixed-Income Core Fund		621,983
	1,720,828		Federated Mortgage Core Portfolio		16,709,234
	264,523		High Yield Bond Portfolio		1,745,851
	8,187,131	6	Prime Value Obligations Fund, Institutional Shares, 5.25%		8,187,131
			TOTAL MUTUAL FUNDS (IDENTIFIED COST $27,671,810)		27,264,199
			TOTAL INVESTMENTS -- 99.7% (IDENTIFIED COST $142,604,895)7		148,076,424
			OTHER ASSETS AND LIABILITIES -- NET--0.3%		517,470
			TOTAL NET ASSETS--100%	$	148,593,894

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, 2007, these restricted securities amounted to $922,449, which represented 0.6% 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. At July 31, 2007, these liquid restricted securities amounted to $922,449, which represented 0.6% of total net assets.

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

5 Affiliated companies.

6 7-Day net yield.

7 The cost of investments for federal tax purposes amounts to $142,664,681.

At July 31, 2007, the Fund had the following outstanding futures contracts:

Description	Number of Contracts	Notional Value	Expiration Date	Unrealized Appreciation/ (Depreciation)
1United States Treasury Notes 10-Year Long Futures	1	$107,422	September 2007	$12
1United States Treasury Bond Short Futures	10	$1,100,625	September 2007	$(40,348)
TOTAL UNREALIZED DEPRECIATION ON FUTURES CONTRACTS				$(40,336)

At July 31, 2007, the Fund had outstanding foreign exchange contracts as follows:

Settlement Date	Foreign Currency Units to Deliver/Receive	In Exchange For		Contracts at Value	Unrealized Appreciation
Contracts Purchased:
9/18/2007	120,925,000 Japanese Yen	$1,000,000	$1,000,000		$0
Contracts Sold:
9/18/2007	60,462,500 Japanese Yen	505,180		500,000	5,180
9/18/2007	60,462,500 Japanese Yen	510,021		500,000	10,021
NET UNREALIZED APPRECIATION ON FOREIGN EXCHANGE CONTRACTS					15,201

Note: The categories of investments are shown as a percentage of total net assets at
July 31, 2007.

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, 2007

Assets:
Total investments in securities, at value including $27,264,199 of investments in affiliated issuers (Note 5) (identified cost $142,604,895)			$	148,076,424
Income receivable				278,878
Receivable for investments sold				1,843,152
Receivable for shares sold				361,145
Receivable for foreign exchange contracts				15,201
TOTAL ASSETS				150,574,800
Liabilities:
Payable for investments purchased	$	1,693,961
Payable for shares redeemed		152,712
Payable for Directors’/Trustees’ fees		1,444
Payable for daily variation margin		4,172
Payable for distribution services fee (Note 5)		9,999
Payable for shareholder services fee (Note 5)		35,732
Accrued expenses		82,886
TOTAL LIABILITIES				1,980,906
Net assets for 10,802,197 shares outstanding			$	148,593,894
Net Assets Consist of:
Paid-in capital			$	133,840,838
Net unrealized appreciation of investments, futures contracts and translation of assets and liabilities in foreign currency				5,446,394
Accumulated net realized gain on investments, futures contracts and foreign currency transactions				8,152,511
Undistributed net investment income				1,154,151
TOTAL NET ASSETS			$	148,593,894

Statement of Assets and Liabilities--continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($81,633,772 ÷ 5,919,092 shares outstanding), no par value, unlimited shares authorized	$13.79
Offering price per share	$13.79
Redemption proceeds per share	$13.79
Class A Shares:
Net asset value per share ($51,166,663 ÷ 3,721,814 shares outstanding), no par value, unlimited shares authorized	$13.75
Offering price per share (100/94.50 of $13.75)1	$14.55
Redemption proceeds per share	$13.75
Class C Shares:
Net asset value per share ($15,775,097 ÷ 1,159,958 shares outstanding), no par value, unlimited shares authorized	$13.60
Offering price per share	$13.60
Redemption proceeds per share (99.00/100 of $13.60)1	$13.46
Class K Shares:
Net asset value per share ($18,362 ÷ 1,333 shares outstanding), no par value, unlimited shares authorized	$13.77
Offering price per share	$13.77
Redemption proceeds per share	$13.77

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, 2007

Investment Income:
Dividends (including $565,630 received from affiliated issuers (Note 5) and net foreign taxes withheld of $563)			$	1,909,242
Interest				1,749,383
Investment income allocated from affiliated partnership (Note 5)				34,199
TOTAL INCOME				3,692,824
Expenses:
Investment adviser fee (Note 5)	$	968,548
Administrative personnel and services fee (Note 5)		258,593
Custodian fees		40,700
Transfer and dividend disbursing agent fees and expenses		108,638
Transfer and dividend disbursing agent recordkeeping fees--Institutional Shares		131
Transfer and dividend disbursing agent recordkeeping fees-- Class A Shares		8,945
Transfer and dividend disbursing agent recordkeeping fees-- Class C Shares		4,847
Transfer and dividend disbursing agent recordkeeping fees-- Class K Shares		11
Auditing fees		17,448
Legal fees		7,143
Portfolio accounting fees		95,041
Distribution services fee--Class A Shares (Note 5)		18,948
Distribution services fee--Class C Shares (Note 5)		86,808
Distribution services fee--Class K Shares (Note 5)		22
Shareholder services fee--Class A Shares (Note 5)		76,333
Shareholder services fee--Class C Shares (Note 5)		20,868
Share registration costs		97,177
Printing and postage		50,784
Insurance premiums		8,572
Miscellaneous		8,812
EXPENSES BEFORE ALLOCATION		1,878,369
Expenses allocated from affiliated partnership		278
TOTAL EXPENSES		1,878,647

Statement of Operations--continued

Waivers and Reimbursement:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(96,420	)
Waiver of administrative personnel and services fee (Note 5)		(85,184	)
Waiver of transfer and dividend disbursing agent fees and expenses		(4,786	)
Reimbursement of transfer and dividend disbursing agent recordkeeping fees--Institutional Shares (Note 5)		(18	)
Reimbursement of transfer and dividend disbursing agent recordkeeping fees--Class A Shares (Note 5)		(8,444	)
Reimbursement of transfer and dividend disbursing agent recordkeeping fees--Class C Shares (Note 5)		(4,032	)
TOTAL WAIVERS AND REIMBURSEMENT				(198,884	)
Net expenses							1,679,763
Net investment income							2,013,061
Realized and Unrealized Gain on Investments, Futures Contracts and Foreign Currency Transactions:
Net realized gain on investments and foreign currency transactions							8,446,655
Net realized gain on futures contracts							98,773
Net realized gain and foreign currency transactions allocated from affiliated partnership							27,060
Net change in unrealized appreciation of investments, and translation of assets and liabilities in foreign currency transactions							786,434
Net change in unrealized depreciation of futures contracts							(40,336	)
Net realized and unrealized gain on investments, futures contracts and foreign currency transactions							9,318,586
Change in net assets resulting from operations						$	11,331,647

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

Year Ended July 31		2007			2006
Increase (Decrease) in Net Assets
Operations:
Net investment income	$	2,013,061		$	1,362,405
Net realized gain on investments including allocations from partnership and futures contracts		8,572,488			6,686,253
Net change in unrealized appreciation/depreciation of investments, futures contracts and translation of assets and liabilities in foreign currency		746,098			(3,917,876	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		11,331,647			4,130,782
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares		(966,746	)		(964,275	)
Class A Shares		(418,667	)		(12	)
Class C Shares		(75,923	)		(11	)
Class K Shares		(1	)		--
Distributions from net realized gain on investments, futures contracts and foreign currency transactions
Institutional Shares		(3,727,211	)		(4,964,729	)
Class A Shares		(1,712,874	)		(68	)
Class C Shares		(451,805	)		(68	)
Class K Shares		(4	)		--
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(7,353,231	)		(5,929,163	)
Share Transactions:
Proceeds from sale of shares		84,031,582			13,083,737
Net asset value of shares issued to shareholders in payment of distributions declared		7,010,766			5,924,802
Cost of shares redeemed		(26,053,811	)		(6,910,472	)
Redemption fees1		7,476			191
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		64,996,013			12,098,258
Change in net assets		68,974,429			10,299,877
Net Assets:
Beginning of period		79,619,465			69,319,588
End of period (including undistributed net investment income of $1,154,151 and $695,231, respectively)	$	148,593,894		$	79,619,465

1 Redemption fees in 2006 have been reclassified to permit comparison.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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 long-term growth through capital appreciation and current 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.

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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities including Exchange-Traded Funds, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors; prices for interest rate swaps are furnished by an independent pricing service and are based upon a valuation model incorporating interest rates, yield curves and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for investments in other open-end registered investment companies, based on net asset value (NAV);
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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, 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 at 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, 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 at 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/deflation adjustments on Treasury Inflation-Protected Securities 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 each class may bear distribution services fees, shareholder services 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.

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.

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, 2007, the Fund had net realized gains on futures contracts of $98,773.

Foreign exchange 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.

Foreign exchange contracts outstanding at period end are listed after the Fund’s portfolio of investments.

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 Fund’s 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 7/31/2007					Year Ended 7/31/2006
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	603,137		$	8,390,088		533,396		$	7,149,815
Shares issued to shareholders in payment of distributions declared	346,321			4,668,405		457,148			5,924,643
Shares redeemed	(604,149	)		(8,303,830	)	(513,140	)		(6,866,506	)
Redemption fees	--			4,965		--			--
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	345,309		$	4,759,628		477,404		$	6,207,952
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	4,589,586		$	62,628,792		149,529		$	1,973,518
Shares issued to shareholders in payment of distributions declared	144,782			1,948,759		6			80
Shares redeemed	(1,161,046	)		(16,085,114	)	(1,043	)		(13,564	)
Redemption fees	--			1,978		--			76
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	3,573,322		$	48,494,415		148,492		$	960,110
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	954,270		$	12,994,037		300,157		$	3,960,404
Shares issued to shareholders in payment of distributions declared	29,439			393,602		6			79
Shares redeemed	(121,568	)		(1,664,768	)	(2,346	)		(30,402	)
Redemption fees	--			533		--			115
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	862,141		$	11,723,404		297,817		$	3,930,196
	Period Ended 7/31/20072					Year Ended 7/31/2006
Class K Shares:	Shares			Amount		Shares			Amount
Shares sold	1,340		$	18,665		--		$	--
Shares redeemed	(7	)		(99	)	--			--
NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS	1,333		$	18,566		--		$	--
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	4,782,105		$	64,996,013		923,713		$	12,098,258

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

2 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 Fund imposed a 2.00% redemption fee to shareholders of the Fund’s Institutional Shares, Class A Shares and Class C Shares who redeem 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 was recorded by the Fund as additions to paid-in-capital.

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 cost adjustment on REITs and partnership income.

For the year ended July 31, 2007, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income	Accumulated Net Realized Gains
$365	$(92,804)	$92,439

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, 2007 and 2006, was as follows:

	2007	2006
Ordinary income1	$3,667,344	$2,863,368
Long-term capital gains	$3,685,887	$3,065,795

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	5,960,881
Undistributed long-term capital gain	$	3,380,432
Net unrealized appreciation	$	5,411,743

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 and REIT adjustments and partnership.

At July 31, 2007, the cost of investments for federal tax purposes was $142,664,681. The net unrealized appreciation of investments for federal tax purposes was $5,411,743. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $9,766,020 and net unrealized depreciation from investments for those securities having an excess of cost over value of $4,354,277.

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

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

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. For the year ended July 31, 2007, the Adviser waived $95,564 of its fee. An affiliate o the Adviser reimbursed $12,494 of transfer and dividend disbursing agent recordkeeping fees.

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 previous administrative services contract. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 0.134% of average daily net assets of the Fund. FAS waived $85,184 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 of up to 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	0.25%
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%

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, 2007, FSC retained $74,254 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC retained $36,549 in sales charges from the sale of Class A Shares. FSC also retained $4,565 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. FSSC may voluntarily reimburse the Fund for shareholder services fees and/or other operating expenses of the Fund. For the year ended July 31, 2007, 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 (including the distribution (12b-1) fee) 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 1.15%, 1.40%, 2.15% and 1.90%, respectively, for the fiscal year ending July 31, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $856 in connection with the affiliated mutual funds listed below. Transactions with affiliated companies during the year ended July 31, 2007 are as follows:

Affiliates	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income/ Allocated Investment Income
Emerging Markets Fixed-Income Core Fund	--	42,893	13,670	29,223	$621,983	$34,199
Federated Mortgage Core Portfolio	--	1,720,828	--	1,720,828	$16,709,234	$420,748
High Yield Bond Portfolio	--	336,781	72,258	264,523	$1,745,851	$87,837
Prime Value Obligations Fund, Institutional Shares	--	13,260,871	5,073,740	8,187,131	$8,187,131	$57,045
TOTAL OF AFFILIATED TRANSACTIONS	--	15,361,373	5,159,668	10,201,705	$27,264,199	$599,829

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, 2007, were as follows:

Purchases	$	246,671,433
Sales	$	187,623,125

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2007, the amount of long-term capital gains designated by the Fund was $3,685,887.

For the fiscal year ended July 31, 2007, 20.35% 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, 2007, 18.35% 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, 2007, 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 financial highlights for each of the periods indicated therein for the years ended July 31, 2007, 2006 and 2003. 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein for the years ended July 31, 2007, 2006 and 2003, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 19, 2007

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. As of December 31, 2006, the Trust comprised eight portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

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 15 Old Timber Trail Pittsburgh, PA 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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 Began Serving	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

FEDERATED MDT BALANCED FUND (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contract at meetings held in May 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

For the periods ending December 31, 2006, the Fund’s performance for the three year period was above the median of the relevant peer group, and the Fund’s performance fell below the median of the relevant peer group for the one year period. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.

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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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.

For the Fund’s most recently completed fiscal year, the Fund’s investment advisory fee after waivers and expense reimbursements, if any, was below 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.

The Senior Officer’s evaluation noted his belief that the information and observations contained in his evaluation supported his 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. For 2006, 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 in 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 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 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT Large Cap Growth Fund

Established 2005

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2007

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

Financial Highlights--Class A Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$10.17		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.14	)3	(0.10	)3
Net realized and unrealized gain on investments	2.20		0.27
TOTAL FROM INVESTMENT OPERATIONS	2.06		0.17
Less Distributions:
Distributions from net realized gain on investments	(0.11	)	--
Net Asset Value, End of Period	$12.12		$10.17
Total Return4	20.38	%	1.70	%
Ratios to Average Net Assets:
Net expenses	1.50	%	2.01	%5
Net investment income (loss)	(1.14	)%	(0.93	)%5
Expense waiver/reimbursement6	2.30	%	20.55	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$88,826		$183
Portfolio turnover	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 the Period)

	Period Ended 7/31/2007	1
Net Asset Value, Beginning of Period	$11.48
Income From Investment Operations:
Net investment income (loss)	(0.08	)2
Net realized and unrealized gain on investments	0.78
TOTAL FROM INVESTMENT OPERATIONS	0.70
Net Asset Value, End of Period	$12.18
Total Return3	6.10	%
Ratios to Average Net Assets:
Net expenses	2.24	%4
Net investment income (loss)	(1.95	)%4
Expense waiver/reimbursement5	0.54	%4
Supplemental Data:
Net assets, end of period (000 omitted)	$46,933
Portfolio turnover6	630	%

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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$10.10		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.22	)3	(0.19	)3
Net realized and unrealized gain on investments	2.17		0.29
TOTAL FROM INVESTMENT OPERATIONS	1.95		0.10
Less Distributions:
Distributions from net realized gain on investments	(0.11	)	--
Net Asset Value, End of Period	$11.94		$10.10
Total Return4	19.42	%	1.00	%
Ratios to Average Net Assets:
Net expenses	2.25	%	2.76	%5
Net investment income (loss)	(1.83	)%	(1.68	)%5
Expense waiver/reimbursement6	5.64	%	20.55	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$14,388		$147
Portfolio turnover	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; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual:
Class A Shares	$1,000	$1,071.60	$7.70
Class B Shares	$1.000	$1,070.40	$7.94
Class C Shares	$1,000	$1,067.00	$11.53
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,017.36	$7.50
Class B Shares	$1.000	$1,013.69	$11.18
Class C Shares	$1,000	$1,013.64	$11.23

1 “Actual” expense information for the Fund’s Class B Shares is for the period from March 29, 2007 (date of initial public investment) to July 31, 2007. Actual expenses are equal to the annualized net expense ratio of the Fund’s Class B Shares, multiplied by 125/365 (to reflect the period from initial public investment to July 31, 2007). “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 181/365 (to reflect the full half-year period). The annualized net expense ratios are as follows:

Class A Shares	1.50%
Class B Shares	2.24%
Class C Shares	2.25%

Management’s Discussion of Fund Performance

The fund’s total return, based on net asset value, for the fiscal year ended July 31, 2007, was 20.38% for Class A Shares, 19.71% for Class B Shares and 19.42% for Class C Shares¹. The total return of the Russell 1000^® Growth Index (Russell 1000G^®)² was 19.48% 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. The total return of the Lipper Large Cap Growth Funds Index³ was 17.67% for the same period.

1 The fund is the successor to the MDT Large 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 Large Cap Growth Fund.

2 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.

3 Lipper figures represent the average of the total returns reported by all the mutual funds designated by Lipper Analytical Servcies, Inc. as falling into the respective categories indicated. 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.

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000^® Index,⁴ which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index,⁵ which exceeded the 15.48% and 12.12% results for the Russell Top 200^® Index⁶ and the Russell 2000^® Index,⁷ respectively. Growth stocks outperformed value stocks by a wide margin during the year with the Russell 3000^® Growth Index⁸ returning 19.24% as compared to 12.97% for the Russell 3000 Value^® Index.⁹ The best performing sectors during the reporting period in the Russell 3000^® Index were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

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 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 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.

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 unlike the Fund, is not affected by cashflows. It is not possible to invest 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 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 Index was its stock selection in the Consumer Discretionary and Energy sectors. Additionally, the fund’s stock selection and relative weighting in the Industrials and Financials sectors provided moderate contributions to relative performance. The most significant negative factor in the fund’s performance relative to the Russell 1000^® Growth Index was its stock selection in the Information Technology sector. The underweight of this sector, which outperformed the benchmark, also detracted from relative performance.

Individual stocks contributing to the fund’s performance relative to the Russell 1000^® Growth Index included: Apple Computer Inc., Schlumberger Limited, Comcast Corp., 3M Co., and Schering Plough Corp.

Individual stocks detracting from the fund’s performance relative to the Russell 1000^® Growth Index included: Cisco Systems Inc., Microsoft Corp., Intel Corp., Du Pont, and Caremark Rx Inc.

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

The graph below illustrates the hypothetical investment of $10,000¹ in the Federated MDT Large Cap Growth Fund (Class A Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, 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 7/31/2007
1 Year	13.77%
Start of Performance (9/15/2005)	8.09%

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 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 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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective category indicated. Lipper figures do not reflect sales charges.

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

The graph below illustrates the hypothetical investment of $10,000¹ in the Federated MDT Large Cap Growth Fund (Class B Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, 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 7/31/2007
1 Year	14.21%
Start of Performance (9/15/2005)4	8.41%

Performance data quoted represents past performance which is no guarantee of future results. Investment return and principal value 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 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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services Inc. as falling into the respective category indicated. Lipper figures do not reflect sales charges.

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.

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

The graph below illustrates the hypothetical investment of $10,000¹ in the Federated MDT Large Cap Growth Fund (Class C Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, 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 7/31/2007
1 Year	18.42%
Start of Performance (9/15/2005)	10.50%

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^® 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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services Inc. as falling into the respective category indicated. Lipper figures do not reflect sales charges.

Portfolio of Investments Summary Table

At July 31, 2007, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Internet Services	6.7	%
Oil Well Supply	6.5	%
Services to Medical Professionals	6.5	%
Defense Aerospace	6.2	%
Discount Department Stores	6.0	%
Biotechnology	4.9	%
Ethical Drugs	4.4	%
Recreational Vehicles	3.8	%
Commodity Chemicals	3.7	%
Home Products	3.7	%
Computers--Low End	3.6	%
Industrial Machinery	3.3	%
Agricultural Chemicals	2.6	%
Paint & Related Materials	2.3	%
Telecommunication Equipment & Services	2.3	%
Metal Fabrication	2.1	%
Office Equipment	2.1	%
Office Supplies	2.0	%
Software Packaged/Custom	1.9	%
Auto Original Equipment Manufacturers	1.8	%
Financial Services	1.8	%
Offshore Driller	1.6	%
Semiconductor Manufacturing	1.6	%
Diversified Leisure	1.4	%
Multi-Industry Transportation	1.2	%
Oil Service, Explore & Drill	1.2	%
Specialty Retailing	1.1	%
Clothing Stores	1.0	%
Miscellaneous Machinery	1.0	%
Regional Bank	1.0	%
Other2	9.3	%
Cash Equivalents3	1.8	%
Other Assets and Liabilities--Net4	(0.4	)%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual 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, 2007

Shares				Value
		COMMON STOCKS--98.6%
		Advertising--0.4%
9,065	1	Lamar Advertising Co., Class A	$	539,639
		Agricultural Chemicals--2.6%
61,926		Monsanto Co.		3,991,131
		Auto Original Equipment Manufacturers--1.8%
21,632	1	AutoZone, Inc.		2,743,154
		Biotechnology--4.9%
37,790	1	Genentech, Inc.		2,810,820
18,263	1	Genzyme Corp.		1,151,847
93,199	1	Gilead Sciences, Inc.		3,469,799
		TOTAL		7,432,466
		Cement--0.4%
4,841		Martin Marietta Materials		663,217
		Clothing Stores--1.0%
54,206		Ross Stores, Inc.		1,568,180
		Commodity Chemicals--3.7%
120,776		Du Pont (E.I.) de Nemours & Co.		5,643,862
		Computer Services--0.3%
6,110	1	Cognizant Technology Solutions Corp.		494,788
		Computers - Low End--3.6%
41,335	1	Apple, Inc.		5,446,300
		Construction Machinery--0.4%
9,074		Manitowoc, Inc.		704,778
		Defense Aerospace--6.2%
59,481		Boeing Co.		6,152,120
36,113		General Dynamics Corp.		2,837,037
7,713		Goodrich (B.F.) Co.		485,225
		TOTAL		9,474,382
		Defense Electronics--0.6%
8,336	1	First Solar, Inc.		938,384
		Discount Department Stores--6.0%
128,995		TJX Cos., Inc.		3,579,611
119,470		Wal-Mart Stores, Inc.		5,489,647
		TOTAL		9,069,258
		COMMON STOCKS--continued
		Diversified Leisure--1.4%
47,016		Carnival Corp.	$	2,083,279
		Ethical Drugs--4.4%
60,206		Schering Plough Corp.		1,718,279
102,241		Wyeth		4,960,733
		TOTAL		6,679,012
		Financial Services--1.8%
4,006		FactSet Research Systems		264,356
10,177		Janus Capital Group, Inc.		305,921
7,099		Mastercard, Inc., Class A		1,141,519
7,885		Nymex Holdings, Inc.		981,683
		TOTAL		2,693,479
		Home Products--3.7%
83,647		Kimberly-Clark Corp.		5,626,934
		Household Appliances--0.7%
10,324		Whirlpool Corp.		1,054,184
		Industrial Machinery--3.3%
98,764		Dover Corp.		5,036,964
		Internet Services--6.7%
61,642	1	Amazon.com, Inc.		4,841,363
5,400	1	Priceline.com, Inc.		344,520
154,131	1	eBay, Inc.		4,993,844
		TOTAL		10,179,727
		Medical Technology--0.8%
6,071	1	Intuitive Surgical, Inc.		1,290,755
		Metal Fabrication--2.1%
23,229		Precision Castparts Corp.		3,183,767
		Miscellaneous Machinery--1.0%
26,603		Illinois Tool Works, Inc.		1,464,495
		Miscellaneous Components--0.3%
14,381		Amphenol Corp., Class A		492,693
		Multi-Industry Transportation--1.2%
16,928		FedEx Corp.		1,874,607
		Mutual Fund Adviser--0.7%
8,774		Franklin Resources, Inc.		1,117,544
		Office Equipment--2.1%
69,698		Pitney Bowes, Inc.		3,213,078
		Office Supplies--2.0%
49,541		Avery Dennison Corp.		3,038,845
		COMMON STOCKS--continued
		Offshore Driller--1.6%
3,927		Noble Corp.	$	402,360
2,718		Tidewater, Inc.		185,966
17,054	1	Transocean, Inc.		1,832,452
		TOTAL		2,420,778
		Oil Refiner--0.7%
15,100		Valero Energy Corp.		1,011,851
		Oil Service, Explore & Drill--1.2%
7,675	1	Grant Prideco, Inc.		430,568
16,898	1	McDermott International, Inc.		1,401,520
		TOTAL		1,832,088
		Oil Well Supply--6.5%
5,067	1	Cameron International Corp.		395,226
5,306	1	FMC Technologies, Inc.		485,605
16,329	1	National-Oilwell, Inc.		1,961,276
64,061		Schlumberger Ltd.		6,067,858
6,111		Smith International, Inc.		375,277
11,197	1	Weatherford International Ltd.		619,530
		TOTAL		9,904,772
		Other Communications Equipment--0.6%
15,977		Harris Corp.		876,818
		Paint & Related Materials--2.3%
50,615		Sherwin-Williams Co.		3,527,359
		Plastic Containers--0.3%
15,828		Sealed Air Corp.		431,313
		Recreational Vehicles--3.8%
101,073		Harley Davidson, Inc.		5,793,504
		Regional Bank--1.0%
52,133		Synovus Financial Corp.		1,457,639
		Semiconductor Manufacturing--1.6%
19,774		KLA-Tencor Corp.		1,122,965
37,041		Linear Technology Corp.		1,320,512
		TOTAL		2,443,477
		Semiconductor Manufacturing Equipment--0.8%
19,835	1	Lam Research Corp.		1,147,256
		COMMON STOCKS--continued
		Services to Medical Professionals--6.5%
40,635	1	Express Scripts, Inc., Class A	$	2,037,032
40,851	1	Health Net, Inc.		2,023,759
105	1	Humana, Inc.		6,729
28,884	1	Medco Health Solutions, Inc.		2,347,403
43,955		UnitedHealth Group, Inc.		2,128,741
17,304	1	Wellpoint, Inc.		1,299,876
		TOTAL		9,843,540
		Shoes--0.3%
7,809	1	Crocs, Inc.		463,230
		Software Packaged/Custom--1.9%
41,113	1	Activision, Inc.		703,443
5,755	1	Akamai Technologies, Inc.		195,440
20,254	1	Autodesk, Inc.		858,162
4,177	1	F5 Networks, Inc.		362,104
32,011	1	Sybase, Inc.		759,301
		TOTAL		2,878,450
		Specialty Retailing--1.1%
6,152		Abercrombie & Fitch Co., Class A		430,025
37,672		Advance Auto Parts, Inc.		1,309,855
		TOTAL		1,739,880
		Steam Generation Machinery--0.5%
6,733	1	Foster Wheeler Ltd.		756,721
		Telecommunication Equipment & Services--2.3%
124,619	1	Corning, Inc.		2,970,917
11,592		Qualcomm, Inc.		482,807
		TOTAL		3,453,724
		Undesignated Consumer Cyclical--0.4%
5,529	1	ITT Educational Services, Inc.		584,194
		Undesignated Consumer Staples--0.2%
6,493	1	NBTY, Inc.		282,705
		COMMON STOCKS--continued
		Undesignated Energy--0.9%
33,788	1	NRG Energy, Inc.	$	1,302,527
		TOTAL COMMON STOCKS (IDENTIFIED COST $145,341,003)		149,890,728
		MUTUAL FUND--1.8%
2,729,873	2,3	Prime Value Obligations Fund, Institutional Shares, 5.25% (AT NET ASSET VALUE)		2,729,873
		TOTAL INVESTMENTS--100.4% (IDENTIFIED COST $148,070,876)4		152,620,601
		OTHER ASSETS AND LIABILITIES - NET--(0.4)%		(675,237	)
		TOTAL NET ASSETS--100%	$	151,945,364

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $148,376,943.

Note: The categories of investments are shown as a percentage of net assets at July 31, 2007.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2007

Assets:
Total investments in securities, at value including $2,729,873 of investments in an affiliated issuer (Note 5) (identified cost $148,070,876)			$	152,620,601
Cash				8,432
Income receivable				10,962
Receivable for investments sold				1,958,101
Receivable for shares sold				1,978,811
TOTAL ASSETS				156,576,907
Liabilities:
Payable for investments purchased	$	4,237,057
Payable for shares redeemed		201,925
Payable for Directors’/Trustees’ fees		92
Payable for distribution services fee (Note 5)		37,693
Payable for shareholder services fee (Note 5)		35,737
Accrued expenses		119,039
TOTAL LIABILITIES				4,631,543
Net assets for 12,533,212 shares outstanding			$	151,945,364
Net Assets Consist of:
Paid-in capital			$	522,131,516
Net unrealized appreciation of investments				4,549,725
Accumulated net realized gain on investments				(374,735,877	)
TOTAL NET ASSETS			$	151,945,364
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($1,797,802 ÷ 147,397 shares outstanding), no par value, unlimited shares authorized				$12.20
Offering price per share				$12.20
Redemption proceeds per share				$12.20
Class A Shares:
Net asset value per share ($88,826,229 ÷ 7,328,249 shares outstanding), no par value, unlimited shares authorized				$12.12
Offering price per share (100/94.50 of $12.12)1				$12.83
Redemption proceeds per share				$12.12
Class B Shares:
Net asset value per share ($46,933,450 ÷ 3,852,906 shares outstanding), no par value, unlimited shares authorized				$12.18
Offering price per share				$12.18
Redemption proceeds per share (94.50/100 of $12.18)1				$11.51
Class C Shares:
Net asset value per share ($14,387,883 ÷ 1,204,660 shares outstanding), no par value, unlimited shares authorized				$11.94
Offering price per share				$11.94
Redemption proceeds per share (99.00/100 of $11.94)1				$11.82

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, 2007

Investment Income:
Dividends (including $9,410 received from an affiliated issuer (Note 5))							$	63,212
Interest								1,456
TOTAL INCOME								64,668
Expenses:
Investment adviser fee (Note 5)				$	128,888
Administrative personnel and services fee (Note 5)					243,738
Custodian fees					10,507
Transfer and dividend disbursing agent fees and expenses					129,918
Auditing fees					15,375
Legal fees					9,336
Portfolio accounting fees					71,956
Distribution services fee--Class A Shares (Note 5)					378
Distribution services fee--Class B Shares (Note 5)					37,205
Distribution services fee--Class C Shares (Note 5)					9,404
Shareholder services fee--Class A Shares (Note 5)					24,769
Shareholder services fee--Class B Shares (Note 5)					12,402
Shareholder services fee--Class C Shares (Note 5)					2,838
Share registration costs					79,176
Printing and postage					25,088
Insurance premiums					6,087
Miscellaneous					3,875
TOTAL EXPENSES					810,940
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(128,888	)
Waiver of administrative personnel and services fee (Note 5)		(109,683	)
Waiver of transfer and dividend disbursing agent fees and expenses		(12,933	)
Waiver of portfolio accounting fees		(21,422	)
Reimbursement of other operating expenses (Note 5)		(236,203	)
TOTAL WAIVERS AND REIMBURSEMENTS					(509,129	)
Net expenses								301,811
Net investment income (loss)								(237,143	)
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments								21,083,611
Net change in unrealized depreciation of investments								(22,417,969	)
Net realized and unrealized loss on investments								(1,334,358	)
Change in net assets resulting from operations							$	(1,571,501	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

	Year Ended 7/31/2007			Period Ended 7/31/2006		1
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(237,143	)	$	(2,998	)
Net realized gain on investments		21,083,611			18,102
Net change in unrealized appreciation/depreciation of investments		(22,417,969	)		(13,048	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(1,571,501	)		2,056
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(7,447	)		--
Class A Shares		(6,679	)		--
Class C Shares		(2,090	)		--
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(16,216	)		--
Share Transactions:
Proceeds from sale of shares		15,014,670			765,410
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		12,437			--
Cost of shares redeemed		(6,430,649	)		(132,687	)
Redemption fees		303			--
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		152,898,302			632,723
Change in net assets		151,310,585			634,779
Net Assets:
Beginning of period		634,779			--
End of period	$	151,945,364		$	634,779

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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 the 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.

The Fund commenced offering Class B Shares on March 29, 2007.

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 Appreciation1	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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• for investments in other open-end registered investment companies, based on net asset value (NAV);
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors; prices for interest rate swaps are furnished by an independent pricing service and are based upon a valuation model incorporating interest rates, yield curves and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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 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.

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 7/31/2007					Period Ended 7/31/20061
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	118,282		$	1,376,167		40,934		$	407,353
Shares issued to shareholders in payment of distributions declared	644			7,254		--			--
Shares redeemed	(1,456	)		(17,389	)	(11,007	)		(118,788	)
Redemption fees	--			99		--			--
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	117,470		$	1,366,131		29,927		$	288,565
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	598,688		$	7,229,781		19,173		$	206,989
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	405			4,547		--			--
Shares redeemed	(306,231	)		(3,782,665	)	(1,223	)		(12,810	)
Redemption fees	--			152		--			--
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	7,310,299		$	89,554,002		17,950		$	194,179
	Period Ended 7/31/20072					Year Ended 7/31/2006
Class B Shares:	Shares			Amount		Shares			Amount
Shares sold	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 redeemed	(194,209	)		(2,424,626	)	--			--
NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS	3,852,906		$	47,522,550		--		$	--
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	486,056		$	5,933,215		14,649		$	151,068
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	57			636		--			--
Shares redeemed	(17,323	)		(205,969	)	(100	)		(1,089	)
Redemption fees	--			52		--			--
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	1,190,111		$	14,455,619		14,549		$	149,979
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	12,470,786		$	152,898,302		62,426		$	632,723

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

2 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 Fund imposed a 2.00% redemption fee to shareholders of the Fund’s Institutional Shares, Class A Shares and Class C Shares who redeem 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.

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, expiration of capital loss carryforwards, capital loss carryforwards from Fund merger and deferred wash sales from Fund merger.

For the year ended July 31, 2007, 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 Loss
$395,581,233	$237,143	$(395,818,376)

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, 2007 was as follows:

	2007
Ordinary income1	$16,216

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	6,354,311
Undistributed long-term capital gains	$	12,029,434
Net unrealized appreciation	$	4,243,658
Capital loss carryforwards	$	(392,813,555	)

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, 2007, the cost of investments for federal tax purposes was $148,376,943. The net unrealized appreciation of investments for federal tax purposes was $4,243,658. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $9,466,770 and net unrealized depreciation from investments for those securities having an excess of cost over value of $5,223,112.

At July 31, 2007, the Fund had a capital loss carryforward of $392,813,555 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
2008	$294,478,872
2009	$76,646,626
2010	$21,688,057

As a result of the tax-free transfer of assets from Federated Large Cap Growth Fund, certain capital loss carryforwards listed above may be limited.

The Fund used capital loss carryforwards of $2,227,653 to offset taxable capital gains realized during the year ended July 31, 2007. Additionally, capital loss carryforwards of $3,983,104 expired during the year ended July 31, 2007.

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	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.80%
Class A Shares	2.05%
Class C Shares	2.80%

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

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. For the year ended July 31, 2007, the Adviser waived $128,757 of its fee and reimbursed $236,203 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 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. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 0.502% of average daily net assets of the Fund. FAS waived $109,683 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 of up to 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	0.25%
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	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

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, 2007, FSC retained $8,880 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC retained $3,448 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, 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. For the year ended July 31, 2007, FSSC did not receive any fees paid by the Fund. A financial intermediary affiliated with management of Federated Investors, Inc. received $4,446 of Service Fees for the year ended July 31, 2007.

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 (including the distribution (12b-1) fee) 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, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $131 in connection with the affiliated mutual fund listed below. Transactions with the affiliated company during the year ended July 31, 2007 are as follows:

Affiliate	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	--	8,218,683	5,488,810	2,729,873	$2,729,873	$9,410

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, 2007, were as follows:

Purchases	$	159,240,189
Sales	$	153,225,112

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the fiscal year ended July 31, 2007, 18.06% 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, 2007, 19.41% 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, 2007, 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 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
September 19, 2007

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. As of December 31, 2006, the Trust comprised eight portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

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 15 Old Timber Trail Pittsburgh, PA 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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

FEDERATED MDT LARGE CAP GROWTH FUND (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contract at meetings held in May 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

The Fund’s performance fell below the median of the relevant peer group for the one year period ending December 31, 2006. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.

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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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 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 his 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. For 2006, 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 in 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 Funds use 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 Funds file 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 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 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT Large Cap Growth Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2007

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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$10.20		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.03	)3	(0.07	)3
Net realized and unrealized gain on investments	2.14		0.27
TOTAL FROM INVESTMENT OPERATIONS	2.11		0.20
Less Distributions:
Distributions from net realized gain on investments	(0.11)		--
Net Asset Value, End of Period	$12.20		$10.20
Total Return4	20.81	%	2.00	%
Ratios to Average Net Assets:
Net expenses	1.25	%	1.76	%5
Net investment income (loss)	(0.29	)%	(0.68	)%5
Expense waiver/reimbursement6	19.41	%	20.55	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$1,798		$305
Portfolio turnover	630	%	237	%

1 MDT Large Cap Growth Fund (the “Predecessor Fund”) was reorganized into the 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; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual	$1,000	$1,073.90	$6.38
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,018.65	$6.21

1 Expenses are equal to the Fund’s annualized net expense ratio of 1.24%, multiplied by the average account value over the period, multiplied by 181/365 (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, 2007, was 20.81% for Institutional Shares.¹ The total return of the Russell 1000^® Growth Index (Russell 1000 Growth^®)² was 19.48% 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 1000 Growth. The total return of the Lipper Large-Cap Growth Funds Index³ was 17.67% for the same period.

1 The fund is the successor to the MDT Large 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 Large Cap Growth Fund.

2 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.

3 Lipper figures represent the average of the total returns reported by all mutual funds designated by Lipper Analytical Services, inc. as falling into the respective categories indicated.

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.

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000^® Index,⁴ which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index,⁵ which exceeded the 15.48% and 12.12% results for the Russell Top 200^® Index⁶ and the Russell 2000^® Index,⁷ respectively. Growth stocks outperformed value stocks by a wide margin during the year with the Russell 3000^® Growth Index⁸ returning 19.24% as compared to 12.97% for the Russell 3000 Value^® Index.⁹

The best performing sectors during the reporting period in the Russell 3000^® Index were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

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 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 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.

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 unlike the Fund, is not affected by cashflows. It is not possible to invest 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 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 Index was its stock selection in the Consumer Discretionary and Energy sectors. Additionally, the fund’s stock selection and relative weighting in the Industrials and Financials sectors provided moderate contributions to relative performance. The most significant negative factor in the fund’s performance relative to the Russell 1000^® Growth Index was its stock selection in the Information Technology sector. The underweight of this sector, which outperformed the benchmark, also detracted from relative performance.

Individual stocks contributing to the fund’s performance relative to the Russell 1000^® Growth Index included: Apple Computer Inc., Schlumberger Limited, Comcast Corp., 3M Co., and Schering Plough Corp.

Individual stocks detracting from the fund’s performance relative to the Russell 1000^® Growth Index included: Cisco Systems Inc., Microsoft Corp., Intel Corp., Du Pont, and Caremark Rx Inc.

GROWTH OF A $25,000 INVESTMENT -- INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000¹ in the Federated MDT Large Cap Growth Fund (Institutional Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, 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 7/31/2007
1 Year	20.81%
Start of Performance (9/15/2005)	11.77%

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 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 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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective category indicated. Lipper figures do not reflect sales charges.

Portfolio of Investments Summary Table

At July 31, 2007, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Internet Services	6.7	%
Oil Well Supply	6.5	%
Services to Medical Professionals	6.5	%
Defense Aerospace	6.2	%
Discount Department Stores	6.0	%
Biotechnology	4.9	%
Ethical Drugs	4.4	%
Recreational Vehicles	3.8	%
Commodity Chemicals	3.7	%
Home Products	3.7	%
Computers--Low End	3.6	%
Industrial Machinery	3.3	%
Agricultural Chemicals	2.6	%
Paint & Related Materials	2.3	%
Telecommunication Equipment & Services	2.3	%
Metal Fabrication	2.1	%
Office Equipment	2.1	%
Office Supplies	2.0	%
Software Packaged/Custom	1.9	%
Auto Original Equipment Manufacturers	1.8	%
Financial Services	1.8	%
Offshore Driller	1.6	%
Semiconductor Manufacturing	1.6	%
Diversified Leisure	1.4	%
Multi-Industry Transportation	1.2	%
Oil Service, Explore & Drill	1.2	%
Specialty Retailing	1.1	%
Clothing Stores	1.0	%
Miscellaneous Machinery	1.0	%
Regional Bank	1.0	%
Other2	9.3	%
Cash Equivalents3	1.8	%
Other Assets and Liabilities--Net4	(0.4	)%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual 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, 2007

Shares				Value
		COMMON STOCKS--98.6%
		Advertising--0.4%
9,065	1	Lamar Advertising Co., Class A	$	539,639
		Agricultural Chemicals--2.6%
61,926		Monsanto Co.		3,991,131
		Auto Original Equipment Manufacturers--1.8%
21,632	1	AutoZone, Inc.		2,743,154
		Biotechnology--4.9%
37,790	1	Genentech, Inc.		2,810,820
18,263	1	Genzyme Corp.		1,151,847
93,199	1	Gilead Sciences, Inc.		3,469,799
		TOTAL		7,432,466
		Cement--0.4%
4,841		Martin Marietta Materials		663,217
		Clothing Stores--1.0%
54,206		Ross Stores, Inc.		1,568,180
		Commodity Chemicals--3.7%
120,776		Du Pont (E.I.) de Nemours & Co.		5,643,862
		Computer Services--0.3%
6,110	1	Cognizant Technology Solutions Corp.		494,788
		Computers - Low End--3.6%
41,335	1	Apple, Inc.		5,446,300
		Construction Machinery--0.4%
9,074		Manitowoc, Inc.		704,778
		Defense Aerospace--6.2%
59,481		Boeing Co.		6,152,120
36,113		General Dynamics Corp.		2,837,037
7,713		Goodrich (B.F.) Co.		485,225
		TOTAL		9,474,382
		Defense Electronics--0.6%
8,336	1	First Solar, Inc.		938,384
		Discount Department Stores--6.0%
128,995		TJX Cos., Inc.		3,579,611
119,470		Wal-Mart Stores, Inc.		5,489,647
		TOTAL		9,069,258
		COMMON STOCKS--continued
		Diversified Leisure--1.4%
47,016		Carnival Corp.	$	2,083,279
		Ethical Drugs--4.4%
60,206		Schering Plough Corp.		1,718,279
102,241		Wyeth		4,960,733
		TOTAL		6,679,012
		Financial Services--1.8%
4,006		FactSet Research Systems		264,356
10,177		Janus Capital Group, Inc.		305,921
7,099		Mastercard, Inc., Class A		1,141,519
7,885		Nymex Holdings, Inc.		981,683
		TOTAL		2,693,479
		Home Products--3.7%
83,647		Kimberly-Clark Corp.		5,626,934
		Household Appliances--0.7%
10,324		Whirlpool Corp.		1,054,184
		Industrial Machinery--3.3%
98,764		Dover Corp.		5,036,964
		Internet Services--6.7%
61,642	1	Amazon.com, Inc.		4,841,363
5,400	1	Priceline.com, Inc.		344,520
154,131	1	eBay, Inc.		4,993,844
		TOTAL		10,179,727
		Medical Technology--0.8%
6,071	1	Intuitive Surgical, Inc.		1,290,755
		Metal Fabrication--2.1%
23,229		Precision Castparts Corp.		3,183,767
		Miscellaneous Machinery--1.0%
26,603		Illinois Tool Works, Inc.		1,464,495
		Miscellaneous Components--0.3%
14,381		Amphenol Corp., Class A		492,693
		Multi-Industry Transportation--1.2%
16,928		FedEx Corp.		1,874,607
		Mutual Fund Adviser--0.7%
8,774		Franklin Resources, Inc.		1,117,544
		Office Equipment--2.1%
69,698		Pitney Bowes, Inc.		3,213,078
		COMMON STOCKS--continued
		Office Supplies--2.0%
49,541		Avery Dennison Corp.	$	3,038,845
		Offshore Driller--1.6%
3,927		Noble Corp.		402,360
2,718		Tidewater, Inc.		185,966
17,054	1	Transocean, Inc.		1,832,452
		TOTAL		2,420,778
		Oil Refiner--0.7%
15,100		Valero Energy Corp.		1,011,851
		Oil Service, Explore & Drill--1.2%
7,675	1	Grant Prideco, Inc.		430,568
16,898	1	McDermott International, Inc.		1,401,520
		TOTAL		1,832,088
		Oil Well Supply--6.5%
5,067	1	Cameron International Corp.		395,226
5,306	1	FMC Technologies, Inc.		485,605
16,329	1	National-Oilwell, Inc.		1,961,276
64,061		Schlumberger Ltd.		6,067,858
6,111		Smith International, Inc.		375,277
11,197	1	Weatherford International Ltd.		619,530
		TOTAL		9,904,772
		Other Communications Equipment--0.6%
15,977		Harris Corp.		876,818
		Paint & Related Materials--2.3%
50,615		Sherwin-Williams Co.		3,527,359
		Plastic Containers--0.3%
15,828		Sealed Air Corp.		431,313
		Recreational Vehicles--3.8%
101,073		Harley Davidson, Inc.		5,793,504
		Regional Bank--1.0%
52,133		Synovus Financial Corp.		1,457,639
		Semiconductor Manufacturing--1.6%
19,774		KLA-Tencor Corp.		1,122,965
37,041		Linear Technology Corp.		1,320,512
		TOTAL		2,443,477
		Semiconductor Manufacturing Equipment--0.8%
19,835	1	Lam Research Corp.		1,147,256
		COMMON STOCKS--continued
		Services to Medical Professionals--6.5%
40,635	1	Express Scripts, Inc., Class A	$	2,037,032
40,851	1	Health Net, Inc.		2,023,759
105	1	Humana, Inc.		6,729
28,884	1	Medco Health Solutions, Inc.		2,347,403
43,955		UnitedHealth Group, Inc.		2,128,741
17,304	1	Wellpoint, Inc.		1,299,876
		TOTAL		9,843,540
		Shoes--0.3%
7,809	1	Crocs, Inc.		463,230
		Software Packaged/Custom--1.9%
41,113	1	Activision, Inc.		703,443
5,755	1	Akamai Technologies, Inc.		195,440
20,254	1	Autodesk, Inc.		858,162
4,177	1	F5 Networks, Inc.		362,104
32,011	1	Sybase, Inc.		759,301
		TOTAL		2,878,450
		Specialty Retailing--1.1%
6,152		Abercrombie & Fitch Co., Class A		430,025
37,672		Advance Auto Parts, Inc.		1,309,855
		TOTAL		1,739,880
		Steam Generation Machinery--0.5%
6,733	1	Foster Wheeler Ltd.		756,721
		Telecommunication Equipment & Services--2.3%
124,619	1	Corning, Inc.		2,970,917
11,592		Qualcomm, Inc.		482,807
		TOTAL		3,453,724
		Undesignated Consumer Cyclical--0.4%
5,529	1	ITT Educational Services, Inc.		584,194
		Undesignated Consumer Staples--0.2%
6,493	1	NBTY, Inc.		282,705
		Undesignated Energy--0.9%
33,788	1	NRG Energy, Inc.		1,302,527
		TOTAL COMMON STOCKS (IDENTIFIED COST $145,341,003)		149,890,728
		MUTUAL FUND--1.8%
2,729,873	2,3	Prime Value Obligations Fund, Institutional Shares, 5.25% (AT NET ASSET VALUE)	$	2,729,873
		TOTAL INVESTMENTS--100.4% (IDENTIFIED COST $148,070,876)4		152,620,601
		OTHER ASSETS AND LIABILITIES - NET--(0.4)%		(675,237	)
		TOTAL NET ASSETS--100%	$	151,945,364

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $148,376,943.

Note: The categories of investments are shown as a percentage of net assets at July 31, 2007.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2007

Assets:
Total investments in securities, at value including $2,729,873 of investments in an affiliated issuer (Note 5) (identified cost $148,070,876)			$	152,620,601
Cash				8,432
Income receivable				10,962
Receivable for investments sold				1,958,101
Receivable for shares sold				1,978,811
TOTAL ASSETS				156,576,907
Liabilities:
Payable for investments purchased	$	4,237,057
Payable for shares redeemed		201,925
Payable for Directors’/Trustees’ fees		92
Payable for distribution services fee (Note 5)		37,693
Payable for shareholder services fee (Note 5)		35,737
Accrued expenses		119,039
TOTAL LIABILITIES				4,631,543
Net assets for 12,533,212 shares outstanding			$	151,945,364
Net Assets Consist of:
Paid-in capital			$	522,131,516
Net unrealized appreciation of investments				4,549,725
Accumulated net realized gain on investments				(374,735,877	)
TOTAL NET ASSETS			$	151,945,364
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($1,797,802 ÷ 147,397 shares outstanding), no par value, unlimited shares authorized				$12.20
Offering price per share				$12.20
Redemption proceeds per share				$12.20
Class A Shares:
Net asset value per share ($88,826,229 ÷ 7,328,249 shares outstanding), no par value, unlimited shares authorized				$12.12
Offering price per share (100/94.50 of $12.12)1				$12.83
Redemption proceeds per share				$12.12
Class B Shares:
Net asset value per share ($46,933,450 ÷ 3,852,906 shares outstanding), no par value, unlimited shares authorized				$12.18
Offering price per share				$12.18
Redemption proceeds per share (94.50/100 of $12.18)1				$11.51
Class C Shares:
Net asset value per share ($14,387,883 ÷ 1,204,660 shares outstanding), no par value, unlimited shares authorized				$11.94
Offering price per share				$11.94
Redemption proceeds per share (99.00/100 of $11.94)1				$11.82

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, 2007

Investment Income:
Dividends (including $9,410 received from an affiliated issuer (Note 5))							$	63,212
Interest								1,456
TOTAL INCOME								64,668
Expenses:
Investment adviser fee (Note 5)				$	128,888
Administrative personnel and services fee (Note 5)					243,738
Custodian fees					10,507
Transfer and dividend disbursing agent fees and expenses					129,918
Auditing fees					15,375
Legal fees					9,336
Portfolio accounting fees					71,956
Distribution services fee--Class A Shares (Note 5)					378
Distribution services fee--Class B Shares (Note 5)					37,205
Distribution services fee--Class C Shares (Note 5)					9,404
Shareholder services fee--Class A Shares (Note 5)					24,769
Shareholder services fee--Class B Shares (Note 5)					12,402
Shareholder services fee--Class C Shares (Note 5)					2,838
Share registration costs					79,176
Printing and postage					25,088
Insurance premiums					6,087
Miscellaneous					3,875
TOTAL EXPENSES					810,940
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(128,888	)
Waiver of administrative personnel and services fee (Note 5)		(109,683	)
Waiver of transfer and dividend disbursing agent fees and expenses		(12,933	)
Waiver of portfolio accounting fees		(21,422	)
Reimbursement of other operating expenses (Note 5)		(236,203	)
TOTAL WAIVERS AND REIMBURSEMENTS					(509,129	)
Net expenses								301,811
Net investment income (loss)								(237,143	)
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments								21,083,611
Net change in unrealized depreciation of investments								(22,417,969	)
Net realized and unrealized loss on investments								(1,334,358	)
Change in net assets resulting from operations							$	(1,571,501	)

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

	Year Ended 7/31/2007			Period Ended 7/31/2006		1
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(237,143	)	$	(2,998	)
Net realized gain on investments		21,083,611			18,102
Net change in unrealized appreciation/depreciation of investments		(22,417,969	)		(13,048	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		(1,571,501	)		2,056
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(7,447	)		--
Class A Shares		(6,679	)		--
Class C Shares		(2,090	)		--
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(16,216	)		--
Share Transactions:
Proceeds from sale of shares		15,014,670			765,410
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		12,437			--
Cost of shares redeemed		(6,430,649	)		(132,687	)
Redemption fees		303			--
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		152,898,302			632,723
Change in net assets		151,310,585			634,779
Net Assets:
Beginning of period		634,779			--
End of period	$	151,945,364		$	634,779

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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 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 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.

The Fund commenced offering Class B Shares on March 29, 2007.

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 Appreciation1	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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• for investments in other open-end registered investment companies, based on net asset value (NAV);
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors; prices for interest rate swaps are furnished by an independent pricing service and are based upon a valuation model incorporating interest rates, yield curves and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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 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.

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 7/31/2007					Period Ended 7/31/20061
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	118,282		$	1,376,167		40,934		$	407,353
Shares issued to shareholders in payment of distributions declared	644			7,254		--			--
Shares redeemed	(1,456	)		(17,389	)	(11,007	)		(118,788	)
Redemption fees	--			99		--			--
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	117,470		$	1,366,131		29,927		$	288,565
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	598,688		$	7,229,781		19,173		$	206,989
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	405			4,547		--			--
Shares redeemed	(306,231	)		(3,782,665	)	(1,223	)		(12,810	)
Redemption fees	--			152		--			--
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	7,310,299		$	89,554,002		17,950		$	194,179
	Period Ended 7/31/20072					Year Ended 7/31/2006
Class B Shares:	Shares			Amount		Shares			Amount
Shares sold	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 redeemed	(194,209	)		(2,424,626	)	--			--
NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS	3,852,906		$	47,522,550		--			--
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	486,056		$	5,933,215		14,649		$	151,068
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	57			636		--			--
Shares redeemed	(17,323	)		(205,969	)	(100	)		(1,089	)
Redemption fees	--			52		--			--
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	1,190,111		$	14,455,619		14,549		$	149,979
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	12,470,786		$	152,898,302		62,426		$	632,723

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

2 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 Fund imposed a 2.00% redemption fee to shareholders of the Fund’s Institutional Shares, Class A Shares and Class C Shares who redeem 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.

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, expiration of capital loss carryforwards, capital loss carryforwards from Fund merger and deferred wash sales from Fund merger.

For the year ended July 31, 2007, 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 Loss
$395,581,233	$237,143	$(395,818,376	)

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, 2007 was as follows:

	2007
Ordinary income1	$16,216

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	6,354,311
Undistributed long-term capital gains	$	12,029,434
Net unrealized appreciation	$	4,243,658
Capital loss carryforwards	$	(392,813,555	)

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, 2007, the cost of investments for federal tax purposes was $148,376,943. The net unrealized appreciation of investments for federal tax purposes was $4,243,658. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $9,466,770 and net unrealized depreciation from investments for those securities having an excess of cost over value of $5,223,112.

At July 31, 2007, the Fund had a capital loss carryforward of $392,813,555 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
2008	$294,478,872
2009	$76,646,626
2010	$21,688,057

As a result of the tax-free transfer of assets from Federated Large Cap Growth Fund, certain capital loss carryforwards listed above may be limited.

The Fund used capital loss carryforwards of $2,227,653 to offset taxable capital gains realized during the year ended July 31, 2007. Additionally, capital loss carryforwards of $3,983,104 expired during the year ended July 31, 2007.

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	Percentage of Average Daily Net Assets of Class
Institutional Shares	1.80%
Class A Shares	2.05%
Class C Shares	2.80%

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

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. For the year ended July 31, 2007, the Adviser waived $128,757 of its fee and reimbursed $236,203 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 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. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 0.502% of average daily net assets of the Fund. FAS waived $109,683 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 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 of up to 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	0.25%
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	Percentage of Average Daily Net Assets of Class
Class A Shares	0.25%
Class C Shares	1.00%

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, 2007, FSC retained $8,880 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC retained $3,448 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, 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. For the year ended July 31, 2007, FSSC did not receive any fees paid by the Fund. A financial intermediary affiliated with management of Federated Investors, Inc. received $4,446 of Service Fees for the year ended July 31, 2007.

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 (including the distribution (12b-1) fee) 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, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $131 in connection with the affiliated mutual fund listed below. Transactions with the affiliated company during the year ended July 31, 2007 are as follows:

Affiliate	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	--	8,218,683	5,488,810	2,729,873	$2,729,873	$9,410

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, 2007, were as follows:

Purchases	$	159,240,189
Sales	$	153,225,112

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the fiscal year ended July 31, 2007, 18.06% 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, 2007, 19.41% 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, 2007, 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 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 19, 2007

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. As of December 31, 2006, the Trust comprised eight portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of
J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

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 15 Old Timber Trail Pittsburgh, PA 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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

FEDERATED MDT LARGE CAP GROWTH FUND (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contract at meetings held in May 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

The Fund’s performance fell below the median of the relevant peer group for the one year period ending December 31, 2006. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.

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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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 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 his 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. For 2006, 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 in 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 Funds use 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 Funds file 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 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 31421R882

37314 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT Mid Cap Growth Fund

Established 2005

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2007

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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$10.67		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.11	)3	(0.09	)3
Net realized and unrealized gain on investments	2.81		0.76
TOTAL FROM INVESTMENT OPERATIONS	2.70		0.67
Less Distributions:
Distributions from net realized gain on investments	(0.32	)	--
Redemption fees	0.00	4	--
Net Asset Value, End of Period	$13.05		$10.67
Total Return5	25.67	%	6.70	%
Ratios to Average Net Assets:
Net expenses	1.50	%	2.02	%6
Net investment income (loss)	(0.88	)%	(0.92	)%6
Expense waiver/reimbursement7	15.03	%	27.33	%6
Supplemental Data:
Net assets, end of period (000 omitted)	$6,446		$104
Portfolio turnover	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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$10.60		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.19	)3	(0.17	)3
Net realized and unrealized gain on investments	2.77		0.77
TOTAL FROM INVESTMENT OPERATIONS	2.58		0.60
Less Distributions:
Distributions from net realized gain on investments	(0.32	)	--
Redemption fees	0.00	4	--
Net Asset Value, End of Period	$12.86		$10.60
Total Return5	24.69	%	6.00	%
Ratios to Average Net Assets:
Net expenses	2.25	%	2.77	%6
Net investment income (loss)	(1.56	)%	(1.67	)%6
Expense waiver/reimbursement7	26.77	%	27.33	%6
Supplemental Data:
Net assets, end of period (000 omitted)	$123		$6
Portfolio turnover	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 cost: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual:
Class A Shares	$1,000	$1,100.30	$7.76
Class C Shares	$1,000	$1,095.40	$11.64
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,017.41	$7.45
Class C Shares	$1,000	$1,013.69	$11.18

1 Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The annualized net expense ratios are as follows:

Class A Shares	1.49%
Class C Shares	2.24%

Management’s Discussion of Fund Performance

The fund’s total return for the fiscal year ended July 31, 2007 was 25.67% for Class A Shares and 24.69% for Class C Shares.¹ The total return of the Russell Midcap^® Growth Index (Russell Midcap^® Growth)² was 21.41% 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 Midcap^® Growth. The total return of the Lipper Mid-Cap Growth Funds Index³ was 25.72% for the same period.

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 Index 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 Mid-Cap Growth Funds Index is composed of the 30 largest funds, measured by total net assets, in the Lipper Mid-Cap Growth Funds classification. These funds, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) less than 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Mid-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P MidCap 400 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.

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000^® Index,⁴ which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index,⁵ which exceeded the 15.48% and 12.12% results for the Russell Top 200^® Index⁶ and the Russell 2000^® Index,⁷ respectively. Growth stocks outperformed value stocks by a wide margin during the year, with the Russell 3000^® Growth Index⁸ returning 19.24% as compared to 12.97% for the Russell 3000 Value^® Index.⁹

The best performing sectors during the reporting period in the Russell 3000^® Index were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

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 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 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.

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 Index was its stock selection in the Industrials, Materials, and Consumer Discretionary sectors. Additionally, the fund’s overweight in the Industrials and Materials sectors provided modest contributions to relative performance. The most significant negative factor in the fund’s performance relative to the Russell Midcap^® Growth Index was its stock selection in the Health Care and Consumer Staples sectors. Additionally, the fund’s overweight in the Health Care sector detracted modestly from relative performance.

Individual stocks contributing to the fund’s performance relative to the Russell Midcap^® Growth Index included: Precision Castparts, MEMC Electrical Materials Inc., Southern Copper Corp., Mcdermott International, and Goodyear Tire & Rubber.

Individual stocks detracting from the fund’s performance relative to the Russell Midcap^® Growth Index included: Hansen National Corp., Sepracor Inc., Nutri Sys. Inc., Medimmune Inc., and Bare Escentuals Inc.

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

The graph below illustrates the hypothetical investment of $10,000¹ in the Federated MDT Mid Cap Growth Fund (Class A Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, 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 7/31/2007
1 Year	18.77%
Start of Performance (9/15/2005)	13.46%

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 The 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 an index.

3 Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

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

The graph below illustrates the hypothetical investment of $10,000¹ in the Federated MDT Mid Cap Growth Fund (Class C Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, 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 7/31/2007
1 Year	23.69%
Start of Performance (9/15/2005)	16.02%

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 The 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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

Portfolio of Investments Summary Table

At July 31, 2007, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Services to Medical Professionals	9.4	%
Internet Services	5.8	%
Metal Fabrication	4.8	%
Recreational Vehicles	4.4	%
Specialty Retailing	4.3	%
Defense Aerospace	4.2	%
Biotechnology	4.1	%
Oil Service, Explore & Drill	3.4	%
Miscellaneous Machinery	3.3	%
Steam Generation Machinery	3.3	%
Household Appliances	3.2	%
Plastic Containers	3.2	%
Multi-Industry Capital Goods	3.1	%
Discount Department Stores	2.8	%
Financial Services	2.6	%
Commodity Chemicals	2.5	%
Home Products	2.5	%
Oil Well Supply	2.5	%
Industrial Machinery	2.1	%
Metal Containers	2.0	%
Undesignated Consumer Cyclicals	1.8	%
Construction Machinery	1.6	%
Computer Peripherals	1.4	%
Computer Services	1.4	%
Copper	1.4	%
Defense Electronics	1.4	%
Miscellaneous Communications	1.4	%
Electrical Equipment	1.3	%
Other2	14.1	%
Cash Equivalents3	2.0	%
Other Assets and Liabilities--Net4	(1.3	)%
TOTAL	100.0	%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual 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, 2007

Shares				Value
		COMMON STOCKS--99.3%
		Auto Original Equipment Manufacturer--0.3%
167	1	AutoZone, Inc.	$	21,177
		Biotechnology--4.1%
1,172	1	Cephalon, Inc.		88,064
1,361	1	OSI Pharmaceuticals, Inc.		43,879
2,838	1	Waters Corp.		165,342
		TOTAL		297,285
		Book Publishing--0.6%
1,108		Wiley (John) & Sons, Inc., Class A		46,857
		Cement--0.2%
126		Martin Marietta Materials		17,262
		Clothing Stores--0.9%
854	1	J. Crew Group, Inc.		42,956
36		Mens Wearhouse, Inc.		1,778
787		Ross Stores, Inc.		22,768
		TOTAL		67,502
		Commodity Chemicals--2.5%
4,279		Celanese Corp.		160,463
942		RPM, Inc.		22,146
		TOTAL		182,609
		Computer Peripherals--1.4%
1,154	1	NVIDIA Corp.		52,807
3,008	1	Nuance Communications, Inc.		49,572
		TOTAL		102,379
		Computer Services--1.4%
403	1	Cognizant Technology Solutions Corp.		32,635
1,568	1	Riverbed Technology, Inc.		69,243
		TOTAL		101,878
		Construction Machinery--1.6%
1,491		Manitowoc, Inc.		115,806
		Contracting--0.1%
48		Harsco Corp.		2,528
130	1	Jacobs Engineering Group, Inc.		8,012
		TOTAL		10,540
		Copper--1.4%
923	1	Southern Copper Corp.		104,031
Shares				Value
		COMMON STOCKS--(continued)
		Cosmetics & Toiletries--0.7%
1,801	1	Bare Escentuals, Inc.	$	50,806
		Defense Aerospace--4.2%
900	1	Alliant Techsystems, Inc.		89,199
3,433		Goodrich (B.F.) Co.		215,970
		TOTAL		305,169
		Defense Electronics--1.4%
492	1	First Solar, Inc.		55,384
672		Rockwell Collins		46,166
		TOTAL		101,550
		Discount Department Stores--2.8%
7,317		TJX Cos., Inc.		203,047
		Electrical Equipment--1.3%
1,954		AMETEK, Inc.		76,245
232	1	Genlyte Group, Inc.		16,140
		TOTAL		92,385
		Financial Services--2.6%
1,287		Deluxe Corp.		48,597
4,543		Janus Capital Group, Inc.		136,563
44	1	Mastercard, Inc.		7,075
		TOTAL		192,235
		Furniture--0.9%
2,017		Tempur-Pedic International, Inc.		62,830
		Home Building--0.2%
20	1	NVR, Inc.		11,570
		Home Health Care--0.1%
102	1	Wellcare Health Plans, Inc.		10,329
		Home Products--2.5%
1,821	1	Energizer Holdings, Inc.		183,739
		Household Appliances--3.2%
2,271		Whirlpool Corp.		231,892
		Industrial Machinery--2.1%
2,932		Dover Corp.		149,532
		Internet Services--5.8%
4,422	1	Amazon.com, Inc.		347,304
1,150	1	Priceline.com, Inc.		73,370
		TOTAL		420,674
Shares				Value
		COMMON STOCKS--(continued)
		Medical Supplies--0.2%
228	1	Kinetic Concepts, Inc.	$	14,017
		Medical Technology--0.7%
231	1	Intuitive Surgical, Inc.		49,113
		Metal Containers--2.0%
2,859		Ball Corp.		146,581
		Metal Fabrication--4.8%
2,526		Precision Castparts Corp.		346,214
		Miscellaneous Communications--1.4%
11,657	1	Qwest Communications International, Inc.		99,434
		Miscellaneous Components--0.3%
682		Amphenol Corp., Class A		23,365
		Miscellaneous Machinery--3.3%
4,494		Cooper Industries Ltd., Class A		237,822
		Multi-Industry Capital Goods--3.1%
1,004		Acuity Brands, Inc.		59,336
1		IDEX Corp.		18
2,291		ITT Corp.		144,058
192		Textron, Inc.		21,675
		TOTAL		225,087
		Multi-Industry Transportation--0.2%
332		C.H. Robinson Worldwide, Inc.		16,152
		Office Equipment--0.7%
1,164		Pitney Bowes, Inc.		53,660
		Office Supplies--0.2%
241		Avery Dennison Corp.		14,783
		Offshore Driller--0.1%
98		Tidewater, Inc.		6,705
		Oil Service, Explore & Drill--3.4%
80	1	Grant Prideco, Inc.		4,488
2,915	1	McDermott International, Inc.		241,770
		TOTAL		246,258
		Oil Well Supply--2.5%
2,059	1	Dresser-Rand Group, Inc.		76,389
140	1	FMC Technologies, Inc.		12,813
614	1	National-Oilwell, Inc.		73,748
421	1	Superior Energy Services, Inc.		16,975
		TOTAL		179,925
Shares				Value
		COMMON STOCKS--(continued)
		Other Communications Equipment--0.2%
315		Harris Corp.	$	17,287
		Packaged Foods--0.6%
1,201		Campbell Soup Co.		44,233
		Paint & Related Materials--0.6%
637		Sherwin-Williams Co.		44,393
		Personnel Agency--0.1%
106		Manpower, Inc.		8,379
		Plastic Containers--3.2%
4,090	1	Owens-Illinois, Inc.		163,518
2,147	1	Pactiv Corp.		67,867
		TOTAL		231,385
		Recreational Vehicles--4.4%
5,583		Harley Davidson, Inc.		320,018
		Restaurant--0.7%
2,234		Burger King Holdings, Inc.		54,264
		Semiconductor Distribution--0.0%
87	1	Avnet, Inc.		3,296
		Semiconductor Manufacturing--0.8%
589		KLA-Tencor Corp.		33,449
644		Linear Technology Corp.		22,959
		TOTAL		56,408
		Semiconductor Manufacturing Equipment--0.5%
536	1	Lam Research Corp.		31,002
150	1	Varian Semiconductor Equipment Associates, Inc.		7,050
		TOTAL		38,052
		Services to Medical Professionals--9.4%
7,089	1	Express Scripts, Inc., Class A		355,372
1,102	1	Health Net, Inc.		54,593
3,718	1	Laboratory Corp. of America Holdings		274,574
		TOTAL		684,539
		Shoes--0.6%
703	1	Crocs, Inc.		41,702
		Software Packaged/Custom--0.6%
266	1	Autodesk, Inc.		11,270
302	1	DST Systems, Inc.		22,913
103	1	F5 Networks, Inc.		8,929
		TOTAL		43,112
Shares				Value
		COMMON STOCKS--(continued)
		Specialty Chemicals--0.6%
2,040	1	Hercules, Inc.	$	42,350
		Specialty Machinery--0.6%
977	1	Gardner Denver, Inc.		40,633
		Specialty Retailing--4.3%
1,981		Abercrombie & Fitch Co., Class A		138,472
787		Advance Auto Parts, Inc.		27,364
4,208	1	Bed Bath & Beyond, Inc.		145,765
		TOTAL		311,601
		Stainless Steel Producer--0.6%
400		Allegheny Technologies, Inc.		41,972
		Steam Generation Machinery--3.3%
2,131	1	Foster Wheeler Ltd.		239,503
		Telecommunication Equipment & Services--0.1%
113	1	Anixter International, Inc.		9,339
		Telephone Utility--0.0%
39		Telephone and Data System, Inc.		2,590
		Toys & Games--0.1%
223	1	Marvel Entertainment, Inc.		5,403
		Truck Manufacturing--0.9%
817		PACCAR, Inc.		66,847
		Undesignated Consumer Cyclicals--1.8%
1,204	1	ITT Educational Services, Inc.		127,215
		Undesignated Consumer Staples--0.1%
139	1	Nutri/System, Inc.		7,745
		TOTAL COMMON STOCKS (IDENTIFIED COST $6,840,306)		7,224,466
		MUTUAL FUND--2.0%
148,403	2,3	Prime Value Obligations Fund, Institutional Shares, 5.25% (AT NET ASSET VALUE)		148,403
		TOTAL INVESTMENTS--101.3% (IDENTIFIED COST $6,988,709)4		7,372,869
		OTHER ASSETS AND LIABILITIES--(1.3)%		(95,806	)
		TOTAL NET ASSETS--100%	$	7,277,063

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $6,996,271.

Note: The categories of investments are shown as a percentage of total net assets at
July 31, 2007.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2007

Assets:
Total investments in securities, at value including $148,403 of investments in an affiliated issuer (Note 5) (identified cost $6,988,709)			$	7,372,869
Income receivable				321
Receivable for investments sold				17,993
Receivable for shares sold				43,493
TOTAL ASSETS				7,434,676
Liabilities:
Payable for investments purchased	$	80,491
Payable for shares redeemed		27,381
Payable for transfer and dividend disbursing agent fees and expenses		11,374
Payable for Directors’/Trustees’ fees		110
Payable for audit fees		14,500
Payable for portfolio accounting fees		5,495
Payable for distribution services fee (Note 5)		88
Payable for shareholder services fee (Note 5)		3,243
Payable for share registration costs		7,824
Accrued expenses		7,107
TOTAL LIABILITIES				157,613
Net assets for 557,709 shares outstanding			$	7,277,063
Net Assets Consist of:
Paid-in capital			$	6,787,071
Net unrealized appreciation of investments				384,160
Accumulated net realized gain on investments				105,832
TOTAL NET ASSETS			$	7,277,063
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($708,041 ÷ 54,053 shares outstanding), no par value, unlimited shares authorized				$13.10
Offering price per share				$13.10
Redemption proceeds per share				$13.10
Class A Shares:
Net asset value per share ($6,445,771 ÷ 494,072 shares outstanding), no par value, unlimited shares authorized				$13.05
Offering price per share (100/94.50 of $13.05)1				$13.81
Redemption proceeds per share				$13.05
Class C Shares:
Net asset value per share ($123,251 ÷ 9,584 shares outstanding), no par value, unlimited shares authorized				$12.86
Offering price per share				$12.86
Redemption proceeds per share (99.00/100 of $12.86)1				$12.73

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, 2007

Investment Income:
Dividends (including $951 received from an affiliated issuer (Note 5))							$	13,525
Interest								1,691
TOTAL INCOME								15,216
Expenses:
Investment adviser fee (Note 5)				$	21,044
Administrative personnel and services fee (Note 5)					229,992
Custodian fees					14,723
Transfer and dividend disbursing agent fees and expenses					47,546
Auditing fees					15,210
Legal fees					7,487
Portfolio accounting fees					68,530
Distribution services fee--Class A Shares (Note 5)					176
Distribution services fee--Class C Shares (Note 5)					311
Shareholder services fee--Class A Shares (Note 5)					4,537
Shareholder services fee--Class C Shares (Note 5)					90
Share registration costs					61,764
Printing and postage					18,843
Insurance premiums					6,070
Miscellaneous					6,115
TOTAL EXPENSES					502,438
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(21,044	)
Waiver of administrative personnel and services fee (Note 5)		(106,536	)
Waiver of transfer and dividend disbursing agent fees and expenses		(13,090	)
Waiver of portfolio accounting fees		(21,554	)
Reimbursement of other operating expenses (Note 5)		(305,878	)
TOTAL WAIVERS AND REIMBURSEMENTS					(468,102	)
Net expenses								34,336
Net investment income (loss)								(19,120	)
Realized and Unrealized Gain on Investments:
Net realized gain on investments								127,473
Net change in unrealized appreciation of investments								379,049
Net realized and unrealized gain on investments								506,522
Change in net assets resulting from operations							$	487,402

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Year Ended 7/31/2007			Period Ended 7/31/2006	1
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(19,120	)	$	(2,184	)
Net realized gain on investments		127,473			16,974
Net change in unrealized appreciation/depreciation of investments		379,049			5,111
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		487,402			19,901
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(8,652	)		--
Class A Shares		(8,228	)		--
Class C Shares		(431	)		--
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(17,311	)		--
Share Transactions:
Proceeds from sale of shares		7,320,573			528,722
Net asset value of shares issued to shareholders in payment of distributions declared		16,366			--
Cost of shares redeemed		(865,450	)		(213,610	)
Redemption fees		470			--
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		6,471,959			315,112
Change in net assets		6,942,050			335,013
Net Assets:
Beginning of period		335,013			--
End of period	$	7,277,063		$	335,013

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• for investments in other open-end registered investment companies, based on net asset value (NAV);
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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 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.

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 7/31/2007					Period Ended 7/31/20061
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	71,994		$	904,172		31,504		$	316,914
Shares issued to shareholders in payment of distributions declared	738			8,505		--			--
Shares redeemed	(39,756	)		(518,903	)	(10,427	)		(115,165	)
Redemption fees	--			194		--			--
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	32,976		$	393,968		21,077		$	201,749
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	511,500		$	6,300,790		18,783		$	206,180
Shares issued to shareholders in payment of distributions declared	659			7,566		--			--
Shares redeemed	(27,853	)		(342,042	)	(9,017	)		(98,445	)
Redemption fees	--			262		--			--
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	484,306		$	5,966,576		9,766		$	107,735
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	9,419		$	115,611		523		$	5,628
Shares issued to shareholders in payment of distributions declared	26			295		--			--
Shares redeemed	(384	)		(4,505	)	--			--
Redemption fees	--			14		--			--
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	9,061		$	111,415		523		$	5,628
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	526,343		$	6,471,959		31,366		$	315,112

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

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 redeem 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.

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, 2007, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gains
$19,120	$(19,120)

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, 2007, was as follows:

		2007
Ordinary income1	$	16,615
Long-term capital gains	$	696

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	90,764
Undistributed long-term capital gain	$	22,630
Net unrealized appreciation	$	376,598

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, 2007, the cost of investments for federal tax purposes was $6,996,271. The net unrealized appreciation of investments for federal tax purposes was $376,598. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $578,872 and net unrealized depreciation from investments for those securities having an excess of cost over value of $202,274.

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

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. For the year ended July 31, 2007, the Adviser waived $21,030 and reimbursed $305,878 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 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. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 5.280% of average daily net assets of the Fund. FAS waived $106,536 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 of up to 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	0.25%
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%

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, 2007, FSC retained $299 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC retained $1,093 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. For the year ended July 31, 2007, 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 (including the distribution (12b-1) fee) paid by the Fund’s Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.25%, 1.50% and 2.25%, respectively, for the fiscal year ending July 31, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $14 in connection with the affiliated mutual fund listed below. Transactions with the affiliated company during the year ended July 31, 2007, were as follows:

Affiliate	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	--	888,550	740,147	148,403	$148,403	$951

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, 2007, were as follows:

Purchases	$	9,753,606
Sales	$	3,368,828

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2007, the amount of long-term capital gains designated by the Fund was $696.

For the fiscal year ended July 31, 2007, 17.64% 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, 2007, 17.82% 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, 2007, 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 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
September 19, 2007

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. As of December 31, 2006, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

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 15 Old Timber Trail Pittsburgh, PA 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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 CHIEF COMPLIANCE OFFICER AND SENIOR VICE PRESIDENT 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

FEDERATED MDT MID CAP GROWTH FUND (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contract at meetings held in May 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

For the one year period ending December 31, 2006, 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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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 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 his 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. For 2006, 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 in 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 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 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT Mid Cap Growth Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2007

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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$10.69		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.05	)3	(0.07	)3
Net realized and unrealized gain on investments	2.77		0.76
TOTAL FROM INVESTMENT OPERATIONS	2.72		0.69
Less Distributions:
Distributions from net realized gain on investments	(0.32	)	--
Redemption fees	0.01		--
Net Asset Value, End of Period	$13.10		$10.69
Total Return4	25.90	%	6.90	%
Ratios to Average Net Assets:
Net expenses	1.25	%	1.77	%5
Net investment income (loss)	(0.45	)%	(0.67	)%5
Expense waiver/reimbursement6	42.16	%	27.33	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$708		$225
Portfolio turnover	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; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual	$1,000	$1,100.80	$6.30
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,018.79	$6.06

1 Expenses are equal to the Fund’s annualized net expense ratio of 1.21%, multiplied by the average account value over the period, multiplied by 181/365 (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, 2007 was 25.90% for Institutional Shares.¹ The total return of the Russell Midcap^® Growth Index (Russell Midcap^® Growth)² was 21.41% 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 Midcap^® Growth. The total return of the Lipper Mid-Cap Growth Funds Index³ was 25.72% for the same period.

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 Index 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 Mid-Cap Growth Funds Index is composed of the 30 largest funds, measured by total net assets, in the Lipper Mid-Cap Growth Funds classification. These funds, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) less than 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Mid-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P MidCap 400 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.

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000^® Index,⁴ which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index,⁵ which exceeded the 15.48% and 12.12% results for the Russell Top 200^® Index⁶ and the Russell 2000^® Index,⁷ respectively. Growth stocks outperformed value stocks by a wide margin during the year, with the Russell 3000^® Growth Index⁸ returning 19.24% as compared to 12.97% for the Russell 3000 Value^® Index.⁹

The best performing sectors during the reporting period in the Russell 3000^® Index were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

FUND PERFORMANCE

The most significant positive factor in the fund’s performance relative to the Russell Midcap^® Growth Index was its stock selection in the Industrials, Materials, and Consumer Discretionary sectors. Additionally, the fund’s overweight in the Industrials and Materials sectors provided modest contributions to relative performance. The most significant negative factor in the fund’s performance relative to the Russell Midcap^® Growth Index was its stock selection in the Health Care and Consumer Staples sectors. Additionally, the fund’s overweight in the Health Care sector detracted modestly from relative performance.

Individual stocks contributing to the fund’s performance relative to the Russell Midcap^® Growth Index included: Precision Castparts, MEMC Electrical Materials Inc., Southern Copper Corp., Mcdermott International, and Goodyear Tire & Rubber.

Individual stocks detracting from the fund’s performance relative to the Russell Midcap^® Growth Index included: Hansen National Corp., Sepracor Inc., Nutri Sys. Inc., Medimmune Inc., and Bare Escentuals Inc.

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 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 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.

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.

GROWTH OF A $25,000 INVESTMENT -- INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000¹ in the Federated MDT Mid Cap Growth Fund (Institutional Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, 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 7/31/2007
1 Year	25.90%
Start of Performance (9/15/2005)	17.15%

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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

Portfolio of Investments Summary Table

At July 31, 2007, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Services to Medical Professionals	9.4%
Internet Services	5.8%
Metal Fabrication	4.8%
Recreational Vehicles	4.4%
Specialty Retailing	4.3%
Defense Aerospace	4.2%
Biotechnology	4.1%
Oil Service, Explore & Drill	3.4%
Miscellaneous Machinery	3.3%
Steam Generation Machinery	3.3%
Household Appliances	3.2%
Plastic Containers	3.2%
Multi-Industry Capital Goods	3.1%
Discount Department Stores	2.8%
Financial Services	2.6%
Commodity Chemicals	2.5%
Home Products	2.5%
Oil Well Supply	2.5%
Industrial Machinery	2.1%
Metal Containers	2.0%
Undesignated Consumer Cyclicals	1.8%
Construction Machinery	1.6%
Computer Peripherals	1.4%
Computer Services	1.4%
Copper	1.4%
Defense Electronics	1.4%
Miscellaneous Communications	1.4%
Electrical Equipment	1.3%
Other2	14.1%
Cash Equivalents3	2.0%
Other Assets and Liabilities--Net4	(1.3)%
TOTAL	100.0%

1 Except for Cash Equivalents and Other Assets and Liabilities, industry classifications are based upon, and individual 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, 2007

Shares				Value
		COMMON STOCKS--99.3%
		Auto Original Equipment Manufacturer--0.3%
167	1	AutoZone, Inc.	$	21,177
		Biotechnology--4.1%
1,172	1	Cephalon, Inc.		88,064
1,361	1	OSI Pharmaceuticals, Inc.		43,879
2,838	1	Waters Corp.		165,342
		TOTAL		297,285
		Book Publishing--0.6%
1,108		Wiley (John) & Sons, Inc., Class A		46,857
		Cement--0.2%
126		Martin Marietta Materials		17,262
		Clothing Stores--0.9%
854	1	J. Crew Group, Inc.		42,956
36		Mens Wearhouse, Inc.		1,778
787		Ross Stores, Inc.		22,768
		TOTAL		67,502
		Commodity Chemicals--2.5%
4,279		Celanese Corp.		160,463
942		RPM, Inc.		22,146
		TOTAL		182,609
		Computer Peripherals--1.4%
1,154	1	NVIDIA Corp.		52,807
3,008	1	Nuance Communications, Inc.		49,572
		TOTAL		102,379
		Computer Services--1.4%
403	1	Cognizant Technology Solutions Corp.		32,635
1,568	1	Riverbed Technology, Inc.		69,243
		TOTAL		101,878
		Construction Machinery--1.6%
1,491		Manitowoc, Inc.		115,806
		Contracting--0.1%
48		Harsco Corp.		2,528
130	1	Jacobs Engineering Group, Inc.		8,012
		TOTAL		10,540
		COMMON STOCKS--continued
		Copper--1.4%
923	1	Southern Copper Corp.	$	104,031
		Cosmetics & Toiletries--0.7%
1,801	1	Bare Escentuals, Inc.		50,806
		Defense Aerospace--4.2%
900	1	Alliant Techsystems, Inc.		89,199
3,433		Goodrich (B.F.) Co.		215,970
		TOTAL		305,169
		Defense Electronics--1.4%
492	1	First Solar, Inc.		55,384
672		Rockwell Collins		46,166
		TOTAL		101,550
		Discount Department Stores--2.8%
7,317		TJX Cos., Inc.		203,047
		Electrical Equipment--1.3%
1,954		AMETEK, Inc.		76,245
232	1	Genlyte Group, Inc.		16,140
		TOTAL		92,385
		Financial Services--2.6%
1,287		Deluxe Corp.		48,597
4,543		Janus Capital Group, Inc.		136,563
44	1	Mastercard, Inc.		7,075
		TOTAL		192,235
		Furniture--0.9%
2,017		Tempur-Pedic International, Inc.		62,830
		Home Building--0.2%
20	1	NVR, Inc.		11,570
		Home Health Care--0.1%
102	1	Wellcare Health Plans, Inc.		10,329
		Home Products--2.5%
1,821	1	Energizer Holdings, Inc.		183,739
		Household Appliances--3.2%
2,271		Whirlpool Corp.		231,892
		Industrial Machinery--2.1%
2,932		Dover Corp.		149,532
		Internet Services--5.8%
4,422	1	Amazon.com, Inc.		347,304
1,150	1	Priceline.com, Inc.		73,370
		TOTAL		420,674
		COMMON STOCKS--continued
		Medical Supplies--0.2%
228	1	Kinetic Concepts, Inc.	$	14,017
		Medical Technology--0.7%
231	1	Intuitive Surgical, Inc.		49,113
		Metal Containers--2.0%
2,859		Ball Corp.		146,581
		Metal Fabrication--4.8%
2,526		Precision Castparts Corp.		346,214
		Miscellaneous Communications--1.4%
11,657	1	Qwest Communications International, Inc.		99,434
		Miscellaneous Components--0.3%
682		Amphenol Corp., Class A		23,365
		Miscellaneous Machinery--3.3%
4,494		Cooper Industries Ltd., Class A		237,822
		Multi-Industry Capital Goods--3.1%
1,004		Acuity Brands, Inc.		59,336
1		IDEX Corp.		18
2,291		ITT Corp.		144,058
192		Textron, Inc.		21,675
		TOTAL		225,087
		Multi-Industry Transportation--0.2%
332		C.H. Robinson Worldwide, Inc.		16,152
		Office Equipment--0.7%
1,164		Pitney Bowes, Inc.		53,660
		Office Supplies--0.2%
241		Avery Dennison Corp.		14,783
		Offshore Driller--0.1%
98		Tidewater, Inc.		6,705
		Oil Service, Explore & Drill--3.4%
80	1	Grant Prideco, Inc.		4,488
2,915	1	McDermott International, Inc.		241,770
		TOTAL		246,258
		Oil Well Supply--2.5%
2,059	1	Dresser-Rand Group, Inc.		76,389
140	1	FMC Technologies, Inc.		12,813
614	1	National-Oilwell, Inc.		73,748
421	1	Superior Energy Services, Inc.		16,975
		TOTAL		179,925
		COMMON STOCKS--continued
		Other Communications Equipment--0.2%
315		Harris Corp.	$	17,287
		Packaged Foods--0.6%
1,201		Campbell Soup Co.		44,233
		Paint & Related Materials--0.6%
637		Sherwin-Williams Co.		44,393
		Personnel Agency--0.1%
106		Manpower, Inc.		8,379
		Plastic Containers--3.2%
4,090	1	Owens-Illinois, Inc.		163,518
2,147	1	Pactiv Corp.		67,867
		TOTAL		231,385
		Recreational Vehicles--4.4%
5,583		Harley Davidson, Inc.		320,018
		Restaurant--0.7%
2,234		Burger King Holdings, Inc.		54,264
		Semiconductor Distribution--0.0%
87	1	Avnet, Inc.		3,296
		Semiconductor Manufacturing--0.8%
589		KLA-Tencor Corp.		33,449
644		Linear Technology Corp.		22,959
		TOTAL		56,408
		Semiconductor Manufacturing Equipment--0.5%
536	1	Lam Research Corp.		31,002
150	1	Varian Semiconductor Equipment Associates, Inc.		7,050
		TOTAL		38,052
		Services to Medical Professionals--9.4%
7,089	1	Express Scripts, Inc., Class A		355,372
1,102	1	Health Net, Inc.		54,593
3,718	1	Laboratory Corp. of America Holdings		274,574
		TOTAL		684,539
		Shoes--0.6%
703	1	Crocs, Inc.		41,702
		Software Packaged/Custom--0.6%
266	1	Autodesk, Inc.		11,270
302	1	DST Systems, Inc.		22,913
103	1	F5 Networks, Inc.		8,929
		TOTAL		43,112
		COMMON STOCKS--continued
		Specialty Chemicals--0.6%
2,040	1	Hercules, Inc.	$	42,350
		Specialty Machinery--0.6%
977	1	Gardner Denver, Inc.		40,633
		Specialty Retailing--4.3%
1,981		Abercrombie & Fitch Co., Class A		138,472
787		Advance Auto Parts, Inc.		27,364
4,208	1	Bed Bath & Beyond, Inc.		145,765
		TOTAL		311,601
		Stainless Steel Producer--0.6%
400		Allegheny Technologies, Inc.		41,972
		Steam Generation Machinery--3.3%
2,131	1	Foster Wheeler Ltd.		239,503
		Telecommunication Equipment & Services--0.1%
113	1	Anixter International, Inc.		9,339
		Telephone Utility--0.0%
39		Telephone and Data System, Inc.		2,590
		Toys & Games--0.1%
223	1	Marvel Entertainment, Inc.		5,403
		Truck Manufacturing--0.9%
817		PACCAR, Inc.		66,847
		Undesignated Consumer Cyclicals--1.8%
1,204	1	ITT Educational Services, Inc.		127,215
		Undesignated Consumer Staples--0.1%
139	1	Nutri/System, Inc.		7,745
		TOTAL COMMON STOCKS (IDENTIFIED COST $6,840,306)		7,224,466
		MUTUAL FUND--2.0%
148,403	2,3	Prime Value Obligations Fund, Institutional Shares, 5.25% (AT NET ASSET VALUE)		148,403
		TOTAL INVESTMENTS --101.3% (IDENTIFIED COST $6,988,709)4		7,372,869
		OTHER ASSETS AND LIABILITIES--(1.3)%		(95,806)
		TOTAL NET ASSETS--100%	$	7,277,063

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $6,996,271.

Note: The categories of investments are shown as a percentage of total net assets at
July 31, 2007.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2007

Assets:
Total investments in securities, at value including $148,403 of investments in an affiliated issuer (Note 5) (identified cost $6,988,709)			$	7,372,869
Income receivable				321
Receivable for investments sold				17,993
Receivable for shares sold				43,493
TOTAL ASSETS				7,434,676
Liabilities:
Payable for investments purchased	$	80,491
Payable for shares redeemed		27,381
Payable for transfer and dividend disbursing agent fees and expenses		11,374
Payable for Directors’/Trustees’ fees		110
Payable for audit fees		14,500
Payable for portfolio accounting fees		5,495
Payable for distribution services fee (Note 5)		88
Payable for shareholder services fee (Note 5)		3,243
Payable for share registration costs		7,824
Accrued expenses		7,107
TOTAL LIABILITIES				157,613
Net assets for 557,709 shares outstanding			$	7,277,063
Net Assets Consist of:
Paid-in capital			$	6,787,071
Net unrealized appreciation of investments				384,160
Accumulated net realized gain on investments				105,832
TOTAL NET ASSETS			$	7,277,063
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($708,041 ÷ 54,053 shares outstanding), no par value, unlimited shares authorized				$13.10
Offering price per share				$13.10
Redemption proceeds per share				$13.10
Class A Shares:
Net asset value per share ($6,445,771 ÷ 494,072 shares outstanding), no par value, unlimited shares authorized				$13.05
Offering price per share (100/94.50 of $13.05)1				$13.81
Redemption proceeds per share				$13.05
Class C Shares:
Net asset value per share ($123,251 ÷ 9,584 shares outstanding), no par value, unlimited shares authorized				$12.86
Offering price per share				$12.86
Redemption proceeds per share (99.00/100 of $12.86)1				$12.73

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, 2007

Investment Income:
Dividends (including $951 received from an affiliated issuer (Note 5))							$	13,525
Interest								1,691
TOTAL INCOME								15,216
Expenses:
Investment adviser fee (Note 5)				$	21,044
Administrative personnel and services fee (Note 5)					229,992
Custodian fees					14,723
Transfer and dividend disbursing agent fees and expenses					47,546
Auditing fees					15,210
Legal fees					7,487
Portfolio accounting fees					68,530
Distribution services fee--Class A Shares (Note 5)					176
Distribution services fee--Class C Shares (Note 5)					311
Shareholder services fee--Class A Shares (Note 5)					4,537
Shareholder services fee--Class C Shares (Note 5)					90
Share registration costs					61,764
Printing and postage					18,843
Insurance premiums					6,070
Miscellaneous					6,115
TOTAL EXPENSES					502,438
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(21,044	)
Waiver of administrative personnel and services fee (Note 5)		(106,536	)
Waiver of transfer and dividend disbursing agent fees and expenses		(13,090	)
Waiver of portfolio accounting fees		(21,554	)
Reimbursement of other operating expenses (Note 5)		(305,878	)
TOTAL WAIVERS AND REIMBURSEMENTS					(468,102	)
Net expenses								34,336
Net investment income (loss)								(19,120	)
Realized and Unrealized Gain on Investments:
Net realized gain on investments								127,473
Net change in unrealized appreciation of investments								379,049
Net realized and unrealized gain on investments								506,522
Change in net assets resulting from operations							$	487,402

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Year Ended 7/31/2007			Period Ended 7/31/2006	1
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(19,120	)	$	(2,184	)
Net realized gain on investments		127,473			16,974
Net change in unrealized appreciation/depreciation of investments		379,049			5,111
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		487,402			19,901
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares		(8,652	)		--
Class A Shares		(8,228	)		--
Class C Shares		(431	)		--
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS		(17,311	)		--
Share Transactions:
Proceeds from sale of shares		7,320,573			528,722
Net asset value of shares issued to shareholders in payment of distributions declared		16,366			--
Cost of shares redeemed		(865,450	)		(213,610	)
Redemption fees		470			--
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		6,471,959			315,112
Change in net assets		6,942,050			335,013
Net Assets:
Beginning of period		335,013			--
End of period	$	7,277,063		$	335,013

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the
  over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• for investments in other open-end registered investment companies, based on net asset value (NAV);
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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 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.

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 7/31/2007					Period Ended 7/31/20061
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	71,994		$	904,172		31,504		$	316,914
Shares issued to shareholders in payment of distributions declared	738			8,505		--			--
Shares redeemed	(39,756	)		(518,903	)	(10,427	)		(115,165	)
Redemption fees	--			194		--			--
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	32,976		$	393,968		21,077		$	201,749
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	511,500		$	6,300,790		18,783		$	206,180
Shares issued to shareholders in payment of distributions declared	659			7,566		--			--
Shares redeemed	(27,853	)		(342,042	)	(9,017	)		(98,445	)
Redemption fees	--			262		--			--
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	484,306		$	5,966,576		9,766		$	107,735
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	9,419		$	115,611		523		$	5,628
Shares issued to shareholders in payment of distributions declared	26			295		--			--
Shares redeemed	(384	)		(4,505	)	--			--
Redemption fees	--			14		--			--
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	9,061		$	111,415		523		$	5,628
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	526,343		$	6,471,959		31,366		$	315,112

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

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 redeem 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.

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, 2007, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gains
$19,120	$(19,120)

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, 2007, was as follows:

	2007
Ordinary income1	$16,615
Long-term capital gains	$696

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	90,764
Undistributed long-term capital gain	$	22,630
Net unrealized appreciation	$	376,598

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, 2007, the cost of investments for federal tax purposes was $6,996,271. The net unrealized appreciation of investments for federal tax purposes was $376,598. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $578,872 and net unrealized depreciation from investments for those securities having an excess of cost over value of $202,274.

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

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. For the year ended July 31, 2007, the Adviser waived $21,030 and reimbursed $305,878 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 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. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 5.280% of average daily net assets of the Fund. FAS waived $106,536 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 of up to 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	0.25%
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%

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, 2007, FSC retained $299 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC retained $1,093 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. For the year ended July 31, 2007, 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 (including the distribution (12b-1) fee) paid by the Fund’s Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.25%, 1.50% and 2.25%, respectively, for the fiscal year ending July 31, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $14 in connection with the affiliated mutual fund listed below. Transactions with the affiliated company during the year ended July 31, 2007 were as follows:

Affiliate	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	--	888,550	740,147	148,403	$148,403	$951

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, 2007, were as follows:

Purchases	$	9,753,606
Sales	$	3,368,828

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

11. FEDERAL TAX INFORMATION (UNAUDITED)

For the year ended July 31, 2007, the amount of long-term capital gains designated by the Fund was $696.

For the fiscal year ended July 31, 2007, 17.64% 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, 2007, 17.82% 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, 2007, 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 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
September 19, 2007

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. As of December 31, 2006, the Trust comprised 8 portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

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 15 Old Timber Trail Pittsburgh, PA 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began Serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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 Began Serving	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 CHIEF COMPLIANCE OFFICER AND SENIOR VICE PRESIDENT 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

FEDERATED MDT MID CAP GROWTH FUND (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contract at meetings held in May 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

For the one year period ending December 31, 2006, 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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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 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 his 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. For 2006, 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 in 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 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 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT Small
Cap Core Fund

Established 2005

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2007

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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$11.11		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.10	)3	(0.13	)3
Net realized and unrealized gain on investments	2.21		1.24
TOTAL FROM INVESTMENT OPERATIONS	2.11		1.11
Net Asset Value, End of Period	$13.22		$11.11
Total Return4	18.99	%	11.10	%
Ratios to Average Net Assets:
Net expenses	1.75	%	2.01	%5
Net investment income (loss)	(0.77	)%	(1.16	)%5
Expense waiver/reimbursement6	7.96	%	9.41	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$2,414		$324
Portfolio turnover	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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$11.05		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.19	)3	(0.23	)3
Net realized and unrealized gain on investments	2.18		1.28
TOTAL FROM INVESTMENT OPERATIONS	1.99		1.05
Net Asset Value, End of Period	$13.04		$11.05
Total Return4	18.01	%	10.50	%
Ratios to Average Net Assets:
Net expenses	2.50	%	2.76	%5
Net investment income (loss)	(1.52	)%	(1.91	)%5
Expense waiver/reimbursement6	8.63	%	9.41	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$3,299		$1,505
Portfolio turnover	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; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual:
Class A Shares	$1,000	$1,050.00	$8.79
Class C Shares	$1,000	$1,045.70	$12.63
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,016.22	$8.65
Class C Shares	$1,000	$1,012.45	$12.42

1 Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The annualized net expense ratios are as follows:

Class A Shares	1.73%
Class C Shares	2.49%

Management’s Discussion of Fund Performance

The fund’s total return for the fiscal year ended July 31, 2007 was 18.99% for Class A Shares and 18.01% for Class C Shares.¹ The total return of the Russell 2000^® Index was 12.12% 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 2000^® Index. The total return of the Lipper Small-Cap Core Funds Index was 16.16% for the same period.³

1 The fund is the successor to the MDT Small 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 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^® 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.

3 The Lipper Small-Cap Core Funds Index is an average of funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) less than 250% of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Small-cap growth funds typically have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P SmallCap 600 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.

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000^® Index, which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index⁴, which exceeded the 15.48% and 12.12% results for the Russell Top 200^® Index⁵ and the Russell 2000^® Index, respectively. Growth stocks outperformed value stocks by a wide margin during the year with the Russell 3000^® Growth Index⁶ returning 19.24% as compared to 12.97% for the Russell 3000^® Value Index.⁷

The best performing sectors during the reporting period in the Russell 3000 Index were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

FUND PERFORMANCE

The most positive contributor to the fund’s performance was its overweight relative to the Russell 2000^® Index in the Industrials and Materials sectors as well as stock selection in those sectors. Additionally, the fund’s stock selection in the Consumer Discretionary and Health Care sectors provided positive contributions to fund performance. The fund’s performance was negatively impacted by its underweight relative to the Russell 2000^® Index in the Information Technology sector and by its stock selection in that sector.

Individual stocks contributing to the fund’s out performance relative to the Russell 2000^® Index included: Crocs Inc., Chaparral Steel Co., Cleveland Cliffs Inc., Guess Inc., and Priceline.com Inc.

Individual stocks detracting from the fund’s performance relative to the Russell 2000^® Index included: Downey Financial Corp., Daktronics Inc., Group 1 Automotive, Aquantive Inc., and Landamerica Financial Group.

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 can not 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 can not 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 can not 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 can not be made directly 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 Small Cap Core Fund (Class A Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, compared to the Russell 2000^® Index² and the Lipper Small-Cap Core Funds Index.³

Average Annual Total Returns for the Period Ended 7/31/2007
1 Year	12.41%
Start of Performance (9/15/2005)	12.60%

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 Russell 2000^® Index is unmanaged and, unlike the Fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

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

The graph below illustrates the hypothetical investment of $10,000¹ in the Federated MDT Small Cap Core Fund (Class C Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, compared to the Russell 2000^® Index² and the Lipper Small-Cap Core Funds Index.³

Average Annual Total Returns for the Period Ended 7/31/2007
1 Year	17.01%
Start of Performance (9/15/2005)	15.19%

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 Russell 2000^® Index is unmanaged and, unlike the Fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

Portfolio of Investments Summary Table

At July 31, 2007, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Regional Bank	8.2%
Electrical Equipment	4.2%
Shoes	3.6%
Specialty Chemicals	3.4%
Oil Well Supply	3.3%
Software Packaged/Custom	3.3%
Property Liability Insurance	2.8%
Specialty Machinery	2.8%
Medical Supplies	2.7%
Savings & Loan	2.7%
Telecommunication Equipment & Services	2.7%
Financial Services	2.5%
Electric & Electrical Original Equipment Manufacturers	2.3%
Internet Services	2.1%
Offshore Driller	2.0%
Home Building	1.8%
Defense Aerospace	1.7%
Industrial Machinery	1.7%
Multi-Line Insurance	1.7%
Oil Service, Explore & Drill	1.7%
Personal Agency	1.7%
Restaurant	1.6%
Specialty Retailing	1.6%
Clothing Stores	1.5%
Contracting	1.5%
Insurance Brokerage	1.5%
Mortgage and Title	1.5%
Undesignated Consumer Cyclicals	1.5%
Defense Electronics	1.4%
Apparel	1.3%
Greeting Cards	1.3%
Trucking	1.3%
Undesignated Consumer Staples	1.2%
Commodity Chemicals	1.0%
Electric Utility	1.0%
Other2	21.0%
Cash Equivalents3	1.8%
Other Assets and Liabilities--Net4	(0.9)%
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, 2007

Shares				Value
		COMMON STOCKS--99.1%
		Agricultural Chemicals--0.8%
873		CF Industries Holdings, Inc.	$	50,180
280		FMC Corp.		24,956
		TOTAL		75,136
		Airline - National--0.2%
358	1	Atlas Air Worldwide Holdings, Inc.		19,407
		Aluminum--0.8%
660	1	Century Aluminum Co.		34,016
544		Kaiser Aluminum Corp.		36,725
		TOTAL		70,741
		Apparel--1.3%
1,154	1	Maidenform Brands, Inc.		20,749
555	1	Volcom, Inc.		19,691
2,106	1	Warnaco Group, Inc.		76,048
		TOTAL		116,488
		Auto Original Equipment Manufacturers--0.9%
2,678		ArvinMeritor, Inc.		53,105
946		Sun Hydraulics Corp.		28,130
		TOTAL		81,235
		Auto Rentals--0.3%
407	1	AMERCO		25,987
		Biotechnology--0.8%
1,023	1	LifeCell Corp.		31,396
3,440	1	ViroPharma, Inc.		44,204
		TOTAL		75,600
		Book Publishing--0.2%
675	1	Scholastic Corp.		21,722
		Building Materials--0.3%
1,147		Apogee Enterprises, Inc.		29,547
		Cellular Communications--0.3%
1,007	1	USA Mobility, Inc.		24,037
		Cement--0.5%
918	1	Astec Industries, Inc.		47,892
		Clothing Stores--1.5%
2,450	1	Aeropostale, Inc.		93,296
828	1	Heelys, Inc.		18,133
		COMMON STOCKS--continued
		Clothing Stores--continued
399	1	Jos A. Bank Clothiers, Inc.	$	13,765
344	1	Tween Brands, Inc.		13,161
		TOTAL		138,355
		Commodity Chemicals--1.0%
3,551		Westlake Chemical Corp.		88,704
		Computer Peripherals--0.7%
1,954	1	Nuance Communications, Inc.		32,202
890	1	Synaptics, Inc.		31,257
		TOTAL		63,459
		Computer Services--0.2%
814	1	Synnex Corp.		16,540
		Contracting--1.5%
2,236	1	Perini Corp.		137,313
		Cosmetics & Toiletries--0.1%
557	1	Helen of Troy Ltd.		12,371
		Crude Oil & Gas Production--0.6%
1,395	1	Swift Energy Co.		59,622
		Defense Aerospace--1.7%
1,684	1	AAR Corp.		50,234
1,026	1	GenCorp, Inc.		12,127
1,284		Triumph Group, Inc.		97,854
		TOTAL		160,215
		Defense Electronics--1.4%
756		EDO Corp.		24,986
2,313	1	FLIR Systems, Inc.		100,962
		TOTAL		125,948
		Diversified Leisure--0.1%
238	1	Life Time Fitness, Inc.		12,238
		Drug Stores--0.9%
1,801		Longs Drug Stores Corp.		87,096
		Electric & Electrical Original Equipment Manufacturers--2.3%
1,522		Cubic Corp.		41,901
2,122	1	General Cable Corp.		168,699
		TOTAL		210,600
		Electric Utility--1.0%
3,517		Portland General Electric Co.		94,642
		Electrical - Radio & TV--0.2%
619	1	Universal Electronics, Inc.		21,814
		COMMON STOCKS--continued
		Electrical Equipment -- 4.2%
2,129		Belden CDT, Inc.	$	116,627
1,283		Encore Wire Corp.		39,196
8,225	1	GrafTech International Ltd.		127,405
480	1	Houston Wire & Cable Co.		12,370
1,986		Smith (A.O.) Corp.		96,420
		TOTAL		392,018
		Electronic Instruments--0.6%
1,083	1	Advanced Analogic Technologies, Inc.		9,617
443		Analogic Corp.		29,411
367	1	Cymer, Inc.		15,689
116	1	FEI Co.		3,327
		TOTAL		58,044
		Ethical Drugs--0.8%
1,868	1	Salix Pharmaceuticals Ltd.		20,585
2,296	1	Sciele Pharma, Inc.		53,244
		TOTAL		73,829
		Financial Services--2.5%
1,547	1	CompuCredit Corp.		40,609
3,167		Deluxe Corp.		119,586
1,220		Greenhill & Co., Inc.		70,760
		TOTAL		230,955
		Food Wholesaling--0.5%
1,810		Winn-Dixie Stores, Inc.		48,345
		Furniture--0.2%
1,468		Furniture Brands International, Inc.		16,177
		Greeting Cards--1.3%
4,870		American Greetings Corp., Class A		120,435
		Home Building--1.8%
1,954	1	Meritage Home Corp.		38,103
3,976		Ryland Group, Inc.		132,202
		TOTAL		170,305
		Home Products--0.3%
1,129		Tupperware Brands Corp.		29,365
		Hotels and Motels--0.0%
134	1	McCormick & Schmick’s Seafood Restaurants, Inc.		3,267
		Household Appliances--0.4%
1,656	1	Goodman Global, Inc.		39,943
		COMMON STOCKS--continued
		Industrial Machinery--1.7%
0		Gorman Rupp Co.	$	7
2,148		Valmont Industries, Inc.		162,367
		TOTAL		162,374
		Insurance Brokerage--1.5%
1,656	1	AmTrust Financial Services, Inc.		24,294
937		Life Partners Holdings, Inc.		40,450
2,022		Odyssey Re Holdings Corp.		71,174
		TOTAL		135,918
		Internet Services--2.1%
453	1	Blue Nile, Inc.		34,251
1,855	1	CNET, Inc.		13,968
2,339	1	Priceline.com, Inc.		149,228
		TOTAL		197,447
		Leasing--0.1%
472		Financial Federal Corp.		13,381
		Life Insurance--0.3%
595		Delphi Financial Group, Inc.		23,901
564		Phoenix Cos., Inc.		7,778
		TOTAL		31,679
		Machine Tools--0.5%
1,089	1	AZZ, Inc.		38,659
176		Hurco Co., Inc.		8,198
		TOTAL		46,857
		Major Steel Producer--0.1%
237		Ryerson, Inc.		7,605
		Maritime--0.2%
251	1	Genco Shipping & Trading Ltd.		14,139
		Medical Supplies--2.7%
1,558	1	Align Technology, Inc.		40,664
505	1	Emergency Medical Services Corp., Class A		19,700
2,725	1	Kyphon, Inc.		178,814
520	1	Obagi Medical Products, Inc.		8,804
		TOTAL		247,982
		Medical Technology--0.5%
1,489	1	Greatbatch Technologies, Inc.		46,204
		COMMON STOCKS--continued
		Metal Fabrication--0.8%
1,040		Barnes Group, Inc.	$	32,448
1,790		Worthington Industries, Inc.		37,053
		TOTAL		69,501
		Mini-Mill Producer--0.6%
610		Quanex Corp.		27,487
595		Schnitzer Steel Industries, Inc., Class A		32,243
		TOTAL		59,730
		Miscellaneous Communications--0.2%
858		Iowa Telecommunication Services, Inc.		17,640
		Miscellaneous Food Products--0.2%
881		Fresh Del Monte Produce, Inc.		22,598
		Miscellaneous Machinery--0.2%
733	1	Lamson & Sessions Co.		16,229
		Miscellaneous Metals--0.2%
435		Metal Management, Inc.		18,274
		Miscellaneous Components--0.5%
2,164	1	MKS Instruments, Inc.		49,123
		Mortgage and Title--1.5%
1,768		LandAmerica Financial Group, Inc.		135,411
		Motion Pictures--0.5%
1,819	1	Macrovision Corp.		43,256
		Multi-Industry Transportation--0.6%
1,559	1	Hub Group, Inc., Class A		53,037
		Multi-Line Insurance--1.7%
436		EMC Insurance Group, Inc.		10,739
220		FBL Financial Group, Inc., Class A		7,742
410	1	FPIC Insurance Group, Inc.		14,260
339		Harleysville Group, Inc.		9,495
5		Infinity Property & Casualty		220
406		Midland Co.		19,293
298		Safety Insurance Group, Inc.		9,923
2,040		Zenith National Insurance Corp.		82,334
		TOTAL		154,006
		Newspaper Publishing--0.3%
1,762		Lee Enterprises, Inc.		31,029
		Office Furniture--0.2%
941		Knoll, Inc.		18,641
		COMMON STOCKS--continued
		Offshore Driller--2.0%
2,070	1	Bristow Group, Inc.	$	98,180
1,497	1	Hornbeck Offshore Services, Inc.		64,446
1,817	1	Pioneer Drilling Co.		22,858
		TOTAL		185,484
		Oil Service, Explore & Drill--1.7%
1,178	1	Comstock Resources, Inc.		31,641
1,994	1	W-H Energy Services, Inc.		127,776
		TOTAL		159,417
		Oil Well Supply--3.3%
1,493		Carbo Ceramics, Inc.		67,304
519		Gulf Island Fabrication, Inc.		17,729
653		Lufkin Industries, Inc.		38,664
4,145	1	Oil States International, Inc.		181,302
		TOTAL		304,999
		Other Communications Equipment--0.3%
2,241		Ikon Office Solutions, Inc.		31,060
		Other Computer Hardware--0.2%
1,634	1	Smart Modular Technologies (WWH), Inc.		20,082
		Other Steel Producer--0.1%
596		Gibraltar Industries, Inc.		11,509
		Paper Products--0.5%
2,329	1	Buckeye Technologies, Inc.		35,704
371		Neenah Paper, Inc.		14,369
		TOTAL		50,073
		Personal Loans--0.4%
1,300		Advanta Corp., Class B		33,371
		Personnel Agency--1.7%
3,369	1	Labor Ready, Inc.		79,374
1,809		Maximus, Inc.		75,598
1	1	Volt Information Science, Inc.		8
		TOTAL		154,980
		Printing--0.6%
2,026		Bowne & Co., Inc.		35,131
1,988	1	Valassis Communications, Inc.		23,598
		TOTAL		58,729
		Property Liability Insurance--2.8%
594	1	American Physicians Capital, Inc.		22,524
1,078	1	CNA Surety Corp.		18,218
		COMMON STOCKS--continued
		Property Liability Insurance--continued
1,247		Horace Mann Educators Corp.	$	22,234
505		National Interstate Corp.		12,878
350		Nymagic, Inc.		12,733
402	1	ProAssurance Corp.		19,851
1,698		RLI Corp.		98,484
2,323		Selective Insurance Group, Inc.		47,668
292	1	Triad Guaranty, Inc.		8,050
		TOTAL		262,640
		Recreational Goods--0.3%
831	1	Smith & Wesson Holding Corp.		15,623
266	1	Steinway Musical Instruments, Inc.		8,903
		TOTAL		24,526
		Regional Bank--8.2%
520		Amcore Financial, Inc.		12,558
1,160		Bancorpsouth, Inc.		27,086
1,460		CVB Financial Corp.		14,289
755		Cathay General Bancorp, Inc.		23,111
1,593		Central Pacific Financial Corp.		44,939
347		City Bank Lynwood, WA		8,448
658		City Holding Co.		21,615
550		Community Bank System, Inc.		9,895
233		Community Trust Bancorp, Inc.		6,682
2,307		Corus Bankshares, Inc.		37,512
897		FNB Corp.		13,464
244		First Merchants Corp.		4,941
2,030		First Midwest Bancorp, Inc.		66,767
177	1	First Regional Bancorp		3,807
1,898		FirstMerit Corp.		34,790
188		Great Southern Bancorp, Inc.		4,728
277		Greene Bancshares, Inc.		9,158
865		Hancock Holding Co.		30,595
1,283		Hanmi Financial Corp.		18,603
469		Independent Bank Corp.- Massachusetts		12,705
586		Irwin Financial Corp.		6,868
729		NBT Bancorp, Inc.		13,188
1,406		National Penn Bancshares, Inc.		20,781
2,231		Old National Bancorp		32,126
304		Old Second Bancorp, Inc.		8,375
		COMMON STOCKS--continued
		Regional Bank--continued
1,713		Pacific Capital Bancorp	$	35,802
420		Park National Corp.		33,369
1,243		Provident Bankshares Corp.		35,674
525		S & T Bancorp, Inc.		16,317
178		Tompkins County Trust Co., Inc.		5,660
1,176		Trustmark Corp.		29,435
1,718		United Bankshares, Inc.		47,846
1,079		WestAmerica Bancorp.		44,163
1,067		Whitney Holding Corp.		26,664
		TOTAL		761,961
		Restaurant--1.6%
1,116	1	Buffalo Wild Wings, Inc.		48,234
765		CBRL Group, Inc.		29,399
2,255	1	Rare Hospitality International, Inc.		60,344
343	1	Red Robin Gourmet Burgers, Inc.		13,230
		TOTAL		151,207
		Rubber--0.1%
297		Cooper Tire & Rubber Co.		6,828
		Savings & Loan--2.7%
866		BankUnited Financial Corp.		14,583
2,604		Downey Financial Corp.		138,507
177		First Financial Holdings, Inc.		4,790
2,278		First Niagara Financial Group, Inc.		29,295
558	1	FirstFed Financial Corp.		25,222
1,291		Flagstar Bancorp, Inc.		13,814
172		ITLA Capital Corp.		7,310
685		PFF Bancorp, Inc.		11,453
130		WSFS Financial Corp.		7,179
		TOTAL		252,153
		Securities Brokerage--0.7%
4,836	1	Knight Capital Group, Inc., Class A		68,381
		Semiconductor Manufacturing--0.3%
1,702	1	Semtech Corp.		27,658
		Semiconductor Manufacturing Equipment--0.2%
1,373	1	Mattson Technology, Inc.		13,675
		Services to Medical Professionals--0.3%
1,262	1	Nighthawk Radiology Holdings, Inc.		26,035
		COMMON STOCKS--continued
		Shoes--3.6%
604		Brown Shoe Co., Inc.	$	12,648
3,324	1	Crocs, Inc.		197,180
1,182	1	Deckers Outdoor Corp.		121,864
		TOTAL		331,692
		Software Packaged/Custom--3.3%
798	1	Blue Coat Systems, Inc.		38,887
586	1	Double-Take Software, Inc.		8,942
4,662	1	Informatica Corp.		64,988
2,178	1	JDA Software Group, Inc.		49,245
1,089	1	Omniture, Inc.		24,884
1,075	1	S1 Corp.		7,815
748	1	SPSS, Inc.		30,698
914	1	Synchronoss Technologies, Inc.		33,233
1,683	1	VASCO Data Security International, Inc.		44,549
		TOTAL		303,241
		Specialty Chemicals--3.4%
2,718		Chemed Corp.		171,995
4,245	1	Hercules, Inc.		88,126
1,974		Koppers Holdings, Inc.		58,371
		TOTAL		318,492
		Specialty Machinery--2.8%
1,279		Cascade Corp.		86,703
1,031	1	Gardner Denver, Inc.		42,879
108	1	Stratasys, Inc.		4,753
2,134		Woodward Governor Co.		123,239
		TOTAL		257,574
		Specialty Retailing--1.6%
2,711		Asbury Automotive Group, Inc.		59,967
314		Lithia Motors, Inc., Class A		6,465
1,329		Pep Boys-Manny Moe & Jack		22,500
686	1	Rush Enterprises, Inc., Class A		19,174
416		Sonic Automotive, Inc., Class A		11,398
1,576	1	Zale Corp.		33,458
		TOTAL		152,962
		Telecommunication Equipment & Services--2.7%
1,016	1	Anixter International, Inc.		83,972
2,737	1	CommScope, Inc.		148,975
812	1	Premiere Global Services, Inc.		9,452
		COMMON STOCKS--continued
		Telecommunication Equipment & Services--continued
1,084	1	Tekelec, Inc.	$	13,886
		TOTAL		256,285
		Toys & Games--0.2%
815	1	JAKKS Pacific, Inc.		19,324
		Truck Manufacturing--0.1%
907	1	Accuride Corp.		12,798
		Trucking--1.3%
1,706		Arkansas Best Corp.		61,467
2,227	1	Old Dominion Freight Lines, Inc.		64,271
		TOTAL		125,738
		Undesignated Consumer Cyclicals--1.5%
1,687	1	Blackboard, Inc.		74,616
406	1	Capella Education Co.		18,152
2,356	1	Rent-A-Center, Inc.		45,730
		TOTAL		138,498
		Undesignated Consumer Staples--1.2%
2,592	1	NBTY, Inc.		112,856
		TOTAL COMMON STOCKS (IDENTIFIED COST $9,168,604)		9,225,681
		MUTUAL FUND--1.8%
166,831	2,3	Prime Value Obligations Fund, Institutional Shares, 5.25% (AT NET ASSET VALUE)		166,831
		TOTAL INVESTMENTS--100.9% (IDENTIFIED COST $9,335,435)4		9,392,512
		OTHER ASSET AND LIABILITIES - NET--(0.9)%		(85,123	)
		TOTAL NET ASSETS--100%	$	9,307,389

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $9,348,893.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2007.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2007

Assets:
Total investments in securities, at value including $166,831 of investments in an affiliated issuer (Note 5) (identified cost $9,335,435)			$	9,392,512
Income receivable				4,612
Receivable for investments sold				402,966
Receivable for shares sold				48,071
TOTAL ASSETS				9,848,161
Liabilities:
Payable for investments purchased	$	464,550
Payable for shares redeemed		29,647
Payable for transfer disbursing agent fees and expenses		11,508
Payable for portfolio accounting fees		5,467
Payable for distribution services fee (Note 5)		2,759
Payable for shareholder services fee (Note 5)		3,270
Accrued expenses		23,571
TOTAL LIABILITIES				540,772
Net assets for 706,295 shares outstanding			$	9,307,389
Net Assets Consist of:
Paid-in capital			$	8,720,910
Net unrealized appreciation of investments				57,077
Accumulated net realized gain on investments				529,402
TOTAL NET ASSETS			$	9,307,389
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($3,595,204 ÷ 270,806 shares outstanding), no par value, unlimited shares authorized				$13.28
Offering price per share				$13.28
Redemption proceeds per share				$13.28
Class A Shares:
Net asset value per share ($2,413,603 ÷ 182,612 shares outstanding), no par value, unlimited shares authorized				$13.22
Offering price per share (100/94.50 of $13.22)1				$13.99
Redemption proceeds per share				$13.22
Class C Shares:
Net asset value per share ($3,298,582 ÷ 252,877 shares outstanding), no par value, unlimited shares authorized				$13.04
Offering price per share				$13.04
Redemption proceeds per share (99.00/100 of $13.04)1				$12.91

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, 2007

Investment Income:
Dividends (including $1,241 received from an affiliated issuer (Note 5))							$	51,630
Interest								4,044
TOTAL INCOME								55,674
Expenses:
Investment adviser fee (Note 5)				$	66,597
Administrative personnel and services fee (Note 5)					230,189
Custodian fees					20,091
Transfer and dividend disbursing agent fees and expenses					52,800
Directors’/Trustees’ fees					11
Auditing fees					15,285
Legal fees					7,381
Portfolio accounting fees					74,567
Distribution services fee--Class A Shares (Note 5)					712
Distribution services fee--Class C Shares (Note 5)					18,717
Shareholder services fee--Class A Shares (Note 5)					2,430
Shareholder services fee--Class C Shares (Note 5)					4,184
Share registration costs					58,731
Printing and postage					20,685
Insurance premiums					6,097
Miscellaneous					3,092
TOTAL EXPENSES					581,569
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(66,597	)
Waiver of administrative personnel and services fee (Note 5)		(105,608	)
Waiver of transfer and dividend disbursing agent fees and expenses		(13,502	)
Waiver of portfolio accounting fees		(20,631	)
Reimbursement of other operating expenses (Note 5)		(264,140	)
TOTAL WAIVERS AND REIMBURSEMENTS					(470,478	)
Net expenses								111,091
Net investment income (loss)								(55,417	)
Realized and Unrealized Gain on Investments:
Net realized gain on investments								658,018
Net change in unrealized depreciation of investments								108,637
Net realized and unrealized gain on investments								766,655
Change in net assets resulting from operations							$	711,238

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

	Year Ended 7/31/2007			Period Ended 7/31/2006		1
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(55,417	)	$	(12,564	)
Net realized gain (loss) on investments		658,018			(73,199	)
Net change in unrealized appreciation/depreciation of investments		108,637			(51,560	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		711,238			(137,323	)
Share Transactions:
Proceeds from sale of shares		7,293,553			2,847,202
Cost of shares redeemed		(1,310,780	)		(96,501	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		5,982,773			2,750,701
Change in net assets		6,694,011			2,613,378
Net Assets:
Beginning of period		2,613,378			--
End of period	$	9,307,389		$	2,613,378

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• for investments in other open-end registered investment companies, based on net asset value (NAV);
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors; prices for interest rate swaps are furnished by an independent pricing service and are based upon a valuation model incorporating interest rates, yield curves and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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 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.

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 7/31/2007					Period Ended 7/31/20061
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	261,010		$	3,371,221		75,245		$	874,307
Shares redeemed	(60,527	)		(814,585	)	(4,922	)		(55,079	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	200,483		$	2,556,636		70,323		$	819,228
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	169,060		$	2,127,392		32,910		$	383,376
Shares redeemed	(15,640	)		(196,596	)	(3,718	)		(40,206	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	153,420		$	1,930,796		29,192		$	343,170
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	141,475		$	1,794,940		136,302		$	1,589,519
Shares redeemed	(24,800	)		(299,599	)	(100	)		(1,216	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	116,675		$	1,495,341		136,202		$	1,588,303
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	470,578		$	5,982,773		235,717		$	2,750,701

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

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 redeem 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, there were no redemption fees.

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, 2007, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gains
$55,417	$(55,417)

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	504,934
Undistributed long-term capital gain	$	37,926
Net unrealized appreciation	$	43,619

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, 2007 the cost of investments for federal tax purposes was $9,348,893. The net unrealized appreciation of investments for federal tax purposes was $43,619. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $762,897 and net unrealized depreciation from investments for those securities having an excess of cost over value of $719,278.

The Fund used capital loss carryforwards of $1,329 to offset taxable capital gains realized during the year ended July 31, 2007.

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

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any portion of its fee. For the year ended July 31, 2007, the Adviser waived $66,575 and reimbursed $264,140 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 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. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 2.197% of average daily net assets of the Fund. FAS waived $105,608 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 of up to 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	0.25%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribtuion 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%

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, 2007, FSC retained $17,610 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC retained $1,761 in sales charges from the sale of Class A Shares. FSC also retained $1,113 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. Financial intermediaries may include a company affiliated with management of Federated Investors, Inc. For the year ended July 31, 2007, FSSC did not receive any fees paid by the Fund. A financial intermediary affiliated with management of Federated Investors, Inc. received $130 of Service Fees for the year ended July 31, 2007.

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 (including the distribution (12b-1) fee) 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, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $22 in connection with the affiliated mutual fund listed below. Transactions with the affiliated company during the year ended July 31, 2007 are as follows:

Affiliate	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	--	1,223,404	1,056,573	166,831	$166,831	$1,241

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, 2007, were as follows:

Purchases	$	19,232,705
Sales	$	13,340,832

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

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, 2007, 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 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
September 19, 2007

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. As of December 31, 2006, the Trust comprised eight portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

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 15 Old Timber Trail Pittsburgh, PA TRUSTEE Began serving: Ausust 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/ Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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 Began Serving	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

FEDERATED MDT SMALL CAP CORE FUND (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contract at meetings held in May 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

For the one year period ending December 31, 2006, 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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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 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 his 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. For 2006, 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 in 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 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 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT Small Cap Core Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2007

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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$11.14		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.07	)3	(0.10	)3
Net realized and unrealized gain on investments	2.21		1.24
TOTAL FROM INVESTMENT OPERATIONS	2.14		1.14
Net Asset Value, End of Period	$13.28		$11.14
Total Return4	19.21	%	11.40	%
Ratios to Average Net Assets:
Net expenses	1.50	%	1.76	%5
Net investment income (loss)	(0.51	)%	(0.91	)%5
Expense waiver/reimbursement6	8.14	%	9.41	%5
Supplemental Data
Net assets, end of period (000 omitted)	$3,595		$784
Portfolio turnover	237	%	209	%

1 MDT Small Cap Core Fund (the “Predecessor Fund”) was reorganized into the 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; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual	$1,000	$1,051.50	$7.63
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,017.36	$7.50

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 181/365 (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, 2007 was 19.21% for Institutional Shares.¹ The total return of the Russell 2000^® Index was 12.12% 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 2000^® Index. The total return of the Lipper Small-Cap Core Funds Index was 16.16% for the same period.³

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000^® Index, which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on

1 The fund is the successor to the MDT Small 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 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^® 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.

3 The Lipper Small-Cap Core Funds Index is an average of funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) less than 250% of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Small-cap growth funds typically have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P SmallCap 600 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.

the Russell Midcap^® Index⁴, which exceeded the 15.48% and 12.12% results for the Russell Top 200^® Index⁵ and the Russell 2000^® Index, respectively. Growth stocks outperformed value stocks by a wide margin during the year with the Russell 3000^® Growth Index⁶ returning 19.24% as compared to 12.97% for the Russell 3000^® Value Index.⁷

The best performing sectors during the reporting period in the Russell 3000^® Index were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

FUND PERFORMANCE

The most positive contributor to the fund’s performance was its overweight relative to the Russell 2000^® Index in the Industrials and Materials sectors as well as stock selection in those sectors. Additionally, the fund’s stock selection in the Consumer Discretionary and Health Care sectors provided positive contributions to fund performance. The fund’s performance was negatively impacted by its underweight relative to the Russell 2000^® Index in the Information Technology sector and by its stock selection in that sector.

Individual stocks contributing to the fund’s out performance relative to the Russell 2000^® Index^® included: Crocs Inc., Chaparral Steel Co., Cleveland Cliffs Inc., Guess Inc., and Priceline.com Inc.

Individual stocks detracting from the fund’s performance relative to the Russell 2000^® Index included: Downey Financial Corp., Daktronics Inc., Group 1 Automotive, Aquantive Inc., and Landamerica Financial Group.

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 can not 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 can not 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 can not 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 can not be made directly 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 Small Cap Core Fund (Institutional Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, compared to the Russell 2000^® Index² and the Lipper Small-Cap Core Funds Index.³

Average Annual Total Returns for the Period Ended 7/31/2007
1 Year	19.21%
Start of Performance (9/15/2005)	16.32%

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 Russell 2000^® Index is unmanaged and, unlike the Fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

Portfolio of Investments Summary Table

At July 31, 2007, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Regional Bank	8.2	%
Electrical Equipment	4.2	%
Shoes	3.6	%
Specialty Chemicals	3.4	%
Oil Well Supply	3.3	%
Software Packaged/Custom	3.3	%
Property Liability Insurance	2.8	%
Specialty Machinery	2.8	%
Medical Supplies	2.7	%
Savings & Loan	2.7	%
Telecommunication Equipment & Services	2.7	%
Financial Services	2.5	%
Electric & Electrical Original Equipment Manufacturers	2.3	%
Internet Services	2.1	%
Offshore Driller	2.0	%
Home Building	1.8	%
Defense Aerospace	1.7	%
Industrial Machinery	1.7	%
Multi-Line Insurance	1.7	%
Oil Service, Explore & Drill	1.7	%
Personal Agency	1.7	%
Restaurant	1.6	%
Specialty Retailing	1.6	%
Clothing Stores	1.5	%
Contracting	1.5	%
Insurance Brokerage	1.5	%
Mortgage and Title	1.5	%
Undesignated Consumer Cyclicals	1.5	%
Defense Electronics	1.4	%
Apparel	1.3	%
Greeting Cards	1.3	%
Trucking	1.3	%
Undesignated Consumer Staples	1.2	%
Commodity Chemicals	1.0	%
Electric Utility	1.0	%
Other2	21.0	%
Cash Equivalents3	1.8	%
Other Assets and Liabilities--Net4	(0.9	)%
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, 2007

Shares				Value
		COMMON STOCKS--99.1%
		Agricultural Chemicals--0.8%
873		CF Industries Holdings, Inc.	$	50,180
280		FMC Corp.		24,956
		TOTAL		75,136
		Airline - National--0.2%
358	1	Atlas Air Worldwide Holdings, Inc.		19,407
		Aluminum--0.8%
660	1	Century Aluminum Co.		34,016
544		Kaiser Aluminum Corp.		36,725
		TOTAL		70,741
		Apparel--1.3%
1,154	1	Maidenform Brands, Inc.		20,749
555	1	Volcom, Inc.		19,691
2,106	1	Warnaco Group, Inc.		76,048
		TOTAL		116,488
		Auto Original Equipment Manufacturers--0.9%
2,678		ArvinMeritor, Inc.		53,105
946		Sun Hydraulics Corp.		28,130
		TOTAL		81,235
		Auto Rentals--0.3%
407	1	AMERCO		25,987
		Biotechnology--0.8%
1,023	1	LifeCell Corp.		31,396
3,440	1	ViroPharma, Inc.		44,204
		TOTAL		75,600
		Book Publishing--0.2%
675	1	Scholastic Corp.		21,722
		Building Materials--0.3%
1,147		Apogee Enterprises, Inc.		29,547
		Cellular Communications--0.3%
1,007	1	USA Mobility, Inc.		24,037
		Cement--0.5%
918	1	Astec Industries, Inc.		47,892
		COMMON STOCKS--continued
		Clothing Stores--1.5%
2,450	1	Aeropostale, Inc.	$	93,296
828	1	Heelys, Inc.		18,133
399	1	Jos A. Bank Clothiers, Inc.		13,765
344	1	Tween Brands, Inc.		13,161
		TOTAL		138,355
		Commodity Chemicals--1.0%
3,551		Westlake Chemical Corp.		88,704
		Computer Peripherals--0.7%
1,954	1	Nuance Communications, Inc.		32,202
890	1	Synaptics, Inc.		31,257
		TOTAL		63,459
		Computer Services--0.2%
814	1	Synnex Corp.		16,540
		Contracting--1.5%
2,236	1	Perini Corp.		137,313
		Cosmetics & Toiletries--0.1%
557	1	Helen of Troy Ltd.		12,371
		Crude Oil & Gas Production--0.6%
1,395	1	Swift Energy Co.		59,622
		Defense Aerospace--1.7%
1,684	1	AAR Corp.		50,234
1,026	1	GenCorp, Inc.		12,127
1,284		Triumph Group, Inc.		97,854
		TOTAL		160,215
		Defense Electronics--1.4%
756		EDO Corp.		24,986
2,313	1	FLIR Systems, Inc.		100,962
		TOTAL		125,948
		Diversified Leisure--0.1%
238	1	Life Time Fitness, Inc.		12,238
		Drug Stores--0.9%
1,801		Longs Drug Stores Corp.		87,096
		Electric & Electrical Original Equipment Manufacturers--2.3%
1,522		Cubic Corp.		41,901
2,122	1	General Cable Corp.		168,699
		TOTAL		210,600
		COMMON STOCKS--continued
		Electric Utility--1.0%
3,517		Portland General Electric Co.	$	94,642
		Electrical - Radio & TV--0.2%
619	1	Universal Electronics, Inc.		21,814
		Electrical Equipment -- 4.2%
2,129		Belden CDT, Inc.		116,627
1,283		Encore Wire Corp.		39,196
8,225	1	GrafTech International Ltd.		127,405
480	1	Houston Wire & Cable Co.		12,370
1,986		Smith (A.O.) Corp.		96,420
		TOTAL		392,018
		Electronic Instruments--0.6%
1,083	1	Advanced Analogic Technologies, Inc.		9,617
443		Analogic Corp.		29,411
367	1	Cymer, Inc.		15,689
116	1	FEI Co.		3,327
		TOTAL		58,044
		Ethical Drugs--0.8%
1,868	1	Salix Pharmaceuticals Ltd.		20,585
2,296	1	Sciele Pharma, Inc.		53,244
		TOTAL		73,829
		Financial Services--2.5%
1,547	1	CompuCredit Corp.		40,609
3,167		Deluxe Corp.		119,586
1,220		Greenhill & Co., Inc.		70,760
		TOTAL		230,955
		Food Wholesaling--0.5%
1,810		Winn-Dixie Stores, Inc.		48,345
		Furniture--0.2%
1,468		Furniture Brands International, Inc.		16,177
		Greeting Cards--1.3%
4,870		American Greetings Corp., Class A		120,435
		Home Building--1.8%
1,954	1	Meritage Home Corp.		38,103
3,976		Ryland Group, Inc.		132,202
		TOTAL		170,305
		Home Products--0.3%
1,129		Tupperware Brands Corp.		29,365
		COMMON STOCKS--continued
		Hotels and Motels--0.0%
134	1	McCormick & Schmick’s Seafood Restaurants, Inc.	$	3,267
		Household Appliances--0.4%
1,656	1	Goodman Global, Inc.		39,943
		Industrial Machinery--1.7%
0		Gorman Rupp Co.		7
2,148		Valmont Industries, Inc.		162,367
		TOTAL		162,374
		Insurance Brokerage--1.5%
1,656	1	AmTrust Financial Services, Inc.		24,294
937		Life Partners Holdings, Inc.		40,450
2,022		Odyssey Re Holdings Corp.		71,174
		TOTAL		135,918
		Internet Services--2.1%
453	1	Blue Nile, Inc.		34,251
1,855	1	CNET, Inc.		13,968
2,339	1	Priceline.com, Inc.		149,228
		TOTAL		197,447
		Leasing--0.1%
472		Financial Federal Corp.		13,381
		Life Insurance--0.3%
595		Delphi Financial Group, Inc.		23,901
564		Phoenix Cos., Inc.		7,778
		TOTAL		31,679
		Machine Tools--0.5%
1,089	1	AZZ, Inc.		38,659
176		Hurco Co., Inc.		8,198
		TOTAL		46,857
		Major Steel Producer--0.1%
237		Ryerson, Inc.		7,605
		Maritime--0.2%
251	1	Genco Shipping & Trading Ltd.		14,139
		Medical Supplies--2.7%
1,558	1	Align Technology, Inc.		40,664
505	1	Emergency Medical Services Corp., Class A		19,700
2,725	1	Kyphon, Inc.		178,814
520	1	Obagi Medical Products, Inc.		8,804
		TOTAL		247,982
		COMMON STOCKS--continued
		Medical Technology--0.5%
1,489	1	Greatbatch Technologies, Inc.	$	46,204
		Metal Fabrication--0.8%
1,040		Barnes Group, Inc.		32,448
1,790		Worthington Industries, Inc.		37,053
		TOTAL		69,501
		Mini-Mill Producer--0.6%
610		Quanex Corp.		27,487
595		Schnitzer Steel Industries, Inc., Class A		32,243
		TOTAL		59,730
		Miscellaneous Communications--0.2%
858		Iowa Telecommunication Services, Inc.		17,640
		Miscellaneous Food Products--0.2%
881		Fresh Del Monte Produce, Inc.		22,598
		Miscellaneous Machinery--0.2%
733	1	Lamson & Sessions Co.		16,229
		Miscellaneous Metals--0.2%
435		Metal Management, Inc.		18,274
		Miscellaneous Components--0.5%
2,164	1	MKS Instruments, Inc.		49,123
		Mortgage and Title--1.5%
1,768		LandAmerica Financial Group, Inc.		135,411
		Motion Pictures--0.5%
1,819	1	Macrovision Corp.		43,256
		Multi-Industry Transportation--0.6%
1,559	1	Hub Group, Inc., Class A		53,037
		Multi-Line Insurance--1.7%
436		EMC Insurance Group, Inc.		10,739
220		FBL Financial Group, Inc., Class A		7,742
410	1	FPIC Insurance Group, Inc.		14,260
339		Harleysville Group, Inc.		9,495
5		Infinity Property & Casualty		220
406		Midland Co.		19,293
298		Safety Insurance Group, Inc.		9,923
2,040		Zenith National Insurance Corp.		82,334
		TOTAL		154,006
		Newspaper Publishing--0.3%
1,762		Lee Enterprises, Inc.		31,029
		COMMON STOCKS--continued
		Office Furniture--0.2%
941		Knoll, Inc.	$	18,641
		Offshore Driller--2.0%
2,070	1	Bristow Group, Inc.		98,180
1,497	1	Hornbeck Offshore Services, Inc.		64,446
1,817	1	Pioneer Drilling Co.		22,858
		TOTAL		185,484
		Oil Service, Explore & Drill--1.7%
1,178	1	Comstock Resources, Inc.		31,641
1,994	1	W-H Energy Services, Inc.		127,776
		TOTAL		159,417
		Oil Well Supply--3.3%
1,493		Carbo Ceramics, Inc.		67,304
519		Gulf Island Fabrication, Inc.		17,729
653		Lufkin Industries, Inc.		38,664
4,145	1	Oil States International, Inc.		181,302
		TOTAL		304,999
		Other Communications Equipment--0.3%
2,241		Ikon Office Solutions, Inc.		31,060
		Other Computer Hardware--0.2%
1,634	1	Smart Modular Technologies (WWH), Inc.		20,082
		Other Steel Producer--0.1%
596		Gibraltar Industries, Inc.		11,509
		Paper Products--0.5%
2,329	1	Buckeye Technologies, Inc.		35,704
371		Neenah Paper, Inc.		14,369
		TOTAL		50,073
		Personal Loans--0.4%
1,300		Advanta Corp., Class B		33,371
		Personnel Agency--1.7%
3,369	1	Labor Ready, Inc.		79,374
1,809		Maximus, Inc.		75,598
1	1	Volt Information Science, Inc.		8
		TOTAL		154,980
		Printing--0.6%
2,026		Bowne & Co., Inc.		35,131
1,988	1	Valassis Communications, Inc.		23,598
		TOTAL		58,729
		COMMON STOCKS--continued
		Property Liability Insurance--2.8%
594	1	American Physicians Capital, Inc.	$	22,524
1,078	1	CNA Surety Corp.		18,218
1,247		Horace Mann Educators Corp.		22,234
505		National Interstate Corp.		12,878
350		Nymagic, Inc.		12,733
402	1	ProAssurance Corp.		19,851
1,698		RLI Corp.		98,484
2,323		Selective Insurance Group, Inc.		47,668
292	1	Triad Guaranty, Inc.		8,050
		TOTAL		262,640
		Recreational Goods--0.3%
831	1	Smith & Wesson Holding Corp.		15,623
266	1	Steinway Musical Instruments, Inc.		8,903
		TOTAL		24,526
		Regional Bank--8.2%
520		Amcore Financial, Inc.		12,558
1,160		Bancorpsouth, Inc.		27,086
1,460		CVB Financial Corp.		14,289
755		Cathay General Bancorp, Inc.		23,111
1,593		Central Pacific Financial Corp.		44,939
347		City Bank Lynwood, WA		8,448
658		City Holding Co.		21,615
550		Community Bank System, Inc.		9,895
233		Community Trust Bancorp, Inc.		6,682
2,307		Corus Bankshares, Inc.		37,512
897		FNB Corp.		13,464
244		First Merchants Corp.		4,941
2,030		First Midwest Bancorp, Inc.		66,767
177	1	First Regional Bancorp		3,807
1,898		FirstMerit Corp.		34,790
188		Great Southern Bancorp, Inc.		4,728
277		Greene Bancshares, Inc.		9,158
865		Hancock Holding Co.		30,595
1,283		Hanmi Financial Corp.		18,603
469		Independent Bank Corp.- Massachusetts		12,705
586		Irwin Financial Corp.		6,868
729		NBT Bancorp, Inc.		13,188
1,406		National Penn Bancshares, Inc.		20,781
		COMMON STOCKS--continued
2,231		Old National Bancorp	$	32,126
304		Old Second Bancorp, Inc.		8,375
1,713		Pacific Capital Bancorp		35,802
420		Park National Corp.		33,369
1,243		Provident Bankshares Corp.		35,674
525		S & T Bancorp, Inc.		16,317
178		Tompkins County Trust Co., Inc.		5,660
1,176		Trustmark Corp.		29,435
1,718		United Bankshares, Inc.		47,846
1,079		WestAmerica Bancorp.		44,163
1,067		Whitney Holding Corp.		26,664
		TOTAL		761,961
		Restaurant--1.6%
1,116	1	Buffalo Wild Wings, Inc.		48,234
765		CBRL Group, Inc.		29,399
2,255	1	Rare Hospitality International, Inc.		60,344
343	1	Red Robin Gourmet Burgers, Inc.		13,230
		TOTAL		151,207
		Rubber--0.1%
297		Cooper Tire & Rubber Co.		6,828
		Savings & Loan--2.7%
866		BankUnited Financial Corp.		14,583
2,604		Downey Financial Corp.		138,507
177		First Financial Holdings, Inc.		4,790
2,278		First Niagara Financial Group, Inc.		29,295
558	1	FirstFed Financial Corp.		25,222
1,291		Flagstar Bancorp, Inc.		13,814
172		ITLA Capital Corp.		7,310
685		PFF Bancorp, Inc.		11,453
130		WSFS Financial Corp.		7,179
		TOTAL		252,153
		Securities Brokerage--0.7%
4,836	1	Knight Capital Group, Inc., Class A		68,381
		Semiconductor Manufacturing--0.3%
1,702	1	Semtech Corp.		27,658
		Semiconductor Manufacturing Equipment--0.2%
1,373	1	Mattson Technology, Inc.		13,675
		Services to Medical Professionals--0.3%
1,262	1	Nighthawk Radiology Holdings, Inc.		26,035
		COMMON STOCKS--continued
		Shoes--3.6%
604		Brown Shoe Co., Inc.	$	12,648
3,324	1	Crocs, Inc.		197,180
1,182	1	Deckers Outdoor Corp.		121,864
		TOTAL		331,692
		Software Packaged/Custom--3.3%
798	1	Blue Coat Systems, Inc.		38,887
586	1	Double-Take Software, Inc.		8,942
4,662	1	Informatica Corp.		64,988
2,178	1	JDA Software Group, Inc.		49,245
1,089	1	Omniture, Inc.		24,884
1,075	1	S1 Corp.		7,815
748	1	SPSS, Inc.		30,698
914	1	Synchronoss Technologies, Inc.		33,233
1,683	1	VASCO Data Security International, Inc.		44,549
		TOTAL		303,241
		Specialty Chemicals--3.4%
2,718		Chemed Corp.		171,995
4,245	1	Hercules, Inc.		88,126
1,974		Koppers Holdings, Inc.		58,371
		TOTAL		318,492
		Specialty Machinery--2.8%
1,279		Cascade Corp.		86,703
1,031	1	Gardner Denver, Inc.		42,879
108	1	Stratasys, Inc.		4,753
2,134		Woodward Governor Co.		123,239
		TOTAL		257,574
		Specialty Retailing--1.6%
2,711		Asbury Automotive Group, Inc.		59,967
314		Lithia Motors, Inc., Class A		6,465
1,329		Pep Boys-Manny Moe & Jack		22,500
686	1	Rush Enterprises, Inc., Class A		19,174
416		Sonic Automotive, Inc., Class A		11,398
1,576	1	Zale Corp.		33,458
		TOTAL		152,962
		COMMON STOCKS--continued
		Telecommunication Equipment & Services--2.7%
1,016	1	Anixter International, Inc.	$	83,972
2,737	1	CommScope, Inc.		148,975
812	1	Premiere Global Services, Inc.		9,452
1,084	1	Tekelec, Inc.		13,886
		TOTAL		256,285
		Toys & Games--0.2%
815	1	JAKKS Pacific, Inc.		19,324
		Truck Manufacturing--0.1%
907	1	Accuride Corp.		12,798
		Trucking--1.3%
1,706		Arkansas Best Corp.		61,467
2,227	1	Old Dominion Freight Lines, Inc.		64,271
		TOTAL		125,738
		Undesignated Consumer Cyclicals--1.5%
1,687	1	Blackboard, Inc.		74,616
406	1	Capella Education Co.		18,152
2,356	1	Rent-A-Center, Inc.		45,730
		TOTAL		138,498
		Undesignated Consumer Staples--1.2%
2,592	1	NBTY, Inc.		112,856
		TOTAL COMMON STOCKS (IDENTIFIED COST $9,168,604)		9,225,681
		MUTUAL FUND--1.8%
166,831	2,3	Prime Value Obligations Fund, Institutional Shares, 5.25% (AT NET ASSET VALUE)		166,831
		TOTAL INVESTMENTS--100.9% (IDENTIFIED COST $9,335,435)4		9,392,512
		OTHER ASSET AND LIABILITIES - NET--(0.9)%		(85,123	)
		TOTAL NET ASSET--100%	$	9,307,389

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $9,348,893.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2007.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2007

Assets:
Total investments in securities, at value including $166,831 of investments in an affiliated issuer (Note 5) (identified cost $9,335,435)			$	9,392,512
Income receivable				4,612
Receivable for investments sold				402,966
Receivable for shares sold				48,071
TOTAL ASSETS				9,848,161
Liabilities:
Payable for investments purchased	$	464,550
Payable for shares redeemed		29,647
Payable for transfer disbursing agent fees and expenses		11,508
Payable for portfolio accounting fees		5,467
Payable for distribution services fee (Note 5)		2,759
Payable for shareholder services fee (Note 5)		3,270
Accrued expenses		23,571
TOTAL LIABILITIES				540,772
Net assets for 706,295 shares outstanding			$	9,307,389
Net Assets Consist of:
Paid-in capital			$	8,720,910
Net unrealized appreciation of investments				57,077
Accumulated net realized gain on investments				529,402
TOTAL NET ASSETS			$	9,307,389
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($3,595,204 ÷ 270,806 shares outstanding), no par value, unlimited shares authorized				$13.28
Offering price per share				$13.28
Redemption proceeds per share				$13.28
Class A Shares:
Net asset value per share ($2,413,603 ÷ 182,612 shares outstanding), no par value, unlimited shares authorized				$13.22
Offering price per share (100/94.50 of $13.22)1				$13.99
Redemption proceeds per share				$13.22
Class C Shares:
Net asset value per share ($3,298,582 ÷ 252,877 shares outstanding), no par value, unlimited shares authorized				$13.04
Offering price per share				$13.04
Redemption proceeds per share (99.00/100 of $13.04)1				$12.91

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, 2007

Investment Income:
Dividends (including $1,241 received from an affiliated issuer (Note 5))							$	51,630
Interest								4,044
TOTAL INCOME								55,674
Expenses:
Investment adviser fee (Note 5)				$	66,597
Administrative personnel and services fee (Note 5)					230,189
Custodian fees					20,091
Transfer and dividend disbursing agent fees and expenses					52,800
Directors’/Trustees’ fees					11
Auditing fees					15,285
Legal fees					7,381
Portfolio accounting fees					74,567
Distribution services fee--Class A Shares (Note 5)					712
Distribution services fee--Class C Shares (Note 5)					18,717
Shareholder services fee--Class A Shares (Note 5)					2,430
Shareholder services fee--Class C Shares (Note 5)					4,184
Share registration costs					58,731
Printing and postage					20,685
Insurance premiums					6,097
Miscellaneous					3,092
TOTAL EXPENSES					581,569
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(66,597	)
Waiver of administrative personnel and services fee (Note 5)		(105,608	)
Waiver of transfer and dividend disbursing agent fees and expenses		(13,502	)
Waiver of portfolio accounting fees		(20,631	)
Reimbursement of other operating expenses (Note 5)		(264,140	)
TOTAL WAIVERS AND REIMBURSEMENTS					(470,478	)
Net expenses								111,091
Net investment income (loss)								(55,417	)
Realized and Unrealized Gain on Investments:
Net realized gain on investments								658,018
Net change in unrealized depreciation of investments								108,637
Net realized and unrealized gain on investments								766,655
Change in net assets resulting from operations							$	711,238

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Year Ended 7/31/2007			Period Ended 7/31/2006	1
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(55,417	)	$	(12,564	)
Net realized gain (loss) on investments		658,018			(73,199	)
Net change in unrealized appreciation/depreciation of investments		108,637			(51,560	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		711,238			(137,323	)
Share Transactions:
Proceeds from sale of shares		7,293,553			2,847,202
Cost of shares redeemed		(1,310,780	)		(96,501	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		5,982,773			2,750,701
Change in net assets		6,694,011			2,613,378
Net Assets:
Beginning of period		2,613,378			--
End of period	$	9,307,389		$	2,613,378

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• for investments in other open-end registered investment companies, based on net asset value (NAV);
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors; prices for interest rate swaps are furnished by an independent pricing service and are based upon a valuation model incorporating interest rates, yield curves and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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 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.

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 7/31/2007					Period Ended 7/31/20061
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	261,010		$	3,371,221		75,245		$	874,307
Shares redeemed	(60,527	)		(814,585	)	(4,922	)		(55,079	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	200,483		$	2,556,636		70,323		$	819,228
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	169,060		$	2,127,392		32,910		$	383,376
Shares redeemed	(15,640	)		(196,596	)	(3,718	)		(40,206	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	153,420		$	1,930,796		29,192		$	343,170
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	141,475		$	1,794,940		136,302		$	1,589,519
Shares redeemed	(24,800	)		(299,599	)	(100	)		(1,216	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	116,675		$	1,495,341		136,202		$	1,588,303
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	470,578		$	5,982,773		235,717		$	2,750,701

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

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 redeem 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, there were no redemption fees.

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, 2007, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gains
$55,417	$(55,417)

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	504,934
Undistributed long-term capital gain	$	37,926
Net unrealized appreciation	$	43,619

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, 2007 the cost of investments for federal tax purposes was $9,348,893. The net unrealized appreciation of investments for federal tax purposes was $43,619. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $762,897 and net unrealized depreciation from investments for those securities having an excess of cost over value of $719,278.

The Fund used capital loss carryforwards of $1,329 to offset taxable capital gains realized during the year ended July 31, 2007.

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

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any portion of its fee. For the year ended July 31, 2007, the Adviser waived $66,575 and reimbursed $264,140 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 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. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 2.197% of average daily net assets of the Fund. FAS waived $105,608 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 of up to 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	0.25%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribtuion 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%

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, 2007, FSC retained $17,610 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC retained $1,761 in sales charges from the sale of Class A Shares. FSC also retained $1,113 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. Financial intermediaries may include a company affiliated with management of Federated Investors, Inc. For the year ended July 31, 2007, FSSC did not receive any fees paid by the Fund. A financial intermediary affiliated with management of Federated Investors, Inc. received $130 of service fees for the year ended July 31, 2007.

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 (including the distribution (12b-1) fee) 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, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $22 in connection with the affiliated mutual fund listed below. Transactions with the affiliated company during the year ended July 31, 2007 are as follows:

Affiliate	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	--	1,223,404	1,056,573	166,831	$166,831	$1,241

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, 2007, were as follows:

Purchases	$	19,232,705
Sales	$	13,340,832

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

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, 2007, 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 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
September 19, 2007

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. As of December 31, 2006, the Trust comprised eight portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by
calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Address 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 15 Old Timber Trail Pittsburgh, PA TRUSTEE Began serving: Ausust 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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 Began Serving	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

FEDERATED MDT SMALL CAP CORE FUND (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contract at meetings held in May 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

For the one year period ending December 31, 2006, 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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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 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 his 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. For 2006, 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 in 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 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 31421R783

37322 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT Small Cap Growth Fund

Established 2005

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2007

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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$10.59		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.14	)3	(0.17	)3
Net realized and unrealized gain on investments	2.50		0.76
TOTAL FROM INVESTMENT OPERATIONS	2.36		0.59
Net Asset Value, End of Period	$12.95		$10.59
Total Return4	22.29	%	5.90	%
Ratios to Average Net Assets:
Net expenses	1.75	%	2.02	%5
Net investment income (loss)	(1.16	)%	(1.50	)%5
Expense waiver/reimbursement6	25.97	%	22.65	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$532		$157
Portfolio turnover	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 C Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$10.52		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.23	)3	(0.26	)3
Net realized and unrealized gain on investments	2.48		0.78
TOTAL FROM INVESTMENT OPERATIONS	2.25		0.52
Net Asset Value, End of Period	$12.77		$10.52
Total Return4	21.39	%	5.20	%
Ratios to Average Net Assets:
Net expenses	2.50	%	2.77	%5
Net investment income (loss)	(1.92	)%	(2.25	)%5
Expense waiver/reimbursement6	27.07	%	25.65	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$702		$348
Portfolio turnover	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 cost: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual:
Class A Shares	$1,000	$1,116.40	$9.03
Class C Shares	$1,000	$1,112.40	$12.94
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,016.27	$8.60
Class C Shares	$1,000	$1,012.55	$12.33

1 Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The annualized net expense ratios are as follows:

Class A Shares	1.72%
Class C Shares	2.47%

Management’s Discussion of Fund Performance

The fund’s total return for the fiscal year ended July 31, 2007 was 22.29% for Class A Shares, and 21.39% for Class C Shares.¹ The total return of the Russell 2000^® Growth Index was 16.83% 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 2000^® Growth Index. The total return of the Lipper Small-Cap Growth Funds Index was 19.51% for the same period.³

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000^® Index, which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index⁴, which exceeded the 15.48% and 12.12% results for the Russell Top 200^® Index⁵ and the Russell 2000^® Index,⁶ respectively. Growth stocks outperformed value stocks by a wide margin during the year with the Russell 3000^® Growth Index⁷ returning 19.24% as compared to 12.97% for the Russell 3000^® Value Index.⁸

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 The Lipper Small-Cap Growth Funds Index is an average of funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) less than 250% of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Small-cap growth funds typically have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P SmallCap 600 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 can not 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 can not be made directly in an index.

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 can not 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 can not 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 can not be made 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.

The best performing sectors during the reporting period in the Russell 3000^® Index were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

FUND PERFORMANCE

The most positive contributor to the fund’s performance relative to the Russell 2000^® Growth Index was its stock selection in the Industrials, Consumer Discretionary, Financials, and Health Care sectors. Additionally, the fund’s underweight in the Financial Services sector contributed positively to relative performance. The fund’s performance was negatively impacted by its stock selection in the Consumer Staples sector. The fund’s stock selection and underweight in the Information Technology sector also detracted from relative performance.

Individual stocks contributing to the fund’s out performance relative to the Russell 2000^® Growth Index included: Crocs Inc., Chaparral Steel Co., Manitowoc Inc., Priceline.com Inc., and Wellcare Group Inc.

Individual stocks detracting from the fund’s performance relative to the Russell 2000^® Growth Index included: Hansen National Corp., Aquantive Inc., EGL Inc., Daktronics Inc., and Logitech International.

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

The graph below illustrates the hypothetical investment of $10,000¹ in the Federated MDT Small Cap Growth Fund (Class A Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, compared to the Russell 2000^® Growth Index² and the Lipper Small-Cap Growth Funds Index.³

Average Annual Total Returns for the Period Ended 7/31/2007
1 Year	15.52%
Start of Performance (9/15/2005)	11.37%

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 Index 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 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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

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

The graph below illustrates the hypothetical investment of $10,000¹ in the Federated MDT Small Cap Growth Fund (Class C Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, compared to the Russell 2000^® Growth Index² and the Lipper Small-Cap Growth Funds Index.³

Average Annual Total Returns for the Period Ended 7/31/2007
1 Year	20.39%
Start of Performance (9/15/2005)	13.92%

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 Index 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 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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

Portfolio of Investments Summary Table

At July 31, 2007, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Software Packaged/Custom	6.9%
Undesignated Consumer Cyclicals	5.1%
Defense Aerospace	4.7%
Clothing Stores	4.4%
Telecommunications Equipment & Services	4.4%
Medical Supplies	3.5%
Specialty Chemicals	3.1%
Financial Services	3.0%
Shoes	2.7%
Industrial Machinery	2.5%
Oil Service, Explore & Drill	2.2%
Defense Electronics	2.1%
Electric & Electrical Original Equipment Manufacturers	1.9%
Electrical Equipment	1.9%
Food Wholesaling	1.9%
Metal Containers	1.8%
Computer Peripherals	1.7%
Restaurant	1.6%
Building Materials	1.4%
Contracting	1.4%
Specialty Machinery	1.4%
Miscellaneous Machinery	1.3%
Motion Pictures	1.3%
Printing	1.3%
Home Products	1.2%
Medical Technology	1.2%
Offshore Driller	1.2%
Personnel Agency	1.2%
Railroad	1.2%
Services to Medical Professionals	1.2%
Cement	1.1%
Furniture	1.1%
Household Appliances	1.1%
Internet Services	1.1%
Metal Fabrication	1.1%
Oil Well Supply	1.1%
Electronic Instruments	1.0%
Generic Drugs	1.0%
Office Supplies	1.0%
Semiconductor Manufacturing	1.0%
Other2	16.5%
Cash Equivalents3	1.8%
Other Assets and Liabilities--Net4	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, 2007

Shares				Value
		COMMON STOCKS--97.8%
		Advertising--0.2%
2,243	1	Greenfield Online, Inc.	$	36,426
		Agricultural Chemicals--0.8%
5,222		UAP Holding Corp.		141,882
		Apparel--0.5%
952	1	Carter’s, Inc.		20,154
3,658	1	Maidenform Brands, Inc.		65,771
		TOTAL		85,925
		Auto Original Equipment Manufacturers--0.7%
3,906		Sun Hydraulics Corp.		116,086
		Beer--0.7%
2,925	1	The Boston Beer Co., Inc., Class A		119,223
		Biotechnology--0.8%
2,054	1	Air Methods Corp.		78,257
1,032	1	LifeCell Corp.		31,672
1,343	1	PharmaNet Development Group, Inc.		37,604
		TOTAL		147,533
		Building Materials--1.4%
703		Aaon, Inc.		21,027
5,425		Apogee Enterprises, Inc.		139,748
2,609	1	Drew Industries, Inc.		90,741
		TOTAL		251,516
		Cellular Communications--0.2%
1,248	1	USA Mobility, Inc.		29,790
		Cement--1.1%
3,610	1	Astec Industries, Inc.		188,334
		Clothing Stores--4.4%
3,469	1	Aeropostale, Inc.		132,100
3,490		Buckle, Inc.		121,975
2,845	1	Dress Barn, Inc.		51,751
6,422	1	Fossil, Inc.		164,082
4,297	1	Gymboree Corp.		184,986
800	1	Heelys, Inc.		17,520
2,569	1	Jos A. Bank Clothiers, Inc.		88,630
		TOTAL		761,044
		COMMON STOCKS--continued
		Computer Networking--0.7%
4,471	1	FalconStor Software, Inc.	$	46,454
1,740	1	NetScout Systems, Inc.		16,895
3,610	1	Radiant Systems, Inc.		50,179
		TOTAL		113,528
		Computer Peripherals--1.7%
5,837	1	Nuance Communications, Inc.		96,194
288	1	Rimage Corp.		6,924
5,478	1	Synaptics, Inc.		192,387
		TOTAL		295,505
		Computer Services--0.2%
1,555	1	Manhattan Associates, Inc.		43,338
		Construction Machinery--0.5%
1,070		Manitowoc, Inc.		83,107
		Contracting--1.4%
3,564	1	Perini Corp.		218,865
393		Team, Inc.		18,475
		TOTAL		237,340
		Cosmetics & Toiletries--0.8%
2,411	1	Chattem, Inc.		135,402
418		Inter Parfums, Inc.		9,158
		TOTAL		144,560
		Defense Aerospace--4.7%
12,825	1	GenCorp, Inc.		151,591
1,561	1	Orbital Sciences Corp.		33,078
4,908	1	Teledyne Technologies, Inc.		217,768
4,603	1	TransDigm Group, Inc.		189,644
3,078		Triumph Group, Inc.		234,574
		TOTAL		826,655
		Defense Electronics--2.1%
4,086	1	FLIR Systems, Inc.		178,354
3,035		United Industrial Corp.		191,691
		TOTAL		370,045
		Drug Stores--0.8%
2,903		Longs Drug Stores Corp.		140,389
		Electric & Electrical Original Equipment Manufacturers--1.9%
5,039		Cubic Corp.		138,724
2,464	1	General Cable Corp.		195,888
		TOTAL		334,612
		COMMON STOCKS--continued
		Electrical Equipment--1.9%
11,140	1	GrafTech International Ltd.	$	172,559
6,090	1	Houston Wire & Cable Co.		156,939
		TOTAL		329,498
		Electrical - Radio & TV--0.2%
1,167	1	Universal Electronics, Inc.		41,125
		Electronic Instruments--1.0%
1,810	1	Advanced Analogic Technologies, Inc.		16,073
3,020	1	FEI Co.		86,614
1,710	1	Hittite Microwave Corp.		68,776
		TOTAL		171,463
		Ethical Drugs--0.8%
6,290	1	Sciele Pharma, Inc.		145,865
		Financial Services--3.0%
3,650		Deluxe Corp.		137,824
2,133	1	GFI Group, Inc.		158,951
1,969		Greenhill & Co., Inc.		114,202
755	1	Huron Consulting Group, Inc.		51,287
1,299	1	Portfolio Recovery Associates, Inc.		67,873
		TOTAL		530,137
		Food Wholesaling--1.9%
3,763		Nash Finch Co.		151,536
7,039		Winn-Dixie Stores, Inc.		188,012
		TOTAL		339,548
		Furniture--1.1%
6,189		Tempur-Pedic International, Inc.		192,787
		Generic Drugs--1.0%
9,022		Perrigo Co.		168,260
		Home Health Care--0.5%
434	1	Apria Healthcare Group, Inc.		11,379
664	1	Wellcare Health Plans, Inc.		67,237
		TOTAL		78,616
		Home Products--1.2%
8,080		Tupperware Brands Corp.		210,161
		Household Appliances--1.1%
7,834	1	Goodman Global, Inc.		188,956
		COMMON STOCKS--continued
		Industrial Machinery--2.5%
3,411		Actuant Corp.	$	208,003
525	1	Columbus McKinnon Corp.		13,466
2,734		Valmont Industries, Inc.		206,663
		TOTAL		428,132
		Insurance Brokerage--0.5%
2,191		Life Partners Holdings, Inc.		94,585
		International Bank--0.3%
1,313		Preferred Bank Los Angeles, CA		50,419
		Internet Services--1.1%
2,527	1	Priceline.com, Inc.		161,223
1,318	1	Shutterfly, Inc.		33,938
		TOTAL		195,161
		Machine Tools--0.8%
3,245	1	AZZ, Inc.		115,197
943	1	Flotek Industries, Inc.		28,045
		TOTAL		143,242
		Machined Parts Original Equipment Manufacturers--0.4%
2,185		Applied Industrial Technologies, Inc.		62,032
		Maritime--0.6%
3,658		Horizon Lines, Inc., Class A		105,570
		Medical Supplies--3.5%
3,682	1	Align Technology, Inc.		96,100
3,100	1	Emergency Medical Services Corp., Class A		120,931
3,072	1	Kyphon, Inc.		201,585
894	1	NuVasive, Inc.		25,640
2,809	1	Obagi Medical Products, Inc.		47,556
2,560		West Pharmaceutical Services, Inc.		118,477
		TOTAL		610,289
		Medical Technology--1.2%
5,768	1	Greatbatch Technologies, Inc.		178,981
1,221	1	MEDTOX Scientific, Inc.		23,932
		TOTAL		202,913
		Metal Containers--1.8%
857		Greif, Inc., Class A		47,135
4,087	1	Mobile Mini, Inc.		116,766
2,913		Silgan Holdings, Inc.		150,369
		TOTAL		314,270
		COMMON STOCKS--continued
		Metal Fabrication--1.1%
2,686		Barnes Group, Inc.	$	83,803
2,628		Dynamic Materials Corp.		110,560
		TOTAL		194,363
		Miscellaneous Components--0.1%
845	1	Atheros Communications		23,559
		Miscellaneous Machinery--1.3%
4,746		Curtiss Wright Corp.		206,783
267		Regal Beloit Corp.		13,542
		TOTAL		220,325
		Motion Pictures--1.3%
9,388	1	Macrovision Corp.		223,247
		Multi-Industry Capital Goods--0.3%
784	1	Ceradyne, Inc.		58,510
		Multi-Industry Transportation--0.9%
4,859	1	Hub Group, Inc.		165,303
		Office Furniture--0.3%
2,378		Knoll, Inc.		47,108
		Office Supplies--1.0%
2,868	1	United Stationers, Inc.		182,806
		Offshore Driller--1.2%
3,382	1	Bristow Group, Inc.		160,408
657	1	Hornbeck Offshore Services, Inc.		28,284
520	1	Oceaneering International, Inc.		29,203
		TOTAL		217,895
		Oil Service, Explore & Drill--2.2%
1,819	1	Dawson Geophysical Co.		99,336
642	1	McDermott International, Inc.		53,247
1,181	1	Parker Drilling Co.		11,125
3,459	1	W-H Energy Services, Inc.		221,653
		TOTAL		385,361
		Oil Well Supply--1.1%
4,319	1	Oil States International, Inc.		188,913
		Optical Reading Equipment--0.4%
2,349	1	ScanSource, Inc.		63,024
		Other Communications Equipment--0.8%
5,113	1	Netgear, Inc.		141,426
		Other Computer Hardware--0.3%
3,890	1	Smart Modular Technologies (WWH), Inc.		47,808
		COMMON STOCKS--continued
		Personal Loans--0.4%
334		Cash America International, Inc.	$	12,231
2,427	1	Ezcorp, Inc., Class A		29,221
939	1	World Acceptance Corp.		30,226
		TOTAL		71,678
		Personnel Agency--1.2%
474		Barrett Business Services, Inc.		11,964
8,186	1	Labor Ready, Inc.		192,862
		TOTAL		204,826
		Pollution Control--0.5%
1,535		American Ecology, Inc.		31,283
1,506		Waste Holdings, Inc.		48,087
		TOTAL		79,370
		Printing--1.3%
3,579	1	Cenveo, Inc.		75,195
1,868	1	Consolidated Graphics, Inc.		123,120
2,433	1	Valassis Communications, Inc.		28,880
		TOTAL		227,195
		Property Liability Insurance--0.2%
1,451		National Interstate Corp.		37,000
		Railroad--1.2%
5,113		Wabtec Corp.		208,815
		Recreational Goods--0.1%
1,267	1	Smith & Wesson Holding Corp.		23,820
		Recreational Vehicles--0.1%
375		Polaris Industries, Inc., Class A		18,510
		Regional Bank--0.3%
417		City Bank Lynwood, WA		10,166
914	1	SVB Financial Group		48,150
		TOTAL		58,316
		Restaurant--1.6%
4,427	1	Buffalo Wild Wings, Inc.		191,335
562	1	Chipotle Mexican Grill, Inc.		49,647
880	1	Red Robin Gourmet Burgers		33,942
		TOTAL		274,924
		Securities Brokerage--0.1%
425	1	Investment Technology Group, Inc.		16,983
		COMMON STOCKS--continued
		Semiconductor Manufacturing--1.0%
4,521	1	NetLogic Microsystems, Inc.	$	137,800
709	1	Plexus Corp.		17,193
722	1	Silicon Laboratories, Inc.		25,147
		TOTAL		180,140
		Services to Medical Professionals--1.2%
2,336	1	American Dental Partners, Inc.		59,965
6,831	1	Nighthawk Radiology Holdings, Inc.		140,924
		TOTAL		200,889
		Shoes--2.7%
4,046	1	Crocs, Inc.		240,009
2,171	1	Deckers Outdoor Corp.		223,830
382		Wolverine World Wide, Inc.		10,337
		TOTAL		474,176
		Software Packaged/Custom--6.9%
3,825	1	Blue Coat Systems, Inc.		186,392
2,176	1	COMSYS IT Partners, Inc.		39,516
4,239	1	Double-Take Software, Inc.		64,687
4,086	1	Epicor Software Corp.		53,363
14,992	1	Informatica Corp.		208,988
788	1	Omniture, Inc.		18,006
956	1	Progress Software Corp.		28,919
6,801	1	S1 Corp.		49,443
4,744	1	SPSS, Inc.		194,694
3,715	1	Synchronoss Technologies, Inc.		135,077
8,411	1	VASCO Data Security International, Inc.		222,639
		TOTAL		1,201,724
		Specialty Chemicals--3.1%
3,313		Chemed Corp.		209,647
8,672	1	Hercules, Inc.		180,031
5,135		Koppers Holdings, Inc.		151,842
		TOTAL		541,520
		Specialty Machinery--1.4%
564	1	Stratasys, Inc.		24,822
3,711		Woodward Governor Co.		214,310
		TOTAL		239,132
		Specialty Retailing--0.1%
920	1	Conn’s, Inc.		23,340
		COMMON STOCKS--continued
		Surveillance-Detection--0.3%
2,635	1	Lo-Jack Corp.	$	56,178
		Telecommunications Equipment & Services--4.4%
775		Adtran, Inc.		20,220
11,033	1	Arris Group, Inc.		163,509
6,862	1	C-COR Electronics, Inc.		92,294
2,918	1	CommScope, Inc.		158,827
4,319	1	Comtech Telecommunications Corp.		187,747
5,354	1	Dycom Industries, Inc.		149,644
		TOTAL		772,241
		Toys & Games--0.1%
876	1	Marvel Entertainment, Inc.		21,225
		Undesignated Consumer Cyclicals--5.1%
4,790	1	Blackboard, Inc.		211,862
2,097	1	Capella Education Co.		93,757
4,007		DeVRY, Inc.		129,827
612	1	PRA International		17,705
1,659	1	Parexel International Corp.		67,073
421		Strayer Education, Inc.		63,794
1,771	1	Sykes Enterprises, Inc.		29,647
4,609	1	TeleTech Holdings, Inc., Class A		135,182
3,155		Watson Wyatt & Co. Holdings		140,555
		TOTAL		889,402
		Undesignated Consumer Staples--0.2%
973	1	USANA, Inc.		39,270
		TOTAL COMMON STOCKS (IDENTIFIED COST $16,500,140)		17,090,189
		MUTUAL FUND--1.8%
317,904	2,3	Prime Value Obligations Fund, Institutional Shares, 5.25% (AT NET ASSET VALUE)		317,904
		TOTAL INVESTMENTS-- 99.6% (IDENTIFIED COST $16,818,044)4		17,408,093
		OTHER ASSETS AND LIABILTIES -- NET--0.4%		70,682
		TOTAL NET ASSETS--100%	$	17,478,775

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $16,830,661.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2007.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2007

Assets:
Total investments in securities, at value including $317,904 of investments in an affiliated issuer (Note 5) (identified cost $16,818,044)			$	17,408,093
Income receivable				1,743
Receivable for investments sold				460,160
Receivable for shares sold				478,519
TOTAL ASSETS				18,348,515
Liabilities:
Payable for investments purchased	$	817,200
Payable for shares redeemed		7,960
Payable to bank		330
Payable for Directors’/Trustees’ fees		241
Payable for distribution services fee (Note 5)		579
Payable for shareholder services fee (Note 5)		676
Accrued expenses		42,754
TOTAL LIABILITIES				869,740
Net assets for 1,343,474 shares outstanding			$	17,478,775
Net Assets Consist of:
Paid-in capital			$	16,728,244
Net unrealized appreciation of investments				590,049
Accumulated net realized gain on investments				160,482
TOTAL NET ASSETS			$	17,478,775
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($16,244,826 ÷ 1,247,445 shares outstanding), no par value, unlimited shares authorized				$13.02
Offering price per share				$13.02
Redemption proceeds per share				$13.02
Class A Shares:
Net asset value per share ($532,355 ÷ 41,100 shares outstanding), no par value, unlimited shares authorized				$12.95
Offering price per share (100/94.50 of $12.95)1				$13.70
Redemption proceeds per share				$12.95
Class C Shares:
Net asset value per share ($701,594 ÷ 54,929 shares outstanding), no par value, unlimited shares authorized				$12.77
Offering price per share				$12.77
Redemption proceeds per share (99.00/100 of $12.77)1				$12.64

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, 2007

Investment Income:
Dividends (including $2,293 received from an affiliated issuer (Note 5))							$	22,391
Interest								3,132
TOTAL INCOME								25,523
Expenses:
Investment adviser fee (Note 5)				$	59,891
Administrative personnel and services fee (Note 5)					230,037
Custodian fees					23,652
Transfer and dividend disbursing agent fees and expenses					47,616
Directors’/Trustees’ fees					225
Auditing fees					14,363
Legal fees					7,624
Portfolio accounting fees					74,199
Distribution services fee--Class A Shares (Note 5)					236
Distribution services fee--Class C Shares (Note 5)					4,051
Shareholder services fee--Class A Shares (Note 5)					654
Shareholder services fee--Class C Shares (Note 5)					892
Share registration costs					61,004
Printing and postage					18,732
Insurance premiums					6,086
Miscellaneous					3,102
TOTAL EXPENSES					552,364
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(59,891	)
Waiver of administrative personnel and services fee (Note 5)		(106,394	)
Waiver of transfer and dividend disbursing agent fees and expenses		(13,076	)
Waiver of portfolio accounting fees		(21,438	)
Reimbursement of other operating expenses (Note 5)		(268,027	)
TOTAL WAIVERS AND REIMBURSEMENTS					(468,826	)
Net expenses								83,538
Net investment income (loss)								(58,015	)
Realized and Unrealized Gain on Investments:
Net realized gain on investments								239,622
Net change in unrealized depreciation of investments								617,453
Net realized and unrealized gain on investments								857,075
Change in net assets resulting from operations							$	799,060

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

	Year Ended 7/31/2007			Period Ended 7/31/2006		1
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(58,015	)	$	(5,109	)
Net realized gain (loss) on investments		239,622			(21,125	)
Net change in unrealized appreciation/depreciation of investments		617,453			(27,404	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		799,060			(53,638	)
Share Transactions:
Proceeds from sale of shares		16,603,113			954,007
Cost of shares redeemed		(655,023	)		(168,744	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		15,948,090			785,263
Change in net assets		16,747,150			731,625
Net Assets:
Beginning of period		731,625			--
End of period	$	17,478,775		$	731,625

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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 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 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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• for investments in other open-end registered investment companies, based on net asset value (NAV);
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors; prices for interest rate swaps are furnished by an independent pricing service and are based upon a valuation model incorporating interest rates, yield curves and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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 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.

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 7/31/2007					Period Ended 7/31/20061
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	1,263,095		$	15,852,998		33,093		$	353,962
Shares redeemed	(37,007	)		(478,571	)	(11,736	)		(133,278	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	1,226,088		$	15,374,427		21,357		$	220,684
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	38,516		$	455,091		17,938		$	198,850
Shares redeemed	(12,243	)		(147,029	)	(3,111	)		(34,280	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	26,273		$	308,062		14,827		$	164,570
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	24,628		$	295,024		33,176		$	401,195
Shares redeemed	(2,775	)		(29,423	)	(100	)		(1,186	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	21,853		$	265,601		33,076		$	400,009
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	1,274,214		$	15,948,090		69,260		$	785,263

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

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 redeem 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, there were no redemption fees.

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, 2007, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gains
$58,015	$(58,015)

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	149,765
Undistributed long-term capital gain	$	23,334
Net unrealized appreciation	$	577,432

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, 2007, the cost of investments for federal tax purposes was $16,830,661. The net unrealized appreciation of investments for federal tax purposes was $577,432. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $1,265,902 and net unrealized depreciation from investments for those securities having an excess of cost over value of $688,470.

The Fund used capital loss carryforwards of $1,761 to offset taxable capital gains realized during the year ended July 31, 2007.

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

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. For the year ended July 31, 2007, the Adviser waived $59,856 and reimbursed $268,027 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 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. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 2.387% of average daily net assets of the Fund. FAS waived $106,394 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 of up to 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	0.25%
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%

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, 2007, FSC retained $3,751 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC retained $374 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. For the year ended July 31, 2007, 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 (including the distribution (12b-1) fee) 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, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $35 in connection with the affiliated mutual fund listed below. Transactions with the affiliated company during the year ended July 31, 2007 are as follows:

Affiliate	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	--	2,121,581	1,803,677	317,904	$317,904	$2,293

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, 2007, were as follows:

Purchases	$	23,896,517
Sales	$	8,396,404

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

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, 2007, 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 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
September 19, 2007

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. As of December 31, 2006, the Trust comprised eight portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

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 15 Old Timber Trail Pittsburgh, PA TRUSTEE Began serving: Ausust 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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 Began Serving	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

FEDERATED MDT SMALL CAP GROWTH FUND (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contract at meetings held in May 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

The Fund’s performance fell below the median of the relevant peer group for the one year period ending December 31, 2006. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.

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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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 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 his 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. For 2006, 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 in 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 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 31421R775
Cusip 31421R767

37313 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT Small Cap Growth Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2007

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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$10.61		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.13	)3	(0.13	)3
Net realized and unrealized gain on investments	2.54		0.74
TOTAL FROM INVESTMENT OPERATIONS	2.41		0.61
Net Asset Value, End of Period	$13.02		$10.61
Total Return4	22.71	%	6.10	%
Ratios to Average Net Assets:
Net expenses	1.50	%	1.77	%5
Net investment income (loss)	(1.03	)%	(1.25	)%5
Expense waiver/reimbursement6	5.58	%	25.65	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$16,245		$227
Portfolio turnover	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; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual	$1,000	$1,117.60	$7.88
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,017.36	$7.50

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 181/365 (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, 2007 was 22.71% for Institutional Shares.¹ The total return of the Russell 2000^® Growth Index was 16.83% 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 2000^® Growth Index. The total return of the Lipper Small-Cap Growth Funds Index was 19.51% for the same period.³

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 The Lipper Small-Cap Growth Funds Index is an average of funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) less than 250% of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Small-cap growth funds typically have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P SmallCap 600 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.

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000 Index, which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index⁴, which exceeded the 15.48% and 12.12% results for the Russell Top 200^® Index⁵ and the Russell 2000^® Index,⁶ respectively. Growth stocks outperformed value stocks by a wide margin during the year with the Russell 3000^® Growth Index⁷ returning 19.24% as compared to 12.97% for the Russell 3000^® Value Index.⁸

The best performing sectors during the reporting period in the Russell 3000^® Index were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

FUND PERFORMANCE

The most positive contributor to the fund’s performance relative to the Russell 2000^® Growth Index was its stock selection in the Industrials, Consumer Discretionary, Financials, and Health Care sectors. Additionally, the fund’s underweight in the Financial Services sector contributed positively to relative performance. The fund’s performance was negatively impacted by its stock selection in the Consumer Staples sector. The fund’s stock selection and underweight in the Information Technology sector also detracted from relative performance.

Individual stocks contributing to the fund’s out performance relative to the Russell 2000^® Growth Index included: Crocs Inc., Chaparral Steel Co., Manitowoc Inc., Priceline.com Inc., and Wellcare Group Inc.

Individual stocks detracting from the fund’s performance relative to the Russell 2000^® Growth Index included: Hansen National Corp., Aquantive Inc., EGL Inc., Daktronics Inc., and Logitech International.

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 can not 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 can not be made directly in an index.

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 can not 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 can not 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 can not be made directly 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 Small Cap Growth Fund (Institutional Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, compared to the Russell 2000^® Growth Index² and the Lipper Small-Cap Growth Funds Index.³

Average Annual Total Returns for the Period Ended 7/31/2007
1 Year	22.71%
Start of Performance (9/15/2005)	15.10%

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 Index 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 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 Russell 2000^® Growth Index is unmanaged and, unlike the Fund, is not affected by cashflows. It is not possible to invest directly in an index.

3 Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

Portfolio of Investments Summary Table

At July 31, 2007, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Software Packaged/Custom	6.9%
Undesignated Consumer Cyclicals	5.1%
Defense Aerospace	4.7%
Clothing Stores	4.4%
Telecommunications Equipment & Services	4.4%
Medical Supplies	3.5%
Specialty Chemicals	3.1%
Financial Services	3.0%
Shoes	2.7%
Industrial Machinery	2.5%
Oil Service, Explore & Drill	2.2%
Defense Electronics	2.1%
Electric & Electrical Original Equipment Manufacturers	1.9%
Electrical Equipment	1.9%
Food Wholesaling	1.9%
Metal Containers	1.8%
Computer Peripherals	1.7%
Restaurant	1.6%
Building Materials	1.4%
Contracting	1.4%
Specialty Machinery	1.4%
Miscellaneous Machinery	1.3%
Motion Pictures	1.3%
Printing	1.3%
Home Products	1.2%
Medical Technology	1.2%
Offshore Driller	1.2%
Personnel Agency	1.2%
Railroad	1.2%
Services to Medical Professionals	1.2%
Cement	1.1%
Furniture	1.1%
Household Appliances	1.1%
Internet Services	1.1%
Metal Fabrication	1.1%
Oil Well Supply	1.1%
Electronic Instruments	1.0%
Generic Drugs	1.0%
Office Supplies	1.0%
Semiconductor Manufacturing	1.0%
Other2	16.5%
Cash Equivalents3	1.8%
Other Assets and Liabilities -- Net4	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, 2007

Shares				Value
		COMMON STOCKS--97.8%
		Advertising--0.2%
2,243	1	Greenfield Online, Inc.	$	36,426
		Agricultural Chemicals--0.8%
5,222		UAP Holding Corp.		141,882
		Apparel--0.5%
952	1	Carter’s, Inc.		20,154
3,658	1	Maidenform Brands, Inc.		65,771
		TOTAL		85,925
		Auto Original Equipment Manufacturers--0.7%
3,906		Sun Hydraulics Corp.		116,086
		Beer--0.7%
2,925	1	The Boston Beer Co., Inc., Class A		119,223
		Biotechnology--0.8%
2,054	1	Air Methods Corp.		78,257
1,032	1	LifeCell Corp.		31,672
1,343	1	PharmaNet Development Group, Inc.		37,604
		TOTAL		147,533
		Building Materials--1.4%
703		Aaon, Inc.		21,027
5,425		Apogee Enterprises, Inc.		139,748
2,609	1	Drew Industries, Inc.		90,741
		TOTAL		251,516
		Cellular Communications--0.2%
1,248	1	USA Mobility, Inc.		29,790
		Cement--1.1%
3,610	1	Astec Industries, Inc.		188,334
		Clothing Stores--4.4%
3,469	1	Aeropostale, Inc.		132,100
3,490		Buckle, Inc.		121,975
2,845	1	Dress Barn, Inc.		51,751
6,422	1	Fossil, Inc.		164,082
4,297	1	Gymboree Corp.		184,986
800	1	Heelys, Inc.		17,520
2,569	1	Jos A. Bank Clothiers, Inc.		88,630
		TOTAL		761,044
		COMMON STOCKS--continued
		Computer Networking--0.7%
4,471	1	FalconStor Software, Inc.	$	46,454
1,740	1	NetScout Systems, Inc.		16,895
3,610	1	Radiant Systems, Inc.		50,179
		TOTAL		113,528
		Computer Peripherals--1.7%
5,837	1	Nuance Communications, Inc.		96,194
288	1	Rimage Corp.		6,924
5,478	1	Synaptics, Inc.		192,387
		TOTAL		295,505
		Computer Services--0.2%
1,555	1	Manhattan Associates, Inc.		43,338
		Construction Machinery--0.5%
1,070		Manitowoc, Inc.		83,107
		Contracting--1.4%
3,564	1	Perini Corp.		218,865
393		Team, Inc.		18,475
		TOTAL		237,340
		Cosmetics & Toiletries--0.8%
2,411	1	Chattem, Inc.		135,402
418		Inter Parfums, Inc.		9,158
		TOTAL		144,560
		Defense Aerospace--4.7%
12,825	1	GenCorp, Inc.		151,591
1,561	1	Orbital Sciences Corp.		33,078
4,908	1	Teledyne Technologies, Inc.		217,768
4,603	1	TransDigm Group, Inc.		189,644
3,078		Triumph Group, Inc.		234,574
		TOTAL		826,655
		Defense Electronics--2.1%
4,086	1	FLIR Systems, Inc.		178,354
3,035		United Industrial Corp.		191,691
		TOTAL		370,045
		Drug Stores--0.8%
2,903		Longs Drug Stores Corp.		140,389
		Electric & Electrical Original Equipment Manufacturers--1.9%
5,039		Cubic Corp.		138,724
2,464	1	General Cable Corp.		195,888
		TOTAL		334,612
		COMMON STOCKS--continued
		Electrical Equipment--1.9%
11,140	1	GrafTech International Ltd.	$	172,559
6,090	1	Houston Wire & Cable Co.		156,939
		TOTAL		329,498
		Electrical - Radio & TV--0.2%
1,167	1	Universal Electronics, Inc.		41,125
		Electronic Instruments--1.0%
1,810	1	Advanced Analogic Technologies, Inc.		16,073
3,020	1	FEI Co.		86,614
1,710	1	Hittite Microwave Corp.		68,776
		TOTAL		171,463
		Ethical Drugs--0.8%
6,290	1	Sciele Pharma, Inc.		145,865
		Financial Services--3.0%
3,650		Deluxe Corp.		137,824
2,133	1	GFI Group, Inc.		158,951
1,969		Greenhill & Co., Inc.		114,202
755	1	Huron Consulting Group, Inc.		51,287
1,299	1	Portfolio Recovery Associates, Inc.		67,873
		TOTAL		530,137
		Food Wholesaling--1.9%
3,763		Nash Finch Co.		151,536
7,039		Winn-Dixie Stores, Inc.		188,012
		TOTAL		339,548
		Furniture--1.1%
6,189		Tempur-Pedic International, Inc.		192,787
		Generic Drugs--1.0%
9,022		Perrigo Co.		168,260
		Home Health Care--0.5%
434	1	Apria Healthcare Group, Inc.		11,379
664	1	Wellcare Health Plans, Inc.		67,237
		TOTAL		78,616
		Home Products--1.2%
8,080		Tupperware Brands Corp.		210,161
		Household Appliances--1.1%
7,834	1	Goodman Global, Inc.		188,956
		COMMON STOCKS--continued
		Industrial Machinery--2.5%
3,411		Actuant Corp.	$	208,003
525	1	Columbus McKinnon Corp.		13,466
2,734		Valmont Industries, Inc.		206,663
		TOTAL		428,132
		Insurance Brokerage--0.5%
2,191		Life Partners Holdings, Inc.		94,585
		International Bank--0.3%
1,313		Preferred Bank Los Angeles, CA		50,419
		Internet Services--1.1%
2,527	1	Priceline.com, Inc.		161,223
1,318	1	Shutterfly, Inc.		33,938
		TOTAL		195,161
		Machine Tools--0.8%
3,245	1	AZZ, Inc.		115,197
943	1	Flotek Industries, Inc.		28,045
		TOTAL		143,242
		Machined Parts Original Equipment Manufacturers--0.4%
2,185		Applied Industrial Technologies, Inc.		62,032
		Maritime--0.6%
3,658		Horizon Lines, Inc., Class A		105,570
		Medical Supplies--3.5%
3,682	1	Align Technology, Inc.		96,100
3,100	1	Emergency Medical Services Corp., Class A		120,931
3,072	1	Kyphon, Inc.		201,585
894	1	NuVasive, Inc.		25,640
2,809	1	Obagi Medical Products, Inc.		47,556
2,560		West Pharmaceutical Services, Inc.		118,477
		TOTAL		610,289
		Medical Technology--1.2%
5,768	1	Greatbatch Technologies, Inc.		178,981
1,221	1	MEDTOX Scientific, Inc.		23,932
		TOTAL		202,913
		Metal Containers--1.8%
857		Greif, Inc., Class A		47,135
4,087	1	Mobile Mini, Inc.		116,766
2,913		Silgan Holdings, Inc.		150,369
		TOTAL		314,270
		COMMON STOCKS--continued
		Metal Fabrication--1.1%
2,686		Barnes Group, Inc.	$	83,803
2,628		Dynamic Materials Corp.		110,560
		TOTAL		194,363
		Miscellaneous Components--0.1%
845	1	Atheros Communications		23,559
		Miscellaneous Machinery--1.3%
4,746		Curtiss Wright Corp.		206,783
267		Regal Beloit Corp.		13,542
		TOTAL		220,325
		Motion Pictures--1.3%
9,388	1	Macrovision Corp.		223,247
		Multi-Industry Capital Goods--0.3%
784	1	Ceradyne, Inc.		58,510
		Multi-Industry Transportation--0.9%
4,859	1	Hub Group, Inc.		165,303
		Office Furniture--0.3%
2,378		Knoll, Inc.		47,108
		Office Supplies--1.0%
2,868	1	United Stationers, Inc.		182,806
		Offshore Driller--1.2%
3,382	1	Bristow Group, Inc.		160,408
657	1	Hornbeck Offshore Services, Inc.		28,284
520	1	Oceaneering International, Inc.		29,203
		TOTAL		217,895
		Oil Service, Explore & Drill--2.2%
1,819	1	Dawson Geophysical Co.		99,336
642	1	McDermott International, Inc.		53,247
1,181	1	Parker Drilling Co.		11,125
3,459	1	W-H Energy Services, Inc.		221,653
		TOTAL		385,361
		Oil Well Supply--1.1%
4,319	1	Oil States International, Inc.		188,913
		Optical Reading Equipment--0.4%
2,349	1	ScanSource, Inc.		63,024
		Other Communications Equipment--0.8%
5,113	1	Netgear, Inc.		141,426
		Other Computer Hardware--0.3%
3,890	1	Smart Modular Technologies (WWH), Inc.		47,808
		COMMON STOCKS--continued
		Personal Loans--0.4%
334		Cash America International, Inc.	$	12,231
2,427	1	Ezcorp, Inc., Class A		29,221
939	1	World Acceptance Corp.		30,226
		TOTAL		71,678
		Personnel Agency--1.2%
474		Barrett Business Services, Inc.		11,964
8,186	1	Labor Ready, Inc.		192,862
		TOTAL		204,826
		Pollution Control--0.5%
1,535		American Ecology, Inc.		31,283
1,506		Waste Holdings, Inc.		48,087
		TOTAL		79,370
		Printing--1.3%
3,579	1	Cenveo, Inc.		75,195
1,868	1	Consolidated Graphics, Inc.		123,120
2,433	1	Valassis Communications, Inc.		28,880
		TOTAL		227,195
		Property Liability Insurance--0.2%
1,451		National Interstate Corp.		37,000
		Railroad--1.2%
5,113		Wabtec Corp.		208,815
		Recreational Goods--0.1%
1,267	1	Smith & Wesson Holding Corp.		23,820
		Recreational Vehicles--0.1%
375		Polaris Industries, Inc., Class A		18,510
		Regional Bank--0.3%
417		City Bank Lynwood, WA		10,166
914	1	SVB Financial Group		48,150
		TOTAL		58,316
		Restaurant--1.6%
4,427	1	Buffalo Wild Wings, Inc.		191,335
562	1	Chipotle Mexican Grill, Inc.		49,647
880	1	Red Robin Gourmet Burgers		33,942
		TOTAL		274,924
		Securities Brokerage--0.1%
425	1	Investment Technology Group, Inc.		16,983
		COMMON STOCKS--continued
		Semiconductor Manufacturing--1.0%
4,521	1	NetLogic Microsystems, Inc.	$	137,800
709	1	Plexus Corp.		17,193
722	1	Silicon Laboratories, Inc.		25,147
		TOTAL		180,140
		Services to Medical Professionals--1.2%
2,336	1	American Dental Partners, Inc.		59,965
6,831	1	Nighthawk Radiology Holdings, Inc.		140,924
		TOTAL		200,889
		Shoes--2.7%
4,046	1	Crocs, Inc.		240,009
2,171	1	Deckers Outdoor Corp.		223,830
382		Wolverine World Wide, Inc.		10,337
		TOTAL		474,176
		Software Packaged/Custom--6.9%
3,825	1	Blue Coat Systems, Inc.		186,392
2,176	1	COMSYS IT Partners, Inc.		39,516
4,239	1	Double-Take Software, Inc.		64,687
4,086	1	Epicor Software Corp.		53,363
14,992	1	Informatica Corp.		208,988
788	1	Omniture, Inc.		18,006
956	1	Progress Software Corp.		28,919
6,801	1	S1 Corp.		49,443
4,744	1	SPSS, Inc.		194,694
3,715	1	Synchronoss Technologies, Inc.		135,077
8,411	1	VASCO Data Security International, Inc.		222,639
		TOTAL		1,201,724
		Specialty Chemicals--3.1%
3,313		Chemed Corp.		209,647
8,672	1	Hercules, Inc.		180,031
5,135		Koppers Holdings, Inc.		151,842
		TOTAL		541,520
		Specialty Machinery--1.4%
564	1	Stratasys, Inc.		24,822
3,711		Woodward Governor Co.		214,310
		TOTAL		239,132
		Specialty Retailing--0.1%
920	1	Conn’s, Inc.		23,340
		COMMON STOCKS--continued
		Surveillance-Detection--0.3%
2,635	1	Lo-Jack Corp.	$	56,178
		Telecommunications Equipment & Services--4.4%
775		Adtran, Inc.		20,220
11,033	1	Arris Group, Inc.		163,509
6,862	1	C-COR Electronics, Inc.		92,294
2,918	1	CommScope, Inc.		158,827
4,319	1	Comtech Telecommunications Corp.		187,747
5,354	1	Dycom Industries, Inc.		149,644
		TOTAL		772,241
		Toys & Games--0.1%
876	1	Marvel Entertainment, Inc.		21,225
		Undesignated Consumer Cyclicals--5.1%
4,790	1	Blackboard, Inc.		211,862
2,097	1	Capella Education Co.		93,757
4,007		DeVRY, Inc.		129,827
612	1	PRA International		17,705
1,659	1	Parexel International Corp.		67,073
421		Strayer Education, Inc.		63,794
1,771	1	Sykes Enterprises, Inc.		29,647
4,609	1	TeleTech Holdings, Inc., Class A		135,182
3,155		Watson Wyatt & Co. Holdings		140,555
		TOTAL		889,402
		Undesignated Consumer Staples--0.2%
973	1	USANA, Inc.		39,270
		TOTAL COMMON STOCKS (IDENTIFIED COST $16,500,140)		17,090,189
		MUTUAL FUND--1.8%
317,904	2,3	Prime Value Obligations Fund, Institutional Shares, 5.25% (AT NET ASSET VALUE)		317,904
		TOTAL INVESTMENTS--99.6% (IDENTIFIED COST $16,818,044)4		17,408,093
		OTHER ASSETS AND LIABILTIES--NET--0.4%		70,682
		TOTAL NET ASSETS--100%	$	17,478,775

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $16,830,661.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2007.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2007

Assets:
Total investments in securities, at value including $317,904 of investments in an affiliated issuer (Note 5) (identified cost $16,818,044)			$	17,408,093
Income receivable				1,743
Receivable for investments sold				460,160
Receivable for shares sold				478,519
TOTAL ASSETS				18,348,515
Liabilities:
Payable for investments purchased	$	817,200
Payable for shares redeemed		7,960
Payable to bank		330
Payable for Directors’/Trustees’ fees		241
Payable for distribution services fee (Note 5)		579
Payable for shareholder services fee (Note 5)		676
Accrued expenses		42,754
TOTAL LIABILITIES				869,740
Net assets for 1,343,474 shares outstanding			$	17,478,775
Net Assets Consist of:
Paid-in capital			$	16,728,244
Net unrealized appreciation of investments				590,049
Accumulated net realized gain on investments				160,482
TOTAL NET ASSETS			$	17,478,775
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($16,244,826 ÷ 1,247,445 shares outstanding), no par value, unlimited shares authorized				$13.02
Offering price per share				$13.02
Redemption proceeds per share				$13.02
Class A Shares:
Net asset value per share ($532,355 ÷ 41,100 shares outstanding), no par value, unlimited shares authorized				$12.95
Offering price per share (100/94.50 of $12.95)1				$13.70
Redemption proceeds per share				$12.95
Class C Shares:
Net asset value per share ($701,594 ÷ 54,929 shares outstanding), no par value, unlimited shares authorized				$12.77
Offering price per share				$12.77
Redemption proceeds per share (99.00/100 of $12.77)1				$12.64

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, 2007

Investment Income:
Dividends (including $2,293 received from an affiliated issuer (Note 5))							$	22,391
Interest								3,132
TOTAL INCOME								25,523
Expenses:
Investment adviser fee (Note 5)				$	59,891
Administrative personnel and services fee (Note 5)					230,037
Custodian fees					23,652
Transfer and dividend disbursing agent fees and expenses					47,616
Directors’/Trustees’ fees					225
Auditing fees					14,363
Legal fees					7,624
Portfolio accounting fees					74,199
Distribution services fee--Class A Shares (Note 5)					236
Distribution services fee--Class C Shares (Note 5)					4,051
Shareholder services fee--Class A Shares (Note 5)					654
Shareholder services fee--Class C Shares (Note 5)					892
Share registration costs					61,004
Printing and postage					18,732
Insurance premiums					6,086
Miscellaneous					3,102
TOTAL EXPENSES					552,364
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(59,891	)
Waiver of administrative personnel and services fee (Note 5)		(106,394	)
Waiver of transfer and dividend disbursing agent fees and expenses		(13,076	)
Waiver of portfolio accounting fees		(21,438	)
Reimbursement of other operating expenses (Note 5)		(268,027	)
TOTAL WAIVERS AND REIMBURSEMENTS					(468,826	)
Net expenses								83,538
Net investment income (loss)								(58,015	)
Realized and Unrealized Gain on Investments:
Net realized gain on investments								239,622
Net change in unrealized depreciation of investments								617,453
Net realized and unrealized gain on investments								857,075
Change in net assets resulting from operations							$	799,060

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Year Ended 7/31/2007			Period Ended 7/31/2006	1
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(58,015	)	$	(5,109	)
Net realized gain (loss) on investments		239,622			(21,125	)
Net change in unrealized appreciation/depreciation of investments		617,453			(27,404	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		799,060			(53,638	)
Share Transactions:
Proceeds from sale of shares		16,603,113			954,007
Cost of shares redeemed		(655,023	)		(168,744	)
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		15,948,090			785,263
Change in net assets		16,747,150			731,625
Net Assets:
Beginning of period		731,625			--
End of period	$	17,478,775		$	731,625

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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 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 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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• for investments in other open-end registered investment companies, based on net asset value (NAV);
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors; prices for interest rate swaps are furnished by an independent pricing service and are based upon a valuation model incorporating interest rates, yield curves and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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 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.

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 7/31/2007					Period Ended 7/31/20061
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	1,263,095		$	15,852,998		33,093		$	353,962
Shares redeemed	(37,007	)		(478,571	)	(11,736	)		(133,278	)
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	1,226,088		$	15,374,427		21,357		$	220,684
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	38,516		$	455,091		17,938		$	198,850
Shares redeemed	(12,243	)		(147,029	)	(3,111	)		(34,280	)
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	26,273		$	308,062		14,827		$	164,570
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	24,628		$	295,024		33,176		$	401,195
Shares redeemed	(2,775	)		(29,423	)	(100	)		(1,186	)
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	21,853		$	265,601		33,076		$	400,009
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	1,274,214		$	15,948,090		69,260		$	785,263

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

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 redeem 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, there were no redemption fees.

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, 2007, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gains
$58,015	$(58,015)

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	149,765
Undistributed long-term capital gain	$	23,334
Net unrealized appreciation	$	577,432

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, 2007, the cost of investments for federal tax purposes was $16,830,661. The net unrealized appreciation of investments for federal tax purposes was $577,432. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $1,265,902 and net unrealized depreciation from investments for those securities having an excess of cost over value of $688,470.

The Fund used capital loss carryforwards of $1,761 to offset taxable capital gains realized during the year ended July 31, 2007.

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

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. For the year ended July 31, 2007, the Adviser waived $59,856 and reimbursed $268,027 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 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. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 2.387% of average daily net assets of the Fund. FAS waived $106,394 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 of up to 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	0.25%
Class C Shares	0.75%

Prior to December 11, 2006, the Fund incurred distribtuion 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%

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, 2007, FSC retained $3,751 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC retained $374 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. For the year ended July 31, 2007, 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 (including the distribution (12b-1) fee) 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, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $35 in connection with the affiliated mutual fund listed below. Transactions with the affiliated company during the year ended July 31, 2007 are as follows:

Affiliate	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	--	2,121,581	1,803,677	317,904	$317,904	$2,293

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, 2007, were as follows:

Purchases	$	23,896,517
Sales	$	8,396,404

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

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, 2007, 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 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
September 19, 2007

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. As of December 31, 2006, the Trust comprised eight portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Address 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 15 Old Timber Trail Pittsburgh, PA TRUSTEE Began serving: Ausust 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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

FEDERATED MDT SMALL CAP GROWTH FUND (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contract at meetings held in May 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

The Fund’s performance fell below the median of the relevant peer group for the one year period ending December 31, 2006. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.

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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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 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 his 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. For 2006, 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 in 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 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 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT Small Cap Value Fund

Established 2005

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2007

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 FUND 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 7/31/2007	1		Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period:		$10.61			$10.00
Income From Investment Operations:
Net investment income (loss)		(0.05	)3		(0.07	)3
Net realized and unrealized gain on investments		0.81			0.68
TOTAL FROM INVESTMENT OPERATIONS		0.76			0.61
Net Asset Value, End of Period		$11.37			$10.61
Total Return4		7.16	%		6.10	%
Ratios to Average Net Assets:
Net expenses		1.75	%		2.00	%5
Net investment income (loss)		(0.44	)%		(0.59	)%5
Expense waiver/reimbursement6		4.45	%		34.07	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$2,950			$699
Portfolio turnover		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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$10.54		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.14	)3	(0.15	)3
Net realized and unrealized gain on investments	0.81		0.69
TOTAL FROM INVESTMENT OPERATIONS	0.67		0.54
Net Asset Value, End of Period	$11.21		$10.54
Total Return4	6.36	%	5.40	%
Ratios to Average Net Assets:
Net expenses	2.50	%	2.75	%5
Net investment income (loss)	(1.20	)%	(1.34	)%5
Expense waiver/reimbursement6	4.06	%	34.07	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$951		$51
Portfolio turnover	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 cost: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual:
Class A Shares	$1,000	$981.90	$8.60
Class C Shares	$1,000	$978.20	$12.26
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,016.12	$8.75
Class C Shares	$1,000	$1,012.40	$12.47

1 Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (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 total return for the fiscal year ended July 31, 2007 was 7.16% for Class A Shares and 6.36% for Class C Shares.¹ The total return of the Russell 2000^® Value Index² (Russell 2000^® Value) was 7.67% 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 2000^® Value. The total return of the Lipper Small-Cap Value Funds Index³ was 13.52% for the same period.

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000^® Index,⁴ which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index,⁵ which exceeded the 15.48% and 12.12% results for

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. The index is unmanaged and investments can not be made directly in an index.

3 Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

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 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 can not be made directly in an index.

Performance data quoted represents past performance and 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.

the Russell Top 200^® Index⁶ and the Russell 2000^® Index,⁷ respectively. Growth stocks outperformed value stocks by a wide margin during the year with the Russell 3000^® Growth Index⁸ returning 19.24% as compared to 12.97% for the Russell 3000^® Value Index.⁹

The best performing sectors during the reporting period in the Russell 3000^® Index were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

Fund Performance

The most significant contributors to the fund’s performance relative to the Russell 2000^® Value were its overweight in the Industrials and Materials sectors and its stock selection in the Financials sector. Stock selection in the Consumer Discretionary sector also provided a modest contribution to relative performance. The fund was negatively impacted by its stock selection in the Information Technology sector. The fund’s underweight in this sector also detracted moderately from relative performance.

Individual stocks contributing to the fund’s performance relative to the Russell 2000^® Value included: Belden CDT Inc., Cleveland Cliffs Inc., Warnaco Group Inc., Greif Inc., and NBTY Inc.

Individual stocks detracting from the fund’s performance relative to the Russell 2000^® Value included: Amerco, EGL Inc., USEC Inc., RPC Inc., and Houston Exploration Co.

6 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 can not be made directly in an index.

7 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.

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 can not 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 can not be made directly 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 Small Cap Value Fund (Class A Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, 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 7/31/2007
1 Year	1.25%
Start of Performance (9/15/2005)	3.91%

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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

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

The graph below illustrates the hypothetical investment of $10,000¹ in the Federated MDT Small Cap Value Fund (Class C Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, 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 7/31/2007
1 Year	5.36%
Start of Performance (9/15/2005)	6.28%

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 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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

Portfolio of Investments Summary Table

At July 31, 2007, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Regional Bank	12.9	%
Property Liability Insurance	7.5	%
Electric Utility	6.8	%
Multi-Line Insurance	5.9	%
Gas Distributor	3.4	%
Crude Oil & Gas Production	3.2	%
Savings & Loan	2.8	%
Specialty Retailing	2.8	%
Life Insurance	2.5	%
Oil Refiner	2.1	%
Insurance Brokerage	2.0	%
Metal Fabrication	1.7	%
Auto Rentals	1.6	%
Oil Service, Explore & Drill	1.6	%
Maritime	1.4	%
Paper Products	1.4	%
Undesignated Consumer Cyclicals	1.4	%
Specialty Machinery	1.3	%
Telecommunication Equipment & Services	1.3	%
Agricultural Chemicals	1.2	%
Personal Loans	1.2	%
Miscellaneous Components	1.1	%
Other2	32.0	%
Cash Equivalents3	1.1	%
Other Assets and Liabilities--Net4	(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, 2007

Shares				Value
		COMMON STOCKS--99.1%
		Advertising--0.1%
642	1	Greenfield Online, Inc.	$	10,426
		Agricultural Chemicals--1.2%
447		CF Industries Holdings, Inc.		25,694
6,366	1	Terra Industries, Inc.		156,158
		TOTAL		181,852
		Agricultural Machinery--0.3%
840	1	Gehl Co.		21,487
641		Lindsay Corp.		26,063
		TOTAL		47,550
		Airline - National--0.4%
1,203	1	Atlas Air Worldwide Holdings, Inc.		65,215
		Airline - Regional--0.3%
2,452	1	Republic Airways Holdings, Inc.		47,299
		Apparel--1.0%
4,127	1	Warnaco Group, Inc.		149,026
		Auto Original Equipment Manufacturers--0.7%
3,935		American Axle & Manufacturing Holdings, Inc.		95,227
446		Sun Hydraulics Corp.		13,255
		TOTAL		108,482
		Auto Rentals--1.6%
3,298	1	AMERCO		210,577
806	1	Dollar Thrifty Automotive Group		29,758
		TOTAL		240,335
		Biotechnology--0.4%
2,481	1	Emergent Biosolutions, Inc.		23,048
604	1	PharmaNet Development Group, Inc.		16,912
1,498	1	Regeneration Technologies, Inc.		16,059
		TOTAL		56,019
		Book Publishing--0.5%
2,397	1	Scholastic Corp.		77,135
		Cellular Communications--0.5%
3,132	1	USA Mobility, Inc.		74,761
		Clothing Stores--0.3%
1,576	1	Fossil, Inc.		40,267
		COMMON STOCKS--continued
		Computer Services--0.7%
5,447	1	Synnex Corp.	$	110,683
		Computer Stores--0.4%
2,839	1	Insight Enterprises, Inc.		64,048
		Construction Machinery--0.9%
1,763		Manitowoc, Inc.		136,932
		Contracting--0.8%
1,397	1	Emcor Group, Inc.		50,152
94		Granite Construction, Inc.		6,109
3,045	1	ICF International, Inc.		62,940
		TOTAL		119,201
		Crude Oil & Gas Production--3.2%
941		Berry Petroleum Co., Class A		35,015
7,960	1	Rosetta Resources, Inc.		143,360
5,574	1	Stone Energy Corp.		181,155
3,019	1	Swift Energy Co.		129,032
		TOTAL		488,562
		Defense Aerospace--0.6%
1,599	1	LMI Aerospace, Inc.		35,450
238	1	TransDigm Group, Inc.		9,806
647		Triumph Group, Inc.		49,308
		TOTAL		94,564
		Defense Electronics--0.8%
2,594		EDO Corp.		85,732
2,550	1	Herley Industries, Inc.		36,235
		TOTAL		121,967
		Discount Department Stores--0.2%
2,287		Freds, Inc., Class A		27,147
		Diversified Leisure--0.3%
987	1	Coinstar, Inc.		30,617
2,288	1	Six Flags, Inc.		8,717
		TOTAL		39,334
		Drug Stores--0.8%
2,374		Longs Drug Stores Corp.		114,807
		Electric & Electronic Original Equipment Manufacturers--0.2%
961		Cubic Corp.		26,456
		COMMON STOCKS--continued
		Electric Utility--6.8%
4,636		Allete, Inc.	$	203,242
3,086		Avista Corp.		61,165
374		Black Hills Corp.		13,950
4,607		Cleco Corp.		109,416
2,808	1	El Paso Electric Co.		65,342
2,090		Empire Distribution Electric Co.		45,332
1,474		Idacorp, Inc.		45,635
5,370		PNM Resources, Inc.		138,707
7,635		Portland General Electric Co.		205,458
1,231		UIL Holdings Corp.		36,413
3,154		UniSource Energy Corp.		95,976
		TOTAL		1,020,636
		Electrical Equipment--0.9%
586		Robbins & Myers, Inc.		30,900
2,013		Smith (A.O.) Corp.		97,731
		TOTAL		128,631
		Electronic Components--0.1%
1,389		Methode Electronics, Inc., Class A		22,460
		Electronic Instruments--0.4%
737		Analogic Corp.		48,929
249	1	Axsys Technologies, Inc.		7,296
		TOTAL		56,225
		Financial Services--0.9%
2,997	1	CompuCredit Corp.		78,671
727		Deluxe Corp.		27,452
1,605		Lakeland Financial Corp.		36,417
2		Security Bank Corp.		28
		TOTAL		142,568
		Food Wholesaling--0.2%
685		Nash Finch Co.		27,585
		Gas Distributor--3.4%
1,146		Atmos Energy Corp.		32,168
2,641		Laclede Group, Inc.		78,042
1,902		NICOR, Inc.		74,958
260		New Jersey Resources Corp.		12,220
828		Northwest Natural Gas Co.		34,503
		COMMON STOCKS--continued
		Gas Distributor--continued
6,159		Southwest Gas Corp.	$	191,422
2,810		WGL Holdings, Inc.		84,131
		TOTAL		507,444
		Generic Drugs--0.8%
6,361		Perrigo Co.		118,633
		Greeting Cards--0.5%
3,005		American Greetings Corp., Class A		74,314
		Grocery Chain--0.4%
2,160		Ruddick Corp.		60,048
		Home Health Care--0.1%
270	1	Amerigroup Corp.		7,474
		Household Appliances--0.5%
3,118	1	Goodman Global, Inc.		75,206
		Insurance Brokerage--2.0%
5,274	1	AmTrust Financial Services, Inc.		77,370
6,410		Odyssey Re Holdings Corp.		225,632
		TOTAL		303,002
		International Bank--0.2%
713		Preferred Bank Los Angeles, CA		27,379
		Internet Services--0.4%
2,336	1	Keynote Systems, Inc.		35,017
4,185	1	RealNetworks, Inc.		29,797
		TOTAL		64,814
		Leasing--0.8%
4,046		Financial Federal Corp.		114,704
		Life Insurance--2.5%
5,068		Delphi Financial Group, Inc., Class A		203,582
13,187		Phoenix Cos., Inc.		181,848
		TOTAL		385,430
		Major Steel Producer--0.4%
2,043		Ryerson, Inc.		65,560
		Maritime--1.4%
1,039		Eagle Bulk Shipping, Inc.		27,346
3,278	1	Genco Shipping & Trading Ltd.		184,650
		TOTAL		211,996
		Metal Containers--0.2%
480		Greif Brothers Corp., Class A		26,400
		COMMON STOCKS--continued
		Metal Fabrication--1.7%
880		Olympic Steel, Inc.	$	23,118
11,347		Worthington Industries, Inc.		234,883
		TOTAL		258,001
		Mini-Mill Producer--0.9%
75		Commercial Metals Corp.		2,313
118		Quanex Corp.		5,317
2,355		Schnitzer Steel Industries, Inc., Class A		127,617
		TOTAL		135,247
		Miscellaneous Components--1.1%
1,134	1	Cree, Inc.		29,053
1,839	1	MKS Instruments, Inc.		41,745
5,151	1	Zoran Corp.		97,096
		TOTAL		167,894
		Miscellaneous Food Products--0.8%
4,756		Fresh Del Monte Produce, Inc.		121,991
		Miscellaneous Machinery--0.5%
1,780		Curtiss Wright Corp.		77,555
		Miscellaneous Metals--0.9%
2,265		Metal Management, Inc.		95,153
2,569	1	USEC, Inc.		43,134
		TOTAL		138,287
		Multi-Industry Basic--0.7%
4,978		Olin Corp.		103,891
		Multi-Line Insurance--5.9%
2,293	1	Amerisafe, Inc.		38,477
2,784		EMC Insurance Group, Inc.		68,570
3,740		FBL Financial Group, Inc., Class A		131,611
1,892	1	FPIC Insurance Group, Inc.		65,804
2,273		Harleysville Group, Inc.		63,667
2,199		Infinity Property & Casualty		96,844
2,833		Midland Co.		134,624
1,572	1	Navigators Group, Inc.		82,231
2,111		Safety Insurance Group, Inc.		70,296
3,533		Zenith National Insurance Corp.		142,592
		TOTAL		894,716
		Mutual Fund Adviser--0.1%
333		GAMCO Investors, Inc., Class A		17,296
		COMMON STOCKS--continued
		Natural Gas Production--0.2%
2,105	1	Natural Gas Services Group, Inc.	$	31,175
		Office Supplies--0.7%
1,604	1	United Stationers, Inc.		102,239
		Offshore Driller--0.9%
3,023	1	Hornbeck Offshore Services, Inc.		130,140
		Oil Refiner--2.1%
3,949		Alon USA Energy, Inc.		140,861
6,784		Delek US Holdings, Inc.		179,640
		TOTAL		320,501
		Oil Service, Explore & Drill--1.6%
368	1	Dawson Geophysical Co.		20,096
2,514	1	Edge Petroleum Corp.		31,199
4,598	1	Grey Wolf, Inc.		34,071
3,245	1	Gulfmark Offshore, Inc.		152,450
		TOTAL		237,816
		Other Communications Equipment--0.6%
2,489	1	Superior Essex, Inc.		86,742
		Other Steel Producer--0.2%
751	1	Northwest Pipe Co.		25,241
		Paint & Related Materials--0.2%
1,187		Fuller (H.B.) Co.		32,797
		Paper Products--1.4%
1,408	1	Buckeye Technologies, Inc.		21,585
2,269		Neenah Paper, Inc.		87,878
3,454		Rock-Tenn Co., Class A		106,107
		TOTAL		215,570
		Personal Loans--1.2%
1,411		ASTA Funding, Inc.		50,909
5,008		Advanta Corp., Class B		128,505
		TOTAL		179,414
		Personnel Agency--0.9%
2,098		CDI Corp.		59,352
1,291		Maximus, Inc.		53,951
3,089	1	Spherion Corp.		27,276
		TOTAL		140,579
		Pollution Control--0.4%
1,598		CLARCOR, Inc.		55,594
		COMMON STOCKS--continued
		Poultry Products--0.7%
2,791		Sanderson Farms, Inc.	$	111,277
		Printing--0.2%
1,270		Bowne & Co., Inc.		22,022
		Property Liability Insurance--7.5%
2,722	1	American Physicians Capital, Inc.		103,218
3,051	1	CNA Surety Corp.		51,562
1,596	1	First Mercury Financial Corp.		31,569
4,581		Horace Mann Educators Corp.		81,679
2,006	1	Meadowbrook Insurance Group, Inc.		18,014
1,602		National Interstate Corp.		40,851
1,859		Nymagic, Inc.		67,630
4,331	1	ProAssurance Corp.		213,865
5,637		RLI Corp.		326,946
3,714	1	Seabright Insurance Holdings, Inc.		67,335
612		Selective Insurance Group, Inc.		12,558
3,236		United Fire & Casualty Co.		111,383
		TOTAL		1,126,610
		Railroad--0.2%
1,433	1	Genesee & Wyoming, Inc., Class A		36,756
		Recreational Goods--0.5%
3,638		Callaway Golf Co.		59,045
578	1	Steinway Musical Instruments, Inc.		19,346
		TOTAL		78,391
		Regional Bank--12.9%
779		Alabama National Bancorp		41,575
1,149		Arrow Financial Corp.		23,612
997		BancFirst Corp.		40,289
9,169		Bancorpsouth, Inc.		214,096
4,262		Central Pacific Financial Corp.		120,231
1,676		City Bank Lynwood, WA		40,861
1,025		City Holding Co.		33,671
1,013		Columbia Banking Systems, Inc.		25,730
3,004		Community Bank System, Inc.		54,042
1,239		Community Trust Bancorp, Inc.		35,535
2,718		First Commonwealth Financial Corp., PA		25,767
1,329		First Financial Bancorp		16,254
1,379		First Merchants Corp.		27,925
2,010		First State Bancorporation		34,693
		COMMON STOCKS--continued
		Regional Bank--continued
9,156		FirstMerit Corp.	$	167,829
1,346		Frontier Financial Corp., WA		28,831
926		Great Southern Bancorp, Inc.		23,289
2,917		Greene Bancshares, Inc.		96,436
607		Horizon Financial Corp. - Washington		11,867
726		Iberiabank Corp.		30,594
1,240		Independent Bank Corp. - Massachusetts		33,592
1,529		Integra Bank Corp.		27,583
2,471		NBT Bancorp, Inc.		44,700
4,081		Old National Bancorp		58,766
2,353		Old Second Bancorp, Inc.		64,825
1,761		Park National Corp.		139,911
469		Provident Bankshares Corp.		13,460
674		S.Y. Bancorp, Inc.		15,778
536		SCBT Financial Corp.		15,619
471		Sierra Bancorp		12,646
2,891		South Financial Group, Inc.		62,330
1,530		United Bankshares, Inc.		42,610
1,445		Vineyard National Bancorp		29,897
1,463		Wesbanco, Inc.		32,259
1,251		West Coast Bancorp - Oregon		32,751
5,866		Whitney Holding Corp.		146,591
2,051		Wintrust Financial Corp.		80,830
		TOTAL		1,947,275
		Resorts--0.2%
4,294	1	Silverleaf Resorts, Inc.		26,150
		Restaurant--0.4%
2,260		Landry’s Seafood Restaurants, Inc.		59,867
		Rubber--0.8%
5,542		Cooper Tire & Rubber Co.		127,411
		Savings & Loan--2.8%
982		Banner Corp.		30,069
853		First Financial Holdings, Inc.		23,082
7,637		First Niagara Financial Group, Inc.		98,212
1,137		ITLA Capital Corp.		48,322
6,325	1	Ocwen Financial Corp.		68,563
		COMMON STOCKS--continued
		Savings & Loan--continued
3,422		Sterling Financial Corp. - Washington	$	77,714
1,270		WSFS Financial Corp.		70,129
		TOTAL		416,091
		Securities Brokerage--0.6%
3,750	1	Knight Capital Group, Inc., Class A		53,025
939	1	Piper Jaffray Cos., Inc.		44,997
		TOTAL		98,022
		Semiconductor Manufacturing--0.8%
2,731	1	Plexus Corp.		66,227
3,727	1	Semtech Corp.		60,564
		TOTAL		126,791
		Shoes--0.2%
257	1	Deckers Outdoor Corp.		26,497
		Software Packaged/Custom--0.7%
1,399	1	EPIQ Systems, Inc.		23,853
340	1	Echelon Corp.		6,708
1,888	1	JDA Software Group, Inc.		42,688
3,608	1	S1 Corp.		26,230
		TOTAL		99,479
		Specialty Chemicals--0.8%
2,428	1	OM Group, Inc.		117,612
		Specialty Machinery--1.3%
1,604		Cascade Corp.		108,735
1,604		Woodward Governor Co.		92,631
		TOTAL		201,366
		Specialty Retailing--2.8%
2,400		Asbury Automotive Group, Inc.		53,088
5,504	1	Cabela’s, Inc., Class A		112,337
2,184	1	Conn’s, Inc.		55,408
2,415		Pep Boys-Manny Moe & Jack		40,886
3,010	1	Rush Enterprises, Inc.		84,130
3,943	1	Zale Corp.		83,710
		TOTAL		429,559
		COMMON STOCKS--continued
		Telecommunication Equipment & Services--1.3%
1,614	1	ADC Telecommunications, Inc.	$	30,166
1,724	1	Dycom Industries, Inc.		48,186
3,948	1	Oplink Communications, Inc.		63,839
4,896	1	Premiere Global Services, Inc.		56,989
		TOTAL		199,180
		Toys & Games--0.2%
1,683	1	JAKKS Pacific, Inc.		39,904
		Trucking--0.5%
426	1	Saia, Inc.		8,618
3,772		Werner Enterprises, Inc.		73,328
		TOTAL		81,946
		Undesignated Consumer Cyclicals--1.4%
4,693		Speedway Motorsports, Inc.		173,500
1,189		Viad Corp.		42,745
		TOTAL		216,245
		Undesignated Consumer Staples--0.2%
554	1	NBTY, Inc.		24,121
		TOTAL COMMON STOCKS (IDENTIFIED COST $15,601,384)		14,967,835
		MUTUAL FUND--1.1%
160,179	2,3	Prime Value Obligations Fund, Institutional Shares, 5.25% (AT NET ASSET VALUE)		160,179
		TOTAL INVESTMENTS--100.2% (IDENTIFIED COST $15,761,563)4		15,128,014
		OTHER ASSETS AND LIABILITIES - NET--(0.2)%		(34,633	)
		TOTAL NET ASSETS--100%	$	15,093,381

1 Non-income producing security.

2 7-Day net yield.

3 Affiliated company.

4 The cost of investments for federal tax purposes amounts to $15,826,416.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2007.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2007

Assets:
Total investments in securities, at value including $160,179 of investments in an affiliated issuer (Note 5) (identified cost $15,761,563)			$	15,128,014
Cash				46,490
Income receivable				8,774
Receivable for investments sold				1,453,235
Receivable for shares sold				39,245
TOTAL ASSETS				16,675,758
Liabilities:
Payable for investments purchased	$	1,517,772
Payable for shares redeemed		16,902
Payable for Directors’/Trustees’ fees		477
Payable for distribution services fee (Note 5)		696
Payable for shareholder service fees (Note 5)		2,496
Accrued expenses		44,034
TOTAL LIABILITIES				1,582,377
Net assets for 1,324,171 shares outstanding			$	15,093,381
Net Assets Consist of:
Paid-in capital			$	14,891,352
Net unrealized depreciation of investments				(633,549	)
Accumulated net realized gain on investments				835,578
TOTAL NET ASSETS			$	15,093,381
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($11,192,438 ÷ 979,818 shares outstanding), no par value, unlimited shares authorized				$11.42
Offering price per share				$11.42
Redemption proceeds per share				$11.42
Class A Shares:
Net asset value per share ($2,950,417 ÷ 259,541 shares outstanding), no par value, unlimited shares authorized				$11.37
Offering price per share (100/94.50 of $11.37)1				$12.03
Redemption proceeds per share				$11.37
Class C Shares:
Net asset value per share ($950,526 ÷ 84,812 shares outstanding), no par value, unlimited shares authorized				$11.21
Offering price per share				$11.21
Redemption proceeds per share (99.00/100 of $11.21)1				$11.10

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, 2007

Investment Income:
Dividends (including $1,266 received from an affiliated issuer (Note 5) and net of foreign taxes withheld of $8)							$	142,622
Interest								10,018
TOTAL INCOME								152,640
Expenses:
Investment adviser fee (Note 5)				$	134,570
Administrative personnel and services fee (Note 5)					230,098
Custodian fees					18,130
Transfer and dividend disbursing agent fees and expenses					51,765
Directors’/Trustees’ fees					621
Auditing fees					14,369
Legal fees					6,324
Portfolio accounting fees					72,498
Distribution services fee--Class A Shares (Note 5)					1,324
Distribution services fee--Class C Shares (Note 5)					4,751
Shareholder services fee--Class A Shares (Note 5)					4,830
Shareholder services fee--Class C Shares (Note 5)					1,165
Share registration costs					61,432
Printing and postage					24,577
Insurance premiums					6,091
Miscellaneous					3,129
TOTAL EXPENSES					635,674
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(134,570	)
Waiver of administrative personnel and services fee (Note 5)		(105,281	)
Waiver of transfer and dividend disbursing agent fees and expenses		(12,318	)
Waiver of portfolio accounting fees		(20,355	)
Reimbursement of other operating expenses (Note 5)		(178,277	)
TOTAL WAIVERS AND REIMBURSEMENTS					(450,801	)
Net expenses								184,873
Net investment income (loss)								(32,233	)
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments								875,788
Net change in unrealized depreciation of investments								(619,049	)
Net realized and unrealized gain on investments								256,739
Change in net assets resulting from operations							$	224,506

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Year Ended 7/31/2007			Period Ended 7/31/2006	1
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(32,233	)	$	(1,041	)
Net realized gain (loss) on investments		875,788			(7,977	)
Net change in unrealized appreciation/depreciation of investments		(619,049	)		(14,500	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		224,506			(23,518	)
Share Transactions:
Proceeds from sale of shares		16,884,477			1,550,300
Cost of shares redeemed		(3,364,195	)		(178,228	)
Redemption fees		39			--
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		13,520,321			1,372,072
Change in net assets		13,744,827			1,348,554
Net Assets:
Beginning of period		1,348,554			--
End of period	$	15,093,381		$	1,348,554

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• for investments in other open-end registered investment companies, based on net asset value (NAV);
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors; prices for interest rate swaps are furnished by an independent pricing service and are based upon a valuation model incorporating interest rates, yield curves and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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 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.

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 7/31/2007					Period Ended 7/31/20061
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	1,140,726		$	12,999,804		69,922		$	747,384
Shares redeemed	(217,235	)		(2,529,781	)	(13,595	)		(150,455	)
Redemption fees	--			23		--			--
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	923,491		$	10,470,046		56,327		$	596,929
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	257,303		$	2,904,620		68,354		$	751,222
Shares redeemed	(63,571	)		(756,151	)	(2,545	)		(27,773	)
Redemption fees	--			13		--			--
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	193,732		$	2,148,482		65,809		$	723,449
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	86,450		$	980,053		4,825		$	51,694
Shares redeemed	(6,463	)		(78,263	)	--			--
Redemption fees	--			3		--			--
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	79,987		$	901,793		4,825		$	51,694
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	1,197,210		$	13,520,321		126,961		$	1,372,072

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

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 redeem 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.

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, 2007, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gains
$32,233	$(32,233)

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	885,624
Undistributed long-term capital gain	$	14,807
Net unrealized depreciation	$	(698,402	)

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, 2007, the cost of investments for federal tax purposes was $15,826,416. The net unrealized depreciation of investments for federal tax purposes was $698,402. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $427,015 and net unrealized depreciation from investments for those securities having an excess of cost over value of $1,125,417.

The Fund used capital loss carryforwards of $252 to offset taxable capital gains realized during the year ended July 31, 2007.

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

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. For the year ended July 31, 2007, the Adviser waived $134,551 of its fee and reimbursed $178,277 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 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. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 1.083% of average daily net assets of the Fund. FAS waived $105,281 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 of up to 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	0.25%
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%

When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended Year July 31, 2007, FSC retained $4,411 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC retained $1,605 in sales charges from the sale of Class A Shares. FSC also retained $464 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, 2007, 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 (including the distribution (12b-1) fee) 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, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $19 in connection with the affiliated mutual fund listed below. Transactions with the affiliated company during the year ended July 31, 2007 are as follows:

Affiliate	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	--	569,124	408,945	160,179	$160,179	$1,266

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, 2007, were as follows:

Purchases	$	40,384,204
Sales	$	27,009,103

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

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, 2007, 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 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

/s/Ernst & Young LLP

Boston, Massachusetts

September 19, 2007

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. As of December 31, 2006, the Trust comprised eight portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

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 15 Old Timber Trail Pittsburgh, PA 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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 Began Serving	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

FEDERATED MDT SMALL CAP VALUE (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contract at meetings held in May 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

The Fund’s performance fell below the median of the relevant peer group for the one year period ending December 31, 2006. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.

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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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 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 his 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. For 2006, 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 in 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 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 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©Federated Investors, Inc.

Federated Investors
World-Class Investment Manager

Federated MDT Small Cap Value Fund

A Portfolio of Federated MDT Series

ANNUAL SHAREHOLDER REPORT

July 31, 2007

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 7/31/2007	1		Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period		$10.64			$10.00
Income From Investment Operations:
Net investment income (loss)		(0.02	)3		(0.03	)3
Net realized and unrealized gain on investments		0.80			0.67
TOTAL FROM INVESTMENT OPERATIONS		0.78			0.64
Net Asset Value, End of Period		$11.42			$10.64
Total Return4		7.33	%		6.40	%
Ratios to Average Net Assets:
Net expenses		1.50	%		1.75	%5
Net investment income (loss)		(0.17	)%		(0.34	)%5
Expense waiver/reimbursement6		3.75	%		34.07	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$11,192			599
Portfolio turnover		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; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual	$1,000	$982.80	$7.37
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,017.36	$7.50

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 181/365 (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, 2007 was 7.33% for Institutional Shares.¹ The total return of the Russell 2000^® Value Index² (Russell 2000^® Value) was 7.67% 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 2000^® Value. The total return of the Lipper Small-Cap Value Funds Index³ was 14.14% for the same period.

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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. 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.

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000^® Index⁴, which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index⁵, which exceeded the 15.48% and 12.12% results for the Russell Top 200^® Index⁶ and the Russell 2000^® Index⁷, respectively. Growth stocks outperformed value stocks by a wide margin during the year with the Russell 3000^® Growth Index⁸ returning 19.24% as compared to 12.97% for the Russell 3000^® Value Index.⁹

The best performing sectors during the reporting period in the Russell 3000^® Index were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

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 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 can not be made directly in an index.

6 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 can not be made directly in an index.

7 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.

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 can not 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 can not be made directly in an index.

FUND PERFORMANCE

The most significant contributors to the fund’s performance relative to the Russell 2000^® Value were its overweight in the Industrials and Materials sectors and its stock selection in the Financials sector. Stock selection in the Consumer Discretionary sector also provided a modest contribution to relative performance. The fund was negatively impacted by its stock selection in the Information Technology sector. The fund’s underweight in this sector also detracted moderately from relative performance.

Individual stocks contributing to the fund’s performance relative to the Russell 2000^® Value included: Belden CDT Inc., Cleveland Cliffs Inc., Warnaco Group Inc., Greif Inc., and NBTY Inc.

Individual stocks detracting from the fund’s performance relative to the Russell 2000^® Value included: Amerco, EGL Inc., USEC Inc., RPC Inc., and Houston Exploration Co.

GROWTH OF A $25,000 INVESTMENT - INSTITUTIONAL SHARES

The graph below illustrates the hypothetical investment of $25,000¹ in the Federated MDT Small Cap Value Fund (Institutional Shares) (the “Fund”) from September 15, 2005 (start of performance) to July 31, 2007, 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 7/31/2007
1 Year	7.33%
Start of Performance (9/15/2005)	7.33%

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 figures represent the average of the total returns reported by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

Portfolio of Investments Summary Table

At July 31, 2007, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Regional Bank	12.9%
Property Liability Insurance	7.5%
Electric Utility	6.8%
Multi-Line Insurance	5.9%
Gas Distributor	3.4%
Crude Oil & Gas Production	3.2%
Savings & Loan	2.8%
Specialty Retailing	2.8%
Life Insurance	2.5%
Oil Refiner	2.1%
Insurance Brokerage	2.0%
Metal Fabrication	1.7%
Auto Rentals	1.6%
Oil Service, Explore & Drill	1.6%
Maritime	1.4%
Paper Products	1.4%
Undesignated Consumer Cyclicals	1.4%
Specialty Machinery	1.3%
Telecommunication Equipment & Services	1.3%
Agricultural Chemicals	1.2%
Personal Loans	1.2%
Miscellaneous Components	1.1%
Other2	32.0%
Cash Equivalents3	1.1%
Other Assets and Liabilities--Net4	(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, 2007

Shares				Value
		COMMON STOCKS--99.1%
		Advertising--0.1%
642	1	Greenfield Online, Inc.	$	10,426
		Agricultural Chemicals--1.2%
447		CF Industries Holdings, Inc.		25,694
6,366	1	Terra Industries, Inc.		156,158
		TOTAL		181,852
		Agricultural Machinery--0.3%
840	1	Gehl Co.		21,487
641		Lindsay Corp.		26,063
		TOTAL		47,550
		Airline - National--0.4%
1,203	1	Atlas Air Worldwide Holdings, Inc.		65,215
		Airline - Regional--0.3%
2,452	1	Republic Airways Holdings, Inc.		47,299
		Apparel--1.0%
4,127	1	Warnaco Group, Inc.		149,026
		Auto Original Equipment Manufacturers--0.7%
3,935		American Axle & Manufacturing Holdings, Inc.		95,227
446		Sun Hydraulics Corp.		13,255
		TOTAL		108,482
		Auto Rentals--1.6%
3,298	1	AMERCO		210,577
806	1	Dollar Thrifty Automotive Group		29,758
		TOTAL		240,335
		Biotechnology--0.4%
2,481	1	Emergent Biosolutions, Inc.		23,048
604	1	PharmaNet Development Group, Inc.		16,912
1,498	1	Regeneration Technologies, Inc.		16,059
		TOTAL		56,019
		Book Publishing--0.5%
2,397	1	Scholastic Corp.		77,135
		Cellular Communications--0.5%
3,132	1	USA Mobility, Inc.		74,761
		Clothing Stores--0.3%
1,576	1	Fossil, Inc.		40,267
		COMMON STOCKS--continued
		Computer Services--0.7%
5,447	1	Synnex Corp.	$	110,683
		Computer Stores--0.4%
2,839	1	Insight Enterprises, Inc.		64,048
		Construction Machinery--0.9%
1,763		Manitowoc, Inc.		136,932
		Contracting--0.8%
1,397	1	Emcor Group, Inc.		50,152
94		Granite Construction, Inc.		6,109
3,045	1	ICF International, Inc.		62,940
		TOTAL		119,201
		Crude Oil & Gas Production--3.2%
941		Berry Petroleum Co., Class A		35,015
7,960	1	Rosetta Resources, Inc.		143,360
5,574	1	Stone Energy Corp.		181,155
3,019	1	Swift Energy Co.		129,032
		TOTAL		488,562
		Defense Aerospace--0.6%
1,599	1	LMI Aerospace, Inc.		35,450
238	1	TransDigm Group, Inc.		9,806
647		Triumph Group, Inc.		49,308
		TOTAL		94,564
		Defense Electronics--0.8%
2,594		EDO Corp.		85,732
2,550	1	Herley Industries, Inc.		36,235
		TOTAL		121,967
		Discount Department Stores--0.2%
2,287		Freds, Inc., Class A		27,147
		Diversified Leisure--0.3%
987	1	Coinstar, Inc.		30,617
2,288	1	Six Flags, Inc.		8,717
		TOTAL		39,334
		Drug Stores--0.8%
2,374		Longs Drug Stores Corp.		114,807
		Electric & Electronic Original Equipment Manufacturers--0.2%
961		Cubic Corp.		26,456
		Electric Utility--6.8%
4,636		Allete, Inc.		203,242
3,086		Avista Corp.		61,165
		COMMON STOCKS--continued
		Electric Utility--continued
374		Black Hills Corp.	$	13,950
4,607		Cleco Corp.		109,416
2,808	1	El Paso Electric Co.		65,342
2,090		Empire Distribution Electric Co.		45,332
1,474		Idacorp, Inc.		45,635
5,370		PNM Resources, Inc.		138,707
7,635		Portland General Electric Co.		205,458
1,231		UIL Holdings Corp.		36,413
3,154		UniSource Energy Corp.		95,976
		TOTAL		1,020,636
		Electrical Equipment--0.9%
586		Robbins & Myers, Inc.		30,900
2,013		Smith (A.O.) Corp.		97,731
		TOTAL		128,631
		Electronic Components--0.1%
1,389		Methode Electronics, Inc., Class A		22,460
		Electronic Instruments--0.4%
737		Analogic Corp.		48,929
249	1	Axsys Technologies, Inc.		7,296
		TOTAL		56,225
		Financial Services--0.9%
2,997	1	CompuCredit Corp.		78,671
727		Deluxe Corp.		27,452
1,605		Lakeland Financial Corp.		36,417
2		Secutity Bank Corp.		28
		TOTAL		142,568
		Food Wholesaling--0.2%
685		Nash Finch Co.		27,585
		Gas Distributor--3.4%
1,146		Atmos Energy Corp.		32,168
2,641		Laclede Group, Inc.		78,042
1,902		NICOR, Inc.		74,958
260		New Jersey Resources Corp.		12,220
828		Northwest Natural Gas Co.		34,503
6,159		Southwest Gas Corp.		191,422
2,810		WGL Holdings, Inc.		84,131
		TOTAL		507,444
		COMMON STOCKS--continued
		Generic Drugs--0.8%
6,361		Perrigo Co.	$	118,633
		Greeting Cards--0.5%
3,005		American Greetings Corp., Class A		74,314
		Grocery Chain--0.4%
2,160		Ruddick Corp.		60,048
		Home Health Care--0.1%
270	1	Amerigroup Corp.		7,474
		Household Appliances--0.5%
3,118	1	Goodman Global, Inc.		75,206
		Insurance Brokerage--2.0%
5,274	1	AmTrust Financial Services, Inc.		77,370
6,410		Odyssey Re Holdings Corp.		225,632
		TOTAL		303,002
		International Bank--0.2%
713		Preferred Bank Los Angeles, CA		27,379
		Internet Services--0.4%
2,336	1	Keynote Systems, Inc.		35,017
4,185	1	RealNetworks, Inc.		29,797
		TOTAL		64,814
		Leasing--0.8%
4,046		Financial Federal Corp.		114,704
		Life Insurance--2.5%
5,068		Delphi Financial Group, Inc., Class A		203,582
13,187		Phoenix Cos., Inc.		181,848
		TOTAL		385,430
		Major Steel Producer--0.4%
2,043		Ryerson, Inc.		65,560
		Maritime--1.4%
1,039		Eagle Bulk Shipping, Inc.		27,346
3,278	1	Genco Shipping & Trading Ltd.		184,650
		TOTAL		211,996
		Metal Containers--0.2%
480		Greif Brothers Corp., Class A		26,400
		Metal Fabrication--1.7%
880		Olympic Steel, Inc.		23,118
11,347		Worthington Industries, Inc.		234,883
		TOTAL		258,001
		COMMON STOCKS--continued
		Mini-Mill Producer--0.9%
75		Commercial Metals Corp.	$	2,313
118		Quanex Corp.		5,317
2,355		Schnitzer Steel Industries, Inc., Class A		127,617
		TOTAL		135,247
		Miscellaneous Components--1.1%
1,134	1	Cree, Inc.		29,053
1,839	1	MKS Instruments, Inc.		41,745
5,151	1	Zoran Corp.		97,096
		TOTAL		167,894
		Miscellaneous Food Products--0.8%
4,756		Fresh Del Monte Produce, Inc.		121,991
		Miscellaneous Machinery--0.5%
1,780		Curtiss Wright Corp.		77,555
		Miscellaneous Metals--0.9%
2,265		Metal Management, Inc.		95,153
2,569	1	USEC, Inc.		43,134
		TOTAL		138,287
		Multi-Industry Basic--0.7%
4,978		Olin Corp.		103,891
		Multi-Line Insurance--5.9%
2,293	1	Amerisafe, Inc.		38,477
2,784		EMC Insurance Group, Inc.		68,570
3,740		FBL Financial Group, Inc., Class A		131,611
1,892	1	FPIC Insurance Group, Inc.		65,804
2,273		Harleysville Group, Inc.		63,667
2,199		Infinity Property & Casualty		96,844
2,833		Midland Co.		134,624
1,572	1	Navigators Group, Inc.		82,231
2,111		Safety Insurance Group, Inc.		70,296
3,533		Zenith National Insurance Corp.		142,592
		TOTAL		894,716
		Mutual Fund Adviser--0.1%
333		GAMCO Investors, Inc., Class A		17,296
		Natural Gas Production--0.2%
2,105	1	Natural Gas Services Group, Inc.		31,175
		Office Supplies--0.7%
1,604	1	United Stationers, Inc.		102,239
		COMMON STOCKS--continued
		Offshore Driller--0.9%
3,023	1	Hornbeck Offshore Services, Inc.	$	130,140
		Oil Refiner--2.1%
3,949		Alon USA Energy, Inc.		140,861
6,784		Delek US Holdings, Inc.		179,640
		TOTAL		320,501
		Oil Service, Explore & Drill--1.6%
368	1	Dawson Geophysical Co.		20,096
2,514	1	Edge Petroleum Corp.		31,199
4,598	1	Grey Wolf, Inc.		34,071
3,245	1	Gulfmark Offshore, Inc.		152,450
		TOTAL		237,816
		Other Communications Equipment--0.6%
2,489	1	Superior Essex, Inc.		86,742
		Other Steel Producer--0.2%
751	1	Northwest Pipe Co.		25,241
		Paint & Related Materials--0.2%
1,187		Fuller (H.B.) Co.		32,797
		Paper Products--1.4%
1,408	1	Buckeye Technologies, Inc.		21,585
2,269		Neenah Paper, Inc.		87,878
3,454		Rock-Tenn Co., Class A		106,107
		TOTAL		215,570
		Personal Loans--1.2%
1,411		ASTA Funding, Inc.		50,909
5,008		Advanta Corp., Class B		128,505
		TOTAL		179,414
		Personnel Agency--0.9%
2,098		CDI Corp.		59,352
1,291		Maximus, Inc.		53,951
3,089	1	Spherion Corp.		27,276
		TOTAL		140,579
		Pollution Control--0.4%
1,598		CLARCOR, Inc.		55,594
		Poultry Products--0.7%
2,791		Sanderson Farms, Inc.		111,277
		Printing--0.2%
1,270		Bowne & Co., Inc.		22,022
		COMMON STOCKS--continued
		Property Liability Insurance--7.5%
2,722	1	American Physicians Capital, Inc.	$	103,218
3,051	1	CNA Surety Corp.		51,562
1,596	1	First Mercury Financial Corp.		31,569
4,581		Horace Mann Educators Corp.		81,679
2,006	1	Meadowbrook Insurance Group, Inc.		18,014
1,602		National Interstate Corp.		40,851
1,859		Nymagic, Inc.		67,630
4,331	1	ProAssurance Corp.		213,865
5,637		RLI Corp.		326,946
3,714	1	Seabright Insurance Holdings, Inc.		67,335
612		Selective Insurance Group, Inc.		12,558
3,236		United Fire & Casualty Co.		111,383
		TOTAL		1,126,610
		Railroad--0.2%
1,433	1	Genesee & Wyoming, Inc., Class A		36,756
		Recreational Goods--0.5%
3,638		Callaway Golf Co.		59,045
578	1	Steinway Musical Instruments, Inc.		19,346
		TOTAL		78,391
		Regional Bank--12.9%
779		Alabama National Bancorp		41,575
1,149		Arrow Financial Corp.		23,612
997		BancFirst Corp.		40,289
9,169		Bancorpsouth, Inc.		214,096
4,262		Central Pacific Financial Corp.		120,231
1,676		City Bank Lynwood, WA		40,861
1,025		City Holding Co.		33,671
1,013		Columbia Banking Systems, Inc.		25,730
3,004		Community Bank System, Inc.		54,042
1,239		Community Trust Bancorp, Inc.		35,535
2,718		First Commonwealth Financial Corp., PA		25,767
1,329		First Financial Bancorp		16,254
1,379		First Merchants Corp.		27,925
2,010		First State Bancorporation		34,693
9,156		FirstMerit Corp.		167,829
1,346		Frontier Financial Corp., WA		28,831
926		Great Southern Bancorp, Inc.		23,289
2,917		Greene Bancshares, Inc.		96,436
		COMMON STOCKS--continued
		Regional Bank--continued
607		Horizon Financial Corp. - Washington	$	11,867
726		Iberiabank Corp.		30,594
1,240		Independent Bank Corp. - Massachusetts		33,592
1,529		Integra Bank Corp.		27,583
2,471		NBT Bancorp, Inc.		44,700
4,081		Old National Bancorp		58,766
2,353		Old Second Bancorp, Inc.		64,825
1,761		Park National Corp.		139,911
469		Provident Bankshares Corp.		13,460
674		S.Y. Bancorp, Inc.		15,778
536		SCBT Financial Corp.		15,619
471		Sierra Bancorp		12,646
2,891		South Financial Group, Inc.		62,330
1,530		United Bankshares, Inc.		42,610
1,445		Vineyard National Bancorp		29,897
1,463		Wesbanco, Inc.		32,259
1,251		West Coast Bancorp - Oregon		32,751
5,866		Whitney Holding Corp.		146,591
2,051		Wintrust Financial Corp.		80,830
		TOTAL		1,947,275
		Resorts--0.2%
4,294	1	Silverleaf Resorts, Inc.		26,150
		Restaurant--0.4%
2,260		Landry’s Seafood Restaurants, Inc.		59,867
		Rubber--0.8%
5,542		Cooper Tire & Rubber Co.		127,411
		Savings & Loan--2.8%
982		Banner Corp.		30,069
853		First Financial Holdings, Inc.		23,082
7,637		First Niagara Financial Group, Inc.		98,212
1,137		ITLA Capital Corp.		48,322
6,325	1	Ocwen Financial Corp.		68,563
3,422		Sterling Financial Corp. - Washington		77,714
1,270		WSFS Financial Corp.		70,129
		TOTAL		416,091
		COMMON STOCKS--continued
		Securities Brokerage--0.6%
3,750	1	Knight Capital Group, Inc., Class A	$	53,025
939	1	Piper Jaffray Cos., Inc.		44,997
		TOTAL		98,022
		Semiconductor Manufacturing--0.8%
2,731	1	Plexus Corp.		66,227
3,727	1	Semtech Corp.		60,564
		TOTAL		126,791
		Shoes--0.2%
257	1	Deckers Outdoor Corp.		26,497
		Software Packaged/Custom--0.7%
1,399	1	EPIQ Systems, Inc.		23,853
340	1	Echelon Corp.		6,708
1,888	1	JDA Software Group, Inc.		42,688
3,608	1	S1 Corp.		26,230
		TOTAL		99,479
		Specialty Chemicals--0.8%
2,428	1	OM Group, Inc.		117,612
		Specialty Machinery--1.3%
1,604		Cascade Corp.		108,735
1,604		Woodward Governor Co.		92,631
		TOTAL		201,366
		Specialty Retailing--2.8%
2,400		Asbury Automotive Group, Inc.		53,088
5,504	1	Cabela’s, Inc., Class A		112,337
2,184	1	Conn’s, Inc.		55,408
2,415		Pep Boys-Manny Moe & Jack		40,886
3,010	1	Rush Enterprises, Inc.		84,130
3,943	1	Zale Corp.		83,710
		TOTAL		429,559
		Telecommunication Equipment & Services--1.3%
1,614	1	ADC Telecommunications, Inc.		30,166
1,724	1	Dycom Industries, Inc.		48,186
3,948	1	Oplink Communications, Inc.		63,839
4,896	1	Premiere Global Services, Inc.		56,989
		TOTAL		199,180
		Toys & Games--0.2%
1,683	1	JAKKS Pacific, Inc.		39,904
		COMMON STOCKS--continued
		Trucking--0.5%
426	1	Saia, Inc.	$	8,618
3,772		Werner Enterprises, Inc.		73,328
		TOTAL		81,946
		Undesignated Consumer Cyclicals--1.4%
4,693		Speedway Motorsports, Inc.		173,500
1,189		Viad Corp.		42,745
		TOTAL		216,245
		Undesignated Consumer Staples--0.2%
554	1	NBTY, Inc.		24,121
		TOTAL COMMON STOCKS (IDENTIFIED COST $15,601,384)		14,967,835
		MUTUAL FUND--1.1%
160,179	2,3	Prime Value Obligations Fund, Institutional Shares, 5.25% (AT NET ASSET VALUE)		160,179
		TOTAL INVESTMENTS--100.2% (IDENTIFIED COST $15,761,563)4		15,128,014
		OTHER ASSETS AND LIABILITIES - NET--(0.2)%		(34,633	)
		TOTAL NET ASSETS--100%	$	15,093,381

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $15,826,416.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2007.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2007

Assets:
Total investments in securities, at value including $160,179 of investments in an affiliated issuer (Note 5) (identified cost $15,761,563)			$	15,128,014
Cash				46,490
Income receivable				8,774
Receivable for investments sold				1,453,235
Receivable for shares sold				39,245
TOTAL ASSETS				16,675,758
Liabilities:
Payable for investments purchased	$	1,517,772
Payable for shares redeemed		16,902
Payable for Directors’/Trustees’ fees		477
Payable for distribution services fee (Note 5)		696
Payable for shareholder service fees (Note 5)		2,496
Accrued expenses		44,034
TOTAL LIABILITIES				1,582,377
Net assets for 1,324,171 shares outstanding			$	15,093,381
Net Assets Consist of:
Paid-in capital			$	14,891,352
Net unrealized depreciation of investments				(633,549	)
Accumulated net realized gain on investments				835,578
TOTAL NET ASSETS			$	15,093,381
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($11,192,438 ÷ 979,818 shares outstanding), no par value, unlimited shares authorized				$11.42
Offering price per share				$11.42
Redemption proceeds per share				$11.42
Class A Shares:
Net asset value per share ($2,950,417 ÷ 259,541 shares outstanding), no par value, unlimited shares authorized				$11.37
Offering price per share (100/94.50 of $11.37)1				$12.03
Redemption proceeds per share				$11.37
Class C Shares:
Net asset value per share ($950,526 ÷ 84,812 shares outstanding), no par value, unlimited shares authorized				$11.21
Offering price per share				$11.21
Redemption proceeds per share (99.00/100 of $11.21)1				$11.10

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, 2007

Investment Income:
Dividends (including $1,266 received from an affiliated issuer (Note 5) and net of foreign taxes withheld of $8)							$	142,622
Interest								10,018
TOTAL INCOME								152,640
Expenses:
Investment adviser fee (Note 5)				$	134,570
Administrative personnel and services fee (Note 5)					230,098
Custodian fees					18,130
Transfer and dividend disbursing agent fees and expenses					51,765
Directors’/Trustees’ fees					621
Auditing fees					14,369
Legal fees					6,324
Portfolio accounting fees					72,498
Distribution services fee--Class A Shares (Note 5)					1,324
Distribution services fee--Class C Shares (Note 5)					4,751
Shareholder services fee--Class A Shares (Note 5)					4,830
Shareholder services fee--Class C Shares (Note 5)					1,165
Share registration costs					61,432
Printing and postage					24,577
Insurance premiums					6,091
Miscellaneous					3,129
TOTAL EXPENSES					635,674
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(134,570	)
Waiver of administrative personnel and services fee (Note 5)		(105,281	)
Waiver of transfer and dividend disbursing agent fees and expenses		(12,318	)
Waiver of portfolio accounting fees		(20,355	)
Reimbursement of other operating expenses (Note 5)		(178,277	)
TOTAL WAIVERS AND REIMBURSEMENTS					(450,801	)
Net expenses								184,873
Net investment income (loss)								(32,233	)
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments								875,788
Net change in unrealized depreciation of investments								(619,049	)
Net realized and unrealized gain on investments								256,739
Change in net assets resulting from operations							$	224,506

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

	Year Ended 7/31/2007			Period Ended 7/31/2006		1
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(32,233	)	$	(1,041	)
Net realized gain (loss) on investments		875,788			(7,977	)
Net change in unrealized appreciation/depreciation of investments		(619,049	)		(14,500	)
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		224,506			(23,518	)
Share Transactions:
Proceeds from sale of shares		16,884,477			1,550,300
Cost of shares redeemed		(3,364,195	)		(178,228	)
Redemption fees		39			--
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		13,520,321			1,372,072
Change in net assets		13,744,827			1,348,554
Net Assets:
Beginning of period		1,348,554			--
End of period	$	15,093,381		$	1,348,554

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

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• for investments in other open-end registered investment companies, based on net asset value (NAV);
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors; prices for interest rate swaps are furnished by an independent pricing service and are based upon a valuation model incorporating interest rates, yield curves and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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 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.

Witholding 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 7/31/2007					Period Ended 7/31/20061
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	1,140,726		$	12,999,804		69,922		$	747,384
Shares redeemed	(217,235	)		(2,529,781	)	(13,595	)		(150,455	)
Redemption fees	--			23		--			--
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	923,491		$	10,470,046		56,327		$	596,929
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	257,303		$	2,904,620		68,354		$	751,222
Shares redeemed	(63,571	)		(756,151	)	(2,545	)		(27,773	)
Redemption fees	--			13		--			--
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	193,732		$	2,148,482		65,809		$	723,449
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	86,450		$	980,053		4,825		$	51,694
Shares redeemed	(6,463	)		(78,263	)	--			--
Redemption fees	--			3		--			--
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	79,987		$	901,793		4,825		$	51,694
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	1,197,210		$	13,520,321		126,961		$	1,372,072

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

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 redeem 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.

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, 2007, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Undistributed Net Investment Income (Loss)	Accumulated Net Realized Gains
$32,233	$(32,233)

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income	$	885,624
Undistributed long-term capital gain	$	14,807
Net unrealized depreciation	$	(698,402	)

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, 2007, the cost of investments for federal tax purposes was $15,826,416. The net unrealized depreciation of investments for federal tax purposes was $698,402. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $427,015 and net unrealized depreciation from investments for those securities having an excess of cost over value of $1,125,417.

The Fund used capital loss carryforwards of $252 to offset taxable capital gains realized during the year ended July 31, 2007.

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

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. For the year ended July 31, 2007, the Adviser waived $134,551 of its fee and reimbursed $178,277 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 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. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 1.083% of average daily net assets of the Fund. FAS waived $105,281 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 of up to 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	0.25%
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%

When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended Year July 31, 2007, FSC retained $4,411 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC retained $1,605 in sales charges from the sale of Class A Shares. FSC also retained $464 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, 2007, 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 (including the distribution (12b-1) fee) 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, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $19 in connection with the affiliated mutual fund listed below. Transactions with the affiliated company during the year ended July 31, 2007 are as follows:

Affiliate	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	--	569,124	408,945	160,179	$160,179	$1,266

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, 2007, were as follows:

Purchases	$	40,384,204
Sales	$	27,009,103

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

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, 2007, 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 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Yount LLP

Boston, Massachusetts
September 19, 2007

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. As of December 31, 2006, the Trust comprised eight portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

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 15 Old Timber Trail Pittsburgh, PA 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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

FEDERATED MDT SMALL CAP VALUE (THE “FUND”)

The Fund’s Board reviewed the Fund’s investment advisory contract at meetings held in May 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

The Fund’s performance fell below the median of the relevant peer group for the one year period ending December 31, 2006. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.

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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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 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 his 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. For 2006, 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 in 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 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 31421R276

37325 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©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, 2007

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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$10.35		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.02	)3	(0.05	)3
Net realized and unrealized gain on investments	1.32		0.40
TOTAL FROM INVESTMENT OPERATIONS	1.30		0.35
Net Asset Value, End of Period	$11.65		$10.35
Total Return4	12.56	%	3.50	%
Ratios to Average Net Assets:
Net expenses	1.65	%	2.01	%5
Net investment income (loss)	(0.14	)%	(0.50	)%5
Expense waiver/reimbursement6	5.81	%	3.71	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$3,903		$2,061
Portfolio turnover	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

Financial Highlights--Class C Shares

(For a Share Outstanding Throughout Each Period)

	Year Ended 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$10.27		$10.00
Income From Investment Operations:
Net investment income (loss)	(0.10	)3	(0.13	)3
Net realized and unrealized gain on investments	1.30		0.40
TOTAL FROM INVESTMENT OPERATIONS	1.20		0.27
Net Asset Value, End of Period	$11.47		$10.27
Total Return4	11.68	%	2.70	%
Ratios to Average Net Assets:
Net expenses	2.40	%	2.76	%5
Net investment income (loss)	(0.89	)%	(1.25	)%5
Expense waiver/reimbursement6	5.70	%	3.71	%5
Supplemental Data:
Net assets, end of period (000 omitted)	$3,007		$1,329
Portfolio turnover	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; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual:
Class A Shares	$1,000	$1,018.40	$8.21
Class C Shares	$1,000	$1,014.10	$11.94
Hypothetical (assuming a 5% return before expenses):
Class A Shares	$1,000	$1,016.66	$8.20
Class C Shares	$1,000	$1,012.94	$11.93

1 Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The annualized net expense ratios are as follows:

Class A Shares	1.64%
Class C Shares	2.39%

Management’s Discussion of Fund Performance

The fund’s total return for the fiscal year ended July 31, 2007 was 12.56% for Class A Shares and 11.68% for Class C Shares.¹ The total return of the Russell 3000^® Index (Russell 3000^®) was 16.08% 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 3000^®. The total return of the Lipper Multi-Cap Core Funds Index was 18.31% for the same period.³

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000^®, which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index,⁴ which exceeded the 15.48% and 12.12% results for the

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 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.

3 Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

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 can not be made 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.

Russell Top 200^® Index⁵ and the Russell 2000^® Index,⁶ respectively. Growth stocks outperformed value stocks by a wide margin during the year with the Russell 3000^® Growth Index⁷ returning 19.24% as compared to 12.97% for the Russell 3000^® Value Index.⁸

The best performing sectors during the reporting period in the Russell 3000^® were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

FUND PERFORMANCE

The most significant contributor to the fund’s performance relative to the Russell 3000^® was its overweight in the Energy sector. Stock selection in the Information Technology sector provided a modest contribution to relative performance. The fund’s performance was negatively impacted by its overweight relative to the Russell 3000^® in the Financials sector and by its stock selection in that sector.

Individual stocks contributing to the fund’s performance relative to the Russell 3000^® included: Apple Computer Inc., Schlumberger Limited Ltd., Chevron Corp., Morgan Stanley, and Marathon Oil Corp.

Individual stocks detracting from the fund’s performance relative to the Russell 3000^® included: Exxon Mobil Corp., Merrill Lynch & Co., Inc., Cisco Systems Inc., Hess Corp. and AT&T Inc.

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 can not be made directly in an index.

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 can not 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 can not 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 can not be made directly 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, 2007, 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 7/31/2007
1 Year	6.39%
Start of Performance (9/15/2005)	5.27%

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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as far as falling into the respected categories indicated. Lipper figures do not reflect sales charges.

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

The graph below illustrates the hypothetical investment of $10,000¹ 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, 2007, 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 7/31/2007
1 Year	10.68%
Start of Performance (9/15/2005)	7.58%

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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as far as falling into the respected categories indicated. Lipper figures do not reflect sales charges.

Portfolio of Investments Summary Table

At July 31, 2007, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Money Center Bank	7.6	%
Securities Brokerage	5.7	%
Multi-Line Insurance	5.4	%
Oil Well Supply	5.4	%
Internet Services	5.2	%
Integrated Domestic Oil	5.0	%
Integrated International Oil	4.9	%
Regional Bank	4.8	%
Life Insurance	4.7	%
Property Liability Insurance	4.6	%
Computers-Low End	4.5	%
Agricultural Chemicals	3.8	%
Oil Refiner	3.0	%
Multi-Industry Capital Goods	2.9	%
Building Supply Stores	2.5	%
Metal Fabrication	2.5	%
Financial Services	2.0	%
Electric Utility	1.7	%
Railroad	1.5	%
Crude Oil & Gas Production	1.3	%
Services to Medical Professionals	1.1	%
Apparel	1.0	%
Ethical Drugs	1.0	%
Other2	17.1	%
Cash Equivalents3	1.8	%
Other Assets and Liabilities--Net4	(1.0	)%
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, 2007

Shares				Value
		COMMON STOCKS--99.2%
		Advertising--0.2%
382		Omnicom Group, Inc.	$	19,814
		Agricultural Chemicals--3.8%
184		Bunge Ltd.		16,672
88		FMC Corp.		7,843
5,799		Monsanto Co.		373,746
		TOTAL		398,261
		Agricultural Machinery--0.5%
400		Deere & Co.		48,168
		Aluminum--0.1%
275		Alcoa, Inc.		10,505
		Apparel--1.0%
2,115	1	Coach, Inc.		96,148
295		Guess ?, Inc.		14,010
		TOTAL		110,158
		Auto Original Equipment Manufacturers--0.4%
258		American Axle & Manufacturing Holdings, Inc.		6,244
183	1	AutoZone, Inc.		23,206
103		Johnson Controls, Inc.		11,654
119		Sun Hydraulics, Inc.		3,537
		TOTAL		44,641
		Biotechnology--0.1%
167	1	Martek Biosciences Corp.		4,279
171	1	Waters Corp.		9,962
		TOTAL		14,241
		Book Publishing--0.0%
69	1	Scholastic Corp.		2,220
		Broadcasting--0.1%
339	1	Discovery Holding Co., Class A		8,041
		Building Supply Stores--2.5%
3,094		Home Depot, Inc.		115,004
5,369		Lowe’s Cos., Inc.		150,386
		TOTAL		265,390
		Cable TV--0.6%
2,368	1	Comcast Corp., Class A		62,207
Shares				Value
		COMMON STOCKS--continued
		Cement--0.3%
261		Martin Marietta Materials, Inc.	$	35,757
		Clothing Stores--0.3%
708	1	Aeropostale, Inc.		26,961
187	1	Hanesbrands, Inc.		5,799
		TOTAL		32,760
		Computer Networking--0.1%
442	1	Juniper Networks, Inc.		13,242
		Computer Services--0.2%
310	1	Cognizant Technology Solutions Corp.		25,104
		Computer Stores--0.1%
666	1	Ingram Micro, Inc., Class A		13,353
		Computers - Low End--4.5%
3,608	1	Apple, Inc.		475,390
		Construction Machinery--0.1%
184		Manitowoc, Inc.		14,291
		Cosmetics & Toiletries--0.0%
47		Estee Lauder Cos., Inc., Class A		2,116
		Crude Oil & Gas Production--1.3%
511		Apache Corp.		41,309
206	1	Bill Barrett Corp.		7,070
149		Cimarex Energy Co.		5,640
1,079		Devon Energy Corp.		80,504
37		Pogo Producing Co.		1,971
		TOTAL		136,494
		Defense Aerospace--0.1%
189		Goodrich (B.F.) Co.		11,890
		Defense Electronics--0.4%
217	1	FLIR Systems, Inc.		9,472
60	1	First Solar, Inc.		6,754
120		Raytheon Co.		6,643
279		Rockwell Collins		19,167
		TOTAL		42,036
		Department Stores--0.1%
159		Target Corp.		9,631
		Discount Department Stores--0.1%
359		Foot Locker, Inc.		6,663
		Diversified Leisure--0.1%
204		Carnival Corp.		9,039
Shares				Value
		COMMON STOCKS--continued
		Diversified Oil--0.6%
1,181		Occidental Petroleum Corp.	$	66,986
		Drug Stores--0.1%
154		Longs Drug Stores Corp.		7,447
		Electric Utility--1.7%
621	1	Allegheny Energy, Inc.		32,435
752		Ameren Corp.		36,081
481		DTE Energy Co.		22,309
1,289		Edison International		68,175
277		Pepco Holdings, Inc.		7,498
165		Portland General Electric Co.		4,440
336		SCANA Corp.		12,560
		TOTAL		183,498
		Electrical Equipment--0.0%
91		AMETEK, Inc.		3,551
		Electronic Instruments--0.0%
74		Analogic Corp.		4,913
		Ethical Drugs--1.0%
366	1	King Pharmaceuticals, Inc.		6,226
402		Pfizer, Inc.		9,451
3,104		Schering Plough Corp.		88,588
		TOTAL		104,265
		Financial Services--2.0%
893		Ambac Financial Group, Inc.		59,965
651		Ameriprise Financial, Inc.		39,236
920		CIT Group, Inc.		37,886
39		CME Group, Inc.		21,478
94		Dun & Bradstreet Corp.		9,189
225		Janus Capital Group, Inc.		6,763
312		MBIA Insurance Corp.		17,503
125	1	Mastercard, Inc., Class A		20,100
		TOTAL		212,120
		Gas Distributor--0.1%
206		AGL Resources, Inc.		7,766
148		MDU Resources Group, Inc.		4,034
		TOTAL		11,800
Shares				Value
		COMMON STOCKS--continued
		Home Building--0.8%
735		Centex Corp.	$	27,423
658		KB HOME		20,931
979		Lennar Corp., Class A		30,016
6	1	NVR, Inc.		3,471
		TOTAL		81,841
		Insurance Brokerage--0.1%
9	1	Markel Corp.		4,190
217		Odyssey Re Holdings Corp.		7,638
		TOTAL		11,828
		Integrated Domestic Oil--5.0%
4,052		ConocoPhillips		327,564
3,595		Marathon Oil Corp.		198,444
		TOTAL		526,008
		Integrated International Oil--4.9%
6,106		Chevron Corp.		520,598
		Internet Services--5.2%
2,795	1	Amazon.com, Inc.		219,519
330	1	IAC Interactive Corp.		9,484
404	1	Priceline.com, Inc.		25,775
9,134	1	eBay, Inc.		295,942
		TOTAL		550,720
		Iron Ore Production--0.2%
257		Cleveland Cliffs, Inc.		17,802
		Leasing--0.0%
91		GATX Corp.		4,128
		Life Insurance--4.7%
145		Delphi Financial Group, Inc.		5,825
4,756		MetLife, Inc.		286,406
334		Nationwide Financial Services, Inc., Class A		19,008
330		Protective Life Corp.		14,197
1,678		Prudential Financial, Inc.		148,721
282		Torchmark Corp.		17,354
		TOTAL		491,511
		Lumber Products--0.1%
466		Louisiana-Pacific Corp.		8,630
		Major Steel Producer--0.1%
169		Ryerson, Inc.		5,423
Shares				Value
		COMMON STOCKS--continued
		Maritime--0.4%
221	1	Genco Shipping & Trading Ltd.	$	12,449
411		Overseas Shipholding Group, Inc.		31,889
		TOTAL		44,338
		Medical Supplies--0.1%
99	1	Kyphon, Inc.		6,496
		Medical Technology--0.9%
157		Dentsply International, Inc.		5,729
307	1	Intuitive Surgical, Inc.		65,271
668	1	St. Jude Medical, Inc.		28,818
		TOTAL		99,818
		Metal Containers--0.1%
134		Ball Corp.		6,870
		Metal Fabrication--2.5%
1,669		Precision Castparts Corp.		228,753
413		Timken Co.		13,794
841		Worthington Industries, Inc.		17,409
		TOTAL		259,956
		Mini-Mill Producer--0.3%
800		Commercial Metals Corp.		24,672
149		Schnitzer Steel Industries, Inc., Class A		8,074
		TOTAL		32,746
		Miscellaneous Components--0.3%
436		Amphenol Corp., Class A		14,937
199	1	Cree, Inc.		5,098
456	1	Vishay Intertechnology, Inc.		7,073
		TOTAL		27,108
		Miscellaneous Food Products--0.8%
2,516		Archer-Daniels-Midland Co.		84,538
		Miscellaneous Machinery--0.2%
113		Roper Industries, Inc.		6,778
104		SPX Corp.		9,762
		TOTAL		16,540
		Miscellaneous Metals--0.3%
57		Kennametal, Inc.		4,370
374		Metal Management, Inc.		15,712
544	1	USEC, Inc.		9,134
		TOTAL		29,216
Shares				Value
		COMMON STOCKS--continued
		Money Center Bank--7.6%
5,711		Bank of America Corp.	$	270,816
955		Citigroup, Inc.		44,474
10,962		J.P. Morgan Chase & Co.		482,438
		TOTAL		797,728
		Mortgage and Title--0.1%
165		LandAmerica Financial Group, Inc.		12,637
		Multi-Industry Transportation--0.1%
276	1	Hub Group, Inc., Class A		9,390
		Multi-Industry Capital Goods--2.9%
33		Acuity Brands, Inc.		1,950
67		American Standard Cos.		3,621
6,466		General Electric Co.		250,622
904		Honeywell International, Inc.		51,989
		TOTAL		308,182
		Multi-Line Insurance--5.4%
1,488		Allstate Corp.		79,087
6,466		American International Group, Inc.		414,988
723		Assurant, Inc.		36,671
214	1	CNA Financial Corp.		8,885
306		Hartford Financial Services Group, Inc.		28,112
		TOTAL		567,743
		Mutual Fund Adviser--0.3%
71	1	Affiliated Managers Group		8,023
171		Franklin Resources, Inc.		21,780
		TOTAL		29,803
		Offshore Driller--0.9%
92	1	Hornbeck Offshore Services, Inc.		3,961
347	1	Oceaneering International, Inc.		19,488
1,059		Tidewater, Inc.		72,457
		TOTAL		95,906
		Oil Refiner--3.0%
1,034		Tesoro Petroleum Corp.		51,493
3,985		Valero Energy Corp.		267,035
		TOTAL		318,528
		Oil Service, Explore & Drill--0.5%
386	1	Grant Prideco, Inc.		21,655
375	1	McDermott International, Inc.		31,103
		TOTAL		52,758
Shares				Value
		COMMON STOCKS--continued
		Oil Well Supply--5.4%
242	1	Cameron International Corp.	$	18,876
508	1	FMC Technologies, Inc.		46,492
5,303		Schlumberger Ltd.		502,300
		TOTAL		567,668
		Other Communications Equipment--0.1%
99		Harris Corp.		5,433
		Other Steel Producer--0.2%
247		Chaparral Steel Co.		20,758
		Paper Products--0.5%
747		MeadWestvaco Corp.		24,307
442		Temple-Inland, Inc.		25,693
		TOTAL		50,000
		Poultry Products--0.3%
563		Pilgrim’s Pride Corp.		18,962
322		Sanderson Farms, Inc.		12,838
		TOTAL		31,800
		Property Liability Insurance--4.6%
429		American Financial Group, Inc.		12,051
2,549		Chubb Corp.		128,495
353		Commerce Group, Inc. - Massachusetts		10,142
545		HCC Insurance Holdings, Inc.		15,958
1,321		Loews Corp.		62,615
141		Mercury General Corp.		7,301
220		Ohio Casualty Corp.		9,550
114	1	Philadelphia Consolidated Holding Corp.		4,120
355		Reinsurance Group of America		18,925
379		SAFECO Corp.		22,160
3,751		The St. Paul Travelers Cos., Inc.		190,476
30		Transatlantic Holdings, Inc.		2,195
		TOTAL		483,988
		Railroad--1.5%
3,021		Norfolk Southern Corp.		162,469
		Regional Bank--4.8%
256		Associated Banc Corp.		7,357
510		BB&T Corp.		19,084
181		Central Pacific Financial Corp.		5,106
161		City National Corp.		11,397
228		Colonial BancGroup, Inc.		4,973
Shares				Value
		COMMON STOCKS--continued
		Regional Bank--continued
901		Comerica, Inc.	$	47,447
1,256		Fifth Third Bancorp		46,334
262		FirstMerit Corp.		4,802
91		Huntington Bancshares, Inc.		1,747
4,171		KeyCorp		144,692
86		M & T Bank Corp.		9,141
1,607		National City Corp.		47,230
1,391		SunTrust Banks, Inc.		108,915
588		UnionBanCal Corp.		32,493
254		Zions Bancorp		18,936
		TOTAL		509,654
		Restaurant--0.2%
280	1	Buffalo Wild Wings, Inc.		12,102
364		Yum! Brands, Inc.		11,663
		TOTAL		23,765
		Securities Brokerage--5.7%
597		Goldman Sachs Group, Inc.		112,439
1,499		Lehman Brothers Holdings, Inc.		92,938
1,559		Merrill Lynch & Co., Inc.		115,678
4,401		Morgan Stanley		281,092
		TOTAL		602,147
		Semiconductor Distribution--0.3%
888	1	Avnet, Inc.		33,637
		Semiconductor Manufacturing--0.7%
248		Altera Corp.		5,754
670		Intersil Corp., Class A		19,598
1,132		Linear Technology Corp.		40,356
433	1	Spansion, Inc.		4,594
		TOTAL		70,302
		Semiconductor Manufacturing Equipment--0.0%
240	1	Teradyne, Inc.		3,766
		Services to Medical Professionals--1.1%
824	1	Express Scripts, Inc.		41,307
45	1	Laboratory Corp. of America Holdings		3,323
741	1	Medco Health Solutions, Inc.		60,221
169	1	Nighthawk Radiology Holdings, Inc.		3,486
116	1	Wellpoint, Inc.		8,714
		TOTAL		117,051
Shares				Value
		COMMON STOCKS--continued
		Shoes--0.4%
658	1	Crocs, Inc.	$	39,033
		Software Packaged/Custom--0.9%
168	1	Blue Coat Systems, Inc.		8,187
608	1	Computer Sciences Corp.		33,853
88		National Instruments Corp.		2,847
2,125	1	Oracle Corp.		40,630
176	1	SPSS, Inc.		7,223
		TOTAL		92,740
		Specialty Chemicals--0.3%
149		Minerals Technologies, Inc.		9,636
465	1	OM Group, Inc.		22,525
		TOTAL		32,161
		Specialty Retailing--0.0%
158	1	AutoNation, Inc.		3,078
88		Borders Group, Inc.		1,440
		TOTAL		4,518
		Telecommunication Equipment & Services--0.2%
772	1	Corning, Inc.		18,404
		Telephone Utility--0.6%
1,008		Embarq Corp.		62,284
		Trucking--0.1%
140		Con-way, Inc.		6,915
		Undesignated Consumer Cyclicals--0.8%
493		DeVRY, Inc.		15,973
565	1	ITT Educational Services, Inc.		59,698
164	1	TeleTech Holdings, Inc.		4,810
		TOTAL		80,481
		Undesignated Consumer Staples--0.2%
422	1	Nutri/System, Inc.		23,514
		Undesignated Health--0.0%
94		IMS Health, Inc.		2,644
		TOTAL COMMON STOCKS (IDENTIFIED COST $9,643,853)		10,469,914
Shares				Value
		MUTUAL FUND--1.8%
189,358	2,3	Prime Value Obligations Fund, Institutional Shares, 5.25% (AT NET ASSET VALUE)	$	189,358
		TOTAL INVESTMENTS--101.0% (IDENTIFIED COST $9,833,211)4		10,659,272
		OTHER ASSETS AND LIABILITIES - NET--(1.0)%		(103,985	)
		TOTAL NET ASSETS--100%	$	10,555,287

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $9,836,512.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2007.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2007

Assets:
Total investments in securities, at value including $189,358 of investments in an affiliated issuer (Note 5) (identified cost $9,833,211)			$	10,659,272
Income receivable				2,719
Receivable for investments sold				427,017
Receivable for shares sold				34,150
TOTAL ASSETS				11,123,158
Liabilities:
Payable for investments purchased	$	516,768
Payable for shares redeemed		76
Payable for transfer and dividend disbursing agent fees and expenses		11,706
Payable for Directors’/Trustees’ fees		616
Payable for portfolio accounting fees		7,169
Payable for distribution services fee (Note 5)		2,674
Payable for shareholder services fee (Note 5)		3,790
Accrued expenses		25,072
TOTAL LIABILITIES				567,871
Net assets for 908,857 shares outstanding			$	10,555,287
Net Assets Consist of:
Paid-in capital			$	9,804,314
Net unrealized appreciation of investments				826,061
Accumulated net realized loss on investments				(75,088	)
TOTAL NET ASSETS			$	10,555,287
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($3,645,436 ÷ 311,864 shares outstanding), no par value, unlimited shares authorized				$11.69
Offering price per share				$11.69
Redemption proceeds per share				$11.69
Class A Shares:
Net asset value per share ($3,902,746 ÷ 334,930 shares outstanding), no par value, unlimited shares authorized				$11.65
Offering price per share (100/94.50 of $11.65)1				$12.33
Redemption proceeds per share				$11.65
Class C Shares:
Net asset value per share ($3,007,105 ÷ 262,063 shares outstanding), no par value, unlimited shares authorized				$11.47
Offering price per share				$11.47
Redemption proceeds per share (99.00/100 of $11.47)1				$11.36

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, 2007

Investment Income:
Dividends (including $1,255 received from an affiliated issuer (Note 5))							$	115,718
Interest								4,900
TOTAL INCOME								120,618
Expenses:
Investment adviser fee (Note 5)				$	73,669
Administrative personnel and services fee (Note 5)					230,295
Custodian fees					15,829
Transfer and dividend disbursing agent fees and expenses					49,541
Directors’/Trustees’ fees					729
Auditing fees					15,591
Legal fees					6,215
Portfolio accounting fees					75,295
Distribution services fee--Class A Shares (Note 5)					2,111
Distribution services fee--Class C Shares (Note 5)					17,556
Shareholder services fee--Class A Shares (Note 5)					5,389
Shareholder services fee--Class C Shares (Note 5)					3,958
Share registration costs					61,489
Printing and postage					23,535
Insurance premiums					6,106
Miscellaneous					3,320
TOTAL EXPENSES					590,628
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(73,669	)
Waiver of administrative personnel and services fee (Note 5)		(105,133	)
Waiver of transfer and dividend disbursing agent fees and expenses		(12,050	)
Waiver of portfolio accounting fees		(20,162	)
Reimbursement of other operating expenses (Note 5)		(239,213	)
TOTAL WAIVERS AND REIMBURSEMENTS					(450,227	)
Net expenses								140,401
Net investment income (loss)								(19,783	)
Realized and Unrealized Gain on Investments:
Net realized gain on investments								222,906
Net change in unrealized appreciation of investments								531,414
Net realized and unrealized gain on investments								754,320
Change in net assets resulting from operations							$	734,537

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

		Year Ended 7/31/2007			Period Ended 7/31/2006	1
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(19,783	)	$	(12,305	)
Net realized gain (loss) on investments		222,906			(297,994	)
Net change in unrealized appreciation/depreciation of investments		531,414			294,647
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		734,537			(15,652	)
Share Transactions:
Proceeds from sale of shares		6,651,420			4,953,565
Cost of shares redeemed		(1,606,158	)		(166,458	)
Redemption fees2		1,870			2,163
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		5,047,132			4,789,270
Change in net assets		5,781,669			4,773,618
Net Assets:
Beginning of period		4,773,618			--
End of period	$	10,555,287		$	4,773,618

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

2 Redemption fees in 2006 have been reclassified to permit comparison.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• for investments in other open-end registered investment companies, based on net asset value (NAV);
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors; prices for interest rate swaps are furnished by an independent pricing service and are based upon a valuation model incorporating interest rates, yield curves and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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 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.

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 7/31/2007					Period Ended 7/31/20061
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	259,278		$	2,871,927		134,445		$	1,376,578
Shares redeemed	(80,930	)		(876,653	)	(929	)		(9,501	)
Redemption fees	--			652		--			--
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	178,348		$	1,995,926		133,516		$	1,367,077
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	187,148		$	2,138,258		212,325		$	2,202,874
Shares redeemed	(51,271	)		(591,818)		(13,272	)		(135,352	)
Redemption fees	--			712		--			2,163
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	135,877		$	1,547,152		199,053		$	2,069,685
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	144,501		$	1,641,235		131,487		$	1,374,113
Shares redeemed	(11,851	)		(137,687	)	(2,074	)		(21,605	)
Redemption fees	--			506		--			--
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	132,650		$	1,504,054		129,413		$	1,352,508
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	446,875		$	5,047,132		461,982		$	4,789,270

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

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 redeem 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.

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, 2007, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income
$(19,783)	$19,783

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Net unrealized appreciation	$	822,760
Capital loss carryforwards	$	(71,787	)

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, 2007, the cost of investments for federal tax purposes was $9,836,512. The net unrealized appreciation of investments for federal tax purposes was $822,760. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $1,100,256 and net unrealized depreciation from investments for those securities having an excess of cost over value of $277,496.

At July 31, 2007, the Fund had a capital loss carryforward of $71,787 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
2014	$2,945
2015	$68,842

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

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. For the year ended July 31, 2007, the Adviser waived $73,652 of its fee and reimbursed $239,213 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 will 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. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 1.573% of average daily net assets of the Fund. FAS waived $105,133 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 of up to 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	0.25%
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%

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, 2007, FSC retained $15,419 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC retained $3,893 in sales charges from the sale of Class A Shares. FSC also retained $14 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, 2007, 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 (including the distribution (12b-1) fee) 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, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $17 in connection with the affiliated mutual fund listed below. Transactions with the affiliated company during the year ended July 31, 2007 are as follows:

Affiliate	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	--	925,941	736,583	189,358	$189,358	$1,255

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, 2007, were as follows:

Purchases	$	17,046,857
Sales	$	12,035,473

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

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, 2007, 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 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

/s/Ernst & Young LLP

Boston, Massachusetts

September 19, 2007

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. As of December 31, 2006, the Trust comprised eight portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

INDEPENDENT TRUSTEES BACKGROUND

Name Birth Date Address 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 15 Old Timber Trail Pittsburgh, PA 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member 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 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant. Other Directorships Held: 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 Chancellor, Duquesne University Pittsburgh, PA 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.
Thomas M. O’Neill Birth Date: June 14, 1951 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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

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 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

The Fund’s performance fell below the median of the relevant peer group for the one year period ending December 31, 2006. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.

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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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 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 his 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. For 2006, 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 in 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 31421R403
Cusip 31421R502

37337 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©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, 2007

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 7/31/2007	1	Period Ended 7/31/2006	2
Net Asset Value, Beginning of Period	$10.36		$10.00
Income From Investment Operations:
Net investment income (loss)	0.01	3	(0.03)	3
Net realized and unrealized gain on investments	1.32		0.39
TOTAL FROM INVESTMENT OPERATIONS	1.33		0.36
Net Asset Value, End of Period	$11.69		$10.36
Total Return4	12.84	%	3.60	%
Ratios to Average Net Assets:
Net expenses	1.40	%	1.76	%5
Net investment income (loss)	0.12	%	(0.25	)%5
Expense waiver/reimbursement6	5.47	%	3.71	%5
Supplemental Data
Net assets, end of period (000 omitted)	$3,645		$1,383
Portfolio turnover	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; 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, 2007 to July 31, 2007.

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 2/1/2007	Ending Account Value 7/31/2007	Expenses Paid During Period1
Actual	$1,000	$1,020.10	$6.96
Hypothetical (assuming a 5% return before expenses)	$1,000	$1,017.90	$6.95

1 Expenses are equal to the Fund’s annualized net expense ratio of 1.39%, multiplied by the average account value over the period, multiplied by 181/365 (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, 2007 was 12.84% for Institutional Shares.¹ The total return of the Russell 3000^® Index² (Russell 3000^®) was 16.08% 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 3000^®. The total return of the Lipper Multi-Cap Core Funds Index³ was 18.31% for the same period.

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 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. The index is unmanaged and investments can not be made directly in an index.

3 Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. 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.

MARKET OVERVIEW

Over the twelve month reporting period ended July 31, 2007, domestic equity markets enjoyed a positive, if somewhat rocky, performance highlighted by a sudden decline in late February and another decline as the reporting period ended in July. The Russell 3000^®, which represents the performance of the 3000 largest U.S. companies by market capitalization, finished the period up a solid 16.08%. Mid-cap stocks lead the way as demonstrated by the 18.93% return on the Russell Midcap^® Index,⁴ which exceeded the 15.48% and 12.12% results for the Russell Top 200^® Index⁵ and the Russell 2000^® Index,⁶ respectively. Growth stocks outperformed value stocks by a wide margin during the year with the Russell 3000^® Growth Index⁷ returning 19.24% as compared to 12.97% for the Russell 3000^® Value Index.⁸

The best performing sectors during the reporting period in the Russell 3000^® were Materials (up 35.67%), Telecommunication Services (up 30.35%) and Information Technology (up 29.43%). Underperforming sectors included Financials (up just 2.11%, negatively influenced by a disruption in credit markets late in the reporting period), Health Care (up 8.23%) and Consumer Staples (up 11.12%).

FUND PERFORMANCE

The most significant contributor to the fund’s performance relative to the Russell 3000^® was its overweight in the Energy sector. Stock selection in the Information Technology sector provided a modest contribution to relative performance. The fund’s performance was negatively impacted by its overweight relative to the Russell 3000^® in the Financials sector and by its stock selection in that sector.

Individual stocks contributing to the fund’s performance relative to the Russell 3000^® included: Apple Computer Inc., Schlumberger Limited Ltd., Chevron Corp., Morgan Stanley, and Marathon Oil Corp.

Individual stocks detracting from the fund’s performance relative to the Russell 3000^® included: Exxon Mobil Corp., Merrill Lynch & Co., Inc., Cisco Systems Inc., Hess Corp. and AT&T Inc.

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 can not 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 can not be made directly in an index.

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 can not 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 can not 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 can not be made 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.

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, 2007, 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 7/31/2007
1 Year	12.84%
Start of Performance (9/15/2005)	8.68%

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 figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as far as falling into the respective categories indicated. Lipper figures do not reflect sales charges.

Portfolio of Investments Summary Table

At July 31, 2007, the Fund’s industry composition¹ was as follows:

Industry	Percentage of Total Net Assets
Money Center Bank	7.6%
Securities Brokerage	5.7%
Multi-Line Insurance	5.4%
Oil Well Supply	5.4%
Internet Services	5.2%
Integrated Domestic Oil	5.0%
Integrated International Oil	4.9%
Regional Bank	4.8%
Life Insurance	4.7%
Property Liability Insurance	4.6%
Computers-Low End	4.5%
Agricultural Chemicals	3.8%
Oil Refiner	3.0%
Multi-Industry Capital Goods	2.9%
Building Supply Stores	2.5%
Metal Fabrication	2.5%
Financial Services	2.0%
Electric Utility	1.7%
Railroad	1.5%
Crude Oil & Gas Production	1.3%
Services to Medical Professionals	1.1%
Apparel	1.0%
Ethical Drugs	1.0%
Other2	17.1%
Cash Equivalents3	1.8%
Other Assets and Liabilities--Net4	(1.0)%
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, 2007

Shares				Value
		COMMON STOCKS--99.2%
		Advertising--0.2%
382		Omnicom Group, Inc.	$	19,814
		Agricultural Chemicals--3.8%
184		Bunge Ltd.		16,672
88		FMC Corp.		7,843
5,799		Monsanto Co.		373,746
		TOTAL		398,261
		Agricultural Machinery--0.5%
400		Deere & Co.		48,168
		Aluminum--0.1%
275		Alcoa, Inc.		10,505
		Apparel--1.0%
2,115	1	Coach, Inc.		96,148
295		Guess ?, Inc.		14,010
		TOTAL		110,158
		Auto Original Equipment Manufacturers--0.4%
258		American Axle & Manufacturing Holdings, Inc.		6,244
183	1	AutoZone, Inc.		23,206
103		Johnson Controls, Inc.		11,654
119		Sun Hydraulics, Inc.		3,537
		TOTAL		44,641
		Biotechnology--0.1%
167	1	Martek Biosciences Corp.		4,279
171	1	Waters Corp.		9,962
		TOTAL		14,241
		Book Publishing--0.0%
69	1	Scholastic Corp.		2,220
		Broadcasting--0.1%
339	1	Discovery Holding Co., Class A		8,041
		Building Supply Stores--2.5%
3,094		Home Depot, Inc.		115,004
5,369		Lowe’s Cos., Inc.		150,386
		TOTAL		265,390
		Cable TV--0.6%
2,368	1	Comcast Corp., Class A		62,207
		COMMON STOCKS--continued
		Cement--0.3%
261		Martin Marietta Materials, Inc.	$	35,757
		Clothing Stores--0.3%
708	1	Aeropostale, Inc.		26,961
187	1	Hanesbrands, Inc.		5,799
		TOTAL		32,760
		Computer Networking--0.1%
442	1	Juniper Networks, Inc.		13,242
		Computer Services--0.2%
310	1	Cognizant Technology Solutions Corp.		25,104
		Computer Stores--0.1%
666	1	Ingram Micro, Inc., Class A		13,353
		Computers - Low End--4.5%
3,608	1	Apple, Inc.		475,390
		Construction Machinery--0.1%
184		Manitowoc, Inc.		14,291
		Cosmetics & Toiletries--0.0%
47		Estee Lauder Cos., Inc., Class A		2,116
		Crude Oil & Gas Production--1.3%
511		Apache Corp.		41,309
206	1	Bill Barrett Corp.		7,070
149		Cimarex Energy Co.		5,640
1,079		Devon Energy Corp.		80,504
37		Pogo Producing Co.		1,971
		TOTAL		136,494
		Defense Aerospace--0.1%
189		Goodrich (B.F.) Co.		11,890
		Defense Electronics--0.4%
217	1	FLIR Systems, Inc.		9,472
60	1	First Solar, Inc.		6,754
120		Raytheon Co.		6,643
279		Rockwell Collins		19,167
		TOTAL		42,036
		Department Stores--0.1%
159		Target Corp.		9,631
		Discount Department Stores--0.1%
359		Foot Locker, Inc.		6,663
		Diversified Leisure--0.1%
204		Carnival Corp.		9,039
		COMMON STOCKS--continued
		Diversified Oil--0.6%
1,181		Occidental Petroleum Corp.	$	66,986
		Drug Stores--0.1%
154		Longs Drug Stores Corp.		7,447
		Electric Utility--1.7%
621	1	Allegheny Energy, Inc.		32,435
752		Ameren Corp.		36,081
481		DTE Energy Co.		22,309
1,289		Edison International		68,175
277		Pepco Holdings, Inc.		7,498
165		Portland General Electric Co.		4,440
336		SCANA Corp.		12,560
		TOTAL		183,498
		Electrical Equipment--0.0%
91		AMETEK, Inc.		3,551
		Electronic Instruments--0.0%
74		Analogic Corp.		4,913
		Ethical Drugs--1.0%
366	1	King Pharmaceuticals, Inc.		6,226
402		Pfizer, Inc.		9,451
3,104		Schering Plough Corp.		88,588
		TOTAL		104,265
		Financial Services--2.0%
893		Ambac Financial Group, Inc.		59,965
651		Ameriprise Financial, Inc.		39,236
920		CIT Group, Inc.		37,886
39		CME Group, Inc.		21,478
94		Dun & Bradstreet Corp.		9,189
225		Janus Capital Group, Inc.		6,763
312		MBIA Insurance Corp.		17,503
125	1	Mastercard, Inc., Class A		20,100
		TOTAL		212,120
		Gas Distributor--0.1%
206		AGL Resources, Inc.		7,766
148		MDU Resources Group, Inc.		4,034
		TOTAL		11,800
		Home Building--0.8%
735		Centex Corp.		27,423
658		KB HOME		20,931
		COMMON STOCKS--continued
		Home Building--continued
979		Lennar Corp., Class A	$	30,016
6	1	NVR, Inc.		3,471
		TOTAL		81,841
		Insurance Brokerage--0.1%
9	1	Markel Corp.		4,190
217		Odyssey Re Holdings Corp.		7,638
		TOTAL		11,828
		Integrated Domestic Oil--5.0%
4,052		ConocoPhillips		327,564
3,595		Marathon Oil Corp.		198,444
		TOTAL		526,008
		Integrated International Oil--4.9%
6,106		Chevron Corp.		520,598
		Internet Services--5.2%
2,795	1	Amazon.com, Inc.		219,519
330	1	IAC Interactive Corp.		9,484
404	1	Priceline.com, Inc.		25,775
9,134	1	eBay, Inc.		295,942
		TOTAL		550,720
		Iron Ore Production--0.2%
257		Cleveland Cliffs, Inc.		17,802
		Leasing--0.0%
91		GATX Corp.		4,128
		Life Insurance--4.7%
145		Delphi Financial Group, Inc.		5,825
4,756		MetLife, Inc.		286,406
334		Nationwide Financial Services, Inc., Class A		19,008
330		Protective Life Corp.		14,197
1,678		Prudential Financial, Inc.		148,721
282		Torchmark Corp.		17,354
		TOTAL		491,511
		Lumber Products--0.1%
466		Louisiana-Pacific Corp.		8,630
		Major Steel Producer--0.1%
169		Ryerson, Inc.		5,423
		COMMON STOCKS--continued
		Maritime--0.4%
221	1	Genco Shipping & Trading Ltd.	$	12,449
411		Overseas Shipholding Group, Inc.		31,889
		TOTAL		44,338
		Medical Supplies--0.1%
99	1	Kyphon, Inc.		6,496
		Medical Technology--0.9%
157		Dentsply International, Inc.		5,729
307	1	Intuitive Surgical, Inc.		65,271
668	1	St. Jude Medical, Inc.		28,818
		TOTAL		99,818
		Metal Containers--0.1%
134		Ball Corp.		6,870
		Metal Fabrication--2.5%
1,669		Precision Castparts Corp.		228,753
413		Timken Co.		13,794
841		Worthington Industries, Inc.		17,409
		TOTAL		259,956
		Mini-Mill Producer--0.3%
800		Commercial Metals Corp.		24,672
149		Schnitzer Steel Industries, Inc., Class A		8,074
		TOTAL		32,746
		Miscellaneous Components--0.3%
436		Amphenol Corp., Class A		14,937
199	1	Cree, Inc.		5,098
456	1	Vishay Intertechnology, Inc.		7,073
		TOTAL		27,108
		Miscellaneous Food Products--0.8%
2,516		Archer-Daniels-Midland Co.		84,538
		Miscellaneous Machinery--0.2%
113		Roper Industries, Inc.		6,778
104		SPX Corp.		9,762
		TOTAL		16,540
		Miscellaneous Metals--0.3%
57		Kennametal, Inc.		4,370
374		Metal Management, Inc.		15,712
544	1	USEC, Inc.		9,134
		TOTAL		29,216
		COMMON STOCKS--continued
		Money Center Bank--7.6%
5,711		Bank of America Corp.	$	270,816
955		Citigroup, Inc.		44,474
10,962		J.P. Morgan Chase & Co.		482,438
		TOTAL		797,728
		Mortgage and Title--0.1%
165		LandAmerica Financial Group, Inc.		12,637
		Multi-Industry Transportation--0.1%
276	1	Hub Group, Inc., Class A		9,390
		Multi-Industry Capital Goods--2.9%
33		Acuity Brands, Inc.		1,950
67		American Standard Cos.		3,621
6,466		General Electric Co.		250,622
904		Honeywell International, Inc.		51,989
		TOTAL		308,182
		Multi-Line Insurance--5.4%
1,488		Allstate Corp.		79,087
6,466		American International Group, Inc.		414,988
723		Assurant, Inc.		36,671
214	1	CNA Financial Corp.		8,885
306		Hartford Financial Services Group, Inc.		28,112
		TOTAL		567,743
		Mutual Fund Adviser--0.3%
71	1	Affiliated Managers Group		8,023
171		Franklin Resources, Inc.		21,780
		TOTAL		29,803
		Offshore Driller--0.9%
92	1	Hornbeck Offshore Services, Inc.		3,961
347	1	Oceaneering International, Inc.		19,488
1,059		Tidewater, Inc.		72,457
		TOTAL		95,906
		Oil Refiner--3.0%
1,034		Tesoro Petroleum Corp.		51,493
3,985		Valero Energy Corp.		267,035
		TOTAL		318,528
		Oil Service, Explore & Drill--0.5%
386	1	Grant Prideco, Inc.		21,655
375	1	McDermott International, Inc.		31,103
		TOTAL		52,758
		COMMON STOCKS--continued
		Oil Well Supply--5.4%
242	1	Cameron International Corp.	$	18,876
508	1	FMC Technologies, Inc.		46,492
5,303		Schlumberger Ltd.		502,300
		TOTAL		567,668
		Other Communications Equipment--0.1%
99		Harris Corp.		5,433
		Other Steel Producer--0.2%
247		Chaparral Steel Co.		20,758
		Paper Products--0.5%
747		MeadWestvaco Corp.		24,307
442		Temple-Inland, Inc.		25,693
		TOTAL		50,000
		Poultry Products--0.3%
563		Pilgrim’s Pride Corp.		18,962
322		Sanderson Farms, Inc.		12,838
		TOTAL		31,800
		Property Liability Insurance--4.6%
429		American Financial Group, Inc.		12,051
2,549		Chubb Corp.		128,495
353		Commerce Group, Inc. - Massachusetts		10,142
545		HCC Insurance Holdings, Inc.		15,958
1,321		Loews Corp.		62,615
141		Mercury General Corp.		7,301
220		Ohio Casualty Corp.		9,550
114	1	Philadelphia Consolidated Holding Corp.		4,120
355		Reinsurance Group of America		18,925
379		SAFECO Corp.		22,160
3,751		The St. Paul Travelers Cos., Inc.		190,476
30		Transatlantic Holdings, Inc.		2,195
		TOTAL		483,988
		Railroad--1.5%
3,021		Norfolk Southern Corp.		162,469
		Regional Bank--4.8%
256		Associated Banc Corp.		7,357
510		BB&T Corp.		19,084
181		Central Pacific Financial Corp.		5,106
161		City National Corp.		11,397
228		Colonial BancGroup, Inc.		4,973
		COMMON STOCKS--continued
		Regional Bank--continued
901		Comerica, Inc.	$	47,447
1,256		Fifth Third Bancorp		46,334
262		FirstMerit Corp.		4,802
91		Huntington Bancshares, Inc.		1,747
4,171		KeyCorp		144,692
86		M & T Bank Corp.		9,141
1,607		National City Corp.		47,230
1,391		SunTrust Banks, Inc.		108,915
588		UnionBanCal Corp.		32,493
254		Zions Bancorp		18,936
		TOTAL		509,654
		Restaurant--0.2%
280	1	Buffalo Wild Wings, Inc.		12,102
364		Yum! Brands, Inc.		11,663
		TOTAL		23,765
		Securities Brokerage--5.7%
597		Goldman Sachs Group, Inc.		112,439
1,499		Lehman Brothers Holdings, Inc.		92,938
1,559		Merrill Lynch & Co., Inc.		115,678
4,401		Morgan Stanley		281,092
		TOTAL		602,147
		Semiconductor Distribution--0.3%
888	1	Avnet, Inc.		33,637
		Semiconductor Manufacturing--0.7%
248		Altera Corp.		5,754
670		Intersil Corp., Class A		19,598
1,132		Linear Technology Corp.		40,356
433	1	Spansion, Inc.		4,594
		TOTAL		70,302
		Semiconductor Manufacturing Equipment--0.0%
240	1	Teradyne, Inc.		3,766
		Services to Medical Professionals--1.1%
824	1	Express Scripts, Inc.		41,307
45	1	Laboratory Corp. of America Holdings		3,323
741	1	Medco Health Solutions, Inc.		60,221
169	1	Nighthawk Radiology Holdings, Inc.		3,486
116	1	Wellpoint, Inc.		8,714
		TOTAL		117,051
		COMMON STOCKS--continued
		Shoes--0.4%
658	1	Crocs, Inc.	$	39,033
		Software Packaged/Custom--0.9%
168	1	Blue Coat Systems, Inc.		8,187
608	1	Computer Sciences Corp.		33,853
88		National Instruments Corp.		2,847
2,125	1	Oracle Corp.		40,630
176	1	SPSS, Inc.		7,223
		TOTAL		92,740
		Specialty Chemicals--0.3%
149		Minerals Technologies, Inc.		9,636
465	1	OM Group, Inc.		22,525
		TOTAL		32,161
		Specialty Retailing--0.0%
158	1	AutoNation, Inc.		3,078
88		Borders Group, Inc.		1,440
		TOTAL		4,518
		Telecommunication Equipment & Services--0.2%
772	1	Corning, Inc.		18,404
		Telephone Utility--0.6%
1,008		Embarq Corp.		62,284
		Trucking--0.1%
140		Con-way, Inc.		6,915
		Undesignated Consumer Cyclicals--0.8%
493		DeVRY, Inc.		15,973
565	1	ITT Educational Services, Inc.		59,698
164	1	TeleTech Holdings, Inc.		4,810
		TOTAL		80,481
		Undesignated Consumer Staples--0.2%
422	1	Nutri/System, Inc.		23,514
		Undesignated Health--0.0%
94		IMS Health, Inc.		2,644
		TOTAL COMMON STOCKS (IDENTIFIED COST $9,643,853)		10,469,914
		MUTUAL FUND--1.8%
189,358	2,3	Prime Value Obligations Fund, Institutional Shares, 5.25% (AT NET ASSET VALUE)	$	189,358
		TOTAL INVESTMENTS--101.0% (IDENTIFIED COST $9,833,211)4		10,659,272
		OTHER ASSETS AND LIABILITIES-NET--(1.0)%		(103,985	)
		TOTAL NET ASSETS--100%	$	10,555,287

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 The cost of investments for federal tax purposes amounts to $9,836,512.

Note: The categories of investments are shown as a percentage of total net assets at July 31, 2007.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

July 31, 2007

Assets:
Total investments in securities, at value including $189,358 of investments in an affiliated issuer (Note 5) (identified cost $9,833,211)			$	10,659,272
Income receivable				2,719
Receivable for investments sold				427,017
Receivable for shares sold				34,150
TOTAL ASSETS				11,123,158
Liabilities:
Payable for investments purchased	$	516,768
Payable for shares redeemed		76
Payable for transfer and dividend disbursing agent fees and expenses		11,706
Payable for Directors’/Trustees’ fees		616
Payable for portfolio accounting fees		7,169
Payable for distribution services fee (Note 5)		2,674
Payable for shareholder services fee (Note 5)		3,790
Accrued expenses		25,072
TOTAL LIABILITIES				567,871
Net assets for 908,857 shares outstanding			$	10,555,287
Net Assets Consist of:
Paid-in capital			$	9,804,314
Net unrealized appreciation of investments				826,061
Accumulated net realized loss on investments				(75,088	)
TOTAL NET ASSETS			$	10,555,287
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($3,645,436 ÷ 311,864 shares outstanding), no par value, unlimited shares authorized				$11.69
Offering price per share				$11.69
Redemption proceeds per share				$11.69
Class A Shares:
Net asset value per share ($3,902,746 ÷ 334,930 shares outstanding), no par value, unlimited shares authorized				$11.65
Offering price per share (100/94.50 of $11.65)1				$12.33
Redemption proceeds per share				$11.65
Class C Shares:
Net asset value per share ($3,007,105 ÷ 262,063 shares outstanding), no par value, unlimited shares authorized				$11.47
Offering price per share				$11.47
Redemption proceeds per share (99.00/100 of $11.47)1				$11.36

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, 2007

Investment Income:
Dividends (including $1,255 received from an affiliated issuer (Note 5))							$	115,718
Interest								4,900
TOTAL INCOME								120,618
Expenses:
Investment adviser fee (Note 5)				$	73,669
Administrative personnel and services fee (Note 5)					230,295
Custodian fees					15,829
Transfer and dividend disbursing agent fees and expenses					49,541
Directors’/Trustees’ fees					729
Auditing fees					15,591
Legal fees					6,215
Portfolio accounting fees					75,295
Distribution services fee--Class A Shares (Note 5)					2,111
Distribution services fee--Class C Shares (Note 5)					17,556
Shareholder services fee--Class A Shares (Note 5)					5,389
Shareholder services fee--Class C Shares (Note 5)					3,958
Share registration costs					61,489
Printing and postage					23,535
Insurance premiums					6,106
Miscellaneous					3,320
TOTAL EXPENSES					590,628
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee (Note 5)	$	(73,669	)
Waiver of administrative personnel and services fee (Note 5)		(105,133	)
Waiver of transfer and dividend disbursing agent fees and expenses		(12,050	)
Waiver of portfolio accounting fees		(20,162	)
Reimbursement of other operating expenses (Note 5)		(239,213	)
TOTAL WAIVERS AND REIMBURSEMENTS					(450,227	)
Net expenses								140,401
Net investment income (loss)								(19,783	)
Realized and Unrealized Gain on Investments:
Net realized gain on investments								222,906
Net change in unrealized appreciation of investments								531,414
Net realized and unrealized gain on investments								754,320
Change in net assets resulting from operations							$	734,537

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

	Year Ended 7/31/2007			Period Ended 7/31/2006		1
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)	$	(19,783	)	$	(12,305	)
Net realized gain (loss) on investments		222,906			(297,994	)
Net change in unrealized appreciation/depreciation of investments		531,414			294,647
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		734,537			(15,652	)
Share Transactions:
Proceeds from sale of shares		6,651,420			4,953,565
Cost of shares redeemed		(1,606,158	)		(166,458	)
Redemption fees2		1,870			2,163
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS		5,047,132			4,789,270
Change in net assets		5,781,669			4,773,618
Net Assets:
Beginning of period		4,773,618			--
End of period	$	10,555,287		$	4,773,618

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

2 Redemption fees in 2006 have been reclassified to permit comparison.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

July 31, 2007

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 eight 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

Market values of the Fund’s portfolio securities are determined as follows:

• for equity securities, according to the last sale price or official closing price reported in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market), if available;
• in the absence of recorded sales for equity securities, according to the mean between the last closing bid and asked prices;
• for investments in other open-end registered investment companies, based on net asset value (NAV);
• futures contracts and options are generally valued at market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the over-the-counter market are generally valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board of Trustees (the “Trustees”) may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value;
• prices for total return swaps are based upon a valuation model determined by management incorporating underlying reference indexes, interest rates, yield curves and other market data or factors; prices for credit default swaps are furnished by an independent pricing service and are based upon a valuation model incorporating default probabilities, recovery rates and other market data or factors; prices for interest rate swaps are furnished by an independent pricing service and are based upon a valuation model incorporating interest rates, yield curves and other market data or factors;
• for mortgage-backed securities, based on the aggregate investment value of the projected cash flows to be generated by the security, as furnished by an independent pricing service;
• for other fixed-income securities, according to prices as furnished by an independent pricing service, except that fixed-income securities with remaining maturities of less than 60 days at the time of purchase are valued at amortized cost; and
• for all other securities at fair value as determined in accordance with procedures established by and under the general supervision of the Trustees.

Prices for fixed-income securities furnished by a pricing service may be based on a valuation matrix which incorporates both dealer-supplied valuations and electronic data processing techniques. Such prices (other than prices of mortgage-backed securities) are generally intended to be indicative of the bid prices currently offered to institutional investors for the securities, except that prices for corporate fixed-income and asset-backed securities traded in the United States are generally intended to be indicative of the mean between such bid prices and asked prices. The Trustees have approved the use of such pricing services. A number of pricing services are available, and the Fund may use various pricing services or discontinue the use of any pricing service.

Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors. From time to time, when prices cannot be obtained from an independent pricing service, securities may be valued based on quotes from broker-dealers or other financial institutions that trade the securities.

Trading in foreign securities may be completed at times which vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund values foreign securities using the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates are generally determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation is done by others under the direction of Fund management. An event is considered material if there is both an affirmative expectation that the security’s value will change in response to the event and a reasonable basis for quantifying the resulting change in value.

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 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.

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 7/31/2007					Period Ended 7/31/20061
Institutional Shares:	Shares			Amount		Shares			Amount
Shares sold	259,278		$	2,871,927		134,445		$	1,376,578
Shares redeemed	(80,930	)		(876,653	)	(929	)		(9,501	)
Redemption fees	--			652		--			--
NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS	178,348		$	1,995,926		133,516		$	1,367,077
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class A Shares:	Shares			Amount		Shares			Amount
Shares sold	187,148		$	2,138,258		212,325		$	2,202,874
Shares redeemed	(51,271	)		(591,818	)	(13,272	)		(135,352	)
Redemption fees	--			712		--			2,163
NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS	135,877		$	1,547,152		199,053		$	2,069,685
	Year Ended 7/31/2007					Period Ended 7/31/20061
Class C Shares:	Shares			Amount		Shares			Amount
Shares sold	144,501		$	1,641,235		131,487		$	1,374,113
Shares redeemed	(11,851	)		(137,687	)	(2,074	)		(21,605	)
Redemption fees	--			506		--			--
NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS	132,650		$	1,504,054		129,413		$	1,352,508
NET CHANGE RESULTING FROM SHARE TRANSACTIONS	446,875		$	5,047,132		461,982		$	4,789,270

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

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 redeem 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.

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, 2007, permanent differences identified and reclassified among the components of net assets were as follows:

Increase (Decrease)
Paid-In Capital	Undistributed Net Investment Income
$(19,783)	$19,783

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

As of July 31, 2007, the components of distributable earnings on a tax basis were as follows:

Net unrealized appreciation	$	822,760
Capital loss carryforwards	$	(71,787	)

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, 2007, the cost of investments for federal tax purposes was $9,836,512. The net unrealized appreciation of investments for federal tax purposes was $822,760. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $1,100,256 and net unrealized depreciation from investments for those securities having an excess of cost over value of $277,496.

At July 31, 2007, the Fund had a capital loss carryforward of $71,787 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
2014	$2,945
2015	$68,842

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

In addition, after fulfilling its contractual commitment, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. For the year ended July 31, 2007, the Adviser waived $73,652 of its fee and reimbursed $239,213 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 will 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. In addition, FAS may voluntarily choose to waive any portion of its fee. For the year ended July 31, 2007, the net fee paid to FAS was 1.573% of average daily net assets of the Fund. FAS waived $105,133 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 of up to 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	0.25%
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%

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, 2007, FSC retained $15,419 of fees paid by the Fund.

Sales Charges

For the year ended July 31, 2007, FSC retained $3,893 in sales charges from the sale of Class A Shares. FSC also retained $14 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, 2007, 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 (including the distribution (12b-1) fee) 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, 2008. Although these actions are voluntary, the Adviser and its affiliates have agreed not to terminate these waivers and/or reimbursements until after September 30, 2008.

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, 2007, the Adviser reimbursed $17 in connection with the affiliated mutual fund listed below. Transactions with the affiliated company during the year ended July 31, 2007 are as follows:

Affiliate	Balance of Shares Held 7/31/2006	Purchases/ Additions	Sales/ Reductions	Balance of Shares Held 7/31/2007	Value	Dividend Income
Prime Value Obligations Fund, Institutional Shares	--	925,941	736,583	189,358	$189,358	$1,255

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, 2007, were as follows:

Purchases	$	17,046,857
Sales	$	12,035,473

7. LINE OF CREDIT

The Fund participates in a $150,000,000 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, 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, 2007, there were no outstanding loans. During the year ended July 31, 2007, the program was not utilized.

9. LEGAL PROCEEDINGS

Beginning in October 2003, Federated Investors, Inc. and various subsidiaries thereof (including the advisers and distributor for various investment companies, collectively, “Federated”), along with various investment companies sponsored by Federated (“Funds”) were 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 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 and various Funds have also been named as defendants in several additional lawsuits, the majority of which 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 Funds has retained the law firm of Dickstein Shapiro LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and intend to defend this litigation. 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 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 Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.

10. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. Recent SEC guidance allows implementing FIN 48 in fund NAV calculations as late as a fund’s last NAV calculation in the first required financial statement reporting period. As a result, the Fund will adopt FIN 48 no later than January 31, 2008. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

In addition, 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 is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

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, 2007, 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 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, 2007, 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, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
September 19, 2007

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. As of December 31, 2006, the Trust comprised eight portfolios, and the Federated Fund Complex consisted of 45 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 Trust Trustees and is available, without charge and upon request, by calling 1-800-341-7400.

INTERESTED TRUSTEES BACKGROUND

Name Birth Date Address 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.
Name Birth Date Address Positions Held with Trust Date Service Began	Principal Occupation(s) for Past Five Years, Other Directorships Held and Previous Position(s)
Lawrence D. Ellis, M.D.* Birth Date: October 11, 1932 3471 Fifth Avenue Suite 1111 Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center. Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America. Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center.

* Family relationships and reasons for “interested” status: John F. Donahue is the father of J. Christopher Donahue; both are “interested” due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is “interested” because his son-in-law is employed by the Fund’s principal underwriter, Federated Securities Corp.

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 15 Old Timber Trail Pittsburgh, PA 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 Investment Properties Corporation 3838 North Tamiami Trail Suite 402 Naples, FL 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. 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 175 Woodshire Drive Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex. Other Directorships Held: Director and Member of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide). Previous Position: Partner, Andersen Worldwide SC.
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. Cunningham Birth Date: March 5, 1943 353 El Brillo Way Palm Beach, FL TRUSTEE Began serving: August 2006	Principal Occupation: Director or Trustee of the Federated Fund Complex; Director, QSGI, Inc. (technology services company). Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College. Previous Positions: 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 One Royal Palm Way 100 Royal Palm Way Palm Beach, FL 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 80 South Road Westhampton Beach, NY 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 Chancellor, Duquesne University Pittsburgh, PA 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.
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 95 Standish Street P.O. Box 2779 Duxbury, MA 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: Director, Midway Pacific (lumber); 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 4905 Bayard Street Pittsburgh, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex. Previous Positions: Public Relations/Marketing Consultant/Conference Coordinator; National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord.
John S. Walsh Birth Date: November 28, 1957 2604 William Drive Valparaiso, IN 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 721 E. McMurray Road McMurray, PA TRUSTEE Began serving: August 2006	Principal Occupations: Director or Trustee of the Federated Fund Complex; Prior to June 2006, 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 Began Serving	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

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 2007. 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 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 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 costs 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 from 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 the advice of 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 included, but are not limited to targeting different investors, being subject to different laws and regulations, different legal structure, distribution costs, average account size and 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.

The Fund’s performance fell below the median of the relevant peer group for the one year period ending December 31, 2006. The Board discussed the Fund’s performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.

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 additional investments in areas such as personnel and processes for the portfolio management, compliance, and risk management functions; distribution efforts; and systems technology; that support all of the Federated funds, 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 independently prepared materials included 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 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 his 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. For 2006, 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 in 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 (9/07)

Federated is a registered mark of Federated Investors, Inc.
2007 ©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 member of the Board's Audit
Committee is an "audit committee financial expert," and that each such member is
"independent," for purposes of this Item.  The Audit Committee consists of the
following Board members:  Thomas G. Bigley, John T. Conroy, Jr., 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 2007 - $165,700

                  Fiscal year ended 2006 - N/A

(b)         Audit-Related Fees billed to the registrant for the two most recent
fiscal years:

                  Fiscal year ended 2007 - $0

                  Fiscal year ended 2006 - N/A

      Amount requiring approval of the registrant's audit committee pursuant to
      paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $4,459 and N/A,
      respectively.  Audit consents issued for N-14 business combinations and N-
      1A filing.

(c)          Tax Fees billed to the registrant for the two most recent fiscal
years:

                  Fiscal year ended 2007 - $0

                  Fiscal year ended 2006 - $N/A

      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 N/A,
      respectively.

(d)         All Other Fees billed to the registrant for the two most recent
fiscal years:

                  Fiscal year ended 2007 - $0

                  Fiscal year ended 2006 - N/A

      Amount requiring approval of the registrant's audit committee pursuant to
      paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $13,020 and N/A,
      respectively.  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 2007 - 0%

            Fiscal year ended 2006 - N/A

            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 2007 - 0%

            Fiscal year ended 2006 - N/A

            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 2007 - 0%

            Fiscal year ended 2006 - N/A

            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 2007 - $102,937

            Fiscal year ended 2006 - N/A

(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 20, 2007
-

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 20, 2007

BY          /S/ ___RICHARD A. NOVAK
            RICHARD A. NOVAK, PRINCIPAL FINANCIAL OFFICER

DATE        September 20, 2007