N-CSRS 1 form.htm Federated MDT Series - N-CSRS
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
4000 Ericsson Drive
 Warrendale, PA 15086-7561
(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:  7/31/09

Date of Reporting Period:  Six months ended 1/31/09








Item 1.                      Reports to Stockholders

Federated
World-Class Investment Manager

Federated MDT All Cap Core Fund

Established 2002

A Portfolio of Federated MDT Series

SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Class A Shares
Class C Shares
Class K Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

Six Months
Ended
(unaudited)		 Year Ended July 31,
   
 1/31/2009
   
 2008
   
 2007
1
   
 2006
2
   
 2005
   
 2004
Net Asset Value, Beginning of Period
$14.05 $16.74 $15.08 $15.26 $13.52 $11.75
Income From Investment Operations:
Net investment income (loss)
 0.04 3 0.06 0.02 3 0.00 3,4 (0.00 ) 3,4 0.01
Net realized and unrealized gain (loss) on investments
(5.53
 )
(1.56
 )
2.18
0.70
2.85
2.05
   TOTAL FROM INVESTMENT OPERATIONS
(5.49
 )
(1.50
 )
2.20
0.70
2.85
2.06
Less Distributions:
Distributions from net investment income
 (0.05 ) -- -- (0.00 ) 4 (0.03 ) (0.02 )
Distributions from net realized gain on investments
--
(1.19
 )
(0.54
 )
(0.88
 )
(1.08
 )
(0.27
 )
   TOTAL DISTRIBUTIONS
(0.05
 )
(1.19
 )
(0.54
 )
(0.88
 )
(1.11
 )
(0.29
 )
Net Asset Value, End of Period
$ 8.51
$14.05
$16.74
$15.08
$15.26
$13.52
Total Return 5
(39.09
 )%
(9.98
 )%
14.67
 %
4.59
 %
21.79
 %
17.53
 %
Ratios to Average Net Assets:
Net expenses
1.34
 % 6
1.29
 %
1.36
 %
1.50
 %
1.50
 %
1.50
 %
Net investment income (loss)
0.66
 % 6
0.43
 %
0.13
 %
0.03
 %
(0.02
 )%
0.05
 %
Expense waiver/reimbursement 7
0.07
 % 6
0.00
 % 8
0.00
 % 8
0.05
 %
0.04
 %
0.15
 %
Supplemental Data:
Net assets, end of period (000 omitted)
$96,443
$194,867
$201,888
$101,723
$30,336
$9,628
Portfolio turnover
147
 %
199
 %
225
 %
212
 %
204
 %
96
 %

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

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

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

4 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.

8 Represents less than 0.01%.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

Six Months
Ended
(unaudited)		 Year Ended July 31,
Period
Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$13.73 $16.51 $14.99 $15.25
Income From Investment Operations:
Net investment income (loss)
 (0.01 ) 3 (0.04 ) (0.11 ) 3 (0.10 ) 3
Net realized and unrealized gain (loss) on investments
(5.39
 )
(1.55
 )
2.17
0.72
   TOTAL FROM INVESTMENT OPERATIONS
(5.40
 )
(1.59
 )
2.06
0.62
Less Distributions:
Distributions from net realized gain on investments
--
(1.19
 )
(0.54
 )
(0.88
 )
Net Asset Value, End of Period
$ 8.33
$13.73
$16.51
$14.99
Total Return 4
(39.33
 )%
(10.69
 )%
13.81
 %
4.01
 %
Ratios to Average Net Assets:
Net expenses
2.14
 % 5
2.08
 %
2.13
 %
2.25
 % 5
Net investment income (loss)
(0.14
 )% 5
(0.36
 )%
(0.64)
 %
(0.72
 )% 5
Expense waiver/reimbursement 6
0.09
 % 5
0.00
 % 7
0.00
 % 7
0.05
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$52,149
$96,601
$104,957
$48,189
Portfolio turnover
147
 %
199
 %
225
 %
212
 % 8

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

7 Represents less than 0.01%.

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

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class K Shares

(For a Share Outstanding Throughout Each Period)

Six Months
Ended
(unaudited)		 Year
Ended 		Period
Ended
   
 1/31/2009
   
 7/31/2008
   
 7/31/2007
1
Net Asset Value, Beginning of Period
$14.10 $16.86 $16.82
Income From Investment Operations:
Net investment income (loss)
 0.01 2 (0.00 ) 3 (0.03) 2
Net realized and unrealized gain (loss) on investments
(5.54
 )
(1.57
 )
0.61
   TOTAL FROM INVESTMENT OPERATIONS
(5.53
 )
(1.57
 )
0.58
Less Distributions:
Distributions from net investment income
 (0.04 ) -- --
Distributions from net realized gain on investments
--
(1.19
 )
(0.54
 )
   TOTAL DISTRIBUTIONS
(0.04
 )
(1.19
 )
(0.54
 )
Net Asset Value, End of Period
$ 8.53
$14.10
$16.86
Total Return 4
(39.25
 )%
(10.34
 )%
3.52
 %
Ratios to Average Net Assets
Net expenses
1.80
 % 5
1.75
 %
1.80
 % 5
Net investment income (loss)
0.18
 % 5
(0.00
 )% 6
0.30
 % 5
Expense waiver/reimbursement 7
0.05
 % 5
0.00
 % 6
0.02
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$1,334
$1,393
$135
Portfolio turnover
147
 %
199
 %
225
 % 8

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 Represents less than $0.01.

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 Represents less than 0.01%.

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

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

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual:
Class A Shares
$1,000
$ 609.10
$ 5.43
Class C Shares
$1,000
$ 606.70
$ 8.67
Class K Shares
$1,000
$ 607.50
$ 7.29
Hypothetical (assuming a 5% return before expenses):
Class A Shares
$1,000
$1,018.45
$ 6.82
Class C Shares
$1,000
$1,014.42
$10.87
Class K Shares
$1,000
$1,016.13
$ 9.15

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

Class A Shares
   
 1.34%
Class C Shares
2.14%
Class K Shares
1.80%

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Electric Utility
6.6
 %
Biotechnology
5.8
 %
Software Packaged/Custom
5.3
 %
Property Liability Insurance
5.0
 %
Ethical Drugs
4.8
 %
Railroad
4.8
 %
Agricultural Chemicals
4.7
 %
Undesignated Consumer Cyclicals
4.7
 %
Miscellaneous Food Products
4.2
 %
Multi-Line Insurance
4.0
 %
Services to Medical Professionals
3.9
 %
Computers--Midrange
3.2
 %
Home Building
3.0
 %
AT&T Divestiture
2.4
 %
Defense Aerospace
2.2
 %
Department Stores
2.2
 %
Integrated International Oil
2.2
 %
Copper
1.9
 %
Diversified Leisure
1.9
 %
Life Insurance
1.7
 %
Money Center Bank
1.4
 %
Regional Bank
1.3
 %
Airline--Regional
1.2
 %
Agricultural Machinery
1.1
 %
Medical Technology
1.0
 %
Other 2
18.1
 %
Cash Equivalents 3
1.6
 %
Other Assets and Liabilities--Net 4
(0.2
 )%
   TOTAL
100.0
%

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

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

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

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

Portfolio of Investments

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--98.6%
Advertising--0.0%
3,100 Omnicom Group, Inc.
$
 80,259
Agricultural Chemicals--4.7%
120,100 Monsanto Co.
 9,134,806
3,200 Mosaic Co./The
114,144
   TOTAL
9,248,950
Agricultural Machinery--1.1%
60,400 Deere & Co.
2,098,296
Airline - Regional--1.2%
38,700 1 Alaska Air Group, Inc.
 1,020,132
7,300 SkyWest, Inc.
 114,245
177,500 Southwest Airlines Co.
1,247,825
   TOTAL
2,382,202
AT&T Divestiture--2.4%
192,600 AT&T, Inc.
4,741,812
Auto Original Equipment Manufacturers--0.5%
17,000 1 Fuel Systems Solutions, Inc.
 444,380
28,500 Johnson Controls, Inc.
 356,535
12,900 Superior Industries International, Inc.
132,483
   TOTAL
933,398
Auto Rentals--0.1%
5,000 1 AMERCO
153,750
Biotechnology--5.8%
12,500 1 Affymetrix, Inc.
 39,750
18,700 1 Cephalon, Inc.
 1,443,266
1,600 1 Charles River Laboratories International, Inc.
 39,056
192,200 1 Gilead Sciences, Inc.
 9,757,994
4,300 1 Hospira, Inc.
 107,070
300 1 Myriad Genetics, Inc.
 22,371
15,100 1 Questcor Pharmaceuticals, Inc.
97,395
   TOTAL
11,506,902
Shares
   
   
Value
COMMON STOCKS--continued
Book Publishing--0.0%
800 Scholastic Corp.
$
8,720
Broadcasting--0.5%
26,300 1 American Tower Systems Corp.
 797,942
23,200 News Corp., Inc.
148,248
   TOTAL
946,190
Building Materials--0.3%
4,100 Ameron, Inc.
 204,385
26,600 1 Owens Corning, Inc.
354,844
   TOTAL
559,229
Cable TV--0.7%
29,800 1 Discovery Communications, Inc.
 432,100
55,100 Time Warner, Inc.
 514,083
35,400 1 Viacom, Inc., Class B
522,150
   TOTAL
1,468,333
Cement--0.2%
12,600 Texas Industries, Inc.
286,146
Clothing Stores--0.3%
14,600 1 Children's Place Retail Stores, Inc.
 274,626
13,600 1 Jos A. Bank Clothiers, Inc.
373,456
   TOTAL
648,082
Commodity Chemicals--0.3%
2,600 Compass Minerals International, Inc.
 156,442
4,900 Eastman Chemical Co.
 127,155
19,600 Westlake Chemical Corp.
267,932
   TOTAL
551,529
Computer Peripherals--0.5%
10,800 Imation Corp.
 105,192
33,900 1 Sandisk Corp.
 387,477
17,900 1 Synaptics, Inc.
421,903
   TOTAL
914,572
Computer Stores--0.1%
14,100 1 Tech Data Corp.
255,351
Shares
   
   
Value
COMMON STOCKS--continued
Computers - Low End--0.3%
63,500 1 Dell, Inc.
$
603,250
Computers - Midrange--3.2%
183,700 Hewlett-Packard Co.
6,383,575
Construction Machinery--0.6%
34,100 Caterpillar, Inc.
 1,051,985
6,700 Joy Global, Inc.
139,561
   TOTAL
1,191,546
Contracting--0.1%
2,200 Harsco Corp.
 52,184
1,700 1 IHS, Inc., Class A
74,460
   TOTAL
126,644
Copper--1.9%
151,800 Freeport-McMoRan Copper & Gold, Inc.
3,816,252
Crude Oil & Gas Production--0.3%
5,600 1 Swift Energy Co.
 85,792
23,300 W&T Offshore, Inc.
 292,881
8,200 1 Whiting Petroleum Corp.
237,800
   TOTAL
616,473
Defense Aerospace--2.2%
95,200 Boeing Co.
 4,027,912
4,200 General Dynamics Corp.
238,266
   TOTAL
4,266,178
Defense Electronics--0.2%
14,000 1 FLIR Systems, Inc.
349,580
Department Stores--2.2%
32,500 Dillards, Inc., Class A
 141,375
72,800 Penney (J.C.) Co., Inc.
 1,219,400
42,800 1 Saks, Inc.
 107,856
70,700 1 Sears Holdings Corp.
2,893,044
   TOTAL
4,361,675
Discount Department Stores--0.1%
21,100 1 99 Cents Only Stores
176,818
Shares
   
   
Value
COMMON STOCKS--continued
Diversified Leisure--1.9%
183,600 Carnival Corp.
 $ 3,339,684
25,500 1 Gaylord Entertainment Co.
 270,300
15,000 1 Pinnacle Entertainment, Inc.
101,700
   TOTAL
3,711,684
Electronic & Electrical Original Equipment Manufacturers--0.1%
13,100 Molex, Inc.
175,147
Electrical Test/Measuring Equipment--0.0%
4,700 1 Multi-Fineline Electronix, Inc.
87,091
Electric Utility--6.6%
43,900 American Electric Power Co., Inc.
 1,376,265
66,300 CMS Energy Corp.
 779,025
189,500 Edison International
 6,172,015
13,000 Idacorp, Inc.
 378,430
3,700 OGE Energy Corp.
 91,316
85,400 Sempra Energy
 3,743,936
23,500 TECO Energy, Inc.
 282,235
10,400 UniSource Energy Corp.
293,696
   TOTAL
13,116,918
Electronics Stores--0.0%
6,300 RadioShack Corp.
72,198
Ethical Drugs--4.8%
42,000 Eli Lilly & Co.
 1,546,440
57,500 1 Forest Laboratories, Inc., Class A
 1,439,800
193,300 Merck & Co., Inc.
 5,518,715
800 1 Noven Pharmaceuticals, Inc.
 7,944
68,500 Pfizer, Inc.
998,730
   TOTAL
9,511,629
Food Wholesaling--0.1%
7,100 SUPERVALU, Inc.
124,534
Furniture--0.0%
10,400 Furniture Brands International, Inc.
21,320
Shares
   
   
Value
COMMON STOCKS--continued
Gas Distributor--0.8%
43,900 Energen Corp.
 $ 1,282,319
4,900 New Jersey Resources Corp.
 196,441
14,000 1 Southern Union Co.
180,460
   TOTAL
1,659,220
Generic Drugs--0.0%
1,900 1 Warner Chilcott Ltd., Class A
26,125
Home Building--3.0%
51,500 Centex Corp.
 438,265
152,400 D.R. Horton, Inc.
 908,304
69,000 Lennar Corp., Class A
 530,610
700 1 M/I Schottenstein Homes, Inc.
 6,188
164,000 Pulte Homes, Inc.
 1,664,600
31,000 Ryland Group, Inc.
 483,600
111,400 1 Toll Brothers, Inc.
1,896,028
   TOTAL
5,927,595
Home Health Care--0.7%
17,900 1 Amedisys, Inc.
 738,017
14,800 1 Amerigroup Corp.
 413,956
10,100 1 LHC Group, Inc.
268,761
   TOTAL
1,420,734
Home Products--0.1%
2,500 1 Energizer Holdings, Inc.
 119,075
4,200 Tupperware Brands Corp.
86,352
   TOTAL
205,427
Hospitals--0.1%
6,500 Universal Health Services, Inc., Class B
246,025
Household Appliances--0.1%
5,500 Whirlpool Corp.
183,865
Industrial Machinery--0.1%
5,000 Flowserve Corp.
266,550
Integrated International Oil--2.2%
61,800 Chevron Corp.
4,358,136
Shares
   
   
Value
COMMON STOCKS--continued
Internet Services--0.5%
14,500 1 NetFlix, Inc.
 $ 524,030
45,900 1 eBay, Inc.
551,718
   TOTAL
1,075,748
Jewelry Stores--0.0%
4,300 Movado Group, Inc.
33,024
Life Insurance--1.7%
10,800 Aflac, Inc.
 250,668
15,400 American Equity Investment Life Holding Co.
 103,026
10,600 Delphi Financial Group, Inc., Class A
 160,802
51,800 Old Republic International Corp.
 534,576
77,400 Torchmark Corp.
2,322,000
   TOTAL
3,371,072
Long-Term Care Centers--0.0%
5,600 1 Kindred Healthcare, Inc.
75,992
Lumber Products--0.1%
25,100 1 Louisiana-Pacific Corp.
 52,208
6,000 Weyerhaeuser Co.
164,040
   TOTAL
216,248
Medical Supplies--0.3%
1,000 1 Haemonetics Corp.
 59,150
3,200 1 Kinetic Concepts, Inc.
 77,120
6,800 1 Merit Medical Systems, Inc.
 104,652
12,400 1 PetMed Express, Inc.
 179,056
10,200 1 Quidel Corp.
125,460
   TOTAL
545,438
Medical Technology--1.0%
5,700 1 Cantel Medical Corp.
 85,443
9,900 1 Cyberonics, Inc.
 152,361
1,300 1 Edwards Lifesciences Corp.
 74,737
2,800 1 Gen-Probe, Inc.
 126,056
7,000 1 Greatbatch Technologies, Inc.
 163,100
7,900 1 ResMed, Inc.
 315,210
Shares
   
   
Value
COMMON STOCKS--continued
Medical Technology--continued
16,400 1 Thoratec Laboratories Corp.
 $ 475,108
14,700 1 Zimmer Holdings, Inc.
535,080
   TOTAL
1,927,095
Metal Fabrication--0.0%
2,300 1 RTI International Metals
 30,613
1,300 Timken Co.
19,357
   TOTAL
49,970
Miscellaneous Components--0.4%
17,500 AVX Corp.
 159,600
13,000 1 Cree, Inc.
 259,090
25,900 1 International Rectifier Corp.
352,758
   TOTAL
771,448
Miscellaneous Food Products--4.2%
275,600 Archer-Daniels-Midland Co.
 7,545,928
6,700 Corn Products International, Inc.
 155,105
26,100 1 Fresh Del Monte Produce, Inc.
629,010
   TOTAL
8,330,043
Miscellaneous Metals--0.1%
23,400 1 USEC, Inc.
119,106
Money Center Bank--1.4%
74,800 Bank of New York Mellon Corp.
 1,925,352
51,900 U.S. Bancorp
770,196
   TOTAL
2,695,548
Mortgage and Title--0.1%
24,000 PMI Group, Inc.
 33,360
18,600 Radian Group, Inc.
 59,892
6,700 Stewart Information Services Corp.
99,428
   TOTAL
192,680
Motion Pictures--0.3%
29,100 Walt Disney Co.
601,788
Shares
   
   
Value
COMMON STOCKS--continued
Multi-Industry Capital Goods--0.5%
17,700 General Electric Co.
 $ 214,701
49,800 KBR, Inc.
 705,168
14,600 Textron, Inc.
131,838
   TOTAL
1,051,707
Multi-Line Insurance--4.0%
134,550 Allstate Corp.
 2,915,699
2,500 1 Amerisafe, Inc.
 46,825
6,400 FBL Financial Group, Inc., Class A
 65,984
22,600 Hanover Insurance Group, Inc.
 913,492
284,900 UNUMProvident Corp.
4,034,184
   TOTAL
7,976,184
Office Equipment--0.2%
13,200 Pitney Bowes, Inc.
293,832
Offshore Driller--0.4%
13,900 1 Transocean Ltd.
759,218
Oil Refiner--0.8%
16,800 Sunoco, Inc.
 778,176
28,600 Western Refining, Inc.
 333,476
11,100 World Fuel Services Corp.
374,847
   TOTAL
1,486,499
Oil Service, Explore & Drill--0.1%
19,600 Patterson-UTI Energy, Inc.
187,376
Oil Well Supply--0.1%
4,400 Baker Hughes, Inc.
 146,608
5,600 1 Dril-Quip, Inc.
137,200
   TOTAL
283,808
Other Communications Equipment--0.1%
42,500 1 Tellabs, Inc.
175,525
Packaged Foods--0.1%
7,100 Hershey Foods Corp.
264,688
Paper Products--0.4%
58,700 MeadWestvaco Corp.
 683,268
2,200 Rock-Tenn Co.
68,574
   TOTAL
751,842
Shares
   
   
Value
COMMON STOCKS--continued
Personal Loans--0.5%
46,100 Capital One Financial Corp.
 $ 730,224
21,000 1 Ezcorp, Inc., Class A
284,970
   TOTAL
1,015,194
Personnel Agency--0.0%
5,000 Kelly Services, Inc., Class A
45,300
Pollution Control--0.2%
6,800 1 Stericycle, Inc.
332,656
Printing--0.0%
6,700 Donnelley (R.R.) & Sons Co.
65,392
Property Liability Insurance--5.0%
14,400 Berkley, W.R. Corp.
 381,312
41,000 Chubb Corp.
 1,745,780
6,300 HCC Insurance Holdings, Inc.
 147,483
195,900 The Travelers Cos., Inc.
7,569,576
   TOTAL
9,844,151
Railroad--4.8%
91,800 CSX Corp.
 2,658,528
21,400 Norfolk Southern Corp.
 820,904
138,400 Union Pacific Corp.
6,060,536
   TOTAL
9,539,968
Recreational Goods--0.3%
8,200 Callaway Golf Co.
 62,402
20,400 1 WMS Industries, Inc.
453,288
   TOTAL
515,690
Recreational Vehicles--0.0%
32,900 Brunswick Corp.
91,462
Regional Bank--1.3%
37,300 BB&T Corp.
 738,167
7,400 Central Pacific Financial Corp.
 49,802
16,400 East West Bancorp, Inc.
 155,636
52,700 Marshall & Ilsley Corp.
 300,917
6,500 PNC Financial Services Group
 211,380
46,000 Popular, Inc.
 126,040
Shares
   
   
Value
COMMON STOCKS--continued
Regional Bank--continued
9,200 South Financial Group, Inc.
 $ 17,296
71,000 SunTrust Banks, Inc.
 870,460
6,000 Whitney Holding Corp.
 77,940
7,400 Wintrust Financial Corp.
98,938
   TOTAL
2,646,576
Restaurant--0.1%
1,000 1 Green Mountain Coffee, Inc.
 38,260
2,900 1 Panera Bread Co.
136,242
   TOTAL
174,502
Roofing & Wallboard--0.1%
43,300 1 USG Corp.
281,883
Rubber--0.0%
18,100 Cooper Tire & Rubber Co.
84,527
Savings & Loan--0.3%
19,800 Astoria Financial Corp.
 179,784
35,000 Hudson City Bancorp, Inc.
406,000
   TOTAL
585,784
Securities Brokerage--0.4%
8,900 1 Interactive Brokers Group, Inc., Class A
 135,903
5,400 1 Knight Capital Group, Inc., Class A
 97,362
11,400 1 Labranche & Co., Inc.
 78,204
28,800 Raymond James Financial, Inc.
533,088
   TOTAL
844,557
Semiconductor Distribution--0.9%
57,600 1 Arrow Electronics, Inc.
 1,098,432
15,500 1 Avnet, Inc.
 307,210
14,500 1 FormFactor, Inc.
 225,620
5,800 1 Tyler Technologies, Inc.
73,022
   TOTAL
1,704,284
Semiconductor Manufacturing--0.4%
8,700 1 ATMI, Inc.
 117,537
146,600 1 Micron Technology, Inc.
 545,352
6,300 1 Plexus Corp.
91,098
   TOTAL
753,987
Shares
   
   
Value
COMMON STOCKS--continued
Semiconductor Manufacturing Equipment--0.3%
48,500 1 Novellus Systems, Inc.
$
 668,815
Services to Medical Professionals--3.9%
3,000 1 Coventry Health Care, Inc.
 45,390
10,500 1 Genoptix, Inc.
 355,950
61,300 1 Humana, Inc.
 2,325,109
5,900 1 Medco Health Solutions, Inc.
 265,087
7,600 Omnicare, Inc.
 212,496
88,300 UnitedHealth Group, Inc.
 2,501,539
49,100 1 Wellpoint, Inc.
2,035,195
   TOTAL
7,740,766
Shoes--0.1%
6,600 1 Genesco, Inc.
101,640
Soft Drinks--0.1%
5,900 The Pepsi Bottling Group, Inc.
113,811
Software Packaged/Custom--5.3%
105,000 1 Computer Sciences Corp.
 3,868,200
16,000 1 DST Systems, Inc.
 508,320
74,200 1 F5 Networks, Inc.
 1,645,014
246,000 Microsoft Corp.
 4,206,600
10,700 1 Solera Holdings, Inc.
257,763
   TOTAL
10,485,897
Specialty Chemicals--0.5%
8,700 Albemarle Corp.
 193,575
7,700 Cabot Corp.
 102,872
4,100 Chemed Corp.
 164,533
4,300 Cytec Industries, Inc.
 87,892
3,900 Lubrizol Corp.
 133,068
15,600 1 OM Group, Inc.
302,328
   TOTAL
984,268
Specialty Retailing--0.2%
11,000 Pep Boys-Manny Moe & Jack
 31,790
38,100 Williams-Sonoma, Inc.
 301,752
9,800 1 Zale Corp.
12,152
   TOTAL
345,694
Shares
   
   
Value
COMMON STOCKS--continued
Stainless Steel Producer--0.5%
44,700 Allegheny Technologies, Inc.
$
987,423
Technology Services--0.1%
7,700 1 Stanley, Inc.
233,002
Telecommunication Equipment & Services--0.2%
84,100 Motorola, Inc.
372,563
Tools and Hardware--0.1%
4,300 Snap-On, Inc.
129,774
Toys & Games--0.2%
18,200 1 JAKKS Pacific, Inc.
333,788
Truck Manufacturing--0.2%
16,200 Cummins, Inc.
388,476
Trucking--0.5%
1,500 Arkansas Best Corp.
 35,085
29,900 Ryder System, Inc.
1,010,022
   TOTAL
1,045,107
Undesignated Consumer Cyclicals--4.7%
51,600 1 Alliance Data Systems Corp.
 2,146,044
6,800 1 American Public Education, Inc.
 266,288
3,200 1 CoStar Group, Inc.
 94,784
58,200 1 Corinthian Colleges, Inc.
 1,087,176
6,100 DeVRY, Inc.
 326,838
39,200 1 ITT Educational Services, Inc.
 4,802,392
11,600 Speedway Motorsports, Inc.
 167,504
1,900 Strayer Education, Inc.
411,217
   TOTAL
9,302,243
Undesignated Consumer Staples--0.1%
4,400 1 USANA, Inc.
102,124
Water Utility--0.1%
10,100 Aqua America, Inc.
209,474
   TOTAL COMMON STOCKS
(IDENTIFIED COST $232,622,472)
195,096,567
Shares
   
   
Value
MUTUAL FUND--1.6%
3,176,994 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
$
3,176,994
   TOTAL INVESTMENTS--100.2%
(IDENTIFIED COST $235,799,466) 4
198,273,561
   OTHER ASSETS AND LIABILITIES - NET--(0.2)% 5
(427,609
 )
   TOTAL NET ASSETS--100%
$
 197,845,952

1 Non-income-producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represents cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$198,273,561
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$198,273,561

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $3,176,994 of investments in an affiliated issuer (Note 5) (identified cost $235,799,466)
 $ 198,273,561
Cash
 13
Income receivable
 132,609
Receivable for investments sold
 10,174,925
Receivable for shares sold
397,936
   TOTAL ASSETS
208,979,044
Liabilities:
Payable for investments purchased
 $ 10,318,903
Payable for shares redeemed
 560,145
Payable for Directors'/Trustees' fees
133
Payable for distribution services fee (Note 5)
 33,408
Payable for shareholder services fee (Note 5)
 85,674
Accrued expenses
134,829
   TOTAL LIABILITIES
11,133,092
Net assets for 23,338,173 shares outstanding
$
 197,845,952
Net Assets Consist of:
Paid-in capital
 $ 381,283,452
Net unrealized depreciation of investments
(37,525,905 )
Accumulated net realized loss on investments
(146,645,848 )
Undistributed net investment income
734,253
   TOTAL NET ASSETS
$
 197,845,952

Statement of Assets and Liabilities - continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
      
Institutional Shares:
Net asset value per share ($47,920,086 ÷ 5,580,172 shares outstanding), no par value, unlimited shares authorized
$8.59
Offering price per share
$8.59
Redemption proceeds per share
$8.59
Class A Shares:
Net asset value per share ($96,443,089 ÷ 11,338,024 shares outstanding), no par value, unlimited shares authorized
$8.51
Offering price per share (100/94.50 of $8.51)
$9.01
Redemption proceeds per share
$8.51
Class C Shares:
Net asset value per share ($52,148,852 ÷ 6,263,567 shares outstanding), no par value, unlimited shares authorized
$8.33
Offering price per share
$8.33
Redemption proceeds per share (99.00/100 of $8.33)
$8.25
Class K Shares:
Net asset value per share ($1,333,925 ÷ 156,410 shares outstanding), no par value, unlimited shares authorized
$8.53
Offering price per share
$8.53
Redemption proceeds per share
$8.53

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $35,673 received from an affiliated issuer (Note 5) and net of foreign taxes withheld of $979)
$
 2,803,851
Expenses:
Investment adviser fee (Note 5)
 $ 1,051,019
Administrative personnel and services fee (Note 5)
 136,110
Custodian fees
 26,323
Transfer and dividend disbursing agent fees and expenses--Institutional Shares
 45,077
Transfer and dividend disbursing agent fees and expenses--Class A Shares
 127,356
Transfer and dividend disbursing agent fees and expenses--Class C Shares
 88,918
Transfer and dividend disbursing agent fees and expenses--Class K Shares
 2,519
Directors'/Trustees' fees
 2,560
Auditing fees
 10,924
Legal fees
 3,339
Portfolio accounting fees
 65,059
Distribution services fee--Class C Shares (Note 5)
 265,025
Distribution services fee--Class K Shares (Note 5)
 3,535
Shareholder services fee--Class A Shares (Note 5)
 178,835
Shareholder services fee--Class C Shares (Note 5)
 88,227
Account administration fee--Class A Shares
 285
Account administration fee--Class C Shares
 114
Share registration costs
 36,491
Printing and postage
 37,215
Insurance premiums
 3,021
Interest expense
 360
Miscellaneous
4,468
   TOTAL EXPENSES
2,176,780

Statement of Operations - continued

Waivers and Reimbursements (Note 5):
         
Waiver/reimbursement of investment adviser fee
 $ (32,773 )
Waiver of administrative personnel and services fee
 (29,467 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Institutional Shares
 (5,695 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class A Shares
 (18,392 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class C Shares
(17,498
 )
   TOTAL WAIVERS AND REIMBURSEMENTS
$
 (103,825
 )
Net expenses
$
 2,072,955
Net investment income
730,896
Realized and Unrealized Loss on Investments:
Net realized loss on investments
(121,053,781 )
Net change in unrealized depreciation of investments
(24,331,707
 )
Net realized and unrealized loss on investments
(145,385,488
 )
Change in net assets resulting from operations
$
 (144,654,592
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   

Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income
$ 730,896 $ 1,186,226
Net realized loss on investments
(121,053,781 ) (25,156,859 )
Net change in unrealized appreciation/depreciation of investments
(24,331,707
 )
(20,313,246
 )
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(144,654,592
 )
(44,283,879
 )
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares
 (512,139 ) --
Class A Shares
 (664,841 ) --
Class C Shares
 -- --
Class K Shares
 (5,889 ) --
Distributions from net realized gain on investments
Institutional Shares
 -- (6,297,925 )
Class A Shares
 -- (14,822,479 )
Class C Shares
 -- (7,853,780 )
Class K Shares
--
(32,808
 )
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
(1,182,869
 )
(29,006,992
 )
Share Transactions:
Proceeds from sale of shares
 47,512,415 148,687,842
Net asset value of shares issued to shareholders in payment of distributions declared
 1,059,659 25,603,826
Cost of shares redeemed
(84,430,847
 )
(113,566,093
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
(35,858,773
 )
60,725,575
Change in net assets
(181,696,234
 )
(12,565,296
 )
Net Assets:
Beginning of period
379,542,186
392,107,482
End of period (including undistributed net investment income of $734,253 and $1,186,226, respectively)
$
 197,845,952
$
 379,542,186

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

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 U.S. generally accepted accounting principles (GAAP).

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

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

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2005 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

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.

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:


   
 Six Months Ended
1/31/2009

   
 Year Ended
7/31/2008

Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 1,063,208 $ 11,697,890 2,316,132 $ 37,878,322
Shares issued to shareholders in payment of distributions declared

45,381


417,053


306,108


5,075,279
Shares redeemed
(1,623,147
 )
(16,925,120
 )
(1,569,357
 )
(25,328,179
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS

(514,558
 )

$
(4,810,177
 )

1,052,883


$
17,625,422



   
 Six Months Ended
1/31/2009



   
 Year Ended
7/31/2008

Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 2,714,876 $ 28,002,953 4,864,131 $ 77,675,376
Shares issued to shareholders in payment of distributions declared

69,892


636,717


864,495



14,186,366
Shares redeemed
(5,316,270
 )
(52,798,626
 )
(3,920,927
 )
(61,812,706
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS
(2,531,502
 )
$
 (24,158,956
 )
1,807,699
$
 30,049,036



   
 Six Months Ended
1/31/2009



   
 Year Ended
7/31/2008

Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 661,270 $ 6,799,326 1,978,773 $ 31,441,573
Shares issued to shareholders in payment of distributions declared

--



--


391,649


6,309,458
Shares redeemed
(1,434,188
 )
(14,352,736
 )
(1,692,463
 )
(26,152,035
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
(772,918
 )
$
 (7,553,410
 )
677,959
$
 11,598,996



   
 Six Months Ended
1/31/2009



   
 Year Ended
7/31/2008

Class K Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 91,780 $ 1,012,246 106,180 $ 1,692,571
Shares issued to shareholders in payment of distributions declared

644



5,889


1,982



32,723
Shares redeemed
(34,812
 )
(354,365
 )
(17,383
 )
(273,173
 )
   NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS

57,612
$
663,770

90,779

$
1,452,121
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS


(3,761,366
 )

$
(35,858,773
 )

3,629,320


$
60,725,575

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $235,799,466. The net unrealized depreciation of investments for federal tax purposes was $37,525,905. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $7,105,497 and net unrealized depreciation from investments for those securities having an excess of cost over value of $44,631,402.

At July 31, 2008, the Fund had a capital loss carryforward of $3,647,165 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire in 2016.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for certain classes of the Fund based on average daily net assets:

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

In addition, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser waived $31,562 of its fee. In addition, an affiliate of the Adviser reimbursed $41,585 of transfer and dividend disbursing agent fees and expenses.

Administrative Fee

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

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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 0.076% of average daily net assets of the Fund. FAS waived $29,467 of its fee.

Distribution Services Fee

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

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

FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC retained $29,228 of fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Fund's Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $9,692 in sales charges from the sale of Class A Shares. FSC also retained $3,822 of CDSC relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC did not receive any fees paid by the Fund.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $1,211. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund, Institutional Shares
1,891,293
39,941,067
38,655,366
3,176,994
$3,176,994
$35,673

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 416,723,922
Sales
$
 452,193,789

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory
Contract - May 2008

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R106
Cusip 31421R205
Cusip 31421R718

36361 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT All Cap Core Fund

A Portfolio of Federated MDT Series



SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
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)

Six Months
Ended
(unaudited)		 Year Ended July 31,
   
 1/31/2009
   
   
 2008
   
 2007
1
   
 2006
2
   
 2005
   
 2004
Net Asset Value, Beginning of Period
$14.22 $16.88 $15.17 $15.32 $13.55 $11.76
Income From Investment Operations:
Net investment income
 0.05 3 0.10 0.07 3 0.05 3 0.03 3 0.04
Net realized and unrealized gain (loss) on investments
(5.59
 )
(1.57
 )
2.18
0.70
2.87
2.05
   TOTAL FROM INVESTMENT OPERATIONS
(5.54
 )
(1.47
 )
2.25
0.75
2.90
2.09
Less Distributions:
Distributions from net investment income
 (0.09 ) -- -- (0.02 ) (0.05 ) (0.03 )
Distributions from net realized gain on investments
--
(1.19
 )
(0.54
 )
(0.88
 )
(1.08
 )
(0.27
 )
   TOTAL DISTRIBUTIONS
(0.09
 )
(1.19
 )
(0.54
 )
(0.90
 )
(1.13
 )
(0.30
 )
Net Asset Value, End of Period
$ 8.59
$14.22
$16.88
$15.17
$15.32
$13.55
Total Return 4
(39.00
 )%
(9.71
 )%
14.92
 %
4.85
 %
22.14
 %
17.78
 %
Ratios to Average Net Assets:
Net expenses
1.06
 % 5
1.01
 %
1.07
 %
1.25
 %
1.25
 %
1.25
 %
Net investment income
0.95
 % 5
0.72
 %
0.40
 %
0.28
 %
0.23
 %
0.30
 %
Expense waiver/reimbursement 6
0.06
 % 5
0.00
 % 7
0.01
 %
0.05
 %
0.04
 %
0.15
 %
Supplemental Data:
Net assets, end of period (000 omitted)
$47,920
$86,681
$85,128
$42,656
$43,782
$31,532
Portfolio turnover
147
 %
199
 %
225
 %
212
 %
204
 %
96
 %

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

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

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

4 Based on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable. 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 Represents less than 0.01%.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual
$1,000
$ 610.00
$4.30
Hypothetical (assuming a 5% return before expenses)
$1,000
$1,019.86
$5.40

1 Expenses are equal to the Fund's annualized net expense ratio of 1.06%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half-year period).

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Electric Utility
6.6
 %
Biotechnology
5.8
 %
Software Packaged/Custom
5.3
 %
Property Liability Insurance
5.0
 %
Ethical Drugs
4.8
 %
Railroad
4.8
 %
Agricultural Chemicals
4.7
 %
Undesignated Consumer Cyclicals
4.7
 %
Miscellaneous Food Products
4.2
 %
Multi-Line Insurance
4.0
 %
Services to Medical Professionals
3.9
 %
Computers - Midrange
3.2
 %
Home Building
3.0
 %
AT&T Divestiture
2.4
 %
Defense Aerospace
2.2
 %
Department Stores
2.2
 %
Integrated International Oil
2.2
 %
Copper
1.9
 %
Diversified Leisure
1.9
 %
Life Insurance
1.7
 %
Money Center Bank
1.4
 %
Regional Bank
1.3
 %
Airline - Regional
1.2
 %
Agricultural Machinery
1.1
 %
Medical Technology
1.0
 %
Other 2
18.1
 %
Cash Equivalents 3
1.6
 %
Other Assets and Liabilities--Net 4
(0.2
 )%
   TOTAL
100.0
%

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

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

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

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

Portfolio of Investments

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--98.6%
Advertising--0.0%
3,100 Omnicom Group, Inc.
$
 80,259
Agricultural Chemicals--4.7%
120,100 Monsanto Co.
 9,134,806
3,200 Mosaic Co./The
114,144
   TOTAL
9,248,950
Agricultural Machinery--1.1%
60,400 Deere & Co.
2,098,296
Airline - Regional--1.2%
38,700 1 Alaska Air Group, Inc.
 1,020,132
7,300 SkyWest, Inc.
 114,245
177,500 Southwest Airlines Co.
1,247,825
   TOTAL
2,382,202
AT&T Divestiture--2.4%
192,600 AT&T, Inc.
4,741,812
Auto Original Equipment Manufacturers--0.5%
17,000 1 Fuel Systems Solutions, Inc.
 444,380
28,500 Johnson Controls, Inc.
 356,535
12,900 Superior Industries International, Inc.
132,483
   TOTAL
933,398
Auto Rentals--0.1%
5,000 1 AMERCO
153,750
Biotechnology--5.8%
12,500 1 Affymetrix, Inc.
 39,750
18,700 1 Cephalon, Inc.
 1,443,266
1,600 1 Charles River Laboratories International, Inc.
 39,056
192,200 1 Gilead Sciences, Inc.
 9,757,994
4,300 1 Hospira, Inc.
 107,070
300 1 Myriad Genetics, Inc.
 22,371
15,100 1 Questcor Pharmaceuticals, Inc.
97,395
   TOTAL
11,506,902
Shares
   
   
Value
COMMON STOCKS--continued
Book Publishing--0.0%
800 Scholastic Corp.
$
8,720
Broadcasting--0.5%
26,300 1 American Tower Systems Corp.
 797,942
23,200 News Corp., Inc.
148,248
   TOTAL
946,190
Building Materials--0.3%
4,100 Ameron, Inc.
 204,385
26,600 1 Owens Corning, Inc.
354,844
   TOTAL
559,229
Cable TV--0.7%
29,800 1 Discovery Communications, Inc.
 432,100
55,100 Time Warner, Inc.
 514,083
35,400 1 Viacom, Inc., Class B
522,150
   TOTAL
1,468,333
Cement--0.2%
12,600 Texas Industries, Inc.
286,146
Clothing Stores--0.3%
14,600 1 Children's Place Retail Stores, Inc.
 274,626
13,600 1 Jos A. Bank Clothiers, Inc.
373,456
   TOTAL
648,082
Commodity Chemicals--0.3%
2,600 Compass Minerals International, Inc.
 156,442
4,900 Eastman Chemical Co.
 127,155
19,600 Westlake Chemical Corp.
267,932
   TOTAL
551,529
Computer Peripherals--0.5%
10,800 Imation Corp.
 105,192
33,900 1 Sandisk Corp.
 387,477
17,900 1 Synaptics, Inc.
421,903
   TOTAL
914,572
Computer Stores--0.1%
14,100 1 Tech Data Corp.
255,351
Shares
   
   
Value
COMMON STOCKS--continued
Computers - Low End--0.3%
63,500 1 Dell, Inc.
$
603,250
Computers - Midrange--3.2%
183,700 Hewlett-Packard Co.
6,383,575
Construction Machinery--0.6%
34,100 Caterpillar, Inc.
 1,051,985
6,700 Joy Global, Inc.
139,561
   TOTAL
1,191,546
Contracting--0.1%
2,200 Harsco Corp.
 52,184
1,700 1 IHS, Inc., Class A
74,460
   TOTAL
126,644
Copper--1.9%
151,800 Freeport-McMoRan Copper & Gold, Inc.
3,816,252
Crude Oil & Gas Production--0.3%
5,600 1 Swift Energy Co.
 85,792
23,300 W&T Offshore, Inc.
 292,881
8,200 1 Whiting Petroleum Corp.
237,800
   TOTAL
616,473
Defense Aerospace--2.2%
95,200 Boeing Co.
 4,027,912
4,200 General Dynamics Corp.
238,266
   TOTAL
4,266,178
Defense Electronics--0.2%
14,000 1 FLIR Systems, Inc.
349,580
Department Stores--2.2%
32,500 Dillards, Inc., Class A
 141,375
72,800 Penney (J.C.) Co., Inc.
 1,219,400
42,800 1 Saks, Inc.
 107,856
70,700 1 Sears Holdings Corp.
2,893,044
   TOTAL
4,361,675
Discount Department Stores--0.1%
21,100 1 99 Cents Only Stores
176,818
Shares
   
   
Value
COMMON STOCKS--continued
Diversified Leisure--1.9%
183,600 Carnival Corp.
 $ 3,339,684
25,500 1 Gaylord Entertainment Co.
 270,300
15,000 1 Pinnacle Entertainment, Inc.
101,700
   TOTAL
3,711,684
Electronic & Electrical Original Equipment Manufacturers--0.1%
13,100 Molex, Inc.
175,147
Electrical Test/Measuring Equipment--0.0%
4,700 1 Multi-Fineline Electronix, Inc.
87,091
Electric Utility--6.6%
43,900 American Electric Power Co., Inc.
 1,376,265
66,300 CMS Energy Corp.
 779,025
189,500 Edison International
 6,172,015
13,000 Idacorp, Inc.
 378,430
3,700 OGE Energy Corp.
 91,316
85,400 Sempra Energy
 3,743,936
23,500 TECO Energy, Inc.
 282,235
10,400 UniSource Energy Corp.
293,696
   TOTAL
13,116,918
Electronics Stores--0.0%
6,300 RadioShack Corp.
72,198
Ethical Drugs--4.8%
42,000 Eli Lilly & Co.
 1,546,440
57,500 1 Forest Laboratories, Inc., Class A
 1,439,800
193,300 Merck & Co., Inc.
 5,518,715
800 1 Noven Pharmaceuticals, Inc.
 7,944
68,500 Pfizer, Inc.
998,730
   TOTAL
9,511,629
Food Wholesaling--0.1%
7,100 SUPERVALU, Inc.
124,534
Furniture--0.0%
10,400 Furniture Brands International, Inc.
21,320
Shares
   
   
Value
COMMON STOCKS--continued
Gas Distributor--0.8%
43,900 Energen Corp.
 $ 1,282,319
4,900 New Jersey Resources Corp.
 196,441
14,000 1 Southern Union Co.
180,460
   TOTAL
1,659,220
Generic Drugs--0.0%
1,900 1 Warner Chilcott Ltd., Class A
26,125
Home Building--3.0%
51,500 Centex Corp.
 438,265
152,400 D.R. Horton, Inc.
 908,304
69,000 Lennar Corp., Class A
 530,610
700 1 M/I Schottenstein Homes, Inc.
 6,188
164,000 Pulte Homes, Inc.
 1,664,600
31,000 Ryland Group, Inc.
 483,600
111,400 1 Toll Brothers, Inc.
1,896,028
   TOTAL
5,927,595
Home Health Care--0.7%
17,900 1 Amedisys, Inc.
 738,017
14,800 1 Amerigroup Corp.
 413,956
10,100 1 LHC Group, Inc.
268,761
   TOTAL
1,420,734
Home Products--0.1%
2,500 1 Energizer Holdings, Inc.
 119,075
4,200 Tupperware Brands Corp.
86,352
   TOTAL
205,427
Hospitals--0.1%
6,500 Universal Health Services, Inc., Class B
246,025
Household Appliances--0.1%
5,500 Whirlpool Corp.
183,865
Industrial Machinery--0.1%
5,000 Flowserve Corp.
266,550
Integrated International Oil--2.2%
61,800 Chevron Corp.
4,358,136
Shares
   
   
Value
COMMON STOCKS--continued
Internet Services--0.5%
14,500 1 NetFlix, Inc.
 $ 524,030
45,900 1 eBay, Inc.
551,718
   TOTAL
1,075,748
Jewelry Stores--0.0%
4,300 Movado Group, Inc.
33,024
Life Insurance--1.7%
10,800 Aflac, Inc.
 250,668
15,400 American Equity Investment Life Holding Co.
 103,026
10,600 Delphi Financial Group, Inc., Class A
 160,802
51,800 Old Republic International Corp.
 534,576
77,400 Torchmark Corp.
2,322,000
   TOTAL
3,371,072
Long-Term Care Centers--0.0%
5,600 1 Kindred Healthcare, Inc.
75,992
Lumber Products--0.1%
25,100 1 Louisiana-Pacific Corp.
 52,208
6,000 Weyerhaeuser Co.
164,040
   TOTAL
216,248
Medical Supplies--0.3%
1,000 1 Haemonetics Corp.
 59,150
3,200 1 Kinetic Concepts, Inc.
 77,120
6,800 1 Merit Medical Systems, Inc.
 104,652
12,400 1 PetMed Express, Inc.
 179,056
10,200 1 Quidel Corp.
125,460
   TOTAL
545,438
Medical Technology--1.0%
5,700 1 Cantel Medical Corp.
 85,443
9,900 1 Cyberonics, Inc.
 152,361
1,300 1 Edwards Lifesciences Corp.
 74,737
2,800 1 Gen-Probe, Inc.
 126,056
7,000 1 Greatbatch Technologies, Inc.
 163,100
7,900 1 ResMed, Inc.
 315,210
Shares
   
   
Value
COMMON STOCKS--continued
Medical Technology--continued
16,400 1 Thoratec Laboratories Corp.
 $ 475,108
14,700 1 Zimmer Holdings, Inc.
535,080
   TOTAL
1,927,095
Metal Fabrication--0.0%
2,300 1 RTI International Metals
 30,613
1,300 Timken Co.
19,357
   TOTAL
49,970
Miscellaneous Components--0.4%
17,500 AVX Corp.
 159,600
13,000 1 Cree, Inc.
 259,090
25,900 1 International Rectifier Corp.
352,758
   TOTAL
771,448
Miscellaneous Food Products--4.2%
275,600 Archer-Daniels-Midland Co.
 7,545,928
6,700 Corn Products International, Inc.
 155,105
26,100 1 Fresh Del Monte Produce, Inc.
629,010
   TOTAL
8,330,043
Miscellaneous Metals--0.1%
23,400 1 USEC, Inc.
119,106
Money Center Bank--1.4%
74,800 Bank of New York Mellon Corp.
 1,925,352
51,900 U.S. Bancorp
770,196
   TOTAL
2,695,548
Mortgage and Title--0.1%
24,000 PMI Group, Inc.
 33,360
18,600 Radian Group, Inc.
 59,892
6,700 Stewart Information Services Corp.
99,428
   TOTAL
192,680
Motion Pictures--0.3%
29,100 Walt Disney Co.
601,788
Shares
   
   
Value
COMMON STOCKS--continued
Multi-Industry Capital Goods--0.5%
17,700 General Electric Co.
 $ 214,701
49,800 KBR, Inc.
 705,168
14,600 Textron, Inc.
131,838
   TOTAL
1,051,707
Multi-Line Insurance--4.0%
134,550 Allstate Corp.
 2,915,699
2,500 1 Amerisafe, Inc.
 46,825
6,400 FBL Financial Group, Inc., Class A
 65,984
22,600 Hanover Insurance Group, Inc.
 913,492
284,900 UNUMProvident Corp.
4,034,184
   TOTAL
7,976,184
Office Equipment--0.2%
13,200 Pitney Bowes, Inc.
293,832
Offshore Driller--0.4%
13,900 1 Transocean Ltd.
759,218
Oil Refiner--0.8%
16,800 Sunoco, Inc.
 778,176
28,600 Western Refining, Inc.
 333,476
11,100 World Fuel Services Corp.
374,847
   TOTAL
1,486,499
Oil Service, Explore & Drill--0.1%
19,600 Patterson-UTI Energy, Inc.
187,376
Oil Well Supply--0.1%
4,400 Baker Hughes, Inc.
 146,608
5,600 1 Dril-Quip, Inc.
137,200
   TOTAL
283,808
Other Communications Equipment--0.1%
42,500 1 Tellabs, Inc.
175,525
Packaged Foods--0.1%
7,100 Hershey Foods Corp.
264,688
Paper Products--0.4%
58,700 MeadWestvaco Corp.
 683,268
2,200 Rock-Tenn Co.
68,574
   TOTAL
751,842
Shares
   
   
Value
COMMON STOCKS--continued
Personal Loans--0.5%
46,100 Capital One Financial Corp.
 $ 730,224
21,000 1 Ezcorp, Inc., Class A
284,970
   TOTAL
1,015,194
Personnel Agency--0.0%
5,000 Kelly Services, Inc., Class A
45,300
Pollution Control--0.2%
6,800 1 Stericycle, Inc.
332,656
Printing--0.0%
6,700 Donnelley (R.R.) & Sons Co.
65,392
Property Liability Insurance--5.0%
14,400 Berkley, W.R. Corp.
 381,312
41,000 Chubb Corp.
 1,745,780
6,300 HCC Insurance Holdings, Inc.
 147,483
195,900 The Travelers Cos., Inc.
7,569,576
   TOTAL
9,844,151
Railroad--4.8%
91,800 CSX Corp.
 2,658,528
21,400 Norfolk Southern Corp.
 820,904
138,400 Union Pacific Corp.
6,060,536
   TOTAL
9,539,968
Recreational Goods--0.3%
8,200 Callaway Golf Co.
 62,402
20,400 1 WMS Industries, Inc.
453,288
   TOTAL
515,690
Recreational Vehicles--0.0%
32,900 Brunswick Corp.
91,462
Regional Bank--1.3%
37,300 BB&T Corp.
 738,167
7,400 Central Pacific Financial Corp.
 49,802
16,400 East West Bancorp, Inc.
 155,636
52,700 Marshall & Ilsley Corp.
 300,917
6,500 PNC Financial Services Group
 211,380
46,000 Popular, Inc.
 126,040
Shares
   
   
Value
COMMON STOCKS--continued
Regional Bank--continued
9,200 South Financial Group, Inc.
 $ 17,296
71,000 SunTrust Banks, Inc.
 870,460
6,000 Whitney Holding Corp.
 77,940
7,400 Wintrust Financial Corp.
98,938
   TOTAL
2,646,576
Restaurant--0.1%
1,000 1 Green Mountain Coffee, Inc.
 38,260
2,900 1 Panera Bread Co.
136,242
   TOTAL
174,502
Roofing & Wallboard--0.1%
43,300 1 USG Corp.
281,883
Rubber--0.0%
18,100 Cooper Tire & Rubber Co.
84,527
Savings & Loan--0.3%
19,800 Astoria Financial Corp.
 179,784
35,000 Hudson City Bancorp, Inc.
406,000
   TOTAL
585,784
Securities Brokerage--0.4%
8,900 1 Interactive Brokers Group, Inc., Class A
 135,903
5,400 1 Knight Capital Group, Inc., Class A
 97,362
11,400 1 Labranche & Co., Inc.
 78,204
28,800 Raymond James Financial, Inc.
533,088
   TOTAL
844,557
Semiconductor Distribution--0.9%
57,600 1 Arrow Electronics, Inc.
 1,098,432
15,500 1 Avnet, Inc.
 307,210
14,500 1 FormFactor, Inc.
 225,620
5,800 1 Tyler Technologies, Inc.
73,022
   TOTAL
1,704,284
Semiconductor Manufacturing--0.4%
8,700 1 ATMI, Inc.
 117,537
146,600 1 Micron Technology, Inc.
 545,352
6,300 1 Plexus Corp.
91,098
   TOTAL
753,987
Shares
   
   
Value
COMMON STOCKS--continued
Semiconductor Manufacturing Equipment--0.3%
48,500 1 Novellus Systems, Inc.
$
 668,815
Services to Medical Professionals--3.9%
3,000 1 Coventry Health Care, Inc.
 45,390
10,500 1 Genoptix, Inc.
 355,950
61,300 1 Humana, Inc.
 2,325,109
5,900 1 Medco Health Solutions, Inc.
 265,087
7,600 Omnicare, Inc.
 212,496
88,300 UnitedHealth Group, Inc.
 2,501,539
49,100 1 Wellpoint, Inc.
2,035,195
   TOTAL
7,740,766
Shoes--0.1%
6,600 1 Genesco, Inc.
101,640
Soft Drinks--0.1%
5,900 The Pepsi Bottling Group, Inc.
113,811
Software Packaged/Custom--5.3%
105,000 1 Computer Sciences Corp.
 3,868,200
16,000 1 DST Systems, Inc.
 508,320
74,200 1 F5 Networks, Inc.
 1,645,014
246,000 Microsoft Corp.
 4,206,600
10,700 1 Solera Holdings, Inc.
257,763
   TOTAL
10,485,897
Specialty Chemicals--0.5%
8,700 Albemarle Corp.
 193,575
7,700 Cabot Corp.
 102,872
4,100 Chemed Corp.
 164,533
4,300 Cytec Industries, Inc.
 87,892
3,900 Lubrizol Corp.
 133,068
15,600 1 OM Group, Inc.
302,328
   TOTAL
984,268
Specialty Retailing--0.2%
11,000 Pep Boys-Manny Moe & Jack
 31,790
38,100 Williams-Sonoma, Inc.
 301,752
9,800 1 Zale Corp.
12,152
   TOTAL
345,694
Shares
   
   
Value
COMMON STOCKS--continued
Stainless Steel Producer--0.5%
44,700 Allegheny Technologies, Inc.
$
987,423
Technology Services--0.1%
7,700 1 Stanley, Inc.
233,002
Telecommunication Equipment & Services--0.2%
84,100 Motorola, Inc.
372,563
Tools and Hardware--0.1%
4,300 Snap-On, Inc.
129,774
Toys & Games--0.2%
18,200 1 JAKKS Pacific, Inc.
333,788
Truck Manufacturing--0.2%
16,200 Cummins, Inc.
388,476
Trucking--0.5%
1,500 Arkansas Best Corp.
 35,085
29,900 Ryder System, Inc.
1,010,022
   TOTAL
1,045,107
Undesignated Consumer Cyclicals--4.7%
51,600 1 Alliance Data Systems Corp.
 2,146,044
6,800 1 American Public Education, Inc.
 266,288
3,200 1 CoStar Group, Inc.
 94,784
58,200 1 Corinthian Colleges, Inc.
 1,087,176
6,100 DeVRY, Inc.
 326,838
39,200 1 ITT Educational Services, Inc.
 4,802,392
11,600 Speedway Motorsports, Inc.
 167,504
1,900 Strayer Education, Inc.
411,217
   TOTAL
9,302,243
Undesignated Consumer Staples--0.1%
4,400 1 USANA, Inc.
102,124
Water Utility--0.1%
10,100 Aqua America, Inc.
209,474
   TOTAL COMMON STOCKS
(IDENTIFIED COST $232,622,472)
195,096,567
Shares
   
   
Value
MUTUAL FUND--1.6%
3,176,994 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
$
3,176,994
   TOTAL INVESTMENTS--100.2%
(IDENTIFIED COST $235,799,466) 4
198,273,561
   OTHER ASSETS AND LIABILITIES - NET--(0.2)% 5
(427,609
 )
   TOTAL NET ASSETS--100%
$
 197,845,952

1 Non-income-producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represents cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$198,273,561
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$198,273,561

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $3,176,994 of investments in an affiliated issuer (Note 5) (identified cost $235,799,466)
 $ 198,273,561
Cash
 13
Income receivable
 132,609
Receivable for investments sold
 10,174,925
Receivable for shares sold
397,936
   TOTAL ASSETS
208,979,044
Liabilities:
Payable for investments purchased
 $ 10,318,903
Payable for shares redeemed
 560,145
Payable for Directors'/Trustees' fees
133
Payable for distribution services fee (Note 5)
 33,408
Payable for shareholder services fee (Note 5)
 85,674
Accrued expenses
134,829
   TOTAL LIABILITIES
11,133,092
Net assets for 23,338,173 shares outstanding
$
 197,845,952
Net Assets Consist of:
Paid-in capital
 $ 381,283,452
Net unrealized depreciation of investments
(37,525,905 )
Accumulated net realized loss on investments
(146,645,848 )
Undistributed net investment income
734,253
   TOTAL NET ASSETS
$
 197,845,952

Statement of Assets and Liabilities - continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($47,920,086 ÷ 5,580,172 shares outstanding), no par value, unlimited shares authorized
$8.59
Offering price per share
$8.59
Redemption proceeds per share
$8.59
Class A Shares:
Net asset value per share ($96,443,089 ÷ 11,338,024 shares outstanding), no par value, unlimited shares authorized
$8.51
Offering price per share (100/94.50 of $8.51)
$9.01
Redemption proceeds per share
$8.51
Class C Shares:
Net asset value per share ($52,148,852 ÷ 6,263,567 shares outstanding), no par value, unlimited shares authorized
$8.33
Offering price per share
$8.33
Redemption proceeds per share (99.00/100 of $8.33)
$8.25
Class K Shares:
Net asset value per share ($1,333,925 ÷ 156,410 shares outstanding), no par value, unlimited shares authorized
$8.53
Offering price per share
$8.53
Redemption proceeds per share
$8.53

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $35,673 received from an affiliated issuer (Note 5) and net of foreign taxes withheld of $979)
$
 2,803,851
Expenses:
Investment adviser fee (Note 5)
 $ 1,051,019
Administrative personnel and services fee (Note 5)
 136,110
Custodian fees
 26,323
Transfer and dividend disbursing agent fees and expenses--Institutional Shares
 45,077
Transfer and dividend disbursing agent fees and expenses--Class A Shares
 127,356
Transfer and dividend disbursing agent fees and expenses--Class C Shares
 88,918
Transfer and dividend disbursing agent fees and expenses--Class K Shares
 2,519
Directors'/Trustees' fees
 2,560
Auditing fees
 10,924
Legal fees
 3,339
Portfolio accounting fees
 65,059
Distribution services fee--Class C Shares (Note 5)
 265,025
Distribution services fee--Class K Shares (Note 5)
 3,535
Shareholder services fee--Class A Shares (Note 5)
 178,835
Shareholder services fee--Class C Shares (Note 5)
 88,227
Account administration fee--Class A Shares
 285
Account administration fee--Class C Shares
 114
Share registration costs
 36,491
Printing and postage
 37,215
Insurance premiums
 3,021
Interest expense
 360
Miscellaneous
4,468
   TOTAL EXPENSES
2,176,780

Statement of Operations - continued

Waivers and Reimbursements (Note 5):
      
Waiver/reimbursement of investment adviser fee
 $ (32,773 )
Waiver of administrative personnel and services fee
 (29,467 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Institutional Shares
 (5,695 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class A Shares
 (18,392 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class C Shares
(17,498
 )
   TOTAL WAIVERS AND REIMBURSEMENTS
$
 (103,825
 )
Net expenses
$
2,072,955
Net investment income
730,896
Realized and Unrealized Loss on Investments:
Net realized loss on investments
(121,053,781 )
Net change in unrealized depreciation of investments
(24,331,707
 )
Net realized and unrealized loss on investments
(145,385,488
 )
Change in net assets resulting from operations
$
 (144,654,592
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   

Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income
$ 730,896 $ 1,186,226
Net realized loss on investments
(121,053,781 ) (25,156,859 )
Net change in unrealized appreciation/depreciation of investments
(24,331,707
 )
(20,313,246
 )
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(144,654,592
 )
(44,283,879
 )
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares
 (512,139 ) --
Class A Shares
 (664,841 ) --
Class C Shares
 -- --
Class K Shares
 (5,889 ) --
Distributions from net realized gain on investments
Institutional Shares
 -- (6,297,925 )
Class A Shares
 -- (14,822,479 )
Class C Shares
 -- (7,853,780 )
Class K Shares
--
(32,808
 )
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
(1,182,869
 )
(29,006,992
 )
Share Transactions:
Proceeds from sale of shares
 47,512,415 148,687,842
Net asset value of shares issued to shareholders in payment of distributions declared
 1,059,659 25,603,826
Cost of shares redeemed
(84,430,847
 )
(113,566,093
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
(35,858,773
 )
60,725,575
Change in net assets
(181,696,234
 )
(12,565,296
 )
Net Assets:
Beginning of period
379,542,186
392,107,482
End of period (including undistributed net investment income of $734,253 and $1,186,226, respectively)
$
 197,845,952
$
 379,542,186

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

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 U.S. generally accepted accounting principles (GAAP).

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

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

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2005 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

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.

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:


   
 Six Months Ended
1/31/2009

   
 Year Ended
7/31/2008

Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 1,063,208 $ 11,697,890 2,316,132 $ 37,878,322
Shares issued to shareholders in payment of distributions declared

45,381


417,053


306,108


5,075,279
Shares redeemed
(1,623,147
 )
(16,925,120
 )
(1,569,357
 )
(25,328,179
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS

(514,558
 )

$
(4,810,177
 )

1,052,883


$
17,625,422



   
 Six Months Ended
1/31/2009



   
 Year Ended
7/31/2008

Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 2,714,876 $ 28,002,953 4,864,131 $ 77,675,376
Shares issued to shareholders in payment of distributions declared

69,892


636,717


864,495



14,186,366
Shares redeemed
(5,316,270
 )
(52,798,626
 )
(3,920,927
 )
(61,812,706
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS
(2,531,502
 )
$
 (24,158,956
 )
1,807,699
$
 30,049,036



   
 Six Months Ended
1/31/2009



   
 Year Ended
7/31/2008

Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 661,270 $ 6,799,326 1,978,773 $ 31,441,573
Shares issued to shareholders in payment of distributions declared

--



--


391,649


6,309,458
Shares redeemed
(1,434,188
 )
(14,352,736
 )
(1,692,463
 )
(26,152,035
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
(772,918
 )
$
 (7,553,410
 )
677,959
$
 11,598,996



   
 Six Months Ended
1/31/2009



   
 Year Ended
7/31/2008

Class K Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 91,780 $ 1,012,246 106,180 $ 1,692,571
Shares issued to shareholders in payment of distributions declared

644



5,889


1,982



32,723
Shares redeemed
(34,812
 )
(354,365
 )
(17,383
 )
(273,173
 )
   NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS

57,612
$
663,770

90,779

$
1,452,121
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS


(3,761,366
 )

$
(35,858,773
 )

3,629,320


$
60,725,575

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $235,799,466. The net unrealized depreciation of investments for federal tax purposes was $37,525,905. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $7,105,497 and net unrealized depreciation from investments for those securities having an excess of cost over value of $44,631,402.

At July 31, 2008, the Fund had a capital loss carryforward of $3,647,165 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire in 2016.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for certain classes of the Fund based on average daily net assets:

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

In addition, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser waived $31,562 of its fee. In addition, an affiliate of the Adviser reimbursed $41,585 of transfer and dividend disbursing agent fees and expenses.

Administrative Fee

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

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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 0.076% of average daily net assets of the Fund. FAS waived $29,467 of its fee.

Distribution Services Fee

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

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

FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC retained $29,228 of fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Fund's Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $9,692 in sales charges from the sale of Class A Shares. FSC also retained $3,822 of CDSC relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC did not receive any fees paid by the Fund.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $1,211. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund, Institutional Shares
1,891,293
39,941,067
38,655,366
3,176,994
$3,176,994
$35,673

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 416,723,922
Sales
$
 452,193,789

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory
Contract - May 2008

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R304

36362 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Balanced Fund

Established 2002

A Portfolio of Federated MDT Series

SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Class A Shares
Class C Shares
Class K Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

    Six Months
Ended
(unaudited)		    Year Ended July 31,
    Period
Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$12.51 $13.75 $13.21 $13.67
Income From Investment Operations:
Net investment income
 0.13 0.28 3 0.20 3 0.18 3
Net realized and unrealized gain (loss) on investments, futures contracts, swap contracts and foreign currency transactions
(3.40
 )
(1.00
 )
1.15
0.46
   TOTAL FROM INVESTMENT OPERATIONS
(3.27
 )
(0.72
 )
1.35
0.64
Less Distributions:
Distributions from net investment income
 (0.27 ) (0.17 ) (0.16 ) (0.17 )
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions
--
(0.35
 )
(0.65
 )
(0.93
 )
   TOTAL DISTRIBUTIONS
(0.27
 )
(0.52
 )
(0.81
 )
(1.10
 )
Net Asset Value, End of Period
$ 8.97
$12.51
$13.75
$13.21
Total Return 4
(26.22
 )%
(5.60
 )%
10.39
 %
4.85
 %
Ratios to Average Net Assets:
Net expenses
1.30
 % 5
1.31
 %
1.40
 %
1.50
 % 5
Net investment income
2.13
 % 5
2.08
 %
1.42
 %
1.60
 % 5
Expense waiver/reimbursement 6
0.09
 % 5
0.03
 %
0.13
 %
0.17
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$104,152
$153,458
$51,167
$1,962
Portfolio turnover
105
 %
158
 %
174
 %
139
 % 7

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

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

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

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

5 Computed on an annualized basis.

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

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

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

    Six Months
Ended
(unaudited)		    Year Ended July 31,
    Period
Ended
1/31/2009
2008
2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$12.30 $13.60 $13.13 $13.67
Income From Investment Operations:
Net investment income
 0.08 0.19 3 0.09 3 0.10 3
Net realized and unrealized gain (loss) on investments, futures contracts, swap contracts and foreign currency transactions
(3.33
 )
(1.00
 )
1.14
0.44
   TOTAL FROM INVESTMENT OPERATIONS
(3.25
 )
(0.81
 )
1.23
0.54
Less Distributions:
Distributions from net investment income
 (0.17 ) (0.14 ) (0.11 ) (0.15 )
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions
--
(0.35
 )
(0.65
 )
(0.93
 )
   TOTAL DISTRIBUTIONS
(0.17
 )
(0.49
 )
(0.76
 )
(1.08
 )
Net Asset Value, End of Period
$ 8.88
$12.30
$13.60
$13.13
Total Return 4
(26.47
 )%
(6.28
 )%
9.50
 %
4.04
 %
Ratios to Average Net Assets:
Net expenses
2.05
 % 5
2.05
 %
2.15
 %
2.25
 % 5
Net investment income
1.38
 % 5
1.41
 %
0.66
 %
0.85
 % 5
Expense waiver/reimbursement 6
0.07
 % 5
0.03
 %
0.16
 %
0.17
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$53,738
$82,033
$15,775
$3,910
Portfolio turnover
105
 %
158
 %
174
 %
139
 % 7

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

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

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

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

5 Computed on an annualized basis.

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

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

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class K Shares

(For a Share Outstanding Throughout Each Period)

Six Months
Ended
(unaudited)		 Year
Ended		 Period
Ended
   
 1/31/2009
   
 7/31/2008
   
 7/31/2007
1
Net Asset Value, Beginning of Period
$12.51 $13.77 $14.28
Income From Investment Operations:
Net investment income
0.09 0.20 2 0.05 2
Net realized and unrealized gain (loss) on investments, futures contracts, swap contracts and foreign currency transactions
(3.39
 )
(0.98
 )
0.26
   TOTAL FROM INVESTMENT OPERATIONS
(3.30
 )
(0.78
 )
0.31
Less Distributions:
Distributions from net investment income
 (0.25 ) (0.13 ) (0.17 )
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions
--
(0.35
 )
(0.65
 )
   TOTAL DISTRIBUTIONS
(0.25
 )
(0.48
 )
(0.82
 )
Net Asset Value, End of Period
$ 8.96
$12.51
$13.77
Total Return 3
(26.44
 )%
(6.01
 )%
2.33
 %
Ratios to Average Net Assets:
Net expenses
1.79
 % 4
1.77
 %
1.90
 % 4
Net investment income
1.66
 % 4
1.53
 %
0.60
 % 4
Expense waiver/reimbursement 5
0.05
 % 4
0.02
 %
0.05
 % 4
Supplemental Data:
Net assets, end of period (000 omitted)
$575
$708
$18
Portfolio turnover
105
 %
158
 %
174
 % 6

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

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

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

4 Computed on an annualized basis.

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

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

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual:
Class A Shares
$1,000
$ 737.80
$ 5.69
Class C Shares
$1,000
$ 735.30
$ 8.97
Class K Shares
$1,000
$ 735.60
$ 7.83
Hypothetical (assuming a 5% return before expenses):
Class A Shares
$1,000
$1,018.65
$ 6.61
Class C Shares
$1,000
$1,014.87
$10.41
Class K Shares
$1,000
$1,016.18
$ 9.10

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

Class A Shares
   
 1.30%
Class C Shares
2.05%
Class K Shares
1.79%

Portfolio of Investments Summary Tables (unaudited)

At January 31, 2009, the Fund's portfolio composition 1 was as follows:

Security Type
   
 Percentage of
Total Net Assets
Domestic Equity Securities
58.2
 %
Mortgage-Backed Securities
11.8
 %
Corporate Debt Securities
8.8
 %
U.S. Treasury and Agency Securities 2
4.8
 %
Collateralized Mortgage Obligations
2.8
 %
Adjustable Rate Mortgage Securities
1.6
 %
Asset-Backed Securities
1.4
 %
Foreign Debt Securities
1.4
 %
International Equity Securities
1.4
 %
Other Securities 3
3.6
 %
Cash Equivalents 4
5.9
 %
Derivatives Contracts 5
0.2
 %
Other Assets and Liabilities--Net 6
(1.9
 )%
   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 mutual 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 $2,723,685 held in U.S. Treasuries pledged as collateral to ensure the Fund is able to satisfy the obligations of its outstanding futures contracts.

3 Other Securities include exchange-traded funds.

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

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

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

At January 31, 2009, the Fund's industry composition 7 for its equity securities was as follows:

Industry
   
 Percentage of
Equity Securities
Electric Utility
6.4%
Biotechnology
5.8%
Property Liability Insurance
4.7%
Software Packaged/Custom
4.7%
Agricultural Chemicals
4.6%
Railroad
4.6%
Ethical Drugs
4.5%
Undesignated Consumer Cyclicals
4.4%
Multi-Line Insurance
3.9%
Miscellaneous Food Products
3.8%
Real Estate Investment Trusts
3.7%
Computers--Midrange
3.4%
Services to Medical Professionals
3.3%
Home Building
2.7%
AT&T Divestiture
2.4%
Department Stores
2.1%
Integrated International Oil
1.9%
Medical Technology
1.9%
Copper
1.8%
Defense Aerospace
1.8%
Diversified Leisure
1.7%
Life Insurance
1.6%
Money Center Bank
1.4%
Regional Bank
1.3%
Computers--High End
1.1%
Airline--Regional
1.0%
Other 8
19.5%
   TOTAL
100.0%

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

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

Portfolio of Investments

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--59.6%
Advertising--0.1%
4,300 Omnicom Group, Inc.
$
 111,327
Agricultural Chemicals--2.8%
3,200 FMC Corp.
 142,784
69,800 Monsanto Co.
 5,308,988
6,300 Mosaic, Co./The
224,721
   TOTAL
5,676,493
Agricultural Machinery--0.5%
400 Bucyrus International
 6,200
31,300 Deere & Co.
1,087,362
   TOTAL
1,093,562
Airline - Regional--0.6%
23,300 1 Alaska Air Group, Inc.
 614,188
5,400 SkyWest, Inc.
 84,510
81,900 Southwest Airlines Co.
575,757
   TOTAL
1,274,455
Aluminum--0.0%
7,300 Alcoa, Inc.
56,867
AT&T Divestiture--1.4%
120,300 AT&T, Inc.
2,961,786
Auto Original Equipment Manufacturer--0.2%
8,600 1 Fuel Systems Solutions, Inc.
 224,804
13,900 Johnson Controls, Inc.
 173,889
5,700 Superior Industries International, Inc.
58,539
   TOTAL
457,232
Auto Rentals--0.0%
3,100 1 AMERCO
95,325
Shares
   
   
Value
COMMON STOCKS--continued
Biotechnology--3.4%
4,800 1 Affymetrix, Inc.
 $ 15,264
11,500 1 Cephalon, Inc.
 887,570
1,200 1 Charles River Laboratories International, Inc.
 29,292
117,500 1 Gilead Sciences, Inc.
 5,965,475
3,500 1 Hospira, Inc.
 87,150
1,300 1 Martek Biosciences Corp.
 34,385
200 1 Myriad Genetics, Inc.
 14,914
9,200 1 Questcor Pharmaceuticals, Inc.
59,340
   TOTAL
7,093,390
Book Publishing--0.0%
1,300 Scholastic Corp.
14,170
Broadcasting--0.3%
17,400 1 American Tower Systems Corp.
 527,916
3,000 1 DISH Network Corp., Class A
 38,520
11,800 News Corp., Inc. - Class A
75,402
   TOTAL
641,838
Building Materials--0.1%
2,400 Ameron, Inc.
 119,640
13,400 1 Owens Corning, Inc.
178,756
   TOTAL
298,396
Cable TV--0.4%
20,800 1 Discovery Communications, Inc.
 301,600
28,300 Time Warner, Inc.
 264,039
17,900 1 Viacom, Inc., Class B - New
264,025
   TOTAL
829,664
Cement--0.1%
6,300 Texas Industries, Inc.
143,073
Clothing Stores--0.2%
7,200 1 Children's Place Retail Stores, Inc.
 135,432
1,800 1 Fossil, Inc.
 20,772
8,000 1 Jos A. Bank Clothiers, Inc.
219,680
   TOTAL
375,884
Shares
   
   
Value
COMMON STOCKS--continued
Commodity Chemicals--0.1%
1,700 Compass Minerals International, Inc.
 $ 102,289
2,200 Eastman Chemical Co.
 57,090
10,500 Westlake Chemical Corp.
143,535
   TOTAL
302,914
Computer Peripherals--0.3%
7,000 Imation Corp.
 68,180
17,600 1 Sandisk Corp.
 201,168
15,900 1 Synaptics, Inc.
374,763
   TOTAL
644,111
Computer Services--0.0%
2,700 1 NCR Corp.
33,885
Computer Stores--0.1%
7,000 1 Tech Data Corp.
126,770
Computers - High End--0.7%
14,800 International Business Machines Corp.
1,356,420
Computers - Low End--0.2%
33,000 1 Dell, Inc.
313,500
Computers - Midrange--2.0%
118,800 Hewlett-Packard Co.
4,128,300
Construction Machinery--0.4%
25,300 Caterpillar, Inc.
 780,505
3,600 Joy Global, Inc.
74,988
   TOTAL
855,493
Contracting--0.1%
2,300 Harsco Corp.
 54,556
1,300 1 IHS, Inc. - Class A
56,940
   TOTAL
111,496
Copper--1.1%
87,400 Freeport-McMoRan Copper & Gold, Inc.
2,197,236
Shares
   
   
Value
COMMON STOCKS--continued
Crude Oil & Gas Production--0.2%
3,600 1 Swift Energy Co.
 $ 55,152
14,500 W&T Offshore, Inc.
 182,265
4,600 1 Whiting Petroleum Corp.
133,400
   TOTAL
370,817
Defense Aerospace--1.1%
49,900 Boeing Co.
 2,111,269
2,700 General Dynamics Corp.
153,171
   TOTAL
2,264,440
Defense Electronics--0.3%
6,000 1 FLIR Systems, Inc.
 149,820
8,100 Northrop Grumman Corp.
389,772
   TOTAL
539,592
Department Stores--1.3%
13,800 Dillards, Inc., Class A
 60,030
41,200 Penney (J.C.) Co., Inc.
 690,100
18,900 1 Saks, Inc.
 47,628
44,700 1 Sears Holdings Corp.
1,829,124
   TOTAL
2,626,882
Discount Department Stores--0.1%
7,900 1 99 Cents Only Stores
 66,202
12,500 Foot Locker, Inc.
92,000
   TOTAL
158,202
Diversified Leisure--1.0%
104,200 Carnival Corp.
 1,895,398
13,000 1 Gaylord Entertainment Co.
 137,800
6,500 1 Pinnacle Entertainment, Inc.
44,070
   TOTAL
2,077,268
Electric & Electronic Original Equipment Manufacturer--0.1%
8,300 Molex, Inc.
110,971
Shares
   
   
Value
COMMON STOCKS--continued
Electronic Testing/Measuring Equipment--0.0%
2,700 1 Multi-Fineline Electronix, Inc.
$
50,031
Electric Utility--3.8%
25,100 American Electric Power Co., Inc.
 786,885
42,700 CMS Energy Corp.
 501,725
111,600 Edison International
 3,634,812
8,500 Idacorp, Inc.
 247,435
9,100 OGE Energy Corp.
 224,588
49,700 Sempra Energy
 2,178,848
13,200 TECO Energy, Inc.
 158,532
6,400 UniSource Energy Corp.
180,736
   TOTAL
7,913,561
Electronics Stores--0.0%
3,700 Radioshack Corp.
42,402
Ethical Drugs--2.6%
30,400 1 Forest Laboratories, Inc., Class A
 761,216
35,400 Lilly (Eli) & Co.
 1,303,428
100,400 Merck & Co., Inc.
 2,866,420
1,700 1 Noven Pharmaceuticals, Inc.
 16,881
35,400 Pfizer, Inc.
516,132
   TOTAL
5,464,077
Food Wholesaling--0.0%
4,500 SUPERVALU, Inc.
78,930
Furniture--0.0%
5,700 Furniture Brands International, Inc.
11,685
Gas Distributor--0.5%
27,400 Energen Corp.
 800,354
1,300 New Jersey Resources Corp.
 52,117
8,000 1 Southern Union Co.
103,120
   TOTAL
955,591
Shares
   
   
Value
COMMON STOCKS--continued
Generic Drugs--0.0%
1,400 1 Warner Chilcott Ltd - Class A
$
19,250
Home Building--1.6%
25,600 Centex Corp.
 217,856
73,100 D.R. Horton, Inc.
 435,676
17,100 KB HOME
 182,457
36,200 Lennar Corp., Class A
 278,378
1,200 1 M/I Schottenstein Homes, Inc.
 10,608
82,700 Pulte Homes, Inc.
 839,405
15,000 Ryland Group, Inc.
 234,000
62,300 1 Toll Brothers, Inc.
1,060,346
   TOTAL
3,258,726
Home Health Care--0.4%
9,000 1 Amedisys, Inc.
 371,070
7,500 1 Amerigroup Corp.
 209,775
5,800 1 LHC Group, Inc.
154,338
   TOTAL
735,183
Home Products--0.1%
1,200 1 Energizer Holdings, Inc.
 57,156
2,100 Tupperware Brands Corp.
43,176
   TOTAL
100,332
Hospitals--0.1%
3,300 Universal Health Services, Inc., Class B
124,905
Household Appliances--0.1%
3,700 Whirlpool Corp.
123,691
Industrial Machinery--0.1%
3,600 Flowserve Corp.
191,916
Integrated International Oil--1.1%
32,300 Chevron Corp.
2,277,796
Shares
   
   
Value
COMMON STOCKS--continued
Internet Services--0.3%
9,500 1 NetFlix, Inc.
 $ 343,330
26,900 1 eBay, Inc.
323,338
   TOTAL
666,668
Leasing--0.0%
800 GATX Corp.
19,280
Life Insurance--1.0%
7,100 Aflac, Inc.
 164,791
8,700 American Equity Investment Life Holding Co.
 58,203
9,000 Delphi Financial Group, Inc., Class A
 136,530
28,200 Old Republic International Corp.
 291,024
1,200 Protective Life Corp.
 9,936
43,400 Torchmark Corp.
1,302,000
   TOTAL
1,962,484
Long-Term Care Centers--0.0%
4,900 1 Kindred Healthcare, Inc.
66,493
Lumber Products--0.1%
12,900 1 Louisiana-Pacific Corp.
 26,832
3,600 Weyerhaeuser Co.
98,424
   TOTAL
125,256
Maritime--0.1%
3,200 Overseas Shipholding Group, Inc.
114,240
Medical Supplies--0.2%
600 1 Haemonetics Corp.
 35,490
1,500 1 Immucor, Inc.
 41,565
2,000 1 Kinetic Concepts, Inc.
 48,200
3,700 1 Merit Medical Systems, Inc.
 56,943
6,700 1 PetMed Express, Inc.
 96,748
4,800 1 Quidel Corp.
 59,040
5,600 Steris Corp.
148,960
   TOTAL
486,946
Shares
   
   
Value
COMMON STOCKS--continued
Medical Technology--1.1%
4,800 1 Cantel Medical Corp.
 $ 71,952
5,600 1 Cyberonics, Inc.
 86,184
700 1 Edwards Lifesciences Corp.
 40,243
2,500 1 Gen-Probe, Inc.
 112,550
3,700 1 Greatbatch Technologies, Inc.
 86,210
4,400 1 ResMed, Inc.
 175,560
11,000 1 Thoratec Laboratories Corp.
 318,670
28,500 1 Varian Medical Systems, Inc.
 1,058,205
9,900 1 Zimmer Holdings, Inc.
360,360
   TOTAL
2,309,934
Metal Containers--0.0%
200 1 Mobile Mini, Inc.
2,528
Metal Fabrication--0.1%
1,700 1 RTI International Metals
 22,627
2,000 Timken Co.
 29,780
4,700 Worthington Industries, Inc.
47,282
   TOTAL
99,689
Miscellaneous Components--0.2%
12,800 AVX Corp.
 116,736
7,300 1 Cree, Inc.
 145,489
16,600 1 International Rectifier Corp.
226,092
   TOTAL
488,317
Miscellaneous Food Products--2.2%
154,600 Archer-Daniels-Midland Co.
 4,232,948
1,000 Corn Products International, Inc.
 23,150
15,100 1 Fresh Del Monte Produce, Inc.
363,910
   TOTAL
4,620,008
Miscellaneous Machinery--0.0%
200 Parker-Hannifin Corp.
7,642
Shares
   
   
Value
COMMON STOCKS--continued
Miscellaneous Metals--0.0%
13,400 1 USEC, Inc.
$
68,206
Money Center Bank--0.8%
47,400 The Bank of New York Mellon Corp.
 1,220,076
33,000 U.S. Bancorp
489,720
   TOTAL
1,709,796
Mortgage and Title--0.0%
10,400 PMI Group, Inc.
 14,456
8,300 Radian Group, Inc.
 26,726
2,900 Stewart Information Services Corp.
43,036
   TOTAL
84,218
Motion Pictures--0.1%
12,000 Walt Disney Co.
248,160
Multi-Industry Capital Goods--0.4%
4,500 1 Ceradyne, Inc.
 102,690
16,400 General Electric Co.
 198,932
34,000 KBR, Inc.
 481,440
7,800 Textron, Inc.
70,434
   TOTAL
853,496
Multi-Line Insurance--2.4%
97,850 Allstate Corp.
 2,120,409
900 1 Amerisafe, Inc.
 16,857
2,400 FBL Financial Group, Inc., Class A
 24,744
11,000 Hanover Insurance Group, Inc.
 444,620
500 Infinity Property & Casualty
 19,200
156,200 UNUMProvident Corp.
2,211,792
   TOTAL
4,837,622
Office Equipment--0.1%
6,600 Pitney Bowes, Inc.
146,916
Shares
   
   
Value
COMMON STOCKS--continued
Offshore Driller--0.3%
1,400 1 Oceaneering International, Inc.
 $ 48,244
10,300 1 Transocean Ltd.
562,586
   TOTAL
610,830
Oil Refiner--0.4%
10,400 Sunoco, Inc.
 481,728
16,800 Western Refining, Inc.
 195,888
6,300 World Fuel Services Corp.
212,751
   TOTAL
890,367
Oil Service, Explore & Drill--0.1%
11,000 Patterson-UTI Energy, Inc.
105,160
Oil Well Supply--0.1%
3,600 Baker Hughes, Inc.
 119,952
3,900 1 Dril-Quip, Inc.
95,550
   TOTAL
215,502
Other Communications Equipment--0.0%
21,700 1 Tellabs, Inc.
89,621
Packaged Foods--0.1%
4,300 Hershey Foods Corp.
160,304
Paper Products--0.3%
40,200 MeadWestvaco Corp.
 467,928
1,400 Rock-Tenn Co.
43,638
   TOTAL
511,566
Personal Loans--0.3%
29,300 Capital One Financial Corp.
 464,112
11,500 1 Ezcorp, Inc., Class A
156,055
   TOTAL
620,167
Personnel Agency--0.0%
2,900 Kelly Services, Inc., Class A
26,274
Shares
   
   
Value
COMMON STOCKS--continued
Pollution Control--0.1%
4,400 1 Stericycle, Inc.
$
215,248
Printing--0.0%
3,300 Donnelley (R.R.) & Sons Co.
32,208
Property Liability Insurance--2.8%
12,350 American Financial Group, Inc. Ohio
 209,703
4,800 Berkley, W. R. Corp.
 127,104
25,900 Chubb Corp.
 1,102,822
3,400 HCC Insurance Holdings, Inc.
 79,594
109,200 The Travelers Cos, Inc.
4,219,488
   TOTAL
5,738,711
Railroad--2.8%
52,300 CSX Corp.
 1,514,608
13,000 Norfolk Southern Corp.
 498,680
83,900 Union Pacific Corp.
3,673,981
   TOTAL
5,687,269
Real Estate Investment Trusts--2.2%
99,000 Annaly Capital Management, Inc.
 1,498,860
7,950 Boston Properties, Inc.
 344,235
5,700 Equity Residential Properties Trust
 136,401
24,200 HCP Inc.
 564,828
19,000 Nationwide Health Properties, Inc.
 485,070
17,000 Plum Creek Timber Co., Inc.
 523,090
8,000 Public Storage
 494,960
8,400 Simon Property Group, Inc.
 361,032
2,750 Vornado Realty Trust
139,728
   TOTAL
4,548,204
Recreational Goods--0.1%
4,200 Callaway Golf Co.
 31,962
11,800 1 WMS Industries, Inc.
262,196
   TOTAL
294,158
Shares
   
   
Value
COMMON STOCKS--continued
Recreational Vehicles--0.0%
7,900 Brunswick Corp.
$
21,962
Regional Bank--0.8%
25,400 BB&T Corp.
 502,666
3,300 Central Pacific Financial Corp.
 22,209
10,500 East West Bancorp, Inc.
 99,645
33,900 Marshall & Ilsley Corp.
 193,569
4,300 PNC Financial Services Group
 139,836
21,000 Popular, Inc.
 57,540
5,600 South Financial Group, Inc.
 10,528
41,100 SunTrust Banks, Inc.
 503,886
3,700 Whitney Holding Corp.
 48,063
4,000 Wintrust Financial Corp.
53,480
   TOTAL
1,631,422
Restaurant--0.2%
900 1 CEC Entertainment, Inc.
 21,006
4,000 1 Green Mountain Coffee, Inc.
 153,040
4,800 1 Panera Bread Co.
225,504
   TOTAL
399,550
Roofing & Wallboard--0.1%
1,200 1 Beacon Roofing Supply, Inc.
 15,276
21,200 1 U.S.G. Corp.
138,012
   TOTAL
153,288
Rubber--0.0%
7,300 Cooper Tire & Rubber Co.
34,091
Savings & Loan--0.1%
11,700 Astoria Financial Corp.
 106,236
14,300 Hudson City Bancorp, Inc.
165,880
   TOTAL
272,116
Shares
   
   
Value
COMMON STOCKS--continued
Securities Brokerage--0.3%
7,100 1 Interactive Brokers Group, Inc., Class A
 $ 108,417
2,000 1 Knight Capital Group, Inc. - A
 36,060
8,800 1 Labranche & Co., Inc.
 60,368
19,200 Raymond James Financial, Inc.
355,392
   TOTAL
560,237
Semiconductor Distribution--0.4%
22,700 1 Arrow Electronics, Inc.
 432,889
10,100 1 Avnet, Inc.
 200,182
7,200 1 FormFactor, Inc.
 112,032
3,100 1 Tyler Technologies, Inc.
39,029
   TOTAL
784,132
Semiconductor Manufacturing--0.2%
4,500 1 ATMI, Inc. 60,795
62,500 1 Micron Technology, Inc.
 232,500
4,300 1 Plexus Corp.
62,178
   TOTAL
355,473
Semiconductor Manufacturing Equipment--0.2%
25,700 1 Novellus Systems, Inc.
354,403
Services to Medical Professionals--2.0%
2,900 1 Coventry Health Care, Inc.
 43,877
5,800 1 Genoptix, Inc.
 196,620
31,600 1 Humana, Inc.
 1,198,588
3,700 1 Medco Health Solutions, Inc.
 166,241
5,400 Omnicare, Inc.
 150,984
45,200 UnitedHealth Group, Inc.
 1,280,516
25,200 1 Wellpoint, Inc.
1,044,540
   TOTAL
4,081,366
Shares
   
   
Value
COMMON STOCKS--continued
Shoes--0.1%
4,600 1 Deckers Outdoor Corp.
 $ 240,304
4,000 1 Genesco, Inc.
61,600
   TOTAL
301,904
Soft Drinks--0.0%
4,500 The Pepsi Bottling Group, Inc.
86,805
Software Packaged/Custom--2.8%
45,500 1 Computer Sciences Corp.
 1,676,220
10,200 1 DST Systems, Inc.
 324,054
41,400 1 F5 Networks, Inc.
 917,838
156,200 Microsoft Corp.
 2,671,020
5,700 1 Solera Holdings, Inc.
137,313
   TOTAL
5,726,445
Specialty Chemicals--0.3%
4,000 Albemarle Corp.
 89,000
3,500 Cabot Corp.
 46,760
2,500 Chemed Corp.
 100,325
3,100 Cytec Industries, Inc.
 63,364
2,900 Lubrizol Corp.
 98,948
9,100 1 OM Group, Inc.
176,358
   TOTAL
574,755
Specialty Retailing--0.1%
16,100 1 CarMax, Inc.
 133,147
4,600 Pep Boys-Manny Moe & Jack
 13,294
18,700 Williams-Sonoma, Inc.
148,104
   TOTAL
294,545
Stainless Steel Producer--0.3%
28,800 Allegheny Technologies, Inc.
636,192
Surveillance-Detection--0.0%
1,900 Diebold, Inc.
47,082
Shares
   
   
Value
COMMON STOCKS--continued
Technology Services--0.1%
7,200 1 Stanley, Inc.
$
217,872
Telecommunication Equipment & Services--0.1%
64,900 Motorola, Inc.
287,507
Tools and Hardware--0.0%
2,200 Snap-On, Inc.
66,396
Toys & Games--0.1%
9,400 1 JAKKS Pacific, Inc.
172,396
Truck Manufacturing--0.1%
6,200 Cummins, Inc.
148,676
Trucking--0.3%
500 Arkansas Best Corp.
 11,695
16,600 Ryder Systems, Inc.
560,748
   TOTAL
572,443
Undesignated Consumer Cyclicals--2.6%
29,800 1 Alliance Data Systems Corp.
 1,239,382
2,900 1 American Public Education, Inc.
 113,564
31,600 1 Corinthian Colleges, Inc.
 590,288
3,700 DeVRY, Inc.
 198,246
24,200 1 ITT Educational Services, Inc.
 2,964,742
4,600 Speedway Motorsports, Inc.
 66,424
1,100 Strayer Education, Inc.
238,073
   TOTAL
5,410,719
Undesignated Consumer Staples--0.0%
2,800 1 USANA, Inc.
64,988
Uniforms--0.0%
800 Unifirst Corp.
20,992
Water Utility--0.1%
6,300 Aqua America, Inc.
130,662
   TOTAL COMMON STOCKS
(IDENTIFIED COST $142,478,094)
122,761,742
Principal
Amount
   
   
Value
ASSET-BACKED SECURITIES--1.4%
$ 400,000 Banc of America Commercial Mortgage, Inc. 2007-1 A2, 5.381%, 1/15/2049
 $ 305,173
250,000 Banc of America Commercial Mortgage, Inc. 2007-4 A4, 5.74%, 2/10/2051
 151,189
1,200,000 Citigroup/Deutsche Bank Commercial Mortgage 2007-CD5, Series 2007 CD5, 5.886%, 11/15/2044
 724,670
398,909 Community Program Loan Trust 1987-A, Series 1987-A, 4.500%, 10/01/2018
 400,087
1,000,000 Credit Suisse Mortgage Capital Certificate 2006-C4, Series 2006-C4, 5.509%, 09/15/2039
 421,913
39,615 CS First Boston Mortgage Securities Corp. 2002-HE4 AF, 5.51%, 8/25/2032
 27,365
100,000 Merrill Lynch Mortgage Trust 2008-C1 AM, 6.266%, 2/12/2051
 40,719
150,000 Merrill Lynch Mortgage Trust 2008-C1, Series 2008-C1, 5.425%, 02/12/2051
 106,821
715,000 Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.331%, 03/12/2051
 537,212
250,000 Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.485%, 03/12/2051
 149,128
140,000 Morgan Stanley Capital I 2006-IQ12 A4, 5.332%, 12/15/2043
91,215
   TOTAL ASSET-BACKED SECURITIES
(IDENTIFIED COST $4,541,864)
2,955,492
COLLATERALIZED MORTGAGE OBLIGATIONS--0.6%
4,077 Bear Stearns Mortgage Securities, Inc. 1997-6 1A, 6.637%, 3/25/2031
 3,835
410,000 Citigroup/Deutsche Bank Commercial Mortgage 2007-CD4 A3, 5.293%, 12/11/2049
 260,132
12,925 Federal Home Loan Mortgage Corp. REMIC 1311 K, 7.000%, 7/15/2022
 12,907
23,085 Federal Home Loan Mortgage Corp. REMIC 1384 D, 7.000%, 9/15/2022
 23,053
21,374 Federal Home Loan Mortgage Corp. REMIC 1595 D, 7.000%, 10/15/2013
 21,668
70,696 Federal Home Loan Mortgage Corp. REMIC 2497 JH, 6.000%, 9/15/2032
 72,751
55,257 Federal National Mortgage Association REMIC 1993-113 SB, 9.748%, 7/25/2023
 62,353
6,695 Federal National Mortgage Association REMIC 2001-37 GA, 8.000%, 7/25/2016
 7,156
14,963 Federal National Mortgage Association REMIC 2003-35 UC, 3.750%, 5/25/2033
 14,266
6,977 Government National Mortgage Association REMIC 1999-29 PB, 7.250%, 7/16/2028
 7,049
Principal
Amount
   
   
Value
COLLATERIZED MORTGAGE OBLIGATIONS--continued
$ 43,522 Government National Mortgage Association REMIC 2002-17 B, 6.000%, 3/20/2032
 $ 44,640
350,000 JPMorgan Chase Commercial Mortgage Securities 2007-CB19 A2, 5.746%, 2/12/2049
 261,303
675,000 LB-UBS Commercial Mortgage Trust 2008-C1 A2, 6.149%, 4/15/2041
416,124
   TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(IDENTIFIED COST $1,708,236)
1,207,237
CORPORATE BONDS--7.9%
Basic Industry - Chemicals--0.2%
100,000 Albemarle Corp., Sr. Note, 5.100%, 02/01/2015
 82,726
85,000 Du Pont (E.I.) de Nemours & Co., 5.000%, 01/15/2013
 87,979
30,000 Du Pont (E.I.) de Nemours & Co., 6.000%, 07/15/2018
 31,131
70,000 Praxair, Inc., 4.625%, 03/30/2015
 72,679
75,000 Rohm & Haas Co., 6.000%, 09/15/2017
62,916
   TOTAL
337,431
Basic Industry - Metals & Mining--0.2%
50,000 Alcan, Inc., 5.000%, 06/01/2015
 39,399
85,000 Alcoa, Inc., Note, 5.550%, 02/01/2017
 58,993
10,000 ArcelorMittal, 6.125%, 6/01/2018
 7,862
150,000 BHP Finance (USA), Inc., Company Guarantee, 5.250%, 12/15/2015
 140,044
50,000 Newmont Mining Corp., Company Guarantee, 5.875%, 04/01/2035
 34,165
85,000 Rio Tinto Finance USA Ltd., 5.875%, 07/15/2013
 74,885
85,000 Rio Tinto Finance USA Ltd., 6.500%, 07/15/2018
71,634
   TOTAL
426,982
Basic Industry - Paper--0.0%
50,000 Weyerhaeuser Co., Deb., 7.375%, 03/15/2032
34,924
Capital Goods - Aerospace & Defense--0.1%
50,000 2,3 BAE Systems Holdings, Inc., 5.200%, 08/15/2015
 45,816
125,000 Boeing Co., Note, 5.125%, 02/15/2013
 127,760
30,000 Lockheed Martin Corp., Sr. Note, 4.121%, 03/14/2013
30,760
   TOTAL
204,336
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Capital Goods - Building Materials--0.0%
$ 70,000 RPM International, Inc., 6.500%, 02/15/2018
$
60,954
Capital Goods - Diversified Manufacturing--0.4%
60,000 Dover Corp., Note, 5.450%, 03/15/2018
 61,372
30,000 Emerson Electric Co., 4.875%, 10/15/2019
 29,725
100,000 Emerson Electric Co., Unsecd. Note, 5.750%, 11/01/2011
 105,095
160,000 Harsco Corp., 5.750%, 05/15/2018
 162,495
80,000 Hubbell, Inc., 5.950%, 06/01/2018
 76,802
60,000 Ingersoll-Rand Global Holding Co. Ltd., 6.875%, 08/15/2018
 56,794
90,000 Roper Industries, Inc., 6.625%, 08/15/2013
 89,374
140,000 Textron Financial Corp., 5.400%, 04/28/2013
 104,219
40,000 2,3 Textron Financial Corp., Jr. Sub. Note, 6.000%, 02/15/2067
 8,755
130,000 Tyco Electronics Group SA, 5.950%, 01/15/2014
118,633
   TOTAL
813,264
Capital Goods - Packaging--0.0%
20,000 Pactiv Corp., 6.40%, 1/15/2018
16,273
Communications - Media & Cable--0.2%
100,000 Comcast Corp., 7.125%, 06/15/2013
 103,205
200,000 Comcast Corp., Company Guarantee, 6.500%, 01/15/2017
 203,169
75,000 Cox Communications, Inc., Unsecd. Note, 5.450%, 12/15/2014
 69,196
25,000 Time Warner Cable, Inc., Sr. Unsecd. Note, 5.850%, 05/01/2017
23,368
   TOTAL
398,938
Communications - Media Noncable--0.1%
75,000 News America Holdings, Inc., Company Guarantee, 8.000%, 10/17/2016
 75,803
75,000 News America Holdings, Inc., Sr. Deb., 9.250%, 02/01/2013
79,855
   TOTAL
155,658
Communications - Telecom Wireless--0.3%
150,000 AT&T Wireless Services, Inc., 8.750%, 03/01/2031
 176,739
100,000 America Movil S.A.B. de C.V., Note, 5.750%, 01/15/2015
 94,200
100,000 Cingular Wireless LLC, Sr. Note, 6.500%, 12/15/2011
 105,737
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Communications - Telecom Wireless-continued
$ 60,000 Vodafone Group PLC, 5.350%, 02/27/2012
 $ 61,325
100,000 Vodafone Group PLC, Note, 5.625%, 02/27/2017
98,234
   TOTAL
536,235
Communications - Telecom Wirelines--0.2%
50,000 Embarq Corp., 6.738%, 06/01/2013
 47,544
100,000 Telecom Italia Capital, Note, 4.875%, 10/01/2010
 96,587
40,000 Telefonica SA, Company Guarantee, 7.045%, 06/20/2036
 44,658
150,000 Telefonica SA, Sr. Note, 5.855%, 02/04/2013
 156,588
125,000 Verizon Global Funding, Note, 7.250%, 12/01/2010
132,568
   TOTAL
477,945
Consumer Cyclical - Automotive--0.1%
100,000 2,3 American Honda Finance Corp., 4.625%, 04/02/2013
 94,166
75,000 DaimlerChrysler North America Holding Corp., 6.500%, 11/15/2013
 71,643
150,000 DaimlerChrysler North America Holding Corp., Note, 4.875%, 06/15/2010
145,028
   TOTAL
310,837
Consumer Cyclical - Entertainment--0.0%
100,000 Time Warner, Inc., 5.500%, 11/15/2011
97,748
Consumer Cyclical - Lodging--0.0%
100,000 Wyndham Worldwide Corp., Sr. Unsecd. Note, 6.000%, 12/01/2016
49,587
Consumer Cyclical - Retailers--0.3%
70,000 Best Buy Co., Inc., 6.750%, 07/15/2013
 63,601
190,000 CVS Caremark Corp., Sr. Unsecd. Note, 5.750%, 06/01/2017
 194,563
80,000 Costco Wholesale Corp., 5.300%, 03/15/2012
 85,130
85,000 JC Penney Corp., Inc., Sr. Unsecd. Note, 5.750%, 02/15/2018
 60,102
25,000 Kohl's Corp., Unsecd. Note, 7.375%, 10/15/2011
 24,950
100,000 Target Corp., 5.875%, 03/01/2012
 105,217
50,000 Target Corp., Note, 5.875%, 07/15/2016
 50,190
40,000 Wal-Mart Stores, Inc., 6.200%, 04/15/2038
43,483
   TOTAL
627,236
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Consumer Non-Cyclical Food/Beverage--0.3%
$ 100,000 Bottling Group LLC, Note, 5.500%, 4/01/2016
 $ 104,237
90,000 General Mills, Inc., Note, 5.700%, 02/15/2017
 92,412
135,000 Kellogg Co., 4.250%, 03/06/2013
 138,547
40,000 Kellogg Co., Sr. Unsub., 5.125%, 12/03/2012
 42,513
75,000 Kraft Foods, Inc., Note, 5.250%, 10/01/2013
 77,948
10,000 Kraft Foods, Inc., Note, 6.250%, 06/01/2012
 10,740
75,000 PepsiCo, Inc., 4.650%, 02/15/2013
80,683
   TOTAL
547,080
Consumer Non-Cyclical Health Care--0.2%
40,000 Baxter International, Inc., 6.250%, 12/01/2037
 42,564
100,000 Medtronic, Inc., Note, Series B, 4.375%, 09/15/2010
 102,204
190,000 Quest Diagnostics, Inc., Sr. Unsecd. Note, 6.400%, 07/01/2017
174,476
   TOTAL
319,244
Consumer Non-Cyclical Pharmaceuticals--0.2%
60,000 Abbott Laboratories, 5.150%, 11/30/2012
 64,219
125,000 Eli Lilly & Co., Unsecd. Note, 6.570%, 01/01/2016
 137,120
100,000 Genentech, Inc., Note, 4.750%, 07/15/2015
 98,403
100,000 Pharmacia Corp., Sr. Deb., 6.500%, 12/01/2018
112,702
   TOTAL
412,444
Consumer Non-Cyclical Products--0.1%
75,000 Philips Electronics NV, 5.750%, 03/11/2018
 70,708
80,000 Whirlpool Corp., 5.500%, 03/01/2013
69,617
   TOTAL
140,325
Consumer Non-Cyclical Supermarkets--0.0%
40,000 Kroger Co., Bond, 6.900%, 04/15/2038
 40,730
50,000 Sysco Corp., Sr. Unsecd. Note, 4.200%, 02/12/2013
49,907
   TOTAL
90,637
Consumer Non-Cyclical Tobacco--0.0%
90,000 Philip Morris International, Inc., 5.650%, 05/16/2018
90,312
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Energy - Independent--0.2%
$ 105,000 Anadarko Petroleum Corp., Sr. Unsecd. Note, 5.950%, 09/15/2016
 $ 94,775
50,000 Canadian Natural Resources Ltd., 4.900%, 12/01/2014
 43,425
75,000 XTO Energy, Inc., 6.375%, 06/15/2038
 66,826
60,000 XTO Energy, Inc., 6.750%, 08/01/2037
 56,543
65,000 XTO Energy, Inc., Sr. Unsecd. Note, 6.250%, 08/01/2017
63,321
   TOTAL
324,890
Energy - Integrated--0.1%
200,000 Husky Oil Ltd., Deb., 7.550%, 11/15/2016
185,502
Energy - Oil Field Services--0.0%
80,000 Weatherford International Ltd., 6.000%, 03/15/2018
64,500
Energy - Refining--0.1%
100,000 Valero Energy Corp., 6.875%, 04/15/2012
 100,341
115,000 Valero Energy Corp., 7.500%, 04/15/2032
 96,714
35,000 Valero Energy Corp., Note, 4.750%, 04/01/2014
32,487
   TOTAL
229,542
Financial Institution - Banking--0.6%
125,000 2,3 Barclays Bank PLC, 5.926%, 12/31/2049
 48,125
155,000 Citigroup, Inc., Sr. Unsecd. Note, 6.875%, 03/05/2038
 142,264
150,000 Credit Suisse First Boston USA, Inc., 5.125%, 01/15/2014
 144,407
100,000 JPMorgan Chase & Co., Sub. Note, 5.125%, 09/15/2014
 95,113
200,000 PNC Funding Corp., Sub. Note, 5.625%, 02/01/2017
 187,924
100,000 PNC Funding Corp., Sub. Note, 7.500%, 11/01/2009
 100,037
100,000 Popular North America, Inc., 5.650%, 04/15/2009
 99,422
200,000 Wachovia Bank N.A., 4.800%, 11/01/2014
 185,018
30,000 Wachovia Corp., 5.750%, 02/01/2018
 29,632
100,000 Wells Fargo Bank, N.A., Sub. Note, 6.450%, 02/01/2011
 103,601
100,000 Wilmington Trust Corp., Sub. Note, 8.500%, 04/02/2018
 107,841
75,000 Zions Bancorp, Sub. Note, 5.500%, 11/16/2015
53,138
   TOTAL
1,296,522
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Financial Institution - Brokerage--0.7%
$ 130,000 Bear Stearns Cos., Inc., Sr. Unsecd. Note, 7.250%, 02/01/2018
 $ 138,476
250,000 Blackrock, Inc., 6.250%, 09/15/2017
 245,037
120,000 Eaton Vance Corp., 6.500%, 10/02/2017
 104,225
150,000 2,3 FMR Corp., Bond, 7.570%, 06/15/2029
 139,038
25,000 Goldman Sachs Group, Inc., 6.125%, 02/15/2033
 21,264
150,000 Goldman Sachs Group, Inc., Note, 5.250%, 10/15/2013
 143,654
170,000 Goldman Sachs Group, Inc., Sr. Note, 6.150%, 04/01/2018
 155,790
100,000 Invesco Ltd., Note, 4.500%, 12/15/2009
 93,400
75,000 Janus Capital Group, Inc., Sr. Note, 6.250%, 06/15/2012
 57,092
80,000 Janus Capital Group, Inc., Sr. Note, 6.700%, 06/15/2017
 51,214
85,000 Merrill Lynch & Co., Inc., Note, 4.125%, 09/10/2009
 84,743
100,000 Morgan Stanley, Note, 4.000%, 01/15/2010
 99,619
35,000 Morgan Stanley, Sr. Unsecd. Note, 5.950%, 12/28/2017
 30,473
70,000 Morgan Stanley, Sr. Unsecd. Note, 6.000%, 04/28/2015
 63,943
110,000 Morgan Stanley, Sr. Unsecd. Note, 6.625%, 04/01/2018
101,157
   TOTAL
1,529,125
Financial Institution - Finance Noncaptive--0.6%
100,000 American Express Co., 4.750%, 06/17/2009
 100,503
100,000 American Express Co., 4.875%, 07/15/2013
 93,957
150,000 American Express Credit Corp., 5.875%, 05/02/2013
 146,456
100,000 American General Finance Corp., 4.000%, 03/15/2011
 55,125
120,000 Capital One Capital IV, 6.745%, 02/17/2037
 60,305
90,000 Capmark Financial Group, Inc., Company Guarantee, Series WI, 6.300%, 05/10/2017
 29,768
240,000 General Electric Capital Corp., 5.625%, 05/01/2018
 222,179
200,000 General Electric Capital Corp., Note, 4.875%, 03/04/2015
 190,050
100,000 HSBC Finance Capital Trust IX, Note, 5.911%, 11/30/2035
 54,391
200,000 2,3 ILFC E-Capital Trust I, 5.900%, 12/21/2065
 63,012
100,000 International Lease Finance Corp., 4.875%, 09/01/2010
 84,625
100,000 International Lease Finance Corp., 6.625%, 11/15/2013
73,190
   TOTAL
1,173,561
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Financial Institution - Insurance - Health--0.1%
$ 75,000 Aetna US Healthcare, 5.750%, 06/15/2011
 $ 74,565
60,000 CIGNA Corp., 6.350%, 03/15/2018
 53,533
100,000 UnitedHealth Group, Inc., Bond, 6.000%, 02/15/2018
95,345
   TOTAL
223,443
Financial Institution - Insurance - Life--0.2%
200,000 AXA-UAP, Sub. Note, 8.600%, 12/15/2030
 152,449
85,000 2,3 Pacific Life Global Funding, Note, 5.150%, 04/15/2013
 83,058
120,000 Prudential Financial, Inc., 5.150%, 01/15/2013
 112,947
85,000 Prudential Financial, Inc., 6.625%, 12/01/2037
65,074
   TOTAL
413,528
Financial Institution - Insurance - P&C--0.4%
90,000 ACE INA Holdings, Inc., 5.600%, 05/15/2015
 84,510
91,000 ACE INA Holdings, Inc., Sr. Note, 5.700%, 02/15/2017
 84,886
100,000 Allstate Corp., Unsecd. Note, 5.000%, 08/15/2014
 94,639
75,000 CNA Financial Corp., 6.500%, 08/15/2016
 54,330
20,000 Chubb Corp., Sr. Note, 5.750%, 05/15/2018
 19,373
100,000 2,3 Liberty Mutual Group, Inc., Unsecd. Note, 5.750%, 03/15/2014
 83,025
100,000 The Travelers Cos., Inc., Sr. Unsecd. Note, 5.500%, 12/01/2015
 97,428
500,000 2,3 ZFS Finance USA Trust I, Jr. Sub. Note, 6.150%, 12/15/2065
262,500
   TOTAL
780,691
Financial Institution - REITs--0.1%
40,000 AMB Property LP, 6.300%, 06/01/2013
 25,728
20,000 Equity One, Inc., Bond, 6.000%, 09/15/2017
 12,994
75,000 Liberty Property LP, 6.625%, 10/01/2017
 53,960
100,000 Prologis, Sr. Note, 5.500%, 04/01/2012
 62,614
95,000 Simon Property Group LP, 6.125%, 05/30/2018
71,918
   TOTAL
227,214
Technology--0.5%
40,000 BMC Software, Inc., 7.250%, 06/01/2018
 35,710
60,000 Cisco Systems, Inc., Sr. Unsecd. Note, 5.500%, 02/22/2016
 64,362
200,000 Dell Computer Corp., Deb., 7.100%, 04/15/2028
 184,852
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Technology--continued
$ 75,000 Dun & Bradstreet Corp., Sr. Unsecd. Note, 5.500%, 03/15/2011
 $ 75,758
80,000 Fiserv, Inc., Sr. Note, 6.800%, 11/20/2017
 69,332
65,000 Harris Corp., 5.950%, 12/01/2017
 55,287
100,000 Hewlett-Packard Co., Note, 5.400%, 03/01/2017
 104,060
125,000 Hewlett-Packard Co., Note, 6.500%, 07/01/2012
 138,314
100,000 IBM Corp., Deb., 8.375%, 11/01/2019
 123,142
70,000 KLA-Tencor Corp., 6.900%, 05/01/2018
 53,344
150,000 Oracle Corp., 6.500%, 04/15/2038
163,775
   TOTAL
1,067,936
Transportation - Airlines--0.1%
75,000 Southwest Airlines Co., 6.500%, 03/01/2012
 70,222
50,000 Southwest Airlines Co., Deb., 7.375%, 03/01/2027
38,946
   TOTAL
109,168
Transportation - Railroads--0.2%
75,000 Burlington Northern Santa Fe Corp., 4.875%, 01/15/2015
 71,760
100,000 Canadian Pacific RR, 7.125%, 10/15/2031
 78,341
100,000 Norfolk Southern Corp., Note, 6.750%, 02/15/2011
 103,086
100,000 Union Pacific Corp., 4.875%, 01/15/2015
94,626
   TOTAL
347,813
Transportation - Services--0.1%
90,000 2,3 Enterprise Rent-A-Car USA Finance Co., 6.375%, 10/15/2017
 54,432
100,000 FedEx Corp., Note, 5.500%, 08/15/2009
101,256
   TOTAL
155,688
Utility - Electric--0.8%
150,000 Alabama Power Co., 5.700%, 02/15/2033
 137,544
100,000 Cleveland Electric Illuminating Co., Sr. Unsecd. Note, 5.950%, 12/15/2036
 72,954
105,000 Commonwealth Edison Co., 1st Mtg. Bond, 5.800%, 03/15/2018
 100,026
100,000 Consolidated Edison Co., Sr. Unsecd. Note, 5.500%, 09/15/2016
 99,614
60,000 2,3 Electricite De France, 5.500%, 01/26/2014
 62,084
100,000 Exelon Generation Co. LLC, Note, 5.350%, 01/15/2014
 94,497
100,000 FPL Group Capital, Inc., Unsecd. Note, 5.350%, 06/15/2013
 103,555
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Utility - Electric--continued
$ 100,000 FirstEnergy Corp., 6.450%, 11/15/2011
 $ 99,784
48,018 2,3 Great River Energy, 1st Mtg. Note, 5.829%, 07/01/2017
 44,773
40,000 National Rural Utilities Cooperative Finance Corp., 5.450%, 02/01/2018
 38,290
90,000 National Rural Utilities Cooperative Finance Corp., Collateral Trust, 5.500%, 07/01/2013
 92,032
80,000 Northern States Power Co., MN, 1st Mtg. Bond, 5.250%, 03/01/2018
 78,311
50,000 PPL Energy Supply LLC, Sr. Unsecd. Note, 6.000%, 12/15/2036
 32,788
100,000 PSEG Power LLC, Company Guarantee, 7.750%, 04/15/2011
 104,081
75,000 PSI Energy, Inc., Bond, 6.050%, 06/15/2016
 72,372
50,000 Pacific Gas & Electric Co., 6.050%, 03/01/2034
 51,396
100,000 Pacific Gas & Electric Co., Unsecd. Note, 4.200%, 03/01/2011
 99,828
90,000 Union Electric Co., 6.000%, 04/01/2018
 85,463
90,000 Virginia Electric & Power Co., Sr. Unsecd. Note, 5.100%, 11/30/2012
91,310
   TOTAL
1,560,702
Utility - Natural Gas Distributor--0.0%
40,000 Atmos Energy Corp., 5.125%, 01/15/2013
37,877
Utility - Natural Gas Pipelines--0.2%
150,000 Consolidated Natural Gas Co., 5.000%, 12/01/2014
 141,453
75,000 Duke Capital Corp., Sr. Note, 6.250%, 02/15/2013
 75,086
40,000 Enbridge, Inc., Sr. Note, 5.600%, 04/01/2017
 32,672
100,000 Kinder Morgan Energy Partners LP, Sr. Unsecd. Note, 5.800%, 03/15/2035
83,871
   TOTAL
333,082
   TOTAL CORPORATE BONDS
(IDENTIFIED COST $18,173,071)
16,209,174
GOVERNMENT/AGENCY--0.0%
Sovereign--0.0%
75,000 United Mexican States, 6.625%, 03/03/2015
(IDENTIFIED COST $80,766)
78,750
GOVERNMENT AGENCIES--3.3%
750,000 Federal Home Loan Mortgage Corp., 5.500%, 7/18/2016
 848,135
5,500,000 Federal National Mortgage Association, 4.375%, 3/15/2013
5,932,622
   TOTAL GOVERNMENT AGENCIES
(IDENTIFIED COST $6,460,780)
6,780,757
Principal
Amount
or Shares
   
   
Value
MORTGAGE-BACKED SECURITIES--0.0%
$ 15,115 Federal National Mortgage Association Pool 408761, 7.000%, 12/1/2012
 $ 15,598
9,858 Federal National Mortgage Association Pool 512255, 7.500%, 9/1/2014
 10,325
19,433 Federal National Mortgage Association Pool 609554, 7.500%, 10/1/2016
20,457
   TOTAL MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $45,830)
46,380
U.S. TREASURY--1.5%
250,000 United States Treasury Bill, 0.190%, 7/2/2009
 249,692
1,300,000 4 United States Treasury Bond, 4.500%, 5/15/2038
 1,511,555
1,000,000 4 United States Treasury Note, 2.750%, 10/31/2013
 1,044,961
150,000 4 United States Treasury Note, 4.125%, 5/15/2015
167,169
   TOTAL U.S. TREASURY
(IDENTIFIED COST $3,088,237)
2,973,377
EXCHANGE-TRADED FUND--3.6%
193,000 iShares MSCI EAFE Index Fund
(IDENTIFIED COST $7,743,224)
7,469,100
MUTUAL FUNDS--22.2% 5
23,540 Emerging Markets Fixed Income Core Fund
 409,010
3,016,597 Federated Mortgage Core Portfolio
 29,803,974
914,135 High Yield Bond Portfolio
 4,396,991
11,190,400 6 Prime Value Obligations Fund, Institutional Shares, 1.75%
11,190,400
   TOTAL MUTUAL FUNDS
(IDENTIFIED COST $46,524,561)
45,800,375
   TOTAL INVESTMENTS--100.1%
(IDENTIFIED COST $230,844,663) 7
206,282,384
   OTHER ASSETS AND LIABILITIES - NET--(0.1)% 8
(166,563
 )
   TOTAL NET ASSETS--100%
$
 206,115,821

At January 31, 2009, the Fund had the following outstanding futures contracts:

 Description
   
 Number
of Contracts
   
 Notional
Value
   
 Expiration
Date
   
 Unrealized
Depreciation
1
Euro-Bond Long Futures
19
$ 2,325,030
March 2009
$ (10,948)
1
United States Treasury Bond 30-Year Long Futures
29
$ 3,674,391
March 2009
$ (68,517)
1
United States Treasury Note 2-Year
Short Futures
60
$13,057,500
March 2009
$ (27,534)
  
   TOTAL UNREALIZED DEPRECIATION ON FUTURES CONTRACTS
$(106,999)

At January 31, 2009, the Fund had the following open swap contracts:

Credit
Default
Swap
Counterparty
   
 Reference
Entity
   
 Buy/
Sell
   
 Pay/
Re-
ceive
Fixed
Rate
   
 Expiration
Date
   
 Implied
Credit
Spread at
1/31/2009 9
   
 Notional
Amount
   
 Market
Value
   
 Upfront
Premiums
Paid/
(Received)
   
 Unrealized
Appre-
ciation
(Deprec-
iation)
Merrill Lynch,
Pierce, Fenner & Smith
Series 10
Investment
Grade Index
Sell
1.55%
6/20/2013
2.23%
$4,880,000
(115,370
 )
16,197
$(131,567
 )
Merrill Lynch,
Pierce, Fenner & Smith
Series 11
Investment
Grade Index
Sell
1.50%
12/20/2013
1.45%
$5,000,000
(102,186
 )
(112,826
 )
$ 10,640
Banc
of America
Securities LLC
Series 11
High Yield
CDX Index
Sell
5.00%
12/20/2013
6.42%
$1,980,000
(513,111
 )
(408,375
 )
$(104,736
 )
   NET UNREALIZED DEPRECIATION OF CREDIT DEFAULT SWAPS
$(225,663
 )

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

1 Non-income producing security.

2 Denotes a restricted security that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) is subject to a contractual restriction on public sales. At January 31, 2009, these restricted securities amounted to $988,784, which represented 0.5% of total net assets.

3 Denotes a restricted security that may be resold without restriction to "qualified institutional buyers" as defined in Rule 144A under the Securities Act of 1933 and that the Fund has determined to be liquid under criteria established by the Fund's Board of Trustees (the "Trustees"). At January 31, 2009, these liquid restricted securities amounted to $988,784, which represented 0.5% 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 $230,846,177.

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

9 Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular reference entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as "Defaulted" indicates a credit event has occurred for the reference entity or obligation.

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments in
Securities
   
 Other Financial
Instruments*
Level 1--Quoted Prices and Investments in Mutual Funds**
$176,031,217
$(106,999
 )
Level 2--Other Significant Observable Inputs
30,251,167
(225,663
 )
Level 3--Significant Unobservable Inputs
--
--
   TOTAL
$206,282,384
$(332,662
 )

* Other financial instruments include futures contracts and swaps contracts.

** Emerging Markets Fixed Income Core Fund (EMCORE) is an affiliated limited partnership offered only to registered investment companies and other accredited investors (see Note 5 to the financial statements). EMCORE invests primarily in emerging markets fixed-income securities.

The following acronyms are used throughout this portfolio:

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

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $45,800,375 of investments in affiliated issuers (Note 5) (identified cost $230,844,663)
 $ 206,282,384
Cash
 7,775
Income receivable
 516,519
Receivable for investments sold
 6,064,809
Receivable for shares sold
 491,206
Receivable for periodic payments from swap contracts
 28,431
Other receivables
4,750
   TOTAL ASSETS
213,395,874
Liabilities:
Payable for investments purchased
 $ 6,103,655
Payable for shares redeemed
 199,232
Payable for daily variation margin
 21,609
Swaps, at value (premium received $505,004)
 730,667
Payable for distribution services fee (Note 5)
 35,831
Payable for shareholder services fee (Note 5)
 74,146
Accrued expenses
114,913
   TOTAL LIABILITIES
7,280,053
Net assets for 23,031,333 shares outstanding
$
 206,115,821
Net Assets Consist of:
Paid-in capital
 $ 314,047,729
Net unrealized depreciation of investments, futures contracts, swap contracts and translation of assets and liabilities in foreign currency
 (24,894,941 )
Accumulated net realized loss on investments, futures contracts, swap contracts and foreign currency transactions
 (82,952,589 )
Distributions in excess of net investment income
(84,378
 )
   TOTAL NET ASSETS
$
 206,115,821

Statement of Assets and Liabilities-continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($47,650,368 ÷ 5,298,653 shares outstanding), no par value, unlimited shares authorized
$8.99
Offering price per share
$8.99
Redemption proceeds per share
$8.99
Class A Shares:
Net asset value per share ($104,151,824 ÷ 11,613,632 shares outstanding), no par value, unlimited shares authorized
$8.97
Offering price per share (100/94.50 of $8.97)
$9.49
Redemption proceeds per share
$8.97
Class C Shares:
Net asset value per share ($53,738,412 ÷ 6,054,882 shares outstanding), no par value, unlimited shares authorized
$8.88
Offering price per share
$8.88
Redemption proceeds per share (99.00/100 of $8.88)
$8.79
Class K Shares:
Net asset value per share ($575,217 ÷ 64,166 shares outstanding), no par value, unlimited shares authorized
$8.96
Offering price per share
$8.96
Redemption proceeds per share
$8.96

See Notes which are an integral part of the financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $1,615,223 received from affiliated issuers (Note 5) and net of foreign taxes withheld of $758)
 $ 3,214,226
Interest
1,043,223
Investment income allocated from affiliated partnership (Note 5)
37,964
   TOTAL INCOME
4,295,413
Expenses:
Investment adviser fee (Note 5)
 $ 939,341
Administrative personnel and services fee (Note 5)
 136,109
Custodian fees
 22,752
Transfer and dividend disbursing agent fees and expenses--Institutional Shares
 30,583
Transfer and dividend disbursing agent fees and expenses--Class A Shares
 98,899
Transfer and dividend disbursing agent fees and expenses--Class C Shares
 40,698
Transfer and dividend disbursing agent fees and expenses--Class K Shares
 1,333
Directors'/Trustees' fees
 2,360
Auditing fees
 11,058
Legal fees
 3,988
Portfolio accounting fees
 67,732
Distribution services fee--Class C Shares (Note 5)
 247,622
Distribution services fee--Class K Shares (Note 5)
 1,903
Shareholder services fee--Class A Shares (Note 5)
 136,538
Shareholder services fee--Class C Shares (Note 5)
 43,690
Account administration fee--Class A Shares
12,108
Account administration fee--Class C Shares
 38,636
Share registration costs
 28,071
Printing and postage
 23,620
Insurance premiums
 2,609
Interest expense
 302
Miscellaneous
5,490
   EXPENSES BEFORE ALLOCATION
1,895,442
Expenses allocated from affiliated partnership (Note 5)
180
   TOTAL EXPENSES
1,895,622

Statement of Operations-continued

Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee
 $ (40,178 )
Waiver of administrative personnel and services fee
 (26,473 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class A Shares
 (22,058 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class C Shares
(3,953
 )
   TOTAL WAIVERS AND REIMBURSEMENTS
$
(92,662
 )
Net expenses
$
1,802,960
Net investment income
2,492,453
Realized and Unrealized Gain (Loss) on Investments, Futures Contracts, Swap Contracts and Foreign Currency Transactions:
Net realized loss on investments and foreign currency transactions (including realized loss of $690,728 on sales of investments in affiliated issuers)
 (64,780,561 )
Net realized gain on futures contracts
 329,090
Net realized gain on swap contracts
 36,848
Net realized loss and foreign currency transactions allocated from affiliated partnership
 (122,350 )
Net change in unrealized depreciation of investments and translation of assets and liabilities in foreign currency
 (16,979,064 )
Net change in unrealized appreciation of futures contracts
 (162,872 )
Net change in unrealized depreciation of swap contracts
(225,663
 )
Net realized and unrealized loss on investments, futures contracts, swap contracts and foreign currency transactions
(81,904,572
 )
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
$
 (79,412,119
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   

Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income
 $ 2,492,453 $ 5,416,027
Net realized loss on investments including allocations from partnership, futures contracts, swap contracts and foreign currency transactions
 (64,536,973 ) (17,550,175 )
Net change in unrealized appreciation/depreciation of investments, futures contracts, swap contracts and translation of assets and liabilities in foreign currency
(17,367,599
 )
(16,954,796
 )
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(79,412,119
 )
(29,088,944
 )
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares
 (1,597,008 ) (1,062,997 )
Class A Shares
 (3,103,691 ) (1,792,159 )
Class C Shares
 (1,038,914 ) (1,022,750 )
Class K Shares
 (16,435 ) (302 )
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions
Institutional Shares
 -- (1,999,436 )
Class A Shares
 -- (3,699,741 )
Class C Shares
 -- (2,473,216 )
Class K Shares
--
(818
 )
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
(5,756,048
 )
(12,051,419
 )
Share Transactions:
Proceeds from sale of shares
 20,685,224 79,093,725
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Conservative Allocation Fund
 -- 52,857,254
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Growth Allocation Fund
 -- 48,170,456
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Moderate Allocation Fund
 -- 93,208,403
Net asset value of shares issued to shareholders in payment of distributions declared
 5,308,890 11,084,827
Cost of shares redeemed
(42,856,880
 )
(83,721,442
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
(16,862,766
 )
200,693,223
Change in net assets
(102,030,933
 )
159,552,860
Net Assets:
Beginning of period
308,146,754
148,593,894
End of period (including undistributed (distributions in excess of) net investment income of $(84,378) and $3,179,217, respectively)
$
 206,115,821
$
 308,146,754

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

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

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

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

2. SIGNIFICANT ACCOUNTING POLICIES

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

INVESTMENT VALUATION

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

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

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

Premium and Discount Amortization/Paydown Gains and Losses

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2005 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

When-Issued and Delayed Delivery Transactions

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

Swap Contracts

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

The Fund uses credit default swaps to manage exposure to a given issuer or sector by either selling protection to increase exposure or buying protection to reduce exposure. The "buyer" in a credit default swap is obligated to pay the "seller" a periodic stream of payments over the term of the contract provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or the "par value,'' of the reference obligation in exchange for the reference obligation. In connection with these agreements, securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default or bankruptcy/insolvency. Recovery values are assumed by market makers considering either industry standard recovery rates or entity specific factors and considerations until a credit event occurs. If a credit event has occurred, the recovery value is typically determined by a facilitated auction whereby a minimum number of allowable broker bids, together with a specified valuation method, are used to calculate the settlement value. The maximum amount of the payment that may occur, as a result of a credit event payable by the protection seller, is equal to the notional amount of the underlying index or security. The Fund's maximum exposure to loss of the notional value of credit default swaps outstanding at January 31, 2009 is $11,860,000. Risks may arise upon entering into swap agreements from the potential inability of the counterparties to meet the terms of their contract from unanticipated changes in the value of the swap agreement.

Upfront payments received or paid by the Fund will be reflected as an asset or liability on the Statement of Assets and Liabilities. Changes in the value of swap contracts are included in "Swaps, at value," on the Statement of Assets and Liabilities, and periodic payments are reported as net realized gain/loss on swap contracts in the Statement of Operations. For the six months ended January 31, 2009, the Fund had a net realized gain on swap contracts of $36,848.

Swap contracts outstanding at period end are listed after the Fund's portfolio of investments.

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 six months ended January 31, 2009, the Fund had a net realized gain on futures contracts of $329,090.

Futures 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 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.

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 108,344 $ 1,103,454 453,471 $ 6,231,682
Shares issued to shareholders in payment of distributions declared

165,994


1,563,667

213,271


2,951,673
Shares redeemed
(700,215
 )
(6,850,172
 )
(861,304
 )
(11,695,320
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS

(425,877
 )

$
(4,183,051
 )
(194,562
 )

$
(2,511,965
 )
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 1,554,512 $ 16,150,280 4,581,561 $ 60,907,542
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Conservative Allocation Fund
 -- -- 2,233,258 32,583,802
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Growth Allocation Fund
 -- -- 1,400,840 20,438,742
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Moderate Allocation Fund
 -- -- 3,731,944 54,450,162
Shares issued to shareholders in payment of distributions declared

293,825
2,761,954

349,074

4,817,220
Shares redeemed
(2,504,405
 )
(25,541,555
 )
(3,748,791
 )
(50,990,523
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS
(656,068
 )
$
 (6,629,321
 )
8,547,886
$
 122,206,945
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 290,207 $ 3,026,915 840,926 $ 11,168,941
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Conservative Allocation Fund
 -- -- 1,406,868 20,273,452
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Growth Allocation Fund
 -- -- 1,924,519 27,731,714
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Moderate Allocation Fund
 -- -- 2,689,616 38,758,241
Shares issued to shareholders in payment of distributions declared
103,849

966,834

243,200

3,314,815
Shares redeemed
(1,009,567
 )
(10,180,104
 )
(1,594,694
 )
(20,976,254
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
(615,511
 )
$
 (6,186,355
 )
5,510,435
$
 80,270,909
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class K Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 33,598 $ 404,575 59,681 $ 785,560
Shares issued to shareholders in payment of distributions declared

1,748

16,435

81


1,119
Shares redeemed
(27,732
 )
(285,049
 )
(4,543
 )
(59,345
 )
   NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS
7,614
$
 135,961
55,219
$
 727,334
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS


(1,689,842
 )

$
 (16,862,766
 )

13,918,978


$
200,693,223

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $230,846,177. The net unrealized depreciation of investments for federal tax purposes excluding any unrealized appreciation/depreciation resulting from futures contracts and swap contracts was $24,563,793. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $4,727,267 and net unrealized depreciation from investments for those securities having an excess of cost over value of $29,291,060.

At July 31, 2008, the Fund had a capital loss carryforward of $49,998 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire in 2016.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for certain Classes of the Fund based on average daily net assets:

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

In addition, subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser voluntarily waived $33,680 of its fee. In addition, an affiliate of the Adviser reimbursed $26,011 of transfer and dividend disbursing agent fees and expenses.

Administrative Fee

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

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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 0.088% of average daily net assets of the Fund. FAS waived $26,473 of its fee.

Distribution Services Fee

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

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

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC retained $20,620 of fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $11,718 in sales charges from the sale of Class A Shares. FSC also retained $2,711 of CDSC relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC did not receive any fees paid by the Fund.

Expense Limitation

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

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $6,498. Transactions with affiliated companies during the six months ended January 31, 2009 were as follows:

Affiliates
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income/
Allocated
Investment
Income
Emerging Markets Fixed Income Core Fund
37,605
64,361
78,426
23,540
$ 409,010
$ 37,964
Federated Mortgage Core Portfolio
4,634,906
378,853
1,997,162
3,016,597
$29,803,974
$1,186,732
High Yield Bond Portfolio
544,156
444,520
74,541
914,135
$ 4,396,991
$ 235,405
Prime Value Obligations Fund,
Institutional Shares
19,839,871
49,984,948
58,634,419
11,190,400
$11,190,400
$ 193,086
   TOTAL OF AFFILIATED TRANSACTIONS
25,056,538
50,872,682
60,784,548
15,144,672
$45,800,375
$1,653,187

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund may invest in portfolios of Federated Core Trust (Core Trust), which is managed by Federated Investment Management Company, an affiliate to 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 or upon request from the Fund.

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 EMCORE, a series of Core Trust II, is to achieve total return on its assets. Federated receives no advisory or administrative fees on behalf of the Core Trust II. The Fund records daily its proportionate share of income, expenses, realized and unrealized gains and losses from EMCORE. The performance of the Fund is directly affected by the performance of the portfolio. A copy of EMCORE's financial statements is available on the EDGAR Database on the SEC's website or upon request from the Fund.

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 244,017,690
Sales
$
 241,267,984

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

10. RECENT ACCOUNTING PRONOUNCEMENTS

In March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. Management has concluded that the adoption of FAS 161 is not expected to have a material impact on the Fund's net assets or results of operations.

The Fund adopted FASB Staff Position No. 133-1 and FIN 45-4, "Disclosure about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No.133 and FASB Interpretation No. 45" (FAS 133). The amendments require additional disclosure relating to credit derivatives. All changes to accounting policies have been made in accordance with the amendments and incorporated for the current period.

Evaluation and Approval of Advisory Contract - May 2008

FEDERATED MDT BALANCED FUND (THE "FUND")

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R841
Cusip 31421R833
Cusip 31421R692

36354 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Balanced Fund

A Portfolio of Federated MDT Series



SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
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)

    Six Months
Ended
(unaudited)		    Year Ended July 31,
   
 1/31/2009
   
 2008
   
 2007
1
   
 2006
2
   
 2005
   
 2004
Net Asset Value, Beginning of Period
$12.57 $13.79 $13.23 $13.60 $12.82 $11.36
Income From Investment Operations:
Net investment income
0.16 0.30 3 0.24 3 0.24 3 0.20 0.13
Net realized and unrealized gain (loss) on investments, futures contracts, swap contracts and foreign currency transactions
(3.43
 )
(0.98
 )
1.14
0.50
1.87
1.61
   TOTAL FROM INVESTMENT OPERATIONS
(3.27
 )
(0.68
 )
1.38
0.74
2.07
1.74
Less Distributions:
Distributions from net investment income
 (0.31 ) (0.19 ) (0.17 ) (0.18 ) (0.15 ) (0.15 )
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions
--
(0.35
 )
(0.65
 )
(0.93
 )
(1.14
 )
(0.13
 )
   TOTAL DISTRIBUTIONS
(0.31
 )
(0.54
 )
(0.82
 )
(1.11
 )
(1.29
 )
(0.28
 )
Net Asset Value, End of Period
$ 8.99
$12.57
$13.79
$13.23
$13.60
$12.82
Total Return 4
(26.15
 )%
(5.33
 )%
10.61
 %
5.62
 %
16.81
 %
15.37
 %
Ratios to Average Net Assets:
Net expenses
1.04
 % 5
1.06
 %
1.14
 %
1.25
 %
1.19
 %
1.17
 %
Net investment income
2.39
 % 5
2.22
 %
1.74
 %
1.82
 %
1.54
 %
1.03
 %
Expense waiver/reimbursement 6
0.05
 % 5
0.03
 %
0.17
 %
0.14
 %
--
--
Supplemental Data:
Net assets, end of period (000 omitted)
$47,650
$71,949
$81,634
$73,747
$69,320
$53,815
Portfolio turnover
105
 %
158
 %
174
 %
139
 %
127
 %
78
 %

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

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

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

4 Based on net asset value, which does not reflect 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.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual
$1,000
$ 738.50
$4.56
Hypothetical (assuming a 5% return before expenses)
$1,000
$1,019.96
$5.30

1 Expenses are equal to the Fund's annualized net expense ratio of 1.04%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half-year period).

Portfolio of Investments Summary Tables (unaudited)

At January 31, 2009, the Fund's portfolio composition 1 was as follows:

Security Type
   
 Percentage of
Total Net Assets
Domestic Equity Securities
58.2
 %
Mortgage-Backed Securities
11.8
 %
Corporate Debt Securities
8.8
 %
U.S. Treasury and Agency Securities 2
4.8
 %
Collateralized Mortgage Obligations
2.8
 %
Adjustable Rate Mortgage Securities
1.6
 %
Asset-Backed Securities
1.4
 %
Foreign Debt Securities
1.4
 %
International Equity Securities
1.4
 %
Other Securities 3
3.6
 %
Cash Equivalents 4
5.9
 %
Derivatives Contracts 5
0.2
 %
Other Assets and Liabilities--Net 6
(1.9
 )%
   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 mutual 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 $2,723,685 held in U.S. Treasuries pledged as collateral to ensure the Fund is able to satisfy the obligations of its outstanding futures contracts.

3 Other Securities include exchange-traded funds.

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

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

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

At January 31, 2009, the Fund's industry composition 7 for its equity securities was as follows:

Industry
   
 Percentage of
Equity Securities
Electric Utility
6.4%
Biotechnology
5.8%
Property Liability Insurance
4.7%
Software Packaged/Custom
4.7%
Agricultural Chemicals
4.6%
Railroad
4.6%
Ethical Drugs
4.5%
Undesignated Consumer Cyclicals
4.4%
Multi-Line Insurance
3.9%
Miscellaneous Food Products
3.8%
Real Estate Investment Trusts
3.7%
Computers - Midrange
3.4%
Services to Medical Professionals
3.3%
Home Building
2.7%
AT&T Divestiture
2.4%
Department Stores
2.1%
Integrated International Oil
1.9%
Medical Technology
1.9%
Copper
1.8%
Defense Aerospace
1.8%
Diversified Leisure
1.7%
Life Insurance
1.6%
Money Center Bank
1.4%
Regional Bank
1.3%
Computers - High End
1.1%
Airline - Regional
1.0%
Other 8
19.5%
   TOTAL
100.0%

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

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

Portfolio of Investments

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--59.6%
Advertising--0.1%
4,300 Omnicom Group, Inc.
$
 111,327
Agricultural Chemicals--2.8%
3,200 FMC Corp.
 142,784
69,800 Monsanto Co.
 5,308,988
6,300 Mosaic, Co./The
224,721
   TOTAL
5,676,493
Agricultural Machinery--0.5%
400 Bucyrus International
 6,200
31,300 Deere & Co.
1,087,362
   TOTAL
1,093,562
Airline - Regional--0.6%
23,300 1 Alaska Air Group, Inc.
 614,188
5,400 SkyWest, Inc.
 84,510
81,900 Southwest Airlines Co.
575,757
   TOTAL
1,274,455
Aluminum--0.0%
7,300 Alcoa, Inc.
56,867
AT&T Divestiture--1.4%
120,300 AT&T, Inc.
2,961,786
Auto Original Equipment Manufacturer--0.2%
8,600 1 Fuel Systems Solutions, Inc.
 224,804
13,900 Johnson Controls, Inc.
 173,889
5,700 Superior Industries International, Inc.
58,539
   TOTAL
457,232
Auto Rentals--0.0%
3,100 1 AMERCO
95,325
Shares
   
   
Value
COMMON STOCKS--continued
Biotechnology--3.4%
4,800 1 Affymetrix, Inc.
 $ 15,264
11,500 1 Cephalon, Inc.
 887,570
1,200 1 Charles River Laboratories International, Inc.
 29,292
117,500 1 Gilead Sciences, Inc.
 5,965,475
3,500 1 Hospira, Inc.
 87,150
1,300 1 Martek Biosciences Corp.
 34,385
200 1 Myriad Genetics, Inc.
 14,914
9,200 1 Questcor Pharmaceuticals, Inc.
59,340
   TOTAL
7,093,390
Book Publishing--0.0%
1,300 Scholastic Corp.
14,170
Broadcasting--0.3%
17,400 1 American Tower Systems Corp.
 527,916
3,000 1 DISH Network Corp., Class A
 38,520
11,800 News Corp., Inc. - Class A
75,402
   TOTAL
641,838
Building Materials--0.1%
2,400 Ameron, Inc.
 119,640
13,400 1 Owens Corning, Inc.
178,756
   TOTAL
298,396
Cable TV--0.4%
20,800 1 Discovery Communications, Inc.
 301,600
28,300 Time Warner, Inc.
 264,039
17,900 1 Viacom, Inc., Class B - New
264,025
   TOTAL
829,664
Cement--0.1%
6,300 Texas Industries, Inc.
143,073
Clothing Stores--0.2%
7,200 1 Children's Place Retail Stores, Inc.
 135,432
1,800 1 Fossil, Inc.
 20,772
8,000 1 Jos A. Bank Clothiers, Inc.
219,680
   TOTAL
375,884
Shares
   
   
Value
COMMON STOCKS--continued
Commodity Chemicals--0.1%
1,700 Compass Minerals International, Inc.
 $ 102,289
2,200 Eastman Chemical Co.
 57,090
10,500 Westlake Chemical Corp.
143,535
   TOTAL
302,914
Computer Peripherals--0.3%
7,000 Imation Corp.
 68,180
17,600 1 Sandisk Corp.
 201,168
15,900 1 Synaptics, Inc.
374,763
   TOTAL
644,111
Computer Services--0.0%
2,700 1 NCR Corp.
33,885
Computer Stores--0.1%
7,000 1 Tech Data Corp.
126,770
Computers - High End--0.7%
14,800 International Business Machines Corp.
1,356,420
Computers - Low End--0.2%
33,000 1 Dell, Inc.
313,500
Computers - Midrange--2.0%
118,800 Hewlett-Packard Co.
4,128,300
Construction Machinery--0.4%
25,300 Caterpillar, Inc.
 780,505
3,600 Joy Global, Inc.
74,988
   TOTAL
855,493
Contracting--0.1%
2,300 Harsco Corp.
 54,556
1,300 1 IHS, Inc. - Class A
56,940
   TOTAL
111,496
Copper--1.1%
87,400 Freeport-McMoRan Copper & Gold, Inc.
2,197,236
Shares
   
   
Value
COMMON STOCKS--continued
Crude Oil & Gas Production--0.2%
3,600 1 Swift Energy Co.
 $ 55,152
14,500 W&T Offshore, Inc.
 182,265
4,600 1 Whiting Petroleum Corp.
133,400
   TOTAL
370,817
Defense Aerospace--1.1%
49,900 Boeing Co.
 2,111,269
2,700 General Dynamics Corp.
153,171
   TOTAL
2,264,440
Defense Electronics--0.3%
6,000 1 FLIR Systems, Inc.
 149,820
8,100 Northrop Grumman Corp.
389,772
   TOTAL
539,592
Department Stores--1.3%
13,800 Dillards, Inc., Class A
 60,030
41,200 Penney (J.C.) Co., Inc.
 690,100
18,900 1 Saks, Inc.
 47,628
44,700 1 Sears Holdings Corp.
1,829,124
   TOTAL
2,626,882
Discount Department Stores--0.1%
7,900 1 99 Cents Only Stores
 66,202
12,500 Foot Locker, Inc.
92,000
   TOTAL
158,202
Diversified Leisure--1.0%
104,200 Carnival Corp.
 1,895,398
13,000 1 Gaylord Entertainment Co.
 137,800
6,500 1 Pinnacle Entertainment, Inc.
44,070
   TOTAL
2,077,268
Electric & Electronic Original Equipment Manufacturer--0.1%
8,300 Molex, Inc.
110,971
Shares
   
   
Value
COMMON STOCKS--continued
Electronic Testing/Measuring Equipment--0.0%
2,700 1 Multi-Fineline Electronix, Inc.
$
50,031
Electric Utility--3.8%
25,100 American Electric Power Co., Inc.
 786,885
42,700 CMS Energy Corp.
 501,725
111,600 Edison International
 3,634,812
8,500 Idacorp, Inc.
 247,435
9,100 OGE Energy Corp.
 224,588
49,700 Sempra Energy
 2,178,848
13,200 TECO Energy, Inc.
 158,532
6,400 UniSource Energy Corp.
180,736
   TOTAL
7,913,561
Electronics Stores--0.0%
3,700 Radioshack Corp.
42,402
Ethical Drugs--2.6%
30,400 1 Forest Laboratories, Inc., Class A
 761,216
35,400 Lilly (Eli) & Co.
 1,303,428
100,400 Merck & Co., Inc.
 2,866,420
1,700 1 Noven Pharmaceuticals, Inc.
 16,881
35,400 Pfizer, Inc.
516,132
   TOTAL
5,464,077
Food Wholesaling--0.0%
4,500 SUPERVALU, Inc.
78,930
Furniture--0.0%
5,700 Furniture Brands International, Inc.
11,685
Gas Distributor--0.5%
27,400 Energen Corp.
 800,354
1,300 New Jersey Resources Corp.
 52,117
8,000 1 Southern Union Co.
103,120
   TOTAL
955,591
Shares
   
   
Value
COMMON STOCKS--continued
Generic Drugs--0.0%
1,400 1 Warner Chilcott Ltd Class A
$
19,250
Home Building--1.6%
25,600 Centex Corp.
 217,856
73,100 D.R. Horton, Inc.
 435,676
17,100 KB HOME
 182,457
36,200 Lennar Corp., Class A
 278,378
1,200 1 M/I Schottenstein Homes, Inc.
 10,608
82,700 Pulte Homes, Inc.
 839,405
15,000 Ryland Group, Inc.
 234,000
62,300 1 Toll Brothers, Inc.
1,060,346
   TOTAL
3,258,726
Home Health Care--0.4%
9,000 1 Amedisys, Inc.
 371,070
7,500 1 Amerigroup Corp.
 209,775
5,800 1 LHC Group, Inc.
154,338
   TOTAL
735,183
Home Products--0.1%
1,200 1 Energizer Holdings, Inc.
 57,156
2,100 Tupperware Brands Corp.
43,176
   TOTAL
100,332
Hospitals--0.1%
3,300 Universal Health Services, Inc., Class B
124,905
Household Appliances--0.1%
3,700 Whirlpool Corp.
123,691
Industrial Machinery--0.1%
3,600 Flowserve Corp.
191,916
Integrated International Oil--1.1%
32,300 Chevron Corp.
2,277,796
Shares
   
   
Value
COMMON STOCKS--continued
Internet Services--0.3%
9,500 1 NetFlix, Inc.
 $ 343,330
26,900 1 eBay, Inc.
323,338
   TOTAL
666,668
Leasing--0.0%
800 GATX Corp.
19,280
Life Insurance--1.0%
7,100 Aflac, Inc.
 164,791
8,700 American Equity Investment Life Holding Co.
 58,203
9,000 Delphi Financial Group, Inc., Class A
 136,530
28,200 Old Republic International Corp.
 291,024
1,200 Protective Life Corp.
 9,936
43,400 Torchmark Corp.
1,302,000
   TOTAL
1,962,484
Long-Term Care Centers--0.0%
4,900 1 Kindred Healthcare, Inc.
66,493
Lumber Products--0.1%
12,900 1 Louisiana-Pacific Corp.
 26,832
3,600 Weyerhaeuser Co.
98,424
   TOTAL
125,256
Maritime--0.1%
3,200 Overseas Shipholding Group, Inc.
114,240
Medical Supplies--0.2%
600 1 Haemonetics Corp.
 35,490
1,500 1 Immucor, Inc.
 41,565
2,000 1 Kinetic Concepts, Inc.
 48,200
3,700 1 Merit Medical Systems, Inc.
 56,943
6,700 1 PetMed Express, Inc.
 96,748
4,800 1 Quidel Corp.
 59,040
5,600 Steris Corp.
148,960
   TOTAL
486,946
Shares
   
   
Value
COMMON STOCKS--continued
Medical Technology--1.1%
4,800 1 Cantel Medical Corp.
 $ 71,952
5,600 1 Cyberonics, Inc.
 86,184
700 1 Edwards Lifesciences Corp.
 40,243
2,500 1 Gen-Probe, Inc.
 112,550
3,700 1 Greatbatch Technologies, Inc.
 86,210
4,400 1 ResMed, Inc.
 175,560
11,000 1 Thoratec Laboratories Corp.
 318,670
28,500 1 Varian Medical Systems, Inc.
 1,058,205
9,900 1 Zimmer Holdings, Inc.
360,360
   TOTAL
2,309,934
Metal Containers--0.0%
200 1 Mobile Mini, Inc.
2,528
Metal Fabrication--0.1%
1,700 1 RTI International Metals
 22,627
2,000 Timken Co.
 29,780
4,700 Worthington Industries, Inc.
47,282
   TOTAL
99,689
Miscellaneous Components--0.2%
12,800 AVX Corp.
 116,736
7,300 1 Cree, Inc.
 145,489
16,600 1 International Rectifier Corp.
226,092
   TOTAL
488,317
Miscellaneous Food Products--2.2%
154,600 Archer-Daniels-Midland Co.
 4,232,948
1,000 Corn Products International, Inc.
 23,150
15,100 1 Fresh Del Monte Produce, Inc.
363,910
   TOTAL
4,620,008
Miscellaneous Machinery--0.0%
200 Parker-Hannifin Corp.
7,642
Shares
   
   
Value
COMMON STOCKS--continued
Miscellaneous Metals--0.0%
13,400 1 USEC, Inc.
$
68,206
Money Center Bank--0.8%
47,400 The Bank of New York Mellon Corp.
 1,220,076
33,000 U.S. Bancorp
489,720
   TOTAL
1,709,796
Mortgage and Title--0.0%
10,400 PMI Group, Inc.
 14,456
8,300 Radian Group, Inc.
 26,726
2,900 Stewart Information Services Corp.
43,036
   TOTAL
84,218
Motion Pictures--0.1%
12,000 Walt Disney Co.
248,160
Multi-Industry Capital Goods--0.4%
4,500 1 Ceradyne, Inc.
 102,690
16,400 General Electric Co.
 198,932
34,000 KBR, Inc.
 481,440
7,800 Textron, Inc.
70,434
   TOTAL
853,496
Multi-Line Insurance--2.4%
97,850 Allstate Corp.
 2,120,409
900 1 Amerisafe, Inc.
 16,857
2,400 FBL Financial Group, Inc., Class A
 24,744
11,000 Hanover Insurance Group, Inc.
 444,620
500 Infinity Property & Casualty
 19,200
156,200 UNUMProvident Corp.
2,211,792
   TOTAL
4,837,622
Office Equipment--0.1%
6,600 Pitney Bowes, Inc.
146,916
Shares
   
   
Value
COMMON STOCKS--continued
Offshore Driller--0.3%
1,400 1 Oceaneering International, Inc.
 $ 48,244
10,300 1 Transocean Ltd.
562,586
   TOTAL
610,830
Oil Refiner--0.4%
10,400 Sunoco, Inc.
 481,728
16,800 Western Refining, Inc.
 195,888
6,300 World Fuel Services Corp.
212,751
   TOTAL
890,367
Oil Service, Explore & Drill--0.1%
11,000 Patterson-UTI Energy, Inc.
105,160
Oil Well Supply--0.1%
3,600 Baker Hughes, Inc.
 119,952
3,900 1 Dril-Quip, Inc.
95,550
   TOTAL
215,502
Other Communications Equipment--0.0%
21,700 1 Tellabs, Inc.
89,621
Packaged Foods--0.1%
4,300 Hershey Foods Corp.
160,304
Paper Products--0.3%
40,200 MeadWestvaco Corp.
 467,928
1,400 Rock-Tenn Co.
43,638
   TOTAL
511,566
Personal Loans--0.3%
29,300 Capital One Financial Corp.
 464,112
11,500 1 Ezcorp, Inc., Class A
156,055
   TOTAL
620,167
Personnel Agency--0.0%
2,900 Kelly Services, Inc., Class A
26,274
Shares
   
   
Value
COMMON STOCKS--continued
Pollution Control--0.1%
4,400 1 Stericycle, Inc.
$
215,248
Printing--0.0%
3,300 Donnelley (R.R.) & Sons Co.
32,208
Property Liability Insurance--2.8%
12,350 American Financial Group, Inc. Ohio
 209,703
4,800 Berkley, W. R. Corp.
 127,104
25,900 Chubb Corp.
 1,102,822
3,400 HCC Insurance Holdings, Inc.
 79,594
109,200 The Travelers Cos, Inc.
4,219,488
   TOTAL
5,738,711
Railroad--2.8%
52,300 CSX Corp.
 1,514,608
13,000 Norfolk Southern Corp.
 498,680
83,900 Union Pacific Corp.
3,673,981
   TOTAL
5,687,269
Real Estate Investment Trusts--2.2%
99,000 Annaly Capital Management, Inc.
 1,498,860
7,950 Boston Properties, Inc.
 344,235
5,700 Equity Residential Properties Trust
 136,401
24,200 HCP Inc.
 564,828
19,000 Nationwide Health Properties, Inc.
 485,070
17,000 Plum Creek Timber Co., Inc.
 523,090
8,000 Public Storage
 494,960
8,400 Simon Property Group, Inc.
 361,032
2,750 Vornado Realty Trust
139,728
   TOTAL
4,548,204
Recreational Goods--0.1%
4,200 Callaway Golf Co.
 31,962
11,800 1 WMS Industries, Inc.
262,196
   TOTAL
294,158
Shares
   
   
Value
COMMON STOCKS--continued
Recreational Vehicles--0.0%
7,900 Brunswick Corp.
$
21,962
Regional Bank--0.8%
25,400 BB&T Corp.
 502,666
3,300 Central Pacific Financial Corp.
 22,209
10,500 East West Bancorp, Inc.
 99,645
33,900 Marshall & Ilsley Corp.
 193,569
4,300 PNC Financial Services Group
 139,836
21,000 Popular, Inc.
 57,540
5,600 South Financial Group, Inc.
 10,528
41,100 SunTrust Banks, Inc.
 503,886
3,700 Whitney Holding Corp.
 48,063
4,000 Wintrust Financial Corp.
53,480
   TOTAL
1,631,422
Restaurant--0.2%
900 1 CEC Entertainment, Inc.
 21,006
4,000 1 Green Mountain Coffee, Inc.
 153,040
4,800 1 Panera Bread Co.
225,504
   TOTAL
399,550
Roofing & Wallboard--0.1%
1,200 1 Beacon Roofing Supply, Inc.
 15,276
21,200 1 U.S.G. Corp.
138,012
   TOTAL
153,288
Rubber--0.0%
7,300 Cooper Tire & Rubber Co.
34,091
Savings & Loan--0.1%
11,700 Astoria Financial Corp.
 106,236
14,300 Hudson City Bancorp, Inc.
165,880
   TOTAL
272,116
Shares
   
   
Value
COMMON STOCKS--continued
Securities Brokerage--0.3%
7,100 1 Interactive Brokers Group, Inc., Class A
 $ 108,417
2,000 1 Knight Capital Group, Inc., A
 36,060
8,800 1 Labranche & Co., Inc.
 60,368
19,200 Raymond James Financial, Inc.
355,392
   TOTAL
560,237
Semiconductor Distribution--0.4%
22,700 1 Arrow Electronics, Inc.
 432,889
10,100 1 Avnet, Inc.
 200,182
7,200 1 FormFactor, Inc.
 112,032
3,100 1 Tyler Technologies, Inc.
39,029
   TOTAL
784,132
Semiconductor Manufacturing--0.2%
4,500 1 ATMI, Inc.
 60,795
62,500 1 Micron Technology, Inc.
 232,500
4,300 1 Plexus Corp.
62,178
   TOTAL
355,473
Semiconductor Manufacturing Equipment--0.2%
25,700 1 Novellus Systems, Inc.
354,403
Services to Medical Professionals--2.0%
2,900 1 Coventry Health Care, Inc.
 43,877
5,800 1 Genoptix, Inc.
 196,620
31,600 1 Humana, Inc.
 1,198,588
3,700 1 Medco Health Solutions, Inc.
 166,241
5,400 Omnicare, Inc.
 150,984
45,200 UnitedHealth Group, Inc.
 1,280,516
25,200 1 Wellpoint, Inc.
1,044,540
   TOTAL
4,081,366
Shares
   
   
Value
COMMON STOCKS--continued
Shoes--0.1%
4,600 1 Deckers Outdoor Corp.
 $ 240,304
4,000 1 Genesco, Inc.
61,600
   TOTAL
301,904
Soft Drinks--0.0%
4,500 The Pepsi Bottling Group, Inc.
86,805
Software Packaged/Custom--2.8%
45,500 1 Computer Sciences Corp.
 1,676,220
10,200 1 DST Systems, Inc.
 324,054
41,400 1 F5 Networks, Inc.
 917,838
156,200 Microsoft Corp.
 2,671,020
5,700 1 Solera Holdings, Inc.
137,313
   TOTAL
5,726,445
Specialty Chemicals--0.3%
4,000 Albemarle Corp.
 89,000
3,500 Cabot Corp.
 46,760
2,500 Chemed Corp.
 100,325
3,100 Cytec Industries, Inc.
 63,364
2,900 Lubrizol Corp.
 98,948
9,100 1 OM Group, Inc.
176,358
   TOTAL
574,755
Specialty Retailing--0.1%
16,100 1 CarMax, Inc.
 133,147
4,600 Pep Boys-Manny Moe & Jack
 13,294
18,700 Williams-Sonoma, Inc.
148,104
   TOTAL
294,545
Stainless Steel Producer--0.3%
28,800 Allegheny Technologies, Inc.
636,192
Surveillance-Detection--0.0%
1,900 Diebold, Inc.
47,082
Shares
   
   
Value
COMMON STOCKS--continued
Technology Services--0.1%
7,200 1 Stanley, Inc.
$
217,872
Telecommunication Equipment & Services--0.1%
64,900 Motorola, Inc.
287,507
Tools and Hardware--0.0%
2,200 Snap-On, Inc.
66,396
Toys & Games--0.1%
9,400 1 JAKKS Pacific, Inc.
172,396
Truck Manufacturing--0.1%
6,200 Cummins, Inc.
148,676
Trucking--0.3%
500 Arkansas Best Corp.
 11,695
16,600 Ryder Systems, Inc.
560,748
   TOTAL
572,443
Undesignated Consumer Cyclicals--2.6%
29,800 1 Alliance Data Systems Corp.
 1,239,382
2,900 1 American Public Education, Inc.
 113,564
31,600 1 Corinthian Colleges, Inc.
 590,288
3,700 DeVRY, Inc.
 198,246
24,200 1 ITT Educational Services, Inc.
 2,964,742
4,600 Speedway Motorsports, Inc.
 66,424
1,100 Strayer Education, Inc.
238,073
   TOTAL
5,410,719
Undesignated Consumer Staples--0.0%
2,800 1 USANA, Inc.
64,988
Uniforms--0.0%
800 Unifirst Corp.
20,992
Water Utility--0.1%
6,300 Aqua America, Inc.
130,662
   TOTAL COMMON STOCKS
(IDENTIFIED COST $142,478,094)
122,761,742
Principal
Amount
   
   
Value
ASSET-BACKED SECURITIES--1.4%
$ 400,000 Banc of America Commercial Mortgage, Inc. 2007-1 A2, 5.381%, 1/15/2049
 $ 305,173
250,000 Banc of America Commercial Mortgage, Inc. 2007-4 A4, 5.74%, 2/10/2051
 151,189
1,200,000 Citigroup/Deutsche Bank Commercial Mortgage 2007-CD5, Series 2007 CD5, 5.886%, 11/15/2044
 724,670
398,909 Community Program Loan Trust 1987-A, Series 1987-A, 4.500%, 10/01/2018
 400,087
1,000,000 Credit Suisse Mortgage Capital Certificate 2006-C4, Series 2006-C4, 5.509%, 09/15/2039
 421,913
39,615 CS First Boston Mortgage Securities Corp. 2002-HE4 AF, 5.51%, 8/25/2032
 27,365
100,000 Merrill Lynch Mortgage Trust 2008-C1 AM, 6.266%, 2/12/2051
 40,719
150,000 Merrill Lynch Mortgage Trust 2008-C1, Series 2008-C1, 5.425%, 02/12/2051
 106,821
715,000 Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.331%, 03/12/2051
 537,212
250,000 Merrill Lynch/Countrywide Commercial Mortgage 2007-6, Series 2007-6, 5.485%, 03/12/2051
 149,128
140,000 Morgan Stanley Capital I 2006-IQ12 A4, 5.332%, 12/15/2043
91,215
   TOTAL ASSET-BACKED SECURITIES
(IDENTIFIED COST $4,541,864)
2,955,492
COLLATERALIZED MORTGAGE OBLIGATIONS--0.6%
4,077 Bear Stearns Mortgage Securities, Inc. 1997-6 1A, 6.637%, 3/25/2031
 3,835
410,000 Citigroup/Deutsche Bank Commercial Mortgage 2007-CD4 A3, 5.293%, 12/11/2049
 260,132
12,925 Federal Home Loan Mortgage Corp. REMIC 1311 K, 7.000%, 7/15/2022
 12,907
23,085 Federal Home Loan Mortgage Corp. REMIC 1384 D, 7.000%, 9/15/2022
 23,053
21,374 Federal Home Loan Mortgage Corp. REMIC 1595 D, 7.000%, 10/15/2013
 21,668
70,696 Federal Home Loan Mortgage Corp. REMIC 2497 JH, 6.000%, 9/15/2032
 72,751
55,257 Federal National Mortgage Association REMIC 1993-113 SB, 9.748%, 7/25/2023
 62,353
6,695 Federal National Mortgage Association REMIC 2001-37 GA, 8.000%, 7/25/2016
 7,156
14,963 Federal National Mortgage Association REMIC 2003-35 UC, 3.750%, 5/25/2033
 14,266
6,977 Government National Mortgage Association REMIC 1999-29 PB, 7.250%, 7/16/2028
 7,049
Principal
Amount
   
   
Value
COLLATERIZED MORTGAGE OBLIGATIONS--continued
$ 43,522 Government National Mortgage Association REMIC 2002-17 B, 6.000%, 3/20/2032
 $ 44,640
350,000 JPMorgan Chase Commercial Mortgage Securities 2007-CB19 A2, 5.746%, 2/12/2049
 261,303
675,000 LB-UBS Commercial Mortgage Trust 2008-C1 A2, 6.149%, 4/15/2041
416,124
   TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(IDENTIFIED COST $1,708,236)
1,207,237
CORPORATE BONDS--7.9%
Basic Industry - Chemicals--0.2%
100,000 Albemarle Corp., Sr. Note, 5.100%, 02/01/2015
 82,726
85,000 Du Pont (E.I.) de Nemours & Co., 5.000%, 01/15/2013
 87,979
30,000 Du Pont (E.I.) de Nemours & Co., 6.000%, 07/15/2018
 31,131
70,000 Praxair, Inc., 4.625%, 03/30/2015
 72,679
75,000 Rohm & Haas Co., 6.000%, 09/15/2017
62,916
   TOTAL
337,431
Basic Industry - Metals & Mining--0.2%
50,000 Alcan, Inc., 5.000%, 06/01/2015
 39,399
85,000 Alcoa, Inc., Note, 5.550%, 02/01/2017
 58,993
10,000 ArcelorMittal, 6.125%, 6/01/2018
 7,862
150,000 BHP Finance (USA), Inc., Company Guarantee, 5.250%, 12/15/2015
 140,044
50,000 Newmont Mining Corp., Company Guarantee, 5.875%, 04/01/2035
 34,165
85,000 Rio Tinto Finance USA Ltd., 5.875%, 07/15/2013
 74,885
85,000 Rio Tinto Finance USA Ltd., 6.500%, 07/15/2018
71,634
   TOTAL
426,982
Basic Industry - Paper--0.0%
50,000 Weyerhaeuser Co., Deb., 7.375%, 03/15/2032
34,924
Capital Goods - Aerospace & Defense--0.1%
50,000 2,3 BAE Systems Holdings, Inc., 5.200%, 08/15/2015
 45,816
125,000 Boeing Co., Note, 5.125%, 02/15/2013
 127,760
30,000 Lockheed Martin Corp., Sr. Note, 4.121%, 03/14/2013
30,760
   TOTAL
204,336
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Capital Goods - Building Materials--0.0%
$ 70,000 RPM International, Inc., 6.500%, 02/15/2018
$
60,954
Capital Goods - Diversified Manufacturing--0.4%
60,000 Dover Corp., Note, 5.450%, 03/15/2018
 61,372
30,000 Emerson Electric Co., 4.875%, 10/15/2019
 29,725
100,000 Emerson Electric Co., Unsecd. Note, 5.750%, 11/01/2011
 105,095
160,000 Harsco Corp., 5.750%, 05/15/2018
 162,495
80,000 Hubbell, Inc., 5.950%, 06/01/2018
 76,802
60,000 Ingersoll-Rand Global Holding Co. Ltd., 6.875%, 08/15/2018
 56,794
90,000 Roper Industries, Inc., 6.625%, 08/15/2013
 89,374
140,000 Textron Financial Corp., 5.400%, 04/28/2013
 104,219
40,000 2,3 Textron Financial Corp., Jr. Sub. Note, 6.000%, 02/15/2067
 8,755
130,000 Tyco Electronics Group SA, 5.950%, 01/15/2014
118,633
   TOTAL
813,264
Capital Goods - Packaging--0.0%
20,000 Pactiv Corp., 6.40%, 1/15/2018
16,273
Communications - Media & Cable--0.2%
100,000 Comcast Corp., 7.125%, 06/15/2013
 103,205
200,000 Comcast Corp., Company Guarantee, 6.500%, 01/15/2017
 203,169
75,000 Cox Communications, Inc., Unsecd. Note, 5.450%, 12/15/2014
 69,196
25,000 Time Warner Cable, Inc., Sr. Unsecd. Note, 5.850%, 05/01/2017
23,368
   TOTAL
398,938
Communications - Media Noncable--0.1%
75,000 News America Holdings, Inc., Company Guarantee, 8.000%, 10/17/2016
 75,803
75,000 News America Holdings, Inc., Sr. Deb., 9.250%, 02/01/2013
79,855
   TOTAL
155,658
Communications - Telecom Wireless--0.3%
150,000 AT&T Wireless Services, Inc., 8.750%, 03/01/2031
 176,739
100,000 America Movil S.A.B. de C.V., Note, 5.750%, 01/15/2015
 94,200
100,000 Cingular Wireless LLC, Sr. Note, 6.500%, 12/15/2011
 105,737
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Communications - Telecom Wireless-continued
$ 60,000 Vodafone Group PLC, 5.350%, 02/27/2012
 $ 61,325
100,000 Vodafone Group PLC, Note, 5.625%, 02/27/2017
98,234
   TOTAL
536,235
Communications - Telecom Wirelines--0.2%
50,000 Embarq Corp., 6.738%, 06/01/2013
 47,544
100,000 Telecom Italia Capital, Note, 4.875%, 10/01/2010
 96,587
40,000 Telefonica SA, Company Guarantee, 7.045%, 06/20/2036
 44,658
150,000 Telefonica SA, Sr. Note, 5.855%, 02/04/2013
 156,588
125,000 Verizon Global Funding, Note, 7.250%, 12/01/2010
132,568
   TOTAL
477,945
Consumer Cyclical - Automotive--0.1%
100,000 2,3 American Honda Finance Corp., 4.625%, 04/02/2013
 94,166
75,000 DaimlerChrysler North America Holding Corp., 6.500%, 11/15/2013
 71,643
150,000 DaimlerChrysler North America Holding Corp., Note, 4.875%, 06/15/2010
145,028
   TOTAL
310,837
Consumer Cyclical - Entertainment--0.0%
100,000 Time Warner, Inc., 5.500%, 11/15/2011
97,748
Consumer Cyclical - Lodging--0.0%
100,000 Wyndham Worldwide Corp., Sr. Unsecd. Note, 6.000%, 12/01/2016
49,587
Consumer Cyclical - Retailers--0.3%
70,000 Best Buy Co., Inc., 6.750%, 07/15/2013
 63,601
190,000 CVS Caremark Corp., Sr. Unsecd. Note, 5.750%, 06/01/2017
 194,563
80,000 Costco Wholesale Corp., 5.300%, 03/15/2012
 85,130
85,000 JC Penney Corp., Inc., Sr. Unsecd. Note, 5.750%, 02/15/2018
 60,102
25,000 Kohl's Corp., Unsecd. Note, 7.375%, 10/15/2011
 24,950
100,000 Target Corp., 5.875%, 03/01/2012
 105,217
50,000 Target Corp., Note, 5.875%, 07/15/2016
 50,190
40,000 Wal-Mart Stores, Inc., 6.200%, 04/15/2038
43,483
   TOTAL
627,236
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Consumer Non-Cyclical Food/Beverage--0.3%
$ 100,000 Bottling Group LLC, Note, 5.500%, 4/01/2016
 $ 104,237
90,000 General Mills, Inc., Note, 5.700%, 02/15/2017
 92,412
135,000 Kellogg Co., 4.250%, 03/06/2013
 138,547
40,000 Kellogg Co., Sr. Unsub., 5.125%, 12/03/2012
 42,513
75,000 Kraft Foods, Inc., Note, 5.250%, 10/01/2013
 77,948
10,000 Kraft Foods, Inc., Note, 6.250%, 06/01/2012
 10,740
75,000 PepsiCo, Inc., 4.650%, 02/15/2013
80,683
   TOTAL
547,080
Consumer Non-Cyclical Health Care--0.2%
40,000 Baxter International, Inc., 6.250%, 12/01/2037
 42,564
100,000 Medtronic, Inc., Note, Series B, 4.375%, 09/15/2010
 102,204
190,000 Quest Diagnostics, Inc., Sr. Unsecd. Note, 6.400%, 07/01/2017
174,476
   TOTAL
319,244
Consumer Non-Cyclical Pharmaceuticals--0.2%
60,000 Abbott Laboratories, 5.150%, 11/30/2012
 64,219
125,000 Eli Lilly & Co., Unsecd. Note, 6.570%, 01/01/2016
 137,120
100,000 Genentech, Inc., Note, 4.750%, 07/15/2015
 98,403
100,000 Pharmacia Corp., Sr. Deb., 6.500%, 12/01/2018
112,702
   TOTAL
412,444
Consumer Non-Cyclical Products--0.1%
75,000 Philips Electronics NV, 5.750%, 03/11/2018
 70,708
80,000 Whirlpool Corp., 5.500%, 03/01/2013
69,617
   TOTAL
140,325
Consumer Non-Cyclical Supermarkets--0.0%
40,000 Kroger Co., Bond, 6.900%, 04/15/2038
 40,730
50,000 Sysco Corp., Sr. Unsecd. Note, 4.200%, 02/12/2013
49,907
   TOTAL
90,637
Consumer Non-Cyclical Tobacco--0.0%
90,000 Philip Morris International, Inc., 5.650%, 05/16/2018
90,312
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Energy - Independent--0.2%
$ 105,000 Anadarko Petroleum Corp., Sr. Unsecd. Note, 5.950%, 09/15/2016
 $ 94,775
50,000 Canadian Natural Resources Ltd., 4.900%, 12/01/2014
 43,425
75,000 XTO Energy, Inc., 6.375%, 06/15/2038
 66,826
60,000 XTO Energy, Inc., 6.750%, 08/01/2037
 56,543
65,000 XTO Energy, Inc., Sr. Unsecd. Note, 6.250%, 08/01/2017
63,321
   TOTAL
324,890
Energy - Integrated--0.1%
200,000 Husky Oil Ltd., Deb., 7.550%, 11/15/2016
185,502
Energy - Oil Field Services--0.0%
80,000 Weatherford International Ltd., 6.000%, 03/15/2018
64,500
Energy - Refining--0.1%
100,000 Valero Energy Corp., 6.875%, 04/15/2012
 100,341
115,000 Valero Energy Corp., 7.500%, 04/15/2032
 96,714
35,000 Valero Energy Corp., Note, 4.750%, 04/01/2014
32,487
   TOTAL
229,542
Financial Institution - Banking--0.6%
125,000 2,3 Barclays Bank PLC, 5.926%, 12/31/2049
 48,125
155,000 Citigroup, Inc., Sr. Unsecd. Note, 6.875%, 03/05/2038
 142,264
150,000 Credit Suisse First Boston USA, Inc., 5.125%, 01/15/2014
 144,407
100,000 JPMorgan Chase & Co., Sub. Note, 5.125%, 09/15/2014
 95,113
200,000 PNC Funding Corp., Sub. Note, 5.625%, 02/01/2017
 187,924
100,000 PNC Funding Corp., Sub. Note, 7.500%, 11/01/2009
 100,037
100,000 Popular North America, Inc., 5.650%, 04/15/2009
 99,422
200,000 Wachovia Bank N.A., 4.800%, 11/01/2014
 185,018
30,000 Wachovia Corp., 5.750%, 02/01/2018
 29,632
100,000 Wells Fargo Bank, N.A., Sub. Note, 6.450%, 02/01/2011
 103,601
100,000 Wilmington Trust Corp., Sub. Note, 8.500%, 04/02/2018
 107,841
75,000 Zions Bancorp, Sub. Note, 5.500%, 11/16/2015
53,138
   TOTAL
1,296,522
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Financial Institution - Brokerage--0.7%
$ 130,000 Bear Stearns Cos., Inc., Sr. Unsecd. Note, 7.250%, 02/01/2018
 $ 138,476
250,000 Blackrock, Inc., 6.250%, 09/15/2017
 245,037
120,000 Eaton Vance Corp., 6.500%, 10/02/2017
 104,225
150,000 2,3 FMR Corp., Bond, 7.570%, 06/15/2029
 139,038
25,000 Goldman Sachs Group, Inc., 6.125%, 02/15/2033
 21,264
150,000 Goldman Sachs Group, Inc., Note, 5.250%, 10/15/2013
 143,654
170,000 Goldman Sachs Group, Inc., Sr. Note, 6.150%, 04/01/2018
 155,790
100,000 Invesco Ltd., Note, 4.500%, 12/15/2009
 93,400
75,000 Janus Capital Group, Inc., Sr. Note, 6.250%, 06/15/2012
 57,092
80,000 Janus Capital Group, Inc., Sr. Note, 6.700%, 06/15/2017
 51,214
85,000 Merrill Lynch & Co., Inc., Note, 4.125%, 09/10/2009
 84,743
100,000 Morgan Stanley, Note, 4.000%, 01/15/2010
 99,619
35,000 Morgan Stanley, Sr. Unsecd. Note, 5.950%, 12/28/2017
 30,473
70,000 Morgan Stanley, Sr. Unsecd. Note, 6.000%, 04/28/2015
 63,943
110,000 Morgan Stanley, Sr. Unsecd. Note, 6.625%, 04/01/2018
101,157
   TOTAL
1,529,125
Financial Institution - Finance Noncaptive--0.6%
100,000 American Express Co., 4.750%, 06/17/2009
 100,503
100,000 American Express Co., 4.875%, 07/15/2013
 93,957
150,000 American Express Credit Corp., 5.875%, 05/02/2013
 146,456
100,000 American General Finance Corp., 4.000%, 03/15/2011
 55,125
120,000 Capital One Capital IV, 6.745%, 02/17/2037
 60,305
90,000 Capmark Financial Group, Inc., Company Guarantee, Series WI, 6.300%, 05/10/2017
 29,768
240,000 General Electric Capital Corp., 5.625%, 05/01/2018
 222,179
200,000 General Electric Capital Corp., Note, 4.875%, 03/04/2015
 190,050
100,000 HSBC Finance Capital Trust IX, Note, 5.911%, 11/30/2035
 54,391
200,000 2,3 ILFC E-Capital Trust I, 5.900%, 12/21/2065
 63,012
100,000 International Lease Finance Corp., 4.875%, 09/01/2010
 84,625
100,000 International Lease Finance Corp., 6.625%, 11/15/2013
73,190
   TOTAL
1,173,561
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Financial Institution - Insurance - Health--0.1%
$ 75,000 Aetna US Healthcare, 5.750%, 06/15/2011
 $ 74,565
60,000 CIGNA Corp., 6.350%, 03/15/2018
 53,533
100,000 UnitedHealth Group, Inc., Bond, 6.000%, 02/15/2018
95,345
   TOTAL
223,443
Financial Institution - Insurance - Life--0.2%
200,000 AXA-UAP, Sub. Note, 8.600%, 12/15/2030
 152,449
85,000 2,3 Pacific Life Global Funding, Note, 5.150%, 04/15/2013
 83,058
120,000 Prudential Financial, Inc., 5.150%, 01/15/2013
 112,947
85,000 Prudential Financial, Inc., 6.625%, 12/01/2037
65,074
   TOTAL
413,528
Financial Institution - Insurance - P&C--0.4%
90,000 ACE INA Holdings, Inc., 5.600%, 05/15/2015
 84,510
91,000 ACE INA Holdings, Inc., Sr. Note, 5.700%, 02/15/2017
 84,886
100,000 Allstate Corp., Unsecd. Note, 5.000%, 08/15/2014
 94,639
75,000 CNA Financial Corp., 6.500%, 08/15/2016
 54,330
20,000 Chubb Corp., Sr. Note, 5.750%, 05/15/2018
 19,373
100,000 2,3 Liberty Mutual Group, Inc., Unsecd. Note, 5.750%, 03/15/2014
 83,025
100,000 The Travelers Cos., Inc., Sr. Unsecd. Note, 5.500%, 12/01/2015
 97,428
500,000 2,3 ZFS Finance USA Trust I, Jr. Sub. Note, 6.150%, 12/15/2065
262,500
   TOTAL
780,691
Financial Institution - REITs--0.1%
40,000 AMB Property LP, 6.300%, 06/01/2013
 25,728
20,000 Equity One, Inc., Bond, 6.000%, 09/15/2017
 12,994
75,000 Liberty Property LP, 6.625%, 10/01/2017
 53,960
100,000 Prologis, Sr. Note, 5.500%, 04/01/2012
 62,614
95,000 Simon Property Group LP, 6.125%, 05/30/2018
71,918
   TOTAL
227,214
Technology--0.5%
40,000 BMC Software, Inc., 7.250%, 06/01/2018
 35,710
60,000 Cisco Systems, Inc., Sr. Unsecd. Note, 5.500%, 02/22/2016
 64,362
200,000 Dell Computer Corp., Deb., 7.100%, 04/15/2028
 184,852
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Technology--continued
$ 75,000 Dun & Bradstreet Corp., Sr. Unsecd. Note, 5.500%, 03/15/2011
 $ 75,758
80,000 Fiserv, Inc., Sr. Note, 6.800%, 11/20/2017
 69,332
65,000 Harris Corp., 5.950%, 12/01/2017
 55,287
100,000 Hewlett-Packard Co., Note, 5.400%, 03/01/2017
 104,060
125,000 Hewlett-Packard Co., Note, 6.500%, 07/01/2012
 138,314
100,000 IBM Corp., Deb., 8.375%, 11/01/2019
 123,142
70,000 KLA-Tencor Corp., 6.900%, 05/01/2018
 53,344
150,000 Oracle Corp., 6.500%, 04/15/2038
163,775
   TOTAL
1,067,936
Transportation - Airlines--0.1%
75,000 Southwest Airlines Co., 6.500%, 03/01/2012
 70,222
50,000 Southwest Airlines Co., Deb., 7.375%, 03/01/2027
38,946
   TOTAL
109,168
Transportation - Railroads--0.2%
75,000 Burlington Northern Santa Fe Corp., 4.875%, 01/15/2015
 71,760
100,000 Canadian Pacific RR, 7.125%, 10/15/2031
 78,341
100,000 Norfolk Southern Corp., Note, 6.750%, 02/15/2011
 103,086
100,000 Union Pacific Corp., 4.875%, 01/15/2015
94,626
   TOTAL
347,813
Transportation - Services--0.1%
90,000 2,3 Enterprise Rent-A-Car USA Finance Co., 6.375%, 10/15/2017
 54,432
100,000 FedEx Corp., Note, 5.500%, 08/15/2009
101,256
   TOTAL
155,688
Utility - Electric--0.8%
150,000 Alabama Power Co., 5.700%, 02/15/2033
 137,544
100,000 Cleveland Electric Illuminating Co., Sr. Unsecd. Note, 5.950%, 12/15/2036
 72,954
105,000 Commonwealth Edison Co., 1st Mtg. Bond, 5.800%, 03/15/2018
 100,026
100,000 Consolidated Edison Co., Sr. Unsecd. Note, 5.500%, 09/15/2016
 99,614
60,000 2,3 Electricite De France, 5.500%, 01/26/2014
 62,084
100,000 Exelon Generation Co. LLC, Note, 5.350%, 01/15/2014
 94,497
100,000 FPL Group Capital, Inc., Unsecd. Note, 5.350%, 06/15/2013
 103,555
Principal
Amount
   
   
Value
CORPORATE BONDS--continued
Utility - Electric--continued
$ 100,000 FirstEnergy Corp., 6.450%, 11/15/2011
 $ 99,784
48,018 2,3 Great River Energy, 1st Mtg. Note, 5.829%, 07/01/2017
 44,773
40,000 National Rural Utilities Cooperative Finance Corp., 5.450%, 02/01/2018
 38,290
90,000 National Rural Utilities Cooperative Finance Corp., Collateral Trust, 5.500%, 07/01/2013
 92,032
80,000 Northern States Power Co., MN, 1st Mtg. Bond, 5.250%, 03/01/2018
 78,311
50,000 PPL Energy Supply LLC, Sr. Unsecd. Note, 6.000%, 12/15/2036
 32,788
100,000 PSEG Power LLC, Company Guarantee, 7.750%, 04/15/2011
 104,081
75,000 PSI Energy, Inc., Bond, 6.050%, 06/15/2016
 72,372
50,000 Pacific Gas & Electric Co., 6.050%, 03/01/2034
 51,396
100,000 Pacific Gas & Electric Co., Unsecd. Note, 4.200%, 03/01/2011
 99,828
90,000 Union Electric Co., 6.000%, 04/01/2018
 85,463
90,000 Virginia Electric & Power Co., Sr. Unsecd. Note, 5.100%, 11/30/2012
91,310
   TOTAL
1,560,702
Utility - Natural Gas Distributor--0.0%
40,000 Atmos Energy Corp., 5.125%, 01/15/2013
37,877
Utility - Natural Gas Pipelines--0.2%
150,000 Consolidated Natural Gas Co., 5.000%, 12/01/2014
 141,453
75,000 Duke Capital Corp., Sr. Note, 6.250%, 02/15/2013
 75,086
40,000 Enbridge, Inc., Sr. Note, 5.600%, 04/01/2017
 32,672
100,000 Kinder Morgan Energy Partners LP, Sr. Unsecd. Note, 5.800%, 03/15/2035
83,871
   TOTAL
333,082
   TOTAL CORPORATE BONDS
(IDENTIFIED COST $18,173,071)
16,209,174
GOVERNMENT/AGENCY--0.0%
Sovereign--0.0%
75,000 United Mexican States, 6.625%, 03/03/2015
(IDENTIFIED COST $80,766)
78,750
GOVERNMENT AGENCIES--3.3%
750,000 Federal Home Loan Mortgage Corp., 5.500%, 7/18/2016
 848,135
5,500,000 Federal National Mortgage Association, 4.375%, 3/15/2013
5,932,622
   TOTAL GOVERNMENT AGENCIES
(IDENTIFIED COST $6,460,780)
6,780,757
Principal
Amount
or Shares
   
   
Value
MORTGAGE-BACKED SECURITIES--0.0%
$ 15,115 Federal National Mortgage Association Pool 408761, 7.000%, 12/1/2012
 $ 15,598
9,858 Federal National Mortgage Association Pool 512255, 7.500%, 9/1/2014
 10,325
19,433 Federal National Mortgage Association Pool 609554, 7.500%, 10/1/2016
20,457
   TOTAL MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $45,830)
46,380
U.S. TREASURY--1.5%
250,000 United States Treasury Bill, 0.190%, 7/2/2009
 249,692
1,300,000 4 United States Treasury Bond, 4.500%, 5/15/2038
 1,511,555
1,000,000 4 United States Treasury Note, 2.750%, 10/31/2013
 1,044,961
150,000 4 United States Treasury Note, 4.125%, 5/15/2015
167,169
   TOTAL U.S. TREASURY
(IDENTIFIED COST $3,088,237)
2,973,377
EXCHANGE-TRADED FUND--3.6%
193,000 iShares MSCI EAFE Index Fund
(IDENTIFIED COST $7,743,224)
7,469,100
MUTUAL FUNDS--22.2% 5
23,540 Emerging Markets Fixed Income Core Fund
 409,010
3,016,597 Federated Mortgage Core Portfolio
 29,803,974
914,135 High Yield Bond Portfolio
 4,396,991
11,190,400 6 Prime Value Obligations Fund, Institutional Shares, 1.75%
11,190,400
   TOTAL MUTUAL FUNDS
(IDENTIFIED COST $46,524,561)
45,800,375
   TOTAL INVESTMENTS--100.1%
(IDENTIFIED COST $230,844,663) 7
206,282,384
   OTHER ASSETS AND LIABILITIES - NET--(0.1)% 8
(166,563
 )
   TOTAL NET ASSETS--100%
$
 206,115,821

At January 31, 2009, the Fund had the following outstanding futures contracts:

 Description
   
 Number
of Contracts
   
 Notional
Value
   
 Expiration
Date
   
 Unrealized
Depreciation
1
Euro-Bond Long Futures
19
$ 2,325,030
March 2009
$ (10,948)
1
United States Treasury Bond 30-Year Long Futures
29
$ 3,674,391
March 2009
$ (68,517)
1
United States Treasury Note 2-Year
Short Futures
60
$13,057,500
March 2009
$ (27,534)
  
   TOTAL UNREALIZED DEPRECIATION ON FUTURES CONTRACTS
$(106,999)

At January 31, 2009, the Fund had the following open swap contracts:

Credit
Default
Swap
Counterparty
   
 Reference
Entity
   
 Buy/
Sell
   
 Pay/
Re-
ceive
Fixed
Rate
   
 Expiration
Date
   
 Implied
Credit
Spread at
1/31/2009 9
   
 Notional
Amount
   
 Market
Value
   
 Upfront
Premiums
Paid/
(Received)
   
 Unrealized
Appre-
ciation
(Deprec-
iation
)
Merrill Lynch,
Pierce, Fenner & Smith
Series 10
Investment
Grade Index
Sell
1.55%
6/20/2013
2.23%
$4,880,000
(115,370
 )
16,197
$(131,567
 )
Merrill Lynch,
Pierce, Fenner & Smith
Series 11
Investment
Grade Index
Sell
1.50%
12/20/2013
1.45%
$5,000,000
(102,186
 )
(112,826
 )
$ 10,640
Banc
of America
Securities LLC
Series 11
High Yield
CDX Index
Sell
5.00%
12/20/2013
6.42%
$1,980,000
(513,111
 )
(408,375
 )
$(104,736
 )
   NET UNREALIZED DEPRECIATION OF CREDIT DEFAULT SWAPS
$(225,663
 )

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

1 Non-income-producing security.

2 Denotes a restricted security that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) is subject to a contractual restriction on public sales. At January 31, 2009, these restricted securities amounted to $988,784, which represented 0.5% of total net assets.

3 Denotes a restricted security that may be resold without restriction to "qualified institutional buyers" as defined in Rule 144A under the Securities Act of 1933 and that the Fund has determined to be liquid under criteria established by the Fund's Board of Trustees (the "Trustees"). At January 31, 2009, these liquid restricted securities amounted to $988,784, which represented 0.5% 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 $230,846,177.

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

9 Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular reference entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as "Defaulted" indicates a credit event has occurred for the reference entity or obligation.

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments in
Securities
   
 Other Financial
Instruments*
Level 1--Quoted Prices and Investments in Mutual Funds**
$176,031,217
$(106,999
 )
Level 2--Other Significant Observable Inputs
30,251,167
(225,663
 )
Level 3--Significant Unobservable Inputs
--
--
   TOTAL
$206,282,384
$(332,662
 )

* Other financial instruments include futures contracts and swaps contracts.

** Emerging Markets Fixed Income Core Fund (EMCORE) is an affiliated limited partnership offered only to registered investment companies and other accredited investors (see Note 5 to the financial statements). EMCORE invests primarily in emerging markets fixed-income securities.

The following acronyms are used throughout this portfolio:

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

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $45,800,375 of investments in affiliated issuers (Note 5) (identified cost $230,844,663)
 $ 206,282,384
Cash
 7,775
Income receivable
 516,519
Receivable for investments sold
 6,064,809
Receivable for shares sold
 491,206
Receivable for periodic payments from swap contracts
 28,431
Other receivables
4,750
   TOTAL ASSETS
213,395,874
Liabilities:
Payable for investments purchased
 $ 6,103,655
Payable for shares redeemed
 199,232
Payable for daily variation margin
 21,609
Swaps, at value (premium received $505,004)
 730,667
Payable for distribution services fee (Note 5)
 35,831
Payable for shareholder services fee (Note 5)
 74,146
Accrued expenses
114,913
   TOTAL LIABILITIES
7,280,053
Net assets for 23,031,333 shares outstanding
$
 206,115,821
Net Assets Consist of:
Paid-in capital
 $ 314,047,729
Net unrealized depreciation of investments, futures contracts, swap contracts and translation of assets and liabilities in foreign currency
 (24,894,941 )
Accumulated net realized loss on investments, futures contracts, swap contracts and foreign currency transactions
 (82,952,589 )
Distributions in excess of net investment income
(84,378
 )
   TOTAL NET ASSETS
$
 206,115,821

Statement of Assets and Liabilities-continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($47,650,368 ÷ 5,298,653 shares outstanding), no par value, unlimited shares authorized
$8.99
Offering price per share
$8.99
Redemption proceeds per share
$8.99
Class A Shares:
Net asset value per share ($104,151,824 ÷ 11,613,632 shares outstanding), no par value, unlimited shares authorized
$8.97
Offering price per share (100/94.50 of $8.97)
$9.49
Redemption proceeds per share
$8.97
Class C Shares:
Net asset value per share ($53,738,412 ÷ 6,054,882 shares outstanding), no par value, unlimited shares authorized
$8.88
Offering price per share
$8.88
Redemption proceeds per share (99.00/100 of $8.88)
$8.79
Class K Shares:
Net asset value per share ($575,217 ÷ 64,166 shares outstanding), no par value, unlimited shares authorized
$8.96
Offering price per share
$8.96
Redemption proceeds per share
$8.96

See Notes which are an integral part of the financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $1,615,223 received from affiliated issuers (Note 5) and net of foreign taxes withheld of $758)
 $ 3,214,226
Interest
1,043,223
Investment income allocated from affiliated partnership (Note 5)
37,964
   TOTAL INCOME
4,295,413
Expenses:
Investment adviser fee (Note 5)
 $ 939,341
Administrative personnel and services fee (Note 5)
 136,109
Custodian fees
 22,752
Transfer and dividend disbursing agent fees and expenses--Institutional Shares
 30,583
Transfer and dividend disbursing agent fees and expenses--Class A Shares
 98,899
Transfer and dividend disbursing agent fees and expenses--Class C Shares
 40,698
Transfer and dividend disbursing agent fees and expenses--Class K Shares
 1,333
Directors'/Trustees' fees
 2,360
Auditing fees
 11,058
Legal fees
 3,988
Portfolio accounting fees
 67,732
Distribution services fee--Class C Shares (Note 5)
 247,622
Distribution services fee--Class K Shares (Note 5)
 1,903
Shareholder services fee--Class A Shares (Note 5)
 136,538
Shareholder services fee--Class C Shares (Note 5)
 43,690
Account administration fee--Class A Shares
12,108
Account administration fee--Class C Shares
 38,636
Share registration costs
 28,071
Printing and postage
 23,620
Insurance premiums
 2,609
Interest expense
 302
Miscellaneous
5,490
   EXPENSES BEFORE ALLOCATION
1,895,442
Expenses allocated from affiliated partnership (Note 5)
180
   TOTAL EXPENSES
1,895,622

Statement of Operations-continued

Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee
 $ (40,178 )
Waiver of administrative personnel and services fee
 (26,473 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class A Shares
 (22,058 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class C Shares
(3,953
 )
   TOTAL WAIVERS AND REIMBURSEMENTS
$
(92,662
 )
Net expenses
$
1,802,960
Net investment income
2,492,453
Realized and Unrealized Gain (Loss) on Investments, Futures Contracts, Swap Contracts and Foreign Currency Transactions:
Net realized loss on investments and foreign currency transactions (including realized loss of $690,728 on sales of investments in affiliated issuers)
 (64,780,561 )
Net realized gain on futures contracts
 329,090
Net realized gain on swap contracts
 36,848
Net realized loss and foreign currency transactions allocated from affiliated partnership
 (122,350 )
Net change in unrealized depreciation of investments and translation of assets and liabilities in foreign currency
 (16,979,064 )
Net change in unrealized appreciation of futures contracts
 (162,872 )
Net change in unrealized depreciation of swap contracts
(225,663
 )
Net realized and unrealized loss on investments, futures contracts, swap contracts and foreign currency transactions
(81,904,572
 )
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
$
 (79,412,119
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   

Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income
 $ 2,492,453 $ 5,416,027
Net realized loss on investments including allocations from partnership, futures contracts, swap contracts and foreign currency transactions
 (64,536,973 ) (17,550,175 )
Net change in unrealized appreciation/depreciation of investments, futures contracts, swap contracts and translation of assets and liabilities in foreign currency
(17,367,599
 )
(16,954,796
 )
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(79,412,119
 )
(29,088,944
 )
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares
 (1,597,008 ) (1,062,997 )
Class A Shares
 (3,103,691 ) (1,792,159 )
Class C Shares
 (1,038,914 ) (1,022,750 )
Class K Shares
 (16,435 ) (302 )
Distributions from net realized gain on investments, futures contracts, swap contracts and foreign currency transactions
Institutional Shares
 -- (1,999,436 )
Class A Shares
 -- (3,699,741 )
Class C Shares
 -- (2,473,216 )
Class K Shares
--
(818
 )
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
(5,756,048
 )
(12,051,419
 )
Share Transactions:
Proceeds from sale of shares
 20,685,224 79,093,725
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Conservative Allocation Fund
 -- 52,857,254
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Growth Allocation Fund
 -- 48,170,456
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Moderate Allocation Fund
 -- 93,208,403
Net asset value of shares issued to shareholders in payment of distributions declared
 5,308,890 11,084,827
Cost of shares redeemed
(42,856,880
 )
(83,721,442
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
(16,862,766
 )
200,693,223
Change in net assets
(102,030,933
 )
159,552,860
Net Assets:
Beginning of period
308,146,754
148,593,894
End of period (including undistributed (distributions in excess of) net investment income of $(84,378) and $3,179,217, respectively)
$
 206,115,821
$
 308,146,754

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

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

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

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

2. SIGNIFICANT ACCOUNTING POLICIES

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

INVESTMENT VALUATION

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

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

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

Premium and Discount Amortization/Paydown Gains and Losses

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2005 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

When-Issued and Delayed Delivery Transactions

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

Swap Contracts

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

The Fund uses credit default swaps to manage exposure to a given issuer or sector by either selling protection to increase exposure or buying protection to reduce exposure. The "buyer" in a credit default swap is obligated to pay the "seller" a periodic stream of payments over the term of the contract provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or the "par value,'' of the reference obligation in exchange for the reference obligation. In connection with these agreements, securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default or bankruptcy/insolvency. Recovery values are assumed by market makers considering either industry standard recovery rates or entity specific factors and considerations until a credit event occurs. If a credit event has occurred, the recovery value is typically determined by a facilitated auction whereby a minimum number of allowable broker bids, together with a specified valuation method, are used to calculate the settlement value. The maximum amount of the payment that may occur, as a result of a credit event payable by the protection seller, is equal to the notional amount of the underlying index or security. The Fund's maximum exposure to loss of the notional value of credit default swaps outstanding at January 31, 2009 is $11,860,000. Risks may arise upon entering into swap agreements from the potential inability of the counterparties to meet the terms of their contract from unanticipated changes in the value of the swap agreement.

Upfront payments received or paid by the Fund will be reflected as an asset or liability on the Statement of Assets and Liabilities. Changes in the value of swap contracts are included in "Swaps, at value," on the Statement of Assets and Liabilities, and periodic payments are reported as net realized gain/loss on swap contracts in the Statement of Operations. For the six months ended January 31, 2009, the Fund had a net realized gain on swap contracts of $36,848.

Swap contracts outstanding at period end are listed after the Fund's portfolio of investments.

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 six months ended January 31, 2009, the Fund had a net realized gain on futures contracts of $329,090.

Futures 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 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.

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 108,344 $ 1,103,454 453,471 $ 6,231,682
Shares issued to shareholders in payment of distributions declared

165,994


1,563,667

213,271


2,951,673
Shares redeemed
(700,215
 )
(6,850,172
 )
(861,304
 )
(11,695,320
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS

(425,877
 )

$
(4,183,051
 )
(194,562
 )

$
(2,511,965
 )
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 1,554,512 $ 16,150,280 4,581,561 $ 60,907,542
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Conservative Allocation Fund
 -- -- 2,233,258 32,583,802
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Growth Allocation Fund
 -- -- 1,400,840 20,438,742
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Moderate Allocation Fund
 -- -- 3,731,944 54,450,162
Shares issued to shareholders in payment of distributions declared

293,825
2,761,954

349,074

4,817,220
Shares redeemed
(2,504,405
 )
(25,541,555
 )
(3,748,791
 )
(50,990,523
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS
(656,068
 )
$
 (6,629,321
 )
8,547,886
$
 122,206,945
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 290,207 $ 3,026,915 840,926 $ 11,168,941
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Conservative Allocation Fund
 -- -- 1,406,868 20,273,452
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Growth Allocation Fund
 -- -- 1,924,519 27,731,714
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Moderate Allocation Fund
 -- -- 2,689,616 38,758,241
Shares issued to shareholders in payment of distributions declared
103,849

966,834

243,200

3,314,815
Shares redeemed
(1,009,567
 )
(10,180,104
 )
(1,594,694
 )
(20,976,254
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
(615,511
 )
$
 (6,186,355
 )
5,510,435
$
 80,270,909
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class K Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 33,598 $ 404,575 59,681 $ 785,560
Shares issued to shareholders in payment of distributions declared

1,748

16,435

81


1,119
Shares redeemed
(27,732
 )
(285,049
 )
(4,543
 )
(59,345
 )
   NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS
7,614
$
 135,961
55,219
$
 727,334
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS


(1,689,842
 )

$
 (16,862,766
 )

13,918,978


$
200,693,223

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $230,846,177. The net unrealized depreciation of investments for federal tax purposes excluding any unrealized appreciation/depreciation resulting from futures contracts and swap contracts was $24,563,793. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $4,727,267 and net unrealized depreciation from investments for those securities having an excess of cost over value of $29,291,060.

At July 31, 2008, the Fund had a capital loss carryforward of $49,998 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire in 2016.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for certain Classes of the Fund based on average daily net assets:

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

In addition, subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser voluntarily waived $33,680 of its fee. In addition, an affiliate of the Adviser reimbursed $26,011 of transfer and dividend disbursing agent fees and expenses.

Administrative Fee

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

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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 0.088% of average daily net assets of the Fund. FAS waived $26,473 of its fee.

Distribution Services Fee

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

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

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC retained $20,620 of fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $11,718 in sales charges from the sale of Class A Shares. FSC also retained $2,711 of CDSC relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC did not receive any fees paid by the Fund.

Expense Limitation

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

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $6,498. Transactions with affiliated companies during the six months ended January 31, 2009 were as follows:

Affiliates
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income/
Allocated
Investment
Income
Emerging Markets Fixed Income Core Fund
37,605
64,361
78,426
23,540
$ 409,010
$ 37,964
Federated Mortgage Core Portfolio
4,634,906
378,853
1,997,162
3,016,597
$29,803,974
$1,186,732
High Yield Bond Portfolio
544,156
444,520
74,541
914,135
$ 4,396,991
$ 235,405
Prime Value Obligations Fund,
Institutional Shares
19,839,871
49,984,948
58,634,419
11,190,400
$11,190,400
$ 193,086
   TOTAL OF AFFILIATED TRANSACTIONS
25,056,538
50,872,682
60,784,548
15,144,672
$45,800,375
$1,653,187

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund may invest in portfolios of Federated Core Trust (Core Trust), which is managed by Federated Investment Management Company, an affiliate to 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 or upon request from the Fund.

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 EMCORE, a series of Core Trust II, is to achieve total return on its assets. Federated receives no advisory or administrative fees on behalf of the Core Trust II. The Fund records daily its proportionate share of income, expenses, realized and unrealized gains and losses from EMCORE. The performance of the Fund is directly affected by the performance of the portfolio. A copy of EMCORE's financial statements is available on the EDGAR Database on the SEC's website or upon request from the Fund.

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 244,017,690
Sales
$
 241,267,984

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

10. RECENT ACCOUNTING PRONOUNCEMENTS

In March 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. Management has concluded that the adoption of FAS 161 is not expected to have a material impact on the Fund's net assets or results of operations.

The Fund adopted FASB Staff Position No. 133-1 and FIN 45-4, "Disclosure about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No.133 and FASB Interpretation No. 45" (FAS 133). The amendments require additional disclosure relating to credit derivatives. All changes to accounting policies have been made in accordance with the amendments and incorporated for the current period.

Evaluation and Approval of Advisory Contract - May 2008

FEDERATED MDT BALANCED FUND (THE "FUND")

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R825

36357 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Large Cap Growth Fund

Established 2005

A Portfolio of Federated MDT Series

SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Class A Shares
Class B Shares
Class C Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

    Six Months
Ended
(unaudited)		    Year Ended July 31,
    Period
Ended
1/31/2009
2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$10.23 $12.12 $10.17 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.00 ) 3,4 (0.06 ) 4 (0.14 ) 4 (0.10 ) 4
Net realized and unrealized gain (loss) on investments
(3.70
 )
(0.48
 )
2.20
0.27
   TOTAL FROM INVESTMENT OPERATIONS
(3.70
 )
(0.54
 )
2.06
0.17
Less Distributions:
Distributions from net realized gain on investments
--
(1.35
 )
(0.11
 )
--
Net Asset Value, End of Period
$ 6.53
$10.23
$12.12
$10.17
Total Return 5
(36.17
 )%
(5.76
 )%
20.38
 %
1.70
 %
Ratios to Average Net Assets:
Net expenses
1.50
 % 6
1.50
 %
1.50
 %
2.01
 % 6
Net investment income (loss)
(0.11
 )% 6
(0.49
 )%
(1.14
 )%
(0.93
 )% 6
Expense waiver/reimbursement 7
0.42
 % 6
0.14
 %
2.30
 %
20.55
 % 6
Supplemental Data:
Net assets, end of period (000 omitted)
$59,428
$102,600
$88,826
$183
Portfolio turnover
172
 %
320
 %
630
 %
237
 %

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

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

3 Represents less than $0.01.

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 (loss) ratios shown above.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class B Shares

(For a Share Outstanding Throughout Each Period)

   
 Six Months
Ended
(unaudited)
1/31/2009
   
 Year
Ended
7/31/2008
   
 Period
Ended
7/31/2007
1
Net Asset Value, Beginning of Period
$10.21 $12.18 $11.48
Income From Investment Operations:
Net investment income (loss)
 (0.03 ) 2 (0.14 ) 2 (0.08 ) 2
Net realized and unrealized gain (loss) on investments
(3.69
 )
(0.48
 )
0.78
   TOTAL FROM INVESTMENT OPERATIONS
(3.72
 )
(0.62
 )
0.70
Less Distributions:
Distributions from net realized gain on investments
--
(1.35
 )
--
Net Asset Value, End of Period
$ 6.49
$10.21
$12.18
Total Return 3
(36.43
 )%
(6.43
 )%
6.10
 %
Ratios to Average Net Assets:
Net expenses
2.25
 % 4
2.25
 %
2.24
 % 4
Net investment income (loss)
(0.85
 )% 4
(1.22
 )%
(1.95
 )% 4
Expense waiver/reimbursement 5
0.42
 % 4
0.14
 %
0.54
 % 4
Supplemental Data:
Net assets, end of period (000 omitted)
$9,486
$22,138
$46,933
Portfolio turnover
172
 %
320
 %
630
 % 6

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

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

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

4 Computed on an annualized basis.

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

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

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

    Six Months
Ended
(unaudited)		    Year Ended July 31,
    Period
Ended
1/31/2009
2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$9.99 $11.94 $10.10 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.03 ) 3 (0.13 ) 3 (0.22 ) 3 (0.19 ) 3
Net realized and unrealized gain (loss) on investments
(3.61
 )
(0.47
 )
2.17
0.29
   TOTAL FROM INVESTMENT OPERATIONS
(3.64
 )
(0.60
 )
1.95
0.10
Less Distributions:
Distributions from net realized gain on investments
--
(1.35
 )
(0.11
 )
--
Net Asset Value, End of Period
$6.35
$ 9.99
$11.94
$10.10
Total Return 4
(36.44
 )%
(6.39
 )%
19.42
 %
1.00
 %
Ratios to Average Net Assets:
Net expenses
2.25
 % 5
2.22
 %
2.25
 %
2.76
 % 5
Net investment income (loss)
(0.85
 )% 5
(1.21
 )%
(1.83
 )%
(1.68
 )% 5
Expense waiver/reimbursement 6
0.42
 % 5
0.14
 %
5.64
 %
20.55
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$7,519
$14,895
$14,388
$147
Portfolio turnover
172
 %
320
 %
630
 %
237
 %

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

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

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

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

5 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual:
Class A Shares
$1,000
$ 638.30
$ 6.19
Class B Shares
$1,000
$ 635.70
$ 9.28
Class C Shares
$1,000
$ 635.60
$ 9.28
Hypothetical (assuming a 5% return before expenses):
Class A Shares
$1,000
$1,017.64
$ 7.63
Class B Shares
$1,000
$1,013.86
$11.42
Class C Shares
$1,000
$1,013.86
$11.42

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

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

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Biotechnology
9.6
 %
Defense Electronics
8.8
 %
Services to Medical Professionals
6.8
 %
Telecommunication Equipment & Services
5.5
 %
Undesignated Consumer Cyclicals
5.4
 %
Restaurant
5.2
 %
Computers--Midrange
4.0
 %
Computers--High End
3.9
 %
Ethical Drugs
3.9
 %
Internet Services
3.8
 %
Agricultural Chemicals
3.7
 %
Computers--Low End
3.5
 %
Medical Technology
3.5
 %
Office Equipment
3.5
 %
Software Packaged/Custom
2.6
 %
Contracting
2.4
 %
Medical Supplies
2.4
 %
Integrated Domestic Oil
2.2
 %
Specialty Retailing
2.2
 %
Telephone Utility
1.6
 %
Undesignated Health
1.5
 %
Home Products
1.4
 %
Building Supply Stores
1.2
 %
Department Stores
1.2
 %
Semiconductor Manufacturing
1.2
 %
Other 2
7.1
 %
Cash Equivalents 3
1.9
 %
Other Assets and Liabilities--Net 4,5
(0.0
 )%
   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.

5 Represents less than 0.1%.

Portfolio of Investments

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--98.1%
Agricultural Chemicals--3.7%
39,347 Monsanto Co.
$
 2,992,733
Biotechnology--9.6%
12,415 1 Alexion Pharmaceuticals, Inc.
 457,741
6,494 1 Biogen Idec, Inc.
 315,933
25,211 1 Cephalon, Inc.
 1,945,785
12,280 1 Charles River Laboratories International, Inc.
 299,755
66,501 1 Gilead Sciences, Inc.
 3,376,256
37,078 1 Hospira, Inc.
 923,242
6,191 1 Myriad Genetics, Inc.
461,663
   TOTAL
7,780,375
Broadcasting--0.1%
3,276 1 American Tower Systems Corp.
99,394
Building Supply Stores--1.2%
51,176 Lowe's Cos., Inc.
934,986
Computers - High End--3.9%
34,799 IBM Corp.
3,189,328
Computers - Low End--3.5%
31,439 1 Apple, Inc.
2,833,597
Computers - Midrange--4.0%
93,288 Hewlett-Packard Co.
3,241,758
Contracting--2.4%
62,986 Harsco Corp.
 1,494,028
10,491 1 IHS, Inc., Class A
459,506
   TOTAL
1,953,534
Crude Oil & Gas Production--0.3%
7,445 Range Resources Corp.
266,829
Defense Electronics--8.8%
20,604 1 FLIR Systems, Inc.
 514,482
21,575 1 First Solar, Inc.
 3,080,910
Shares
   
   
Value
COMMON STOCKS--continued
Defense Electronics--continued
7,590 Raytheon Co.
 $ 384,206
84,029 Rockwell Collins
3,166,213
   TOTAL
7,145,811
Department Stores--1.2%
26,421 1 Kohl's Corp.
969,915
Discount Department Stores--0.4%
7,399 1 Dollar Tree, Inc.
316,011
Electric Utility--0.7%
17,549 PPL Corp.
538,052
Ethical Drugs--3.9%
109,226 Merck & Co., Inc.
3,118,402
Financial Services--0.9%
10,096 FactSet Research Systems
 401,821
9,720 1 Metavante Technologies, Inc.
 141,037
16,168 Total System Services, Inc.
204,687
   TOTAL
747,545
Home Products--1.4%
6,678 Clorox Corp.
 334,902
4,075 Colgate-Palmolive Co.
 265,038
10,942 1 Energizer Holdings, Inc.
521,167
   TOTAL
1,121,107
Hotels and Motels--0.3%
9,214 1 Wynn Resorts Ltd.
277,157
Integrated Domestic Oil--2.2%
31,510 Hess Corp.
1,752,271
Internet Services--3.8%
8,559 1 Google, Inc.
 2,897,478
4,017 1 NetFlix, Inc.
145,174
   TOTAL
3,042,652
Life Insurance--0.8%
28,897 Aflac, Inc.
670,699
Medical Supplies--2.4%
42,986 McKesson HBOC, Inc.
1,899,981
Shares
   
   
Value
COMMON STOCKS--continued
Medical Technology--3.5%
1,600 1 Varian Medical Systems, Inc.
 $ 59,408
75,917 1 Zimmer Holdings, Inc.
2,763,379
   TOTAL
2,822,787
Multi-Industry Capital Goods--0.4%
12,697 Acuity Brands, Inc.
341,168
Mutual Fund Adviser--0.5%
13,168 T. Rowe Price Group, Inc.
363,174
Office Equipment--3.5%
128,399 Pitney Bowes, Inc.
2,858,162
Oil Refiner--0.6%
9,822 Sunoco, Inc.
454,955
Oil Well Supply--0.7%
13,887 Schlumberger Ltd.
566,729
Packaged Foods--0.3%
5,434 Hershey Foods Corp.
202,580
Pollution Control--0.3%
5,706 1 Stericycle, Inc.
279,138
Restaurant--5.2%
35,460 Darden Restaurants, Inc.
 929,761
56,670 McDonald's Corp.
3,287,993
   TOTAL
4,217,754
Semiconductor Manufacturing--1.2%
13,471 1 Broadcom Corp.
 213,515
35,178 Intel Corp.
 453,796
18,853 Texas Instruments, Inc.
281,852
   TOTAL
949,163
Services to Medical Professionals--6.8%
39,371 1 Express Scripts, Inc., Class A
 2,116,585
118,184 UnitedHealth Group, Inc.
3,348,153
   TOTAL
5,464,738
Soft Drinks--0.3%
6,590 1 Hansen Natural Corp.
220,765
Shares
   
   
Value
COMMON STOCKS--continued
Software Packaged/Custom--2.6%
45,796 1 DST Systems, Inc.
 $ 1,454,939
10,213 1 F5 Networks, Inc.
 226,422
16,076 Microsoft Corp.
 274,900
5,378 1 Solera Holdings, Inc.
129,556
   TOTAL
2,085,817
Specialty Retailing--2.2%
11,445 1 Bed Bath & Beyond, Inc.
 265,867
33,814 Costco Wholesale Corp.
1,522,644
   TOTAL
1,788,511
Telecommunication Equipment & Services--5.5%
77,618 1 Amdocs Ltd.
 1,313,297
90,725 Qualcomm, Inc.
3,134,549
   TOTAL
4,447,846
Telephone Utility--1.6%
149,010 Windstream Corp.
1,293,407
Truck Manufacturing--0.5%
15,080 PACCAR, Inc.
397,961
Undesignated Consumer Cyclicals--5.4%
19,287 1 Alliance Data Systems Corp.
 802,146
20,070 1 Apollo Group, Inc., Class A
 1,634,902
9,810 1 ITT Educational Services, Inc.
 1,201,823
3,413 Strayer Education, Inc.
738,676
   TOTAL
4,377,547
Undesignated Health--1.5%
83,543 IMS Health, Inc.
1,213,044
   TOTAL COMMON STOCKS
(IDENTIFIED COST $80,266,848)
79,237,383
Shares
   
   
Value
MUTUAL FUND--1.9%
1,536,767 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
$
1,536,767
TOTAL INVESTMENTS--100.0%
(IDENTIFIED COST $81,803,615) 4
80,774,150
OTHER ASSETS AND LIABILITIES - NET--(0.0)% 5
(28,425
 )
TOTAL NET ASSETS--100%
$
 80,745,725

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represents cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$80,774,150
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$80,774,150

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $1,536,767 of investments in an affiliated issuer (Note 5) (identified cost $81,803,615)
 $ 80,774,150
Income receivable
 6,589
Receivable for investments sold
 4,284,961
Receivable for shares sold
265,844
   TOTAL ASSETS
85,331,544
Liabilities:
Payable for investments purchased
 $ 4,302,031
Payable for shares redeemed
 111,827
Payable for Directors'/Trustees' fees
 308
Payable for distribution services fee (Note 5)
 11,471
Payable for shareholder services fee (Note 5)
 37,223
Accrued expenses
122,959
   TOTAL LIABILITIES
4,585,819
Net assets for 12,406,997 shares outstanding
$
 80,745,725
Net Assets Consist of:
Paid-in capital
 $ 235,983,795
Net unrealized depreciation of investments
(1,029,465 )
Accumulated net realized loss on investments
(154,065,987 )
Accumulated net investment income (loss)
(142,618
 )
   TOTAL NET ASSETS
$
 80,745,725

Statement of Assets and Liabilities - continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($4,313,306 ÷ 653,712 shares outstanding), no par value, unlimited shares authorized
$6.60
Offering price per share
$6.60
Redemption proceeds per share
$6.60
Class A Shares:
Net asset value per share ($59,427,987 ÷ 9,106,118 shares outstanding), no par value, unlimited shares authorized
$6.53
Offering price per share (100/94.50 of $6.53)
$6.91
Redemption proceeds per share
$6.53
Class B Shares:
Net asset value per share ($9,485,666 ÷ 1,462,586 shares outstanding), no par value, unlimited shares authorized
$6.49
Offering price per share
$6.49
Redemption proceeds per share (94.50/100 of $6.49)
$6.13
Class C Shares:
Net asset value per share ($7,518,766 ÷ 1,184,581 shares outstanding), no par value, unlimited shares authorized
$6.35
Offering price per share
$6.35
Redemption proceeds per share (99.00/100 of $6.35)
$6.29

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $12,710 received from an affiliated issuer (Note 5))
$
 742,551
Expenses:
Investment adviser fee (Note 5)
 $ 400,293
Administrative personnel and services fee (Note 5)
 136,110
Custodian fees
 7,480
Transfer and dividend disbursing agent fees and expenses
 226,090
Directors'/Trustees' fees
 1,294
Auditing fees
 10,924
Legal fees
 3,273
Portfolio accounting fees
 42,592
Distribution services fee--Class B Shares (Note 5)
 53,190
Distribution services fee--Class C Shares (Note 5)
 39,130
Shareholder services fee--Class A Shares (Note 5)
 90,915
Shareholder services fee--Class B Shares (Note 5)
 17,730
Shareholder services fee--Class C Shares (Note 5)
 13,043
Account administration fee--Class A Shares
 3,983
Share registration costs
 24,342
Printing and postage
 32,958
Insurance premiums
 2,616
Miscellaneous
3,059
   TOTAL EXPENSES
1,109,022
Waivers and Reimbursement (Note 5):
Waiver/reimbursement of investment adviser fee
 $ (196,662 )
Waiver of administrative personnel and services fee
(27,191
 )
   TOTAL WAIVERS AND REIMBURSEMENT
(223,853
 )
Net expenses
885,169
Net investment income (loss)
(142,618
 )
Realized and Unrealized Loss on Investments:
Net realized loss on investments
(44,918,538 )
Net change in unrealized appreciation of investments
(6,959,247
 )
Net realized and unrealized loss on investments
(51,877,785
 )
Change in net assets resulting from operations
$
 (52,020,403
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   
Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)
 $ (142,618 ) $ (1,147,470 )
Net realized loss on investments
(44,918,538 ) (10,506,699 )
Net change in unrealized appreciation/depreciation of investments
(6,959,247
 )
1,380,057
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(52,020,403
 )
(10,274,112
 )
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares
 -- (257,727 )
Class A Shares
 -- (11,660,461 )
Class B Shares
 -- (4,329,484 )
Class C Shares
--
(2,139,318
 )
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
--
(18,386,990
 )
Share Transactions:
Proceeds from sale of shares
 14,225,230 70,026,996
Net asset value of shares issued to shareholders in payment of distributions declared
 -- 15,708,083
Cost of shares redeemed
(27,372,481
 )
(63,105,962
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
(13,147,251
 )
22,629,117
Change in net assets
(65,167,654
 )
(6,031,985
 )
Net Assets:
Beginning of period
145,913,379
151,945,364
End of period (including accumulated net investment income (loss) of $(142,618) and $0, respectively)
$
 80,745,725
$
 145,913,379

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

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 U.S. generally accepted accounting principles (GAAP).

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. 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 account administration, distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

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

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

   
 Six Months Ended
1/31/2009
Year Ended
7/31/2008
Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 301,859 $ 2,542,236 481,360 $ 5,340,579
Shares issued to shareholders in payment of distributions declared

--



--


16,469



193,018
Shares redeemed
(255,979
 )
(1,807,565
 )
(37,394
 )
(447,625
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS
45,880
$
 734,671
460,435
$
 5,085,972

   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 1,425,185 $ 10,451,530 4,265,442 $ 49,806,979
Shares issued to shareholders in payment of distributions declared

--


--


882,581


10,255,594
Shares redeemed
(2,346,901
 )
(16,667,923
 )
(2,448,438
 )
(27,452,372
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS
(921,716
 )
$
 (6,216,393
 )
2,699,585
$
 32,610,201

   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class B Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 73,995 $ 544,207 376,994 $ 4,378,454
Shares issued to shareholders in payment of distributions declared

--


--


344,460



4,012,963
Shares redeemed
(780,319
 )
(6,044,411
 )
(2,405,450
 )
(27,366,232
 )
   NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS
(706,324
 )
$
 (5,500,204
 )
(1,683,996
 )
$
 (18,974,815
 )

   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 96,998 $ 687,257 912,018 $ 10,500,984
Shares issued to shareholders in payment of distributions declared

--



--


109,439


1,246,508
Shares redeemed
(403,754
 )
(2,852,582
 )
(734,780
 )
(7,839,733
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
(306,756
 )
$
 (2,165,325
 )
286,677
$
 3,907,759
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS


(1,888,916
 )

$
(13,147,251
 )

1,762,701


$
22,629,117

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $81,803,615. The net unrealized depreciation of investments for federal tax purposes was $1,029,465. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $6,397,402 and net unrealized depreciation from investments for those securities having an excess of cost over value of $7,426,867.

At July 31, 2008, the Fund had a capital loss carryforward of $98,518,058 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year
   
 Expiration Amount
2009
$76,646,626
2010
$21,688,057
2016
$ 183,375

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

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for certain Classes of the Fund based on average daily net assets:


Share Class Name


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

In addition, subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any additional portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser waived $196,234 of its fee.

Administrative Fee

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


Administrative Fee


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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 0.204% of average daily net assets of the Fund. The Fund is currently being charged the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above. FAS waived $27,191 of its fee.

Distribution Services Fee

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


Share Class Name


   
 Percentage of Average Daily
Net Assets of Class
Class A Shares
0.05%
Class B Shares
0.75%
Class C Shares
0.75%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC retained $2,905 of fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $2,790 in sales charges from the sale of Class A Shares. FSC also retained $825 of CDSC relating to redemptions of Class A Shares and $429 relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Financial intermediaries may include a company affiliated with management of Federated Investors, Inc. A financial intermediary affiliated with management of Federated Investors, Inc. received $13,127 of Service Fees for the six months ended January 31, 2009. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC received $222 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares, Class B Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.25%, 1.50%, 2.25% and 2.25%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $428. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund, Institutional Shares
507,081
15,445,738
14,416,052
1,536,767
$1,536,767
$12,710

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 185,652,643
Sales
$
 199,461,464

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT LARGE CAP GROWTH FUND (THE "FUND")

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

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

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

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

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

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

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

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

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

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

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

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

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

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

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

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R700
Cusip 31421R684
Cusip 31421R809

36353 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Large Cap Growth Fund

A Portfolio of Federated MDT Series



SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
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)

    Six Months
Ended
(unaudited)		    Year Ended July 31,
Period
Ended
1/31/2009
2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$10.33 $12.20 $10.20 $10.00
Income From Investment Operations:
Net investment income (loss)
 0.01 3 (0.03 ) 3 (0.03 ) 3 (0.07 ) 3
Net realized and unrealized gain (loss) on investments
(3.74
 )
(0.49
 )
2.14
0.27
   TOTAL FROM INVESTMENT OPERATIONS
(3.73
 )
(0.52
 )
2.11
0.20
Less Distributions:
Distributions from net realized gain on investments
--
(1.35
 )
(0.11
 )
--
Net Asset Value, End of Period
$ 6.60
$10.33
$12.20
$10.20
Total Return 4
(36.11
 )%
(5.55
 )%
20.81
 %
2.00
 %
Ratios to Average Net Assets:
Net expenses
1.25
 % 5
1.25
 %
1.25
 %
1.76
 % 5
Net investment income (loss)
0.15
 % 5
(0.28
 )%
(0.29
 )%
(0.68
 )% 5
Expense waiver/reimbursement 6
0.42
 % 5
0.14
 %
19.41
 %
20.55
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$4,313
$6,280
$1,798
$305
Portfolio turnover
172
 %
320
 %
630
 %
237
 %

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

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

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

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

5 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual
$1,000
$ 638.90
$5.16
Hypothetical (assuming a 5% return before expenses)
$1,000
$1,018.90
$6.36

1 Expenses are equal to the Fund's annualized net expense ratio of 1.25%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half-year period).

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Biotechnology
9.6
 %
Defense Electronics
8.8
 %
Services to Medical Professionals
6.8
 %
Telecommunication Equipment & Services
5.5
 %
Undesignated Consumer Cyclicals
5.4
 %
Restaurant
5.2
 %
Computers - Midrange
4.0
 %
Computers - High End
3.9
 %
Ethical Drugs
3.9
 %
Internet Services
3.8
 %
Agricultural Chemicals
3.7
 %
Computers - Low End
3.5
 %
Medical Technology
3.5
 %
Office Equipment
3.5
 %
Software Packaged/Custom
2.6
 %
Contracting
2.4
 %
Medical Supplies
2.4
 %
Integrated Domestic Oil
2.2
 %
Specialty Retailing
2.2
 %
Telephone Utility
1.6
 %
Undesignated Health
1.5
 %
Home Products
1.4
 %
Building Supply Stores
1.2
 %
Department Stores
1.2
 %
Semiconductor Manufacturing
1.2
 %
Other 2
7.1
 %
Cash Equivalents 3
1.9
 %
Other Assets and Liabilities--Net 4,5
(0.0
 )%
   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.

5 Represents less than 0.1%.

Portfolio of Investments

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--98.1%
Agricultural Chemicals--3.7%
39,347 Monsanto Co.
$
 2,992,733
Biotechnology--9.6%
12,415 1 Alexion Pharmaceuticals, Inc.
 457,741
6,494 1 Biogen Idec, Inc.
 315,933
25,211 1 Cephalon, Inc.
 1,945,785
12,280 1 Charles River Laboratories International, Inc.
 299,755
66,501 1 Gilead Sciences, Inc.
 3,376,256
37,078 1 Hospira, Inc.
 923,242
6,191 1 Myriad Genetics, Inc.
461,663
   TOTAL
7,780,375
Broadcasting--0.1%
3,276 1 American Tower Systems Corp.
99,394
Building Supply Stores--1.2%
51,176 Lowe's Cos., Inc.
934,986
Computers - High End--3.9%
34,799 IBM Corp.
3,189,328
Computers - Low End--3.5%
31,439 1 Apple, Inc.
2,833,597
Computers - Midrange--4.0%
93,288 Hewlett-Packard Co.
3,241,758
Contracting--2.4%
62,986 Harsco Corp.
 1,494,028
10,491 1 IHS, Inc., Class A
459,506
   TOTAL
1,953,534
Crude Oil & Gas Production--0.3%
7,445 Range Resources Corp.
266,829
Defense Electronics--8.8%
20,604 1 FLIR Systems, Inc.
 514,482
21,575 1 First Solar, Inc.
 3,080,910
Shares
   
   
Value
COMMON STOCKS--continued
Defense Electronics--continued
7,590 Raytheon Co.
 $ 384,206
84,029 Rockwell Collins
3,166,213
   TOTAL
7,145,811
Department Stores--1.2%
26,421 1 Kohl's Corp.
969,915
Discount Department Stores--0.4%
7,399 1 Dollar Tree, Inc.
316,011
Electric Utility--0.7%
17,549 PPL Corp.
538,052
Ethical Drugs--3.9%
109,226 Merck & Co., Inc.
3,118,402
Financial Services--0.9%
10,096 FactSet Research Systems
 401,821
9,720 1 Metavante Technologies, Inc.
 141,037
16,168 Total System Services, Inc.
204,687
   TOTAL
747,545
Home Products--1.4%
6,678 Clorox Corp.
 334,902
4,075 Colgate-Palmolive Co.
 265,038
10,942 1 Energizer Holdings, Inc.
521,167
   TOTAL
1,121,107
Hotels and Motels--0.3%
9,214 1 Wynn Resorts Ltd.
277,157
Integrated Domestic Oil--2.2%
31,510 Hess Corp.
1,752,271
Internet Services--3.8%
8,559 1 Google, Inc.
 2,897,478
4,017 1 NetFlix, Inc.
145,174
   TOTAL
3,042,652
Life Insurance--0.8%
28,897 Aflac, Inc.
670,699
Medical Supplies--2.4%
42,986 McKesson HBOC, Inc.
1,899,981
Shares
   
   
Value
COMMON STOCKS--continued
Medical Technology--3.5%
1,600 1 Varian Medical Systems, Inc.
 $ 59,408
75,917 1 Zimmer Holdings, Inc.
2,763,379
   TOTAL
2,822,787
Multi-Industry Capital Goods--0.4%
12,697 Acuity Brands, Inc.
341,168
Mutual Fund Adviser--0.5%
13,168 T. Rowe Price Group, Inc.
363,174
Office Equipment--3.5%
128,399 Pitney Bowes, Inc.
2,858,162
Oil Refiner--0.6%
9,822 Sunoco, Inc.
454,955
Oil Well Supply--0.7%
13,887 Schlumberger Ltd.
566,729
Packaged Foods--0.3%
5,434 Hershey Foods Corp.
202,580
Pollution Control--0.3%
5,706 1 Stericycle, Inc.
279,138
Restaurant--5.2%
35,460 Darden Restaurants, Inc.
 929,761
56,670 McDonald's Corp.
3,287,993
   TOTAL
4,217,754
Semiconductor Manufacturing--1.2%
13,471 1 Broadcom Corp.
 213,515
35,178 Intel Corp.
 453,796
18,853 Texas Instruments, Inc.
281,852
   TOTAL
949,163
Services to Medical Professionals--6.8%
39,371 1 Express Scripts, Inc., Class A
 2,116,585
118,184 UnitedHealth Group, Inc.
3,348,153
   TOTAL
5,464,738
Soft Drinks--0.3%
6,590 1 Hansen Natural Corp.
220,765
Shares
   
   
Value
COMMON STOCKS--continued
Software Packaged/Custom--2.6%
45,796 1 DST Systems, Inc.
 $ 1,454,939
10,213 1 F5 Networks, Inc.
 226,422
16,076 Microsoft Corp.
 274,900
5,378 1 Solera Holdings, Inc.
129,556
   TOTAL
2,085,817
Specialty Retailing--2.2%
11,445 1 Bed Bath & Beyond, Inc.
 265,867
33,814 Costco Wholesale Corp.
1,522,644
   TOTAL
1,788,511
Telecommunication Equipment & Services--5.5%
77,618 1 Amdocs Ltd.
 1,313,297
90,725 Qualcomm, Inc.
3,134,549
   TOTAL
4,447,846
Telephone Utility--1.6%
149,010 Windstream Corp.
1,293,407
Truck Manufacturing--0.5%
15,080 PACCAR, Inc.
397,961
Undesignated Consumer Cyclicals--5.4%
19,287 1 Alliance Data Systems Corp.
 802,146
20,070 1 Apollo Group, Inc., Class A
 1,634,902
9,810 1 ITT Educational Services, Inc.
 1,201,823
3,413 Strayer Education, Inc.
738,676
   TOTAL
4,377,547
Undesignated Health--1.5%
83,543 IMS Health, Inc.
1,213,044
   TOTAL COMMON STOCKS
(IDENTIFIED COST $80,266,848)
79,237,383
Shares
   
   
Value
MUTUAL FUND--1.9%
1,536,767 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
$
1,536,767
TOTAL INVESTMENTS--100.0%
(IDENTIFIED COST $81,803,615) 4
80,774,150
OTHER ASSETS AND LIABILITIES - NET--(0.0)% 5
(28,425
 )
TOTAL NET ASSETS--100%
$
 80,745,725

1 Non-income-producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represents cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$80,774,150
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$80,774,150

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $1,536,767 of investments in an affiliated issuer (Note 5) (identified cost $81,803,615)
 $ 80,774,150
Income receivable
 6,589
Receivable for investments sold
 4,284,961
Receivable for shares sold
265,844
   TOTAL ASSETS
85,331,544
Liabilities:
Payable for investments purchased
 $ 4,302,031
Payable for shares redeemed
 111,827
Payable for Directors'/Trustees' fees
 308
Payable for distribution services fee (Note 5)
 11,471
Payable for shareholder services fee (Note 5)
 37,223
Accrued expenses
122,959
   TOTAL LIABILITIES
4,585,819
Net assets for 12,406,997 shares outstanding
$
 80,745,725
Net Assets Consist of:
Paid-in capital
 $ 235,983,795
Net unrealized depreciation of investments
(1,029,465 )
Accumulated net realized loss on investments
(154,065,987 )
Accumulated net investment income (loss)
(142,618
 )
   TOTAL NET ASSETS
$
 80,745,725

Statement of Assets and Liabilities - continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($4,313,306 ÷ 653,712 shares outstanding), no par value, unlimited shares authorized
$6.60
Offering price per share
$6.60
Redemption proceeds per share
$6.60
Class A Shares:
Net asset value per share ($59,427,987 ÷ 9,106,118 shares outstanding), no par value, unlimited shares authorized
$6.53
Offering price per share (100/94.50 of $6.53)
$6.91
Redemption proceeds per share
$6.53
Class B Shares:
Net asset value per share ($9,485,666 ÷ 1,462,586 shares outstanding), no par value, unlimited shares authorized
$6.49
Offering price per share
$6.49
Redemption proceeds per share (94.50/100 of $6.49)
$6.13
Class C Shares:
Net asset value per share ($7,518,766 ÷ 1,184,581 shares outstanding), no par value, unlimited shares authorized
$6.35
Offering price per share
$6.35
Redemption proceeds per share (99.00/100 of $6.35)
$6.29

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $12,710 received from an affiliated issuer) (Note 5)
$
 742,551
Expenses:
Investment adviser fee (Note 5)
 $ 400,293
Administrative personnel and services fee (Note 5)
 136,110
Custodian fees
 7,480
Transfer and dividend disbursing agent fees and expenses
 226,090
Directors'/Trustees' fees
 1,294
Auditing fees
 10,924
Legal fees
 3,273
Portfolio accounting fees
 42,592
Distribution services fee--Class B Shares (Note 5)
 53,190
Distribution services fee--Class C Shares (Note 5)
 39,130
Shareholder services fee--Class A Shares (Note 5)
 90,915
Shareholder services fee--Class B Shares (Note 5)
 17,730
Shareholder services fee--Class C Shares (Note 5)
 13,043
Account administration fee--Class A Shares
 3,983
Share registration costs
 24,342
Printing and postage
 32,958
Insurance premiums
 2,616
Miscellaneous
3,059
   TOTAL EXPENSES
1,109,022
Waivers and Reimbursement (Note 5):
Waiver/reimbursement of investment adviser fee
 $ (196,662 )
Waiver of administrative personnel and services fee
(27,191
 )
   TOTAL WAIVERS AND REIMBURSEMENT
(223,853
 )
Net expenses
885,169
Net investment income (loss)
(142,618
 )
Realized and Unrealized Loss on Investments:
Net realized loss on investments
(44,918,538 )
Net change in unrealized appreciation of investments
(6,959,247
 )
Net realized and unrealized loss on investments
(51,877,785
 )
Change in net assets resulting from operations
$
 (52,020,403
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   
Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)
 $ (142,618 ) $ (1,147,470 )
Net realized loss on investments
(44,918,538 ) (10,506,699 )
Net change in unrealized appreciation/depreciation of investments
(6,959,247
 )
1,380,057
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(52,020,403
 )
(10,274,112
 )
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares
 -- (257,727 )
Class A Shares
 -- (11,660,461 )
Class B Shares
 -- (4,329,484 )
Class C Shares
--
(2,139,318
 )
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
--
(18,386,990
 )
Share Transactions:
Proceeds from sale of shares
 14,225,230 70,026,996
Net asset value of shares issued to shareholders in payment of distributions declared
 -- 15,708,083
Cost of shares redeemed
(27,372,481
 )
(63,105,962
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
(13,147,251
 )
22,629,117
Change in net assets
(65,167,654
 )
(6,031,985
 )
Net Assets:
Beginning of period
145,913,379
151,945,364
End of period (including accumulated net investment income (loss) of $(142,618) and $0, respectively)
$
 80,745,725
$
 145,913,379

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

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 U.S. generally accepted accounting principles (GAAP).

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. 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 account administration, distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

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

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

   
 Six Months Ended
1/31/2009
Year Ended
7/31/2008
Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 301,859 $ 2,542,236 481,360 $ 5,340,579
Shares issued to shareholders in payment of distributions declared

--



--


16,469



193,018
Shares redeemed
(255,979
 )
(1,807,565
 )
(37,394
 )
(447,625
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS
45,880
$
 734,671
460,435
$
 5,085,972

   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 1,425,185 $ 10,451,530 4,265,442 $ 49,806,979
Shares issued to shareholders in payment of distributions declared

--


--


882,581


10,255,594
Shares redeemed
(2,346,901
 )
(16,667,923
 )
(2,448,438
 )
(27,452,372
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS
(921,716
 )
$
 (6,216,393
 )
2,699,585
$
 32,610,201

   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class B Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 73,995 $ 544,207 376,994 $ 4,378,454
Shares issued to shareholders in payment of distributions declared

--


--


344,460



4,012,963
Shares redeemed
(780,319
 )
(6,044,411
 )
(2,405,450
 )
(27,366,232
 )
   NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS
(706,324
 )
$
 (5,500,204
 )
(1,683,996
 )
$
 (18,974,815
 )

   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 96,998 $ 687,257 912,018 $ 10,500,984
Shares issued to shareholders in payment of distributions declared

--



--


109,439


1,246,508
Shares redeemed
(403,754
 )
(2,852,582
 )
(734,780
 )
(7,839,733
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
(306,756
 )
$
 (2,165,325
 )
286,677
$
 3,907,759
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS


(1,888,916
 )

$
(13,147,251
 )

1,762,701


$
22,629,117

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $81,803,615. The net unrealized depreciation of investments for federal tax purposes was $1,029,465. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $6,397,402 and net unrealized depreciation from investments for those securities having an excess of cost over value of $7,426,867.

At July 31, 2008, the Fund had a capital loss carryforward of $98,518,058 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year
   
 Expiration Amount
2009
$76,646,626
2010
$21,688,057
2016
$ 183,375

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

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for certain Classes of the Fund based on average daily net assets:


Share Class Name


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

In addition, subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any additional portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser waived $196,234 of its fee.

Administrative Fee

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


Administrative Fee


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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 0.204% of average daily net assets of the Fund. The Fund is currently being charged the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above. FAS waived $27,191 of its fee.

Distribution Services Fee

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


Share Class Name


   
 Percentage of Average Daily
Net Assets of Class
Class A Shares
0.05%
Class B Shares
0.75%
Class C Shares
0.75%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC retained $2,905 of fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $2,790 in sales charges from the sale of Class A Shares. FSC also retained $825 of CDSC relating to redemptions of Class A Shares and $429 relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Financial intermediaries may include a company affiliated with management of Federated Investors, Inc. A financial intermediary affiliated with management of Federated Investors, Inc. received $13,127 of Service Fees for the six months ended January 31, 2009. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC received $222 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares, Class B Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.25%, 1.50%, 2.25% and 2.25%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $428. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund, Institutional Shares
507,081
15,445,738
14,416,052
1,536,767
$1,536,767
$12,710

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 185,652,643
Sales
$
 199,461,464

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT LARGE CAP GROWTH FUND (THE "FUND")

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

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

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

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

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

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

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

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

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

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

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

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

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

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

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

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R882

36356 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Large Cap
Value Fund

Established 2008

A Portfolio of Federated MDT Series

SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Class A Shares
Class C Shares
Class K Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

   
 Six Months
Ended
(unaudited)
1/31/2009
   
 Period
Ended
7/31/2008
1
Net Asset Value, Beginning of Period
$9.46 $10.00
Income From Investment Operations:
Net investment income
0.05 2 0.03 2
Net realized and unrealized loss on investments
(3.50
 )
(0.57
 )
   TOTAL FROM INVESTMENT OPERATIONS
(3.45
 )
(0.54
 )
Less Distributions:
Distributions from net investment income
(0.05
 )
--
Net Asset Value, End of Period
$5.96
$9.46
Total Return 3
(36.51
 )%
(5.40
 )%
Ratios to Average Net Assets:
Net expenses
1.22
 % 4
1.24
 % 4
Net investment income
1.46
 % 4
0.80
 % 4
Expense waiver/reimbursement 5
91.14
 % 4
111.75
 % 4
Supplemental Data:
Net assets, end of period (000 omitted)
$134
$64
Portfolio turnover
78
 %
41
 %

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

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

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

4 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

   
 Six Months
Ended
(unaudited)
1/31/2009
   
 Period
Ended
7/31/2008
1
Net Asset Value, Beginning of Period
$9.47 $10.00
Income From Investment Operations:
Net investment income
0.02 2 0.02 2
Net realized and unrealized loss on investments
(3.48
 )
(0.55
 )
   TOTAL FROM INVESTMENT OPERATIONS
(3.46
 )
(0.53
 )
Less Distributions:
Distributions from net investment income
(0.05
 )
--
Net Asset Value, End of Period
$5.96
$9.47
Total Return 3
(36.58
 )%
(5.30
 )%
Ratios to Average Net Assets:
Net expenses
1.96
 % 4
1.99
 % 4
Net investment income
0.73
 % 4
0.05
 % 4
Expense waiver/reimbursement 5
91.19
 % 4
111.80
 % 4
Supplemental Data:
Net assets, end of period (000 omitted)
$20
$0
 6
Portfolio turnover
78
 %
41
 %

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

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

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

4 Computed on an annualized basis.

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

6 Represents less than $1,000.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class K Shares

(For a Share Outstanding Throughout Each Period)

   
 Six Months
Ended
(unaudited)
1/31/2009
   
 Period
Ended
7/31/2008
1
Net Asset Value, Beginning of Period
$9.47 $10.00
Income From Investment Operations:
Net investment income
0.05 2 0.03 2
Net realized and unrealized loss on investments
(3.49
 )
(0.56
 )
   TOTAL FROM INVESTMENT OPERATIONS
(3.44
 )
(0.53
 )
Less Distributions:
Distributions from net investment income
(0.06
 )
--
Net Asset Value, End of Period
$5.97
$9.47
Total Return 3
(36.42
 )%
(5.30
 )%
Ratios to Average Net Assets:
Net expenses
1.72
 % 4
1.74
 % 4
Net investment income
0.96
 % 4
0.30
 % 4
Expense waiver/reimbursement 5
91.16
 % 4
111.71
 % 4
Supplemental Data:
Net assets, end of period (000 omitted)
$0
 6
$0
 6
Portfolio turnover
78
 %
41
 %

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

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

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

4 Computed on an annualized basis.

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

6 Represents less than $1,000.

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual:
Class A Shares
$1,000
$ 634.90
$ 5.03
Class C Shares
$1,000
$ 634.20
$ 8.07
Class K Shares
$1,000
$ 635.80
$ 7.09
Hypothetical (assuming a 5% return before expenses):
Class A Shares
$1,000
$1,019.06
$ 6.21
Class C Shares
$1,000
$1,015.32
$ 9.96
Class K Shares
$1,000
$1,016.53
$ 8.74

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

Class A Shares
1.22%
Class C Shares
1.96%
Class K Shares
1.72%

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Electric Utility
6.9
 %
Ethical Drugs
5.9
 %
Integrated International Oil
5.7
 %
Property Liability Insurance
5.7
 %
Oil Refiner
4.8
 %
Railroad
4.8
 %
Diversified Oil
4.7
 %
Securities Brokerage
4.5
 %
Integrated Domestic Oil
4.4
 %
Home Products
4.3
 %
Restaurant
4.1
 %
Multi-Line Insurance
3.7
 %
Services to Medical Professionals
3.0
 %
Commodity Chemicals
2.4
 %
Crude Oil & Gas Production
2.2
 %
Department Stores
2.1
 %
Major Steel Producer
2.1
 %
Defense Aerospace
1.9
 %
Life Insurance
1.9
 %
Personal Loans
1.8
 %
Multi-Industry Capital Goods
1.6
 %
AT&T Divestiture
1.4
 %
Financial Services
1.4
 %
Aluminum
1.0
 %
Other 2
14.5
 %
Cash Equivalents 3
11.5
 %
Other Assets and Liabilities--Net 4
(8.3
 )%
   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

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--96.8%
Agricultural Machinery--0.5%
117 Deere & Co.
$
 4,065
Aluminum--1.0%
955 Alcoa, Inc.
7,439
Apparel--0.2%
36 Columbia Sportswear Co.
 1,034
107 Liz Claiborne, Inc.
235
   TOTAL
1,269
AT&T Divestiture--1.4%
422 AT&T, Inc.
10,390
Auto Part Replacement--0.2%
38 Genuine Parts Co.
1,217
Biotechnology--0.9%
128 1 Amgen, Inc.
7,021
Building Materials--0.1%
63 1 Owens Corning, Inc.
840
Clothing Stores--0.2%
75 American Eagle Outfitters, Inc.
 676
93 1 AnnTaylor Stores Corp.
458
   TOTAL
1,134
Commodity Chemicals--2.4%
1,169 Dow Chemical Co.
 13,549
185 Eastman Chemical Co.
4,801
   TOTAL
18,350
Computer Peripherals--0.4%
136 1 Lexmark International Group, Class A
3,220
Computer Stores--0.3%
118 1 Ingram Micro, Inc., Class A
 1,448
33 1 Tech Data Corp.
598
   TOTAL
2,046
Shares
   
   
Value
COMMON STOCKS--continued
Construction Machinery--0.2%
107 Trinity Industries, Inc.
$
1,232
Contracting--0.3%
63 Granite Construction, Inc.
2,219
Crude Oil & Gas Production--2.2%
283 Anadarko Petroleum Corp.
 10,397
87 1 Encore Aquisition Co.
 2,365
173 Pioneer Natural Resources, Inc.
 2,533
74 St. Mary Land & Exploration Co.
1,432
   TOTAL
16,727
Defense Aerospace--1.9%
102 General Dynamics Corp.
 5,786
107 Lockheed Martin Corp.
8,778
   TOTAL
14,564
Defense Electronics--0.8%
30 Grainger (W.W.), Inc.
 2,188
38 Northrop Grumman Corp.
 1,829
33 Raytheon Co.
1,670
   TOTAL
5,687
Department Stores--2.1%
54 Dillards, Inc., Class A
 235
383 1 Sears Holdings Corp.
15,672
   TOTAL
15,907
Discount Department Stores--0.4%
101 1 BJ's Wholesale Club, Inc.
2,897
Diversified Leisure--0.2%
279 Royal Caribbean Cruises Ltd.
1,811
Diversified Oil--4.7%
640 Occidental Petroleum Corp.
34,912
Electric Utility--6.9%
271 Edison International
 8,826
148 Entergy Corp.
 11,301
727 Sempra Energy
31,872
   TOTAL
51,999
Shares
   
   
Value
COMMON STOCKS--continued
Ethical Drugs--5.9%
64 1 Forest Laboratories, Inc., Class A
 $ 1,603
606 Johnson & Johnson
 34,960
267 Merck & Co., Inc.
7,623
   TOTAL
44,186
Financial Services--1.4%
512 Ameriprise Financial, Inc.
10,317
Gas Distributor--0.9%
159 Energen Corp.
 4,644
58 National Fuel Gas Co.
1,738
   TOTAL
6,382
Grocery Chain--0.4%
126 Safeway, Inc.
2,700
Home Building--0.1%
91 KB HOME
971
Home Products--4.3%
590 Procter & Gamble Co.
32,155
Industrial Machinery--0.3%
220 1 Terex Corp.
2,605
Insurance Brokerage--0.2%
6 1 Markel Corp.
1,620
Integrated Domestic Oil--4.4%
693 ConocoPhillips
32,938
Integrated International Oil--5.7%
467 Chevron Corp.
 32,933
124 Exxon Mobil Corp.
9,484
   TOTAL
42,417
Life Insurance--1.9%
100 Principal Financial Group
 1,659
400 Prudential Financial, Inc.
 10,300
71 Torchmark Corp.
2,130
   TOTAL
14,089
Shares
   
   
Value
COMMON STOCKS--continued
Machine Tools--0.1%
12 1 Mettler-Toledo International, Inc.
$
799
Major Steel Producer--2.1%
531 United States Steel Corp.
15,946
Maritime--0.6%
47 Alexander and Baldwin, Inc.
 1,036
88 Overseas Shipholding Group, Inc.
3,142
   TOTAL
4,178
Medical Supplies--0.6%
79 AmerisourceBergen Corp.
 2,869
30 McKesson HBOC, Inc.
1,326
   TOTAL
4,195
Medical Technology--0.1%
15 1 Zimmer Holdings, Inc.
546
Metal Fabrication--0.4%
124 Reliance Steel & Aluminum Co.
2,744
Mini-Mill Producer--0.3%
193 Commercial Metals Corp.
2,219
Miscellaneous Food Products--0.2%
61 Corn Products International, Inc.
1,412
Miscellaneous Machinery--0.1%
25 Illinois Tool Works, Inc.
816
Motion Pictures--0.3%
51 1 Dreamworks Animation SKG, Inc.
 1,119
59 Walt Disney Co.
1,220
   TOTAL
2,339
Multi-Industry Capital Goods--1.6%
252 United Technologies Corp.
12,093
Multi-Line Insurance--3.7%
533 Allstate Corp.
 11,550
86 Assurant, Inc.
 2,270
432 CIGNA Corp.
 7,499
Shares
   
   
Value
COMMON STOCKS--continued
Multi-Line Insurance--continued
30 Cincinnati Financial Corp.
 $ 658
25 Hanover Insurance Group, Inc.
 1,011
188 Hartford Financial Services Group, Inc.
 2,474
89 Lincoln National Corp.
 1,347
39 UNUMProvident Corp.
552
   TOTAL
27,361
Oil Refiner--4.8%
137 Frontier Oil Corp.
 1,956
1,401 Valero Energy Corp.
33,792
   TOTAL
35,748
Oil Service, Explore & Drill--0.7%
61 1 Exterran Holdings, Inc.
 1,352
63 1 Seacor Holdings, Inc.
4,098
   TOTAL
5,450
Packaged Foods--0.8%
24 Campbell Soup Co.
 729
41 General Mills, Inc.
 2,425
107 Kraft Foods, Inc., Class A
3,001
   TOTAL
6,155
Paper Products--0.2%
160 MeadWestvaco Corp.
1,862
Personal Loans--1.8%
837 Capital One Financial Corp.
13,258
Personal Products--0.1%
50 1 NBTY, Inc.
944
Personnel Agency--0.3%
90 Manpower, Inc.
2,561
Property Liability Insurance--5.7%
77 Berkley, W. R. Corp.
 2,039
408 Chubb Corp.
 17,373
609 The Travelers Cos., Inc.
23,532
   TOTAL
42,944
Shares
   
   
Value
COMMON STOCKS--continued
Railroad--4.8%
942 Norfolk Southern Corp.
$
36,135
Recreational Vehicles--0.4%
267 Harley Davidson, Inc.
3,252
Regional Bank--0.2%
236 Marshall & Ilsley Corp.
1,348
Restaurant--4.1%
528 McDonald's Corp.
30,635
Securities Brokerage--4.5%
1,668 Morgan Stanley
33,744
Semiconductor Distribution--0.4%
155 1 Arrow Electronics, Inc.
2,956
Semiconductor Manufacturing Equipment--0.2%
94 1 Novellus Systems, Inc.
 1,296
102 1 Teradyne, Inc.
491
   TOTAL
1,787
Services to Medical Professionals--3.0%
165 Aetna, Inc.
 5,115
80 1 Health Net, Inc.
 1,170
88 1 Medco Health Solutions, Inc.
 3,954
256 UnitedHealth Group, Inc.
 7,252
128 1 Wellpoint, Inc.
5,306
   TOTAL
22,797
Software Packaged/Custom--0.1%
22 1 DST Systems, Inc.
699
Specialty Retailing--0.5%
83 Barnes & Noble, Inc.
 1,363
97 CVS Caremark Corp.
2,607
   TOTAL
3,970
Shares
   
   
Value
COMMON STOCKS--continued
Stainless Steel Producer--0.2%
71 Carpenter Technology Corp.
$
1,171
Telecommunication Equipment & Services--0.3%
84 1 Anixter International, Inc.
2,266
Trucking--0.8%
179 Ryder System, Inc.
6,047
   TOTAL COMMON STOCKS
(IDENTIFIED COST $916,044)
725,703
MUTUAL FUND--11.5%
85,959 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
85,959
   TOTAL INVESTMENTS--108.3%
(IDENTIFIED COST $1,002,003) 4
811,662
   OTHER ASSETS AND LIABILITIES - NET--(8.3)% 5
(62,189
 )
   TOTAL NET ASSETS--100%
$
 749,473

1 Non-income-producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represents cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$811,662
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$811,662

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $85,959 of investments in an affiliated issuer (Note 5) (identified cost $1,002,003)
 $ 811,662
Income receivable
 1,073
Receivable for investments sold
1,556
   TOTAL ASSETS
814,291
Liabilities:
Payable for investments purchased
 $ 1,528
Payable for custodian fees
 688
Payable for auditing fees
 13,686
Payable for legal fees
 4,607
Payable for portfolio accounting fees
 19,278
Payable for distribution services fee (Note 5)
 13
Payable for shareholder services fee (Note 5)
 53
Payable for share registration costs
 21,135
Accrued expenses
3,830
   TOTAL LIABILITIES
64,818
Net assets for 125,604 shares outstanding
$
 749,473
Net Assets Consist of:
Paid-in capital
 $ 1,014,199
Net unrealized depreciation of investments
 (190,341 )
Accumulated net realized loss on investments
 (74,481 )
Undistributed net investment income
96
   TOTAL NET ASSETS
$
 749,473

Statement of Assets and Liabilities - continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($596,052 ÷ 99,870 shares outstanding), no par value, unlimited shares authorized
$5.97
Offering price per share
$5.97
Redemption proceeds per share
$5.97
Class A Shares:
Net asset value per share ($133,626 ÷ 22,414 shares outstanding), no par value, unlimited shares authorized
$5.96
Offering price per share (100/94.50 of $5.96)
$6.31
Redemption proceeds per share
$5.96
Class C Shares:
Net asset value per share ($19,736 ÷ 3,310 shares outstanding), no par value, unlimited shares authorized
$5.96
Offering price per share
$5.96
Redemption proceeds per share (99.00/100 of $5.96)
$5.90
Class K Shares:
Net asset value per share ($59.70 ÷ 10 shares outstanding), no par value, unlimited shares authorized
$5.97
Offering price per share
$5.97
Redemption proceeds per share
$5.97

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $418 received from an affiliated issuer) (Note 5)
$
 7,486
Expenses:
Investment adviser fee (Note 5)
 $ 2,091
Administrative personnel and services fee (Note 5)
 136,109
Custodian fees
 3,870
Transfer and dividend disbursing agent fees and
expenses--Institutional Shares
 21,596
Transfer and dividend disbursing agent fees and
expenses--Class A Shares
 4,139
Transfer and dividend disbursing agent fees and
expenses--Class C Shares
 233
Transfer and dividend disbursing agent fees and
expenses--Class K Shares
 3
Auditing fees
 4,486
Legal fees
 3,133
Portfolio accounting fees
 37,424
Distribution services fee--Class C Shares (Note 5)
 25
Shareholder services fee--Class A Shares (Note 5)
 113
Shareholder services fee--Class C Shares (Note 5)
 8
Share registration costs
 22,897
Printing and postage
 17,392
Insurance premiums
 2,057
Miscellaneous
1,310
   TOTAL EXPENSES
256,886
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee
 $ (2,091 )
Waiver of administrative personnel and services fee
 (27,723 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Institutional Shares
 (23 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class A Shares
 (18 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class C Shares
 (3 )
Reimbursement of other operating expenses
(224,166
 )
   TOTAL WAIVERS AND REIMBURSEMENTS
(254,024
 )
Net expenses
2,862
Net investment income
4,624
Realized and Unrealized Loss on Investments:
Net realized loss on investments
 (73,472 )
Net change in unrealized depreciation of investments
(154,495
 )
Net realized and unrealized loss on investments
(227,967
 )
Change in net assets resulting from operations
$
 (223,343
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   

Period
Ended
7/31/2008
1
Increase (Decrease) in Net Assets
Operations:
Net investment income
 $ 4,624 $ 2,255
Net realized loss on investments
 (73,472 ) (1,009 )
Net change in unrealized appreciation/depreciation of investments
(154,495
 )
(35,846
 )
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(223,343
 )
(34,600
 )
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares
 (5,519 ) --
Class A Shares
 (1,095 ) --
Class C Shares
 (168 ) --
Class K Shares
(1
 )
--
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
(6,783
 )
--
Share Transactions:
Proceeds from sale of shares
 444,950 574,741
Net asset value of shares issued to shareholders in payment of distributions declared
 4,007 --
Cost of shares redeemed
(6,427
 )
(3,072
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
442,530
571,669
Change in net assets
212,404
537,069
Net Assets:
Beginning of period
537,069
--
End of period (including undistributed net investment income of $96 and $2,255, respectively)
$
 749,473
$
 537,069

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

The Fund's Institutional Shares, Class A Shares, Class C Shares and Class K Shares became effective with the Securities and Exchange Commission (SEC) on March 3, 2008.

2. SIGNIFICANT ACCOUNTING POLICIES

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

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

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

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax year 2008 remains subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

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

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

   
 Six Months Ended
1/31/2009
   
 Period Ended
7/31/2008 1
Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 49,450 $ 315,000 50,010 $ 500,100
Shares issued to shareholders in payment of distributions declared
 420 2,744 -- --
Shares redeemed
--
--
(10
 )
(100
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS
49,870

$
 317,744

50,000
$
 500,000
   
 Six Months Ended
1/31/2009
   
 Period Ended
7/31/2008 1
Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 16,498 $ 109,641 7,012 $ 74,441
Shares issued to shareholders in payment of distributions declared
 168 1,095 -- --
Shares redeemed
(966
 )
(6,077
 )
(298
 )
(2,972
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS
15,700


$
 104,659
6,714

$
 71,469
   
 Six Months Ended
1/31/2009
   
 Period Ended
7/31/2008 1
Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 3,329 $ 20,309 10 $ 100
Shares issued to shareholders in payment of distributions declared
 26 168 -- --
Shares redeemed
(55
 )
(350
 )
--
--
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
3,300

$
 20,127
10

$
 100
   
 Six Months Ended
1/31/2009
   
 Period Ended
7/31/2008 1
Class K Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
--
$
 --
10
$
 100
   NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS
--
$
 --
10

$
 100
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS

68,870


$
 442,530

56,734


$
 571,669

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $1,002,003. The net unrealized depreciation of investments for federal tax purposes was $190,341. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $7,962 and net unrealized depreciation from investments for those securities having an excess of cost over value of $198,303.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser voluntarily waived $2,078 of its fee and voluntarily reimbursed $224,166 of other operating expenses. In addition, an affiliate of the Adviser reimbursed $44 of transfer and dividend disbursing agent fees and expenses.

Administrative Fee

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

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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 38.879% of average daily net assets of the Fund. The Fund is currently being charged the minimum administrative fee; therefore the fee as a percentage of average daily net assets is greater than the amounts presented in the chart above. FAS waived $27,723 of its fee.

Distribution Services Fee

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

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

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC did not retain any fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees.

Sales Charges

Front-end sales charges do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $63 in sales charges from the sale of Class A Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC did not receive any fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares, Class C Shares and Class K Shares (after the voluntary waivers and reimbursements) will not exceed 0.97%, 1.22%, 1.97% and 1.72%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $13. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund, Institutional Shares
73,796
540,847
528,684
85,959
$85,959
$418

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 859,830
Sales
$
 442,240

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory Contract - May 2008

FEDERATED MDT LARGE CAP VALUE FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. Because the Fund did not yet have a meaningful operating history, the Board's decision to approve the contract reflects the exercise of its business judgment primarily on whether to authorize the continued offering of this new investment vehicle, as originally proposed by, and based on information previously provided by, the Federated organization, and based on Federated's recommendation to go forward with the Fund.

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

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

The Board considered and weighed these circumstances in light of its substantial accumulated experience in working with Federated on matters relating to other Federated funds, and was assisted in its deliberations by independent legal counsel. The Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); and the nature, quality and extent of the advisory and other services to be provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

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

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

It was recognized that the factors mentioned above relating to such matters as fund performance and any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with the Fund, are essentially impossible to apply before the Fund has experienced any meaningful operating history. Nevertheless, the Board monitors the Fund's performance quarterly as information becomes available. Moreover, in connection with the Board's governance of other Federated funds, it should be noted that the Board regularly receives financial information about Federated, including reports on the compensation and benefits Federated derives from its relationships with the other Federated funds. These reports cover not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts ( e.g. , for serving as the Federated funds' administrator). The reports also discuss any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waive fees and/or reimburse expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

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

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

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

It was noted in the materials for the Board meeting that the Fund had only recently commenced its first fiscal year, and that the Fund's investment advisory fee has been waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. With due regard for the fact that the Fund did not yet have a meaningful operating history, the Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

The Board based its decision to approve the contract on the totality of the circumstances and relevant factors, and with a view to past and future long-term considerations. As noted, not all of the factors and considerations identified above were relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that are relevant, the Board's decision to approve the contract reflects its determination that, based upon the information previously requested and supplied, Federated's proposal to establish and manage the Fund, and its past performance and actions in providing services to other mutual funds, provide a satisfactory basis to support the business decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R668
Cusip 31421R650
Cusip 31421R643

40125 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Large Cap Value Fund

A Portfolio of Federated MDT Series



SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
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)

   
 Six Months
Ended
(unaudited)
1/31/2009
   
 Period
Ended
7/31/2008
1
Net Asset Value, Beginning of Period
$9.47 $10.00
Income From Investment Operations:
Net investment income
0.06 2 0.04 2
Net realized and unrealized loss on investments
(3.50
 )
(0.57
 )
   TOTAL FROM INVESTMENT OPERATIONS
(3.44
 )
(0.53
 )
Less Distributions:
Distributions from net investment income
(0.06
 )
--
Net Asset Value, End of Period
$5.97
$9.47
Total Return 3
(36.42
 )%
(5.30
 )%
Ratios to Average Net Assets:
Net expenses
0.97
 % 4
0.99
 % 4
Net investment income
1.71
 % 4
1.05
 % 4
Expense waiver/reimbursement 5
91.11
 % 4
111.72
 % 4
Supplemental Data:
Net assets, end of period (000 omitted)
$596
$473
Portfolio turnover
78
 %
41
 %

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

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

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

4 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual
$1,000
$ 635.80
$4.00
Hypothetical (assuming a 5% return before expenses)
$1,000
$1,020.32
$4.94

1 Expenses are equal to the Fund's annualized net expense ratio of 0.97%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Electric Utility
6.9
 %
Ethical Drugs
5.9
 %
Integrated International Oil
5.7
 %
Property Liability Insurance
5.7
 %
Oil Refiner
4.8
 %
Railroad
4.8
 %
Diversified Oil
4.7
 %
Securities Brokerage
4.5
 %
Integrated Domestic Oil
4.4
 %
Home Products
4.3
 %
Restaurant
4.1
 %
Multi-Line Insurance
3.7
 %
Services to Medical Professionals
3.0
 %
Commodity Chemicals
2.4
 %
Crude Oil & Gas Production
2.2
 %
Department Stores
2.1
 %
Major Steel Producer
2.1
 %
Defense Aerospace
1.9
 %
Life Insurance
1.9
 %
Personal Loans
1.8
 %
Multi-Industry Capital Goods
1.6
 %
AT&T Divestiture
1.4
 %
Financial Services
1.4
 %
Aluminum
1.0
 %
Other 2
14.5
 %
Cash Equivalents 3
11.5
 %
Other Assets and Liabilities--Net 4
(8.3
 )%
   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

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--96.8%
Agricultural Machinery--0.5%
117 Deere & Co.
$
 4,065
Aluminum--1.0%
955 Alcoa, Inc.
7,439
Apparel--0.2%
36 Columbia Sportswear Co.
 1,034
107 Liz Claiborne, Inc.
235
   TOTAL
1,269
AT&T Divestiture--1.4%
422 AT&T, Inc.
10,390
Auto Part Replacement--0.2%
38 Genuine Parts Co.
1,217
Biotechnology--0.9%
128 1 Amgen, Inc.
7,021
Building Materials--0.1%
63 1 Owens Corning, Inc.
840
Clothing Stores--0.2%
75 American Eagle Outfitters, Inc.
 676
93 1 AnnTaylor Stores Corp.
458
   TOTAL
1,134
Commodity Chemicals--2.4%
1,169 Dow Chemical Co.
 13,549
185 Eastman Chemical Co.
4,801
   TOTAL
18,350
Computer Peripherals--0.4%
136 1 Lexmark International Group, Class A
3,220
Computer Stores--0.3%
118 1 Ingram Micro, Inc., Class A
 1,448
33 1 Tech Data Corp.
598
   TOTAL
2,046
Shares
   
   
Value
COMMON STOCKS--continued
Construction Machinery--0.2%
107 Trinity Industries, Inc.
$
1,232
Contracting--0.3%
63 Granite Construction, Inc.
2,219
Crude Oil & Gas Production--2.2%
283 Anadarko Petroleum Corp.
 10,397
87 1 Encore Aquisition Co.
 2,365
173 Pioneer Natural Resources, Inc.
 2,533
74 St. Mary Land & Exploration Co.
1,432
   TOTAL
16,727
Defense Aerospace--1.9%
102 General Dynamics Corp.
 5,786
107 Lockheed Martin Corp.
8,778
   TOTAL
14,564
Defense Electronics--0.8%
30 Grainger (W.W.), Inc.
 2,188
38 Northrop Grumman Corp.
 1,829
33 Raytheon Co.
1,670
   TOTAL
5,687
Department Stores--2.1%
54 Dillards, Inc., Class A
 235
383 1 Sears Holdings Corp.
15,672
   TOTAL
15,907
Discount Department Stores--0.4%
101 1 BJ's Wholesale Club, Inc.
2,897
Diversified Leisure--0.2%
279 Royal Caribbean Cruises Ltd.
1,811
Diversified Oil--4.7%
640 Occidental Petroleum Corp.
34,912
Electric Utility--6.9%
271 Edison International
 8,826
148 Entergy Corp.
 11,301
727 Sempra Energy
31,872
   TOTAL
51,999
Shares
   
   
Value
COMMON STOCKS--continued
Ethical Drugs--5.9%
64 1 Forest Laboratories, Inc., Class A
 $ 1,603
606 Johnson & Johnson
 34,960
267 Merck & Co., Inc.
7,623
   TOTAL
44,186
Financial Services--1.4%
512 Ameriprise Financial, Inc.
10,317
Gas Distributor--0.9%
159 Energen Corp.
 4,644
58 National Fuel Gas Co.
1,738
   TOTAL
6,382
Grocery Chain--0.4%
126 Safeway, Inc.
2,700
Home Building--0.1%
91 KB HOME
971
Home Products--4.3%
590 Procter & Gamble Co.
32,155
Industrial Machinery--0.3%
220 1 Terex Corp.
2,605
Insurance Brokerage--0.2%
6 1 Markel Corp.
1,620
Integrated Domestic Oil--4.4%
693 ConocoPhillips
32,938
Integrated International Oil--5.7%
467 Chevron Corp.
 32,933
124 Exxon Mobil Corp.
9,484
   TOTAL
42,417
Life Insurance--1.9%
100 Principal Financial Group
 1,659
400 Prudential Financial, Inc.
 10,300
71 Torchmark Corp.
2,130
   TOTAL
14,089
Shares
   
   
Value
COMMON STOCKS--continued
Machine Tools--0.1%
12 1 Mettler-Toledo International, Inc.
$
799
Major Steel Producer--2.1%
531 United States Steel Corp.
15,946
Maritime--0.6%
47 Alexander and Baldwin, Inc.
 1,036
88 Overseas Shipholding Group, Inc.
3,142
   TOTAL
4,178
Medical Supplies--0.6%
79 AmerisourceBergen Corp.
 2,869
30 McKesson HBOC, Inc.
1,326
   TOTAL
4,195
Medical Technology--0.1%
15 1 Zimmer Holdings, Inc.
546
Metal Fabrication--0.4%
124 Reliance Steel & Aluminum Co.
2,744
Mini-Mill Producer--0.3%
193 Commercial Metals Corp.
2,219
Miscellaneous Food Products--0.2%
61 Corn Products International, Inc.
1,412
Miscellaneous Machinery--0.1%
25 Illinois Tool Works, Inc.
816
Motion Pictures--0.3%
51 1 Dreamworks Animation SKG, Inc.
 1,119
59 Walt Disney Co.
1,220
   TOTAL
2,339
Multi-Industry Capital Goods--1.6%
252 United Technologies Corp.
12,093
Multi-Line Insurance--3.7%
533 Allstate Corp.
 11,550
86 Assurant, Inc.
 2,270
432 CIGNA Corp.
 7,499
Shares
   
   
Value
COMMON STOCKS--continued
Multi-Line Insurance--continued
30 Cincinnati Financial Corp.
 $ 658
25 Hanover Insurance Group, Inc.
 1,011
188 Hartford Financial Services Group, Inc.
 2,474
89 Lincoln National Corp.
 1,347
39 UNUMProvident Corp.
552
   TOTAL
27,361
Oil Refiner--4.8%
137 Frontier Oil Corp.
 1,956
1,401 Valero Energy Corp.
33,792
   TOTAL
35,748
Oil Service, Explore & Drill--0.7%
61 1 Exterran Holdings, Inc.
 1,352
63 1 Seacor Holdings, Inc.
4,098
   TOTAL
5,450
Packaged Foods--0.8%
24 Campbell Soup Co.
 729
41 General Mills, Inc.
 2,425
107 Kraft Foods, Inc., Class A
3,001
   TOTAL
6,155
Paper Products--0.2%
160 MeadWestvaco Corp.
1,862
Personal Loans--1.8%
837 Capital One Financial Corp.
13,258
Personal Products--0.1%
50 1 NBTY, Inc.
944
Personnel Agency--0.3%
90 Manpower, Inc.
2,561
Property Liability Insurance--5.7%
77 Berkley, W. R. Corp.
 2,039
408 Chubb Corp.
 17,373
609 The Travelers Cos., Inc.
23,532
   TOTAL
42,944
Shares
   
   
Value
COMMON STOCKS--continued
Railroad--4.8%
942 Norfolk Southern Corp.
$
36,135
Recreational Vehicles--0.4%
267 Harley Davidson, Inc.
3,252
Regional Bank--0.2%
236 Marshall & Ilsley Corp.
1,348
Restaurant--4.1%
528 McDonald's Corp.
30,635
Securities Brokerage--4.5%
1,668 Morgan Stanley
33,744
Semiconductor Distribution--0.4%
155 1 Arrow Electronics, Inc.
2,956
Semiconductor Manufacturing Equipment--0.2%
94 1 Novellus Systems, Inc.
 1,296
102 1 Teradyne, Inc.
491
   TOTAL
1,787
Services to Medical Professionals--3.0%
165 Aetna, Inc.
 5,115
80 1 Health Net, Inc.
 1,170
88 1 Medco Health Solutions, Inc.
 3,954
256 UnitedHealth Group, Inc.
 7,252
128 1 Wellpoint, Inc.
5,306
   TOTAL
22,797
Software Packaged/Custom--0.1%
22 1 DST Systems, Inc.
699
Specialty Retailing--0.5%
83 Barnes & Noble, Inc.
 1,363
97 CVS Caremark Corp.
2,607
   TOTAL
3,970
Shares
   
   
Value
COMMON STOCKS--continued
Stainless Steel Producer--0.2%
71 Carpenter Technology Corp.
$
1,171
Telecommunication Equipment & Services--0.3%
84 1 Anixter International, Inc.
2,266
Trucking--0.8%
179 Ryder System, Inc.
6,047
   TOTAL COMMON STOCKS
(IDENTIFIED COST $916,044)
725,703
MUTUAL FUND--11.5%
85,959 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75% (AT NET ASSET VALUE)
85,959
   TOTAL INVESTMENTS--108.3%
(IDENTIFIED COST $1,002,003) 4
811,662
   OTHER ASSETS AND LIABILITIES - NET--(8.3)% 5
(62,189
 )
   TOTAL NET ASSETS--100%
$
 749,473

1 Non-income-producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represents cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$811,662
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$811,662

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $85,959 of investments in an affiliated issuer (Note 5) (identified cost $1,002,003)
 $ 811,662
Income receivable
 1,073
Receivable for investments sold
1,556
   TOTAL ASSETS
814,291
Liabilities:
Payable for investments purchased
 $ 1,528
Payable for custodian fees
 688
Payable for auditing fees
 13,686
Payable for legal fees
 4,607
Payable for portfolio accounting fees
 19,278
Payable for distribution services fee (Note 5)
 13
Payable for shareholder services fee (Note 5)
 53
Payable for share registration costs
 21,135
Accrued expenses
3,830
   TOTAL LIABILITIES
64,818
Net assets for 125,604 shares outstanding
$
 749,473
Net Assets Consist of:
Paid-in capital
 $ 1,014,199
Net unrealized depreciation of investments
 (190,341 )
Accumulated net realized loss on investments
 (74,481 )
Undistributed net investment income
96
   TOTAL NET ASSETS
$
 749,473

Statement of Assets and Liabilities - continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($596,052 ÷ 99,870 shares outstanding), no par value, unlimited shares authorized
$5.97
Offering price per share
$5.97
Redemption proceeds per share
$5.97
Class A Shares:
Net asset value per share ($133,626 ÷ 22,414 shares outstanding), no par value, unlimited shares authorized
$5.96
Offering price per share (100/94.50 of $5.96)
$6.31
Redemption proceeds per share
$5.96
Class C Shares:
Net asset value per share ($19,736 ÷ 3,310 shares outstanding), no par value, unlimited shares authorized
$5.96
Offering price per share
$5.96
Redemption proceeds per share (99.00/100 of $5.96)
$5.90
Class K Shares:
Net asset value per share ($59.70 ÷ 10 shares outstanding), no par value, unlimited shares authorized
$5.97
Offering price per share
$5.97
Redemption proceeds per share
$5.97

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $418 received from an affiliated issuer) (Note 5)
$
 7,486
Expenses:
Investment adviser fee (Note 5)
 $ 2,091
Administrative personnel and services fee (Note 5)
 136,109
Custodian fees
 3,870
Transfer and dividend disbursing agent fees and
expenses--Institutional Shares
 21,596
Transfer and dividend disbursing agent fees and
expenses--Class A Shares
 4,139
Transfer and dividend disbursing agent fees and
expenses--Class C Shares
 233
Transfer and dividend disbursing agent fees and
expenses--Class K Shares
 3
Auditing fees
 4,486
Legal fees
 3,133
Portfolio accounting fees
 37,424
Distribution services fee--Class C Shares (Note 5)
 25
Shareholder services fee--Class A Shares (Note 5)
 113
Shareholder services fee--Class C Shares (Note 5)
 8
Share registration costs
 22,897
Printing and postage
 17,392
Insurance premiums
 2,057
Miscellaneous
1,310
   TOTAL EXPENSES
256,886
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee
 $ (2,091 )
Waiver of administrative personnel and services fee
 (27,723 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Institutional Shares
 (23 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class A Shares
 (18 )
Reimbursement of transfer and dividend disbursing agent fees and expenses--Class C Shares
 (3 )
Reimbursement of other operating expenses
(224,166
 )
   TOTAL WAIVERS AND REIMBURSEMENTS
(254,024
 )
Net expenses
2,862
Net investment income
4,624
Realized and Unrealized Loss on Investments:
Net realized loss on investments
 (73,472 )
Net change in unrealized depreciation of investments
(154,495
 )
Net realized and unrealized loss on investments
(227,967
 )
Change in net assets resulting from operations
$
 (223,343
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   

Period
Ended
7/31/2008
1
Increase (Decrease) in Net Assets
Operations:
Net investment income
 $ 4,624 $ 2,255
Net realized loss on investments
 (73,472 ) (1,009 )
Net change in unrealized appreciation/depreciation of investments
(154,495
 )
(35,846
 )
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(223,343
 )
(34,600
 )
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares
 (5,519 ) --
Class A Shares
 (1,095 ) --
Class C Shares
 (168 ) --
Class K Shares
(1
 )
--
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
(6,783
 )
--
Share Transactions:
Proceeds from sale of shares
 444,950 574,741
Net asset value of shares issued to shareholders in payment of distributions declared
 4,007 --
Cost of shares redeemed
(6,427
 )
(3,072
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
442,530
571,669
Change in net assets
212,404
537,069
Net Assets:
Beginning of period
537,069
--
End of period (including undistributed net investment income of $96 and $2,255, respectively)
$
 749,473
$
 537,069

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

The Fund's Institutional Shares, Class A Shares, Class C Shares and Class K Shares became effective with the Securities and Exchange Commission (SEC) on March 3, 2008.

2. SIGNIFICANT ACCOUNTING POLICIES

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

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

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

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax year 2008 remains subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

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

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

   
 Six Months Ended
1/31/2009
   
 Period Ended
7/31/2008 1
Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 49,450 $ 315,000 50,010 $ 500,100
Shares issued to shareholders in payment of distributions declared
 420 2,744 -- --
Shares redeemed
--
--
(10
 )
(100
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS
49,870

$
 317,744

50,000
$
 500,000
   
 Six Months Ended
1/31/2009
   
 Period Ended
7/31/2008 1
Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 16,498 $ 109,641 7,012 $ 74,441
Shares issued to shareholders in payment of distributions declared
 168 1,095 -- --
Shares redeemed
(966
 )
(6,077
 )
(298
 )
(2,972
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS
15,700


$
 104,659
6,714

$
 71,469
   
 Six Months Ended
1/31/2009
   
 Period Ended
7/31/2008 1
Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 3,329 $ 20,309 10 $ 100
Shares issued to shareholders in payment of distributions declared
 26 168 -- --
Shares redeemed
(55
 )
(350
 )
--
--
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
3,300

$
 20,127
10

$
 100
   
 Six Months Ended
1/31/2009
   
 Period Ended
7/31/2008 1
Class K Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
--
$
 --
10
$
 100
   NET CHANGE RESULTING FROM CLASS K SHARE TRANSACTIONS
--
$
 --
10

$
 100
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS

68,870


$
 442,530

56,734


$
 571,669

1 Reflects operations for the period from March 7, 2008 (date of initial investment) to July 31, 2008.

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $1,002,003. The net unrealized depreciation of investments for federal tax purposes was $190,341. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $7,962 and net unrealized depreciation from investments for those securities having an excess of cost over value of $198,303.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund's average daily net assets. Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser voluntarily waived $2,078 of its fee and voluntarily reimbursed $224,166 of other operating expenses. In addition, an affiliate of the Adviser reimbursed $44 of transfer and dividend disbursing agent fees and expenses.

Administrative Fee

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

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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 38.879% of average daily net assets of the Fund. The Fund is currently being charged the minimum administrative fee; therefore the fee as a percentage of average daily net assets is greater than the amounts presented in the chart above. FAS waived $27,723 of its fee.

Distribution Services Fee

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

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

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC did not retain any fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees.

Sales Charges

Front-end sales charges do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $63 in sales charges from the sale of Class A Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC did not receive any fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares, Class C Shares and Class K Shares (after the voluntary waivers and reimbursements) will not exceed 0.97%, 1.22%, 1.97% and 1.72%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $13. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund, Institutional Shares
73,796
540,847
528,684
85,959
$85,959
$418

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 859,830
Sales
$
 442,240

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory Contract -- May 2008

FEDERATED MDT LARGE CAP VALUE FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. Because the Fund did not yet have a meaningful operating history, the Board's decision to approve the contract reflects the exercise of its business judgment primarily on whether to authorize the continued offering of this new investment vehicle, as originally proposed by, and based on information previously provided by, the Federated organization, and based on Federated's recommendation to go forward with the Fund.

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

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

The Board considered and weighed these circumstances in light of its substantial accumulated experience in working with Federated on matters relating to other Federated funds, and was assisted in its deliberations by independent legal counsel. The Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); and the nature, quality and extent of the advisory and other services to be provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

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

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

It was recognized that the factors mentioned above relating to such matters as fund performance and any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with the Fund, are essentially impossible to apply before the Fund has experienced any meaningful operating history. Nevertheless, the Board monitors the Fund's performance quarterly as information becomes available. Moreover, in connection with the Board's governance of other Federated funds, it should be noted that the Board regularly receives financial information about Federated, including reports on the compensation and benefits Federated derives from its relationships with the other Federated funds. These reports cover not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discuss any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waive fees and/or reimburse expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

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

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

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

It was noted in the materials for the Board meeting that the Fund had only recently commenced its first fiscal year, and that the Fund's investment advisory fee has been waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. With due regard for the fact that the Fund did not yet have a meaningful operating history, the Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

The Board based its decision to approve the contract on the totality of the circumstances and relevant factors, and with a view to past and future long-term considerations. As noted, not all of the factors and considerations identified above were relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that are relevant, the Board's decision to approve the contract reflects its determination that, based upon the information previously requested and supplied, Federated's proposal to establish and manage the Fund, and its past performance and actions in providing services to other mutual funds, provide a satisfactory basis to support the business decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R635

40126 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Mid Cap Growth Fund

Established 2005

A Portfolio of Federated MDT Series

SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Class A Shares
Class C Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

Six Months
Ended
(unaudited)		 Year Ended July 31,
Period
Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$12.10 $13.05 $10.67 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.02 ) (0.11 ) 3 (0.11 ) 3 (0.09 ) 3
Net realized and unrealized gain (loss) on investments
(4.60
 )
(0.72
 )
2.81
0.76
   TOTAL FROM INVESTMENT OPERATIONS
(4.62
 )
(0.83
 )
2.70
0.67
Less Distributions:
Distributions from net realized gain on investments
-- (0.12 ) (0.32 ) --
Redemption fees
--
--
0.00
 4
--
Net Asset Value, End of Period
$ 7.48
$12.10
$13.05
$10.67
Total Return 5
(38.18
 )%
(6.47
 )%
25.67
 %
6.70
 %
Ratios to Average Net Assets:
Net expenses
1.49
 % 6
1.50
 %
1.50
 %
2.02
 % 6
Net investment income (loss)
(0.43
 )% 6
(0.82
 )%
(0.88
 )%
(0.92
 )% 6
Expense waiver/reimbursement 7
4.27
 % 6
4.06
 %
15.03
 %
27.33
 % 6
Supplemental Data:
Net assets, end of period (000 omitted)
$7,059
$10,242
$6,446
$104
Portfolio turnover
148
 %
216
 %
141
 %
201
 %

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

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

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

4 Represents less than $0.01.

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

6 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

Six Months
Ended
(unaudited)		 Year Ended July 31,
Period
Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$11.84 $12.86 $10.60 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.05 ) (0.19 ) 3 (0.19 ) 3 (0.17 ) 3
Net realized and unrealized gain (loss) on investments
(4.50
 )
(0.71
 )
2.77
0.77
   TOTAL FROM INVESTMENT OPERATIONS
(4.55
 )
(0.90
 )
2.58
0.60
Less Distributions:
Distributions from net realized gain on investments
-- (0.12 ) (0.32 ) --
Redemption fees
--
--
0.00
 4
--
Net Asset Value, End of Period
$ 7.29
$11.84
$12.86
$10.60
Total Return 5
(38.43
 )%
(7.12
 )%
24.69
 %
6.00
 %
Ratios to Average Net Assets:
Net expenses
2.24
 % 6
2.24
 %
2.25
 %
2.77
 % 6
Net investment income (loss)
(1.23
 )% 6
(1.51
 )%
(1.56
 )%
(1.67
 )% 6
Expense waiver/reimbursement 7
4.33
 % 6
3.86
 %
26.77
 %
27.33
 % 6
Supplemental Data:
Net assets, end of period (000 omitted)
$648
$909
$123
$6
Portfolio turnover
148
 %
216
 %
141
 %
201
 %

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

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

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

4 Represents less than $0.01.

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

6 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual:
Class A Shares
$1,000
$618.20
$ 6.08
Class C Shares
$1,000
$615.70
$ 9.12
Hypothetical (assuming a 5% return before expenses):
Class A Shares
$1,000
$1,017.69
$ 7.58
Class C Shares
$1,000
$1,013.91
$11.37

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (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%

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Undesignated Consumer Cyclicals
12.2
 %
Biotechnology
9.2
 %
Defense Electronics
7.2
 %
Software Packaged/Custom
7.2
 %
Personnel Agency
4.4
 %
Agricultural Chemicals
4.2
 %
Financial Services
4.1
 %
Computer Services
3.9
 %
Generic Drugs
3.8
 %
Office Equipment
3.7
 %
Undesignated Health
3.4
 %
Medical Technology
3.3
 %
Home Products
3.1
 %
Defense Aerospace
2.9
 %
Metal Containers
2.9
 %
Other Communications Equipment
2.8
 %
Restaurant
2.3
 %
Oil Refiner
2.1
 %
Contracting
2.0
 %
Medical Supplies
1.9
 %
Discount Department Stores
1.8
 %
Cable TV
1.7
 %
Packaged Foods
1.5
 %
Securities Brokerage
1.2
 %
Soft Drinks
1.0
 %
Telecommunication Equipment & Services
1.0
 %
Other 2
4.8
 %
Cash Equivalents 3
0.8
 %
Other Assets and Liabilities--Net 4
(0.4
 )%
   TOTAL
100.0
%

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

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

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

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

Portfolio of Investments

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--99.6%
Agricultural Chemicals--4.2%
12,097 Scotts Co.
$
 389,765
Baking--0.5%
2,168 Flowers Foods, Inc.
46,590
Biotechnology--9.2%
9,839 1 Alexion Pharmaceuticals, Inc.
 362,764
4,561 1 Cephalon, Inc.
 352,018
1,919 1 Myriad Genetics, Inc.
143,100
   TOTAL
857,882
Cable TV--1.7%
9,872 1 Cablevision Systems Corp., Class A
158,248
Commodity Chemicals--0.7%
1,158 Compass Minerals International, Inc.
69,677
Computer Services--3.9%
11,490 1 Fiserv, Inc.
364,808
Contracting--2.0%
7,868 Harsco Corp.
186,629
Cosmetics & Toiletries--0.4%
2,053 Avon Products, Inc.
41,984
Defense Aerospace--2.9%
2,323 1 Alliant Techsystems, Inc.
 187,722
942 1 Teledyne Technologies, Inc.
 26,254
1,582 1 TransDigm Group, Inc.
53,915
   TOTAL
267,891
Defense Electronics--7.2%
2,855 1 FLIR Systems, Inc.
 71,289
4,103 L-3 Communications Holdings, Inc.
 324,219
7,393 Rockwell Collins
278,568
   TOTAL
674,076
Discount Department Stores--1.8%
3,867 1 Dollar Tree, Inc.
165,160
Shares
   
   
Value
COMMON STOCKS--continued
Financial Services--4.1%
4,068 Equifax, Inc.
 $ 100,561
1,916 FactSet Research Systems
 76,257
5,564 1 Metavante Technologies, Inc.
 80,734
9,827 Total System Services, Inc.
124,410
   TOTAL
381,962
Generic Drugs--3.8%
2,388 1 Endo Pharmaceuticals Holdings, Inc.
 53,658
21,747 1 Warner Chilcott Ltd., Class A
299,021
   TOTAL
352,679
Home Health Care--0.4%
1,429 1 Lincare Holdings, Inc.
34,367
Home Products--3.1%
4,583 Clorox Corp.
 229,837
1,348 1 Energizer Holdings, Inc.
64,205
   TOTAL
294,042
Internet Services--0.3%
865 1 NetFlix, Inc.
31,261
Medical Supplies--1.9%
1,173 1 Hologic, Inc.
 13,830
703 1 Immucor, Inc.
 19,480
1,040 Owens & Minor, Inc.
 41,361
3,676 1 Patterson Cos., Inc.
 67,602
1,463 Steris Corp.
38,916
   TOTAL
181,189
Medical Technology--3.3%
674 1 Gen-Probe, Inc.
 30,343
2,766 1 Masimo Corp.
 76,812
1,808 1 ResMed, Inc.
 72,139
3,447 1 Varian Medical Systems, Inc.
127,987
   TOTAL
307,281
Metal Containers--2.9%
7,073 Ball Corp.
271,179
Shares
   
   
Value
COMMON STOCKS--continued
Motion Pictures--0.4%
1,562 1 Dreamworks Animation SKG, Inc.
$
34,286
Multi-Industry Capital Goods--0.5%
1,678 Acuity Brands, Inc.
45,088
Office Equipment--3.7%
15,674 Pitney Bowes, Inc.
348,903
Oil Refiner--2.1%
4,351 Sunoco, Inc.
201,538
Other Communications Equipment--2.8%
6,074 Harris Corp.
262,943
Packaged Foods--1.5%
3,727 Hershey Foods Corp.
138,943
Paint & Related Materials--0.6%
1,111 Sherwin-Williams Co.
53,050
Personnel Agency--4.4%
1,313 1 Aecom Technology Corp.
 33,232
13,235 1 Hewitt Associates, Inc.
375,609
   TOTAL
408,841
Psychiatric Centers--0.4%
1,298 1 Psychiatric Solutions, Inc.
33,748
Recreational Goods--0.3%
1,496 1 WMS Industries, Inc.
33,241
Restaurant--2.3%
8,226 Darden Restaurants, Inc.
215,686
Securities Brokerage--1.2%
10,087 1 TD Ameritrade Holding Corp.
113,378
Shoes--0.3%
558 1 Deckers Outdoor Corp.
29,150
Soft Drinks--1.0%
2,953 1 Hansen Natural Corp.
98,926
Shares
   
   
Value
COMMON STOCKS--continued
Software Packaged/Custom--7.2%
188 CA, Inc.
 $ 3,382
5,996 1 DST Systems, Inc.
 190,493
2,861 1 F5 Networks, Inc.
 63,428
17,444 1 Solera Holdings, Inc.
420,226
   TOTAL
677,529
Telecommunication Equipment & Services--1.0%
5,280 1 Amdocs Ltd.
89,338
Undesignated Consumer Cyclicals--12.2%
4,448 1 Alliance Data Systems Corp.
 184,992
4,883 1 Apollo Group, Inc., Class A
 397,769
408 DeVRY, Inc.
 21,861
3,047 1 ITT Educational Services, Inc.
 373,288
655 Strayer Education, Inc.
 141,762
1,180 1 Weight Watchers International, Inc.
26,916
   TOTAL
1,146,588
Undesignated Health--3.4%
12,179 IMS Health, Inc.
 176,839
4,213 MEDNAX, Inc.
141,430
   TOTAL
318,269
   TOTAL COMMON STOCKS
(IDENTIFIED COST $9,339,422)
9,326,115
MUTUAL FUND--0.8%
76,111 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
76,111
   TOTAL INVESTMENTS--100.4%
(IDENTIFIED COST $9,415,533) 4
9,402,226
   OTHER ASSETS AND LIABILITIES - NET--(0.4)% 5
(36,352
 )
   TOTAL NET ASSETS--100%
$
 9,365,874

1 Non-income-producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represents cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$9,402,226
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$9,402,226

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $76,111 of investments in an affiliated issuer (Note 5) (identified cost $9,415,533)
 $ 9,402,226
Cash
 119,367
Income receivable
 4,000
Receivable for investments sold
 374,521
Receivable for shares sold
14,981
   TOTAL ASSETS
9,915,095
Liabilities:
Payable for investments purchased
 $ 499,258
Payable for shares redeemed
 916
Payable for auditing fees
10,924
Payable for portfolio accounting fees
 11,663
Payable for distribution services fee (Note 5)
 532
Payable for shareholder services fee (Note 5)
 4,317
Accrued expenses
21,611
   TOTAL LIABILITIES
549,221
Net assets for 1,252,694 shares outstanding
$
 9,365,874
Net Assets Consist of:
Paid-in capital
 $ 15,359,285
Net unrealized depreciation of investments
(13,307 )
Accumulated net realized loss on investments
(5,956,588 )
Accumulated net investment income (loss)
(23,516
 )
   TOTAL NET ASSETS
$
 9,365,874

Statement of Assets and Liabilities - continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($1,658,699 ÷ 220,017 shares outstanding), no par value, unlimited shares authorized
$7.54
Offering price per share
$7.54
Redemption proceeds per share
$7.54
Class A Shares:
Net asset value per share ($7,059,389 ÷ 943,826 shares outstanding), no par value, unlimited shares authorized
$7.48
Offering price per share (100/94.50 of $7.48)
$7.92
Redemption proceeds per share
$7.48
Class C Shares:
Net asset value per share ($647,786 ÷ 88,851 shares outstanding), no par value, unlimited shares authorized
$7.29
Offering price per share
$7.29
Redemption proceeds per share (99.00/100 of $7.29)
$7.22

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $2,377 received from an affiliated issuer) (Note 5)
$
 56,780
Expenses:
Investment adviser fee (Note 5)
 $ 47,959
Administrative personnel and services fee (Note 5)
 115,946
Custodian fees
 8,250
Transfer and dividend disbursing agent fees and expenses
 31,326
Directors'/Trustees' fees
 813
Auditing fees
 10,924
Legal fees
 3,199
Portfolio accounting fees
 35,692
Distribution services fee--Class C Shares (Note 5)
 3,165
Shareholder services fee--Class A Shares (Note 5)
 9,769
Shareholder services fee--Class C Shares (Note 5)
 1,055
Share registration costs
 17,048
Printing and postage
 18,821
Insurance premiums
 2,377
Miscellaneous
1,518
   TOTAL EXPENSES
307,862
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee
 $ (47,959 )
Waiver of administrative personnel and services fee
 (22,632 )
Waiver of distribution services fee--Class C Shares
 (15 )
Reimbursement of other operating expenses
(156,960
 )
   TOTAL WAIVERS AND REIMBURSEMENTS
(227,566
 )
Net expenses
80,296
Net investment income (loss)
(23,516
 )
Realized and Unrealized Loss on Investments:
Net realized loss on investments
(5,133,492 )
Net change in unrealized appreciation of investments
(123,263
 )
Net realized and unrealized loss on investments
(5,256,755
 )
Change in net assets resulting from operations
$
 (5,280,271
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   

Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)
 $ (23,516 ) $ (95,701 )
Net realized loss on investments
(5,133,492 ) (815,534 )
Net change in unrealized appreciation/depreciation of investments
(123,263
 )
(274,204
 )
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(5,280,271
 )
(1,185,439
 )
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares
 -- (10,164 )
Class A Shares
 -- (99,042 )
Class C Shares
--
(4,334
 )
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
--
(113,540
 )
Share Transactions:
Proceeds from sale of shares
 2,616,856 9,679,167
Net asset value of shares issued to shareholders in payment of distributions declared
 -- 104,453
Cost of shares redeemed
(1,856,777
 )
(1,875,638
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
760,079
7,907,982
Change in net assets
(4,520,192
 )
6,609,003
Net Assets:
Beginning of period
13,886,066
7,277,063
End of period (including accumulated net investment income (loss) of $(23,516) and $0, respectively)
$
 9,365,874
$
 13,886,066

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

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 U.S. generally accepted accounting principles (GAAP).

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

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

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:


   
 Six Months Ended
1/31/2009



   
 Year Ended
7/31/2008

Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 19,123 $ 170,750 200,619 $ 2,563,412
Shares issued to shareholders in payment of distributions declared
--

--

266

3,799
Shares redeemed
(23,721
 )
(196,311
 )
(30,323
 )
(384,900
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS
(4,598
 )

$
 (25,561
 )
170,562
$
 2,182,311



   
 Six Months Ended
1/31/2009



   
 Year Ended
7/31/2008

Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 230,989 $ 1,895,751 447,249 $ 6,047,252
Shares issued to shareholders in payment of distributions declared
--

--

6,900


98,193
Shares redeemed
(133,813
 )
(1,220,443
 )
(101,571
 )
(1,283,471
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS

97,176

$
 675,308
352,578

$
 4,861,974



   
 Six Months Ended
1/31/2009



   
 Year Ended
7/31/2008

Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 69,473 $ 550,355 83,860 $ 1,068,503
Shares issued to shareholders in payment of distributions declared
--


--

176

2,461
Shares redeemed
(57,442
 )
(440,023
 )
(16,800
 )
(207,267
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
12,031

$
 110,332
67,236
$
 863,697
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS

104,609


$
 760,079

590,376


$
 7,907,982

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $9,415,533. The net unrealized depreciation of investments for federal tax purposes was $13,307. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $490,162 and net unrealized depreciation from investments for those securities having an excess of cost over value of $503,469.

At July 31, 2008, the Fund had a capital loss carryforward of $80,433 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire in 2016.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.90% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to 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:

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

In addition, subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser waived $47,876 of its fee and reimbursed $156,960 of other operating expenses.

Administrative Fee

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


Administrative Fee


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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 1.751% of average daily net assets of the Fund. The Fund is currently being charged the minimum administrative fee; therefore the fee as a percentage of average daily net assets is greater than the amounts presented in the chart above. FAS waived $22,632 of its fee.

Distribution Services Fee

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


Share Class Name


   
 Percentage of Average Daily
Net Assets of Class
Class A Shares
0.05%
Class C Shares
0.75%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, FSC voluntarily waived $15 of its fee. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC did not retain any fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $106 in sales charges from the sale of Class A Shares. FSC also retained $109 of CDSC relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC received $119 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.24%, 1.49% and 2.24%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $83. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund,
Institutional Shares
909,461
2,260,298
3,093,648
76,111
$76,111
$2,377

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 16,815,105
Sales
$
 16,013,744

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT MID CAP GROWTH FUND (THE "FUND")

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

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

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

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

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

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

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

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

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

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

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

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

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

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

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

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R874
Cusip 31421R866

36358 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Mid Cap Growth Fund

A Portfolio of Federated MDT Series



SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
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)

    Six Months
Ended (unaudited)		    Period Ended
       Year Ended July 31,
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$12.18 $13.10 $10.69 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.01 ) (0.07 ) 3 (0.05 ) 3 (0.07 ) 3
Net realized and unrealized gain (loss) on investments
(4.63
 )
(0.73
 )
2.77
0.76
   TOTAL FROM INVESTMENT OPERATIONS
(4.64
 )
(0.80
 )
2.72
0.69
Less Distributions:
Distributions from net realized gain on investments
-- (0.12 ) (0.32 ) --
Redemption fees
--
--
0.01
--
Net Asset Value, End of Period
$ 7.54
$12.18
$13.10
$10.69
Total Return 4
(38.10
 )%
(6.22
 )%
25.90
 %
6.90
 %
Ratios to Average Net Assets:
Net expenses
1.24
 % 5
1.25
 %
1.25
 %
1.77
 % 5
Net investment income (loss)
(0.16
 )% 5
(0.57
 )%
(0.45
 )%
(0.67
 )% 5
Expense waiver/reimbursement 6
4.24
 % 5
3.95
 %
42.16
 %
27.33
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$1,659
$2,735
$708
$225
Portfolio turnover
148
 %
216
 %
141
 %
201
 %

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

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

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

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

5 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual
$1,000
$ 619.00
$5.06
Hypothetical (assuming a 5% return before expenses)
$1,000
$1,018.95
$6.31

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 184/365 (to reflect the one-half-year period).

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Undesignated Consumer Cyclicals
12.2
 %
Biotechnology
9.2
 %
Defense Electronics
7.2
 %
Software Packaged/Custom
7.2
 %
Personnel Agency
4.4
 %
Agricultural Chemicals
4.2
 %
Financial Services
4.1
 %
Computer Services
3.9
 %
Generic Drugs
3.8
 %
Office Equipment
3.7
 %
Undesignated Health
3.4
 %
Medical Technology
3.3
 %
Home Products
3.1
 %
Defense Aerospace
2.9
 %
Metal Containers
2.9
 %
Other Communications Equipment
2.8
 %
Restaurant
2.3
 %
Oil Refiner
2.1
 %
Contracting
2.0
 %
Medical Supplies
1.9
 %
Discount Department Stores
1.8
 %
Cable TV
1.7
 %
Packaged Foods
1.5
 %
Securities Brokerage
1.2
 %
Soft Drinks
1.0
 %
Telecommunication Equipment & Services
1.0
 %
Other 2
4.8
 %
Cash Equivalents 3
0.8
 %
Other Assets and Liabilities--Net 4
(0.4
 )
   TOTAL
100.0
%

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

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

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

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

Portfolio of Investments

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--99.6%
Agricultural Chemicals--4.2%
12,097 Scotts Co.
$
 389,765
Baking--0.5%
2,168 Flowers Foods, Inc.
46,590
Biotechnology--9.2%
9,839 1 Alexion Pharmaceuticals, Inc.
 362,764
4,561 1 Cephalon, Inc.
 352,018
1,919 1 Myriad Genetics, Inc.
143,100
   TOTAL
857,882
Cable TV--1.7%
9,872 1 Cablevision Systems Corp., Class A
158,248
Commodity Chemicals--0.7%
1,158 Compass Minerals International, Inc.
69,677
Computer Services--3.9%
11,490 1 Fiserv, Inc.
364,808
Contracting--2.0%
7,868 Harsco Corp.
186,629
Cosmetics & Toiletries--0.4%
2,053 Avon Products, Inc.
41,984
Defense Aerospace--2.9%
2,323 1 Alliant Techsystems, Inc.
 187,722
942 1 Teledyne Technologies, Inc.
 26,254
1,582 1 TransDigm Group, Inc.
53,915
   TOTAL
267,891
Defense Electronics--7.2%
2,855 1 FLIR Systems, Inc.
 71,289
4,103 L-3 Communications Holdings, Inc.
 324,219
7,393 Rockwell Collins
278,568
   TOTAL
674,076
Discount Department Stores--1.8%
3,867 1 Dollar Tree, Inc.
165,160
Shares
   
   
Value
COMMON STOCKS--continued
Financial Services--4.1%
4,068 Equifax, Inc.
 $ 100,561
1,916 FactSet Research Systems
 76,257
5,564 1 Metavante Technologies, Inc.
 80,734
9,827 Total System Services, Inc.
124,410
   TOTAL
381,962
Generic Drugs--3.8%
2,388 1 Endo Pharmaceuticals Holdings, Inc.
 53,658
21,747 1 Warner Chilcott Ltd., Class A
299,021
   TOTAL
352,679
Home Health Care--0.4%
1,429 1 Lincare Holdings, Inc.
34,367
Home Products--3.1%
4,583 Clorox Corp.
 229,837
1,348 1 Energizer Holdings, Inc.
64,205
   TOTAL
294,042
Internet Services--0.3%
865 1 NetFlix, Inc.
31,261
Medical Supplies--1.9%
1,173 1 Hologic, Inc.
 13,830
703 1 Immucor, Inc.
 19,480
1,040 Owens & Minor, Inc.
 41,361
3,676 1 Patterson Cos., Inc.
 67,602
1,463 Steris Corp.
38,916
   TOTAL
181,189
Medical Technology--3.3%
674 1 Gen-Probe, Inc.
 30,343
2,766 1 Masimo Corp.
 76,812
1,808 1 ResMed, Inc.
 72,139
3,447 1 Varian Medical Systems, Inc.
127,987
   TOTAL
307,281
Metal Containers--2.9%
7,073 Ball Corp.
271,179
Shares
   
   
Value
COMMON STOCKS--continued
Motion Pictures--0.4%
1,562 1 Dreamworks Animation SKG, Inc.
$
34,286
Multi-Industry Capital Goods--0.5%
1,678 Acuity Brands, Inc.
45,088
Office Equipment--3.7%
15,674 Pitney Bowes, Inc.
348,903
Oil Refiner--2.1%
4,351 Sunoco, Inc.
201,538
Other Communications Equipment--2.8%
6,074 Harris Corp.
262,943
Packaged Foods--1.5%
3,727 Hershey Foods Corp.
138,943
Paint & Related Materials--0.6%
1,111 Sherwin-Williams Co.
53,050
Personnel Agency--4.4%
1,313 1 Aecom Technology Corp.
 33,232
13,235 1 Hewitt Associates, Inc.
375,609
   TOTAL
408,841
Psychiatric Centers--0.4%
1,298 1 Psychiatric Solutions, Inc.
33,748
Recreational Goods--0.3%
1,496 1 WMS Industries, Inc.
33,241
Restaurant--2.3%
8,226 Darden Restaurants, Inc.
215,686
Securities Brokerage--1.2%
10,087 1 TD Ameritrade Holding Corp.
113,378
Shoes--0.3%
558 1 Deckers Outdoor Corp.
29,150
Soft Drinks--1.0%
2,953 1 Hansen Natural Corp.
98,926
Shares
   
   
Value
COMMON STOCKS--continued
Software Packaged/Custom--7.2%
188 CA, Inc.
 $ 3,382
5,996 1 DST Systems, Inc.
 190,493
2,861 1 F5 Networks, Inc.
 63,428
17,444 1 Solera Holdings, Inc.
420,226
   TOTAL
677,529
Telecommunication Equipment & Services--1.0%
5,280 1 Amdocs Ltd.
89,338
Undesignated Consumer Cyclicals--12.2%
4,448 1 Alliance Data Systems Corp.
 184,992
4,883 1 Apollo Group, Inc., Class A
 397,769
408 DeVRY, Inc.
 21,861
3,047 1 ITT Educational Services, Inc.
 373,288
655 Strayer Education, Inc.
 141,762
1,180 1 Weight Watchers International, Inc.
26,916
   TOTAL
1,146,588
Undesignated Health--3.4%
12,179 IMS Health, Inc.
 176,839
4,213 MEDNAX, Inc.
141,430
   TOTAL
318,269
   TOTAL COMMON STOCKS
(IDENTIFIED COST $9,339,422)
9,326,115
MUTUAL FUND--0.8%
76,111 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
76,111
   TOTAL INVESTMENTS--100.4%
(IDENTIFIED COST $9,415,533) 4
9,402,226
   OTHER ASSETS AND LIABILITIES - NET--(0.4)% 5
(36,352
 )
   TOTAL NET ASSETS--100%
$
 9,365,874

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represents cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$9,402,226
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$9,402,226

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $76,111 of investments in an affiliated issuer (Note 5) (identified cost $9,415,533)
 $ 9,402,226
Cash
 119,367
Income receivable
 4,000
Receivable for investments sold
 374,521
Receivable for shares sold
14,981
   TOTAL ASSETS
9,915,095
Liabilities:
Payable for investments purchased
 $ 499,258
Payable for shares redeemed
 916
Payable for auditing fees
10,924
Payable for portfolio accounting fees
 11,663
Payable for distribution services fee (Note 5)
 532
Payable for shareholder services fee (Note 5)
 4,317
Accrued expenses
21,611
   TOTAL LIABILITIES
549,221
Net assets for 1,252,694 shares outstanding
$
 9,365,874
Net Assets Consist of:
Paid-in capital
 $ 15,359,285
Net unrealized depreciation of investments
(13,307 )
Accumulated net realized loss on investments
(5,956,588 )
Accumulated net investment income (loss)
(23,516
 )
   TOTAL NET ASSETS
$
 9,365,874

Statement of Assets and Liabilities - continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($1,658,699 ÷ 220,017 shares outstanding), no par value, unlimited shares authorized
$7.54
Offering price per share
$7.54
Redemption proceeds per share
$7.54
Class A Shares:
Net asset value per share ($7,059,389 ÷ 943,826 shares outstanding), no par value, unlimited shares authorized
$7.48
Offering price per share (100/94.50 of $7.48)
$7.92
Redemption proceeds per share
$7.48
Class C Shares:
Net asset value per share ($647,786 ÷ 88,851 shares outstanding), no par value, unlimited shares authorized
$7.29
Offering price per share
$7.29
Redemption proceeds per share (99.00/100 of $7.29)
$7.22

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $2,377 received from an affiliated issuer) (Note 5)
$
 56,780
Expenses:
Investment adviser fee (Note 5)
 $ 47,959
Administrative personnel and services fee (Note 5)
 115,946
Custodian fees
 8,250
Transfer and dividend disbursing agent fees and expenses
 31,326
Directors'/Trustees' fees
 813
Auditing fees
 10,924
Legal fees
 3,199
Portfolio accounting fees
 35,692
Distribution services fee--Class C Shares (Note 5)
 3,165
Shareholder services fee--Class A Shares (Note 5)
 9,769
Shareholder services fee--Class C Shares (Note 5)
 1,055
Share registration costs
 17,048
Printing and postage
 18,821
Insurance premiums
 2,377
Miscellaneous
1,518
   TOTAL EXPENSES
307,862
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee
 $ (47,959 )
Waiver of administrative personnel and services fee
 (22,632 )
Waiver of distribution services fee--Class C Shares
 (15 )
Reimbursement of other operating expenses
(156,960
 )
   TOTAL WAIVERS AND REIMBURSEMENTS
(227,566
 )
Net expenses
80,296
Net investment income (loss)
(23,516
 )
Realized and Unrealized Loss on Investments:
Net realized loss on investments
(5,133,492 )
Net change in unrealized appreciation of investments
(123,263
 )
Net realized and unrealized loss on investments
(5,256,755
 )
Change in net assets resulting from operations
$
 (5,280,271
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   

Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)
 $ (23,516 ) $ (95,701 )
Net realized loss on investments
(5,133,492 ) (815,534 )
Net change in unrealized appreciation/depreciation of investments
(123,263
 )
(274,204
 )
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(5,280,271
 )
(1,185,439
 )
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares
 -- (10,164 )
Class A Shares
 -- (99,042 )
Class C Shares
--
(4,334
 )
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
--
(113,540
 )
Share Transactions:
Proceeds from sale of shares
 2,616,856 9,679,167
Net asset value of shares issued to shareholders in payment of distributions declared
 -- 104,453
Cost of shares redeemed
(1,856,777
 )
(1,875,638
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
760,079
7,907,982
Change in net assets
(4,520,192
 )
6,609,003
Net Assets:
Beginning of period
13,886,066
7,277,063
End of period (including accumulated net investment income (loss) of $(23,516) and $0, respectively)
$
 9,365,874
$
 13,886,066

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

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 U.S. generally accepted accounting principles (GAAP).

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

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

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:


   
 Six Months Ended
1/31/2009



   
 Year Ended
7/31/2008

Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 19,123 $ 170,750 200,619 $ 2,563,412
Shares issued to shareholders in payment of distributions declared
--

--

266

3,799
Shares redeemed
(23,721
 )
(196,311
 )
(30,323
 )
(384,900
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS
(4,598
 )

$
 (25,561
 )
170,562
$
 2,182,311



   
 Six Months Ended
1/31/2009



   
 Year Ended
7/31/2008

Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 230,989 $ 1,895,751 447,249 $ 6,047,252
Shares issued to shareholders in payment of distributions declared
--

--

6,900


98,193
Shares redeemed
(133,813
 )
(1,220,443
 )
(101,571
 )
(1,283,471
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS

97,176

$
 675,308
352,578

$
 4,861,974



   
 Six Months Ended
1/31/2009



   
 Year Ended
7/31/2008

Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 69,473 $ 550,355 83,860 $ 1,068,503
Shares issued to shareholders in payment of distributions declared
--


--

176

2,461
Shares redeemed
(57,442
 )
(440,023
 )
(16,800
 )
(207,267
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
12,031

$
 110,332
67,236
$
 863,697
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS

104,609


$
 760,079

590,376


$
 7,907,982

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $9,415,533. The net unrealized depreciation of investments for federal tax purposes was $13,307. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $490,162 and net unrealized depreciation from investments for those securities having an excess of cost over value of $503,469.

At July 31, 2008, the Fund had a capital loss carryforward of $80,433 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire in 2016.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.90% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to 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:

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

In addition, subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser waived $47,876 of its fee and reimbursed $156,960 of other operating expenses.

Administrative Fee

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


Administrative Fee


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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 1.751% of average daily net assets of the Fund. The Fund is currently being charged the minimum administrative fee; therefore the fee as a percentage of average daily net assets is greater than the amounts presented in the chart above. FAS waived $22,632 of its fee.

Distribution Services Fee

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


Share Class Name


   
 Percentage of Average Daily
Net Assets of Class
Class A Shares
0.05%
Class C Shares
0.75%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, FSC voluntarily waived $15 of its fee. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC did not retain any fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $106 in sales charges from the sale of Class A Shares. FSC also retained $109 of CDSC relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC received $119 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.24%, 1.49% and 2.24%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $83. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund,
Institutional Shares
909,461
2,260,298
3,093,648
76,111
$76,111
$2,377

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 16,815,105
Sales
$
 16,013,744

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT MID CAP GROWTH FUND (THE "FUND")

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

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

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

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

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

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

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

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

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

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

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

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

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

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

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

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R858

36360 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Small Cap
Core Fund

Established 2005

A Portfolio of Federated MDT Series

SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Class A Shares
Class C Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

    Six Months
Ended
(unaudited)		    Year Ended July 31,
    Period
Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$10.21 $13.22 $11.11 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.03 ) 3 (0.08 ) 3 (0.10 ) 3 (0.13 ) 3
Net realized and unrealized gain (loss) on investments
(4.42
 )
(2.22
 )
2.21
1.24
   TOTAL FROM INVESTMENT OPERATIONS
(4.45
 )
(2.30
 )
2.11
1.11
Less Distributions:
Distributions from net realized gain on investments
--
(0.71
 )
--
--
Net Asset Value, End of Period
$5.76
$10.21
$13.22
$11.11
Total Return 4
(43.58
 )%
(18.09
 )%
18.99
 %
11.10
 %
Ratios to Average Net Assets:
Net expenses
1.74
 % 5
1.75
 %
1.75
 %
2.01
 % 5
Net investment income (loss)
(0.66
 )% 5
(0.68
 )%
(0.77
 )%
(1.16
 )% 5
Expense waiver/reimbursement 6
4.41
 % 5
3.85
 %
7.96
 %
9.41
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$1,668
$2,623
$2,414
$324
Portfolio turnover
106
 %
243
 %
237
 %
209
 %

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

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

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

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

5 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

    Six Months
Ended
(unaudited)		    Year Ended July 31,
    Period
Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$9.99 $13.04 $11.05 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.05 ) 3 (0.16 ) 3 (0.19 ) 3 (0.23 ) 3
Net realized and unrealized gain (loss) on investments
(4.32
 )
(2.18
 )
2.18
1.28
   TOTAL FROM INVESTMENT OPERATIONS
(4.37
 )
(2.34
 )
1.99
1.05
Less Distributions:
Distributions from net realized gain on investments
--
(0.71
 )
--
--
Net Asset Value, End of Period
$5.62
$ 9.99
$13.04
$11.05
Total Return 4
(43.74
 )%
(18.66
 )%
18.01
 %
10.50
 %
Ratios to Average Net Assets:
Net expenses
2.49
 % 5
2.46
 %
2.50
 %
2.76
 % 5
Net investment income (loss)
(1.40
 )% 5
(1.40
 )%
(1.52
 )%
(1.91
 )% 5
Expense waiver/reimbursement 6
4.37
 % 5
3.90
 %
8.63
 %
9.41
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$1,632
$2,759
$3,299
$1,505
Portfolio turnover
106
 %
243
 %
237
 %
209
 %

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

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

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

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

5 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual:
Class A Shares
$1,000
$ 564.20
$ 6.86
Class C Shares
$1,000
$ 562.60
$ 9.81
Hypothetical (assuming a 5% return before expenses):
Class A Shares
$1,000
$1,016.43
$ 8.84
Class C Shares
$1,000
$1,012.65
$12.63

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

Class A Shares
1.74%
Class C Shares
2.49%

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Undesignated Consumer Cyclicals
8.3
 %
Home Health Care
4.5
 %
Electric Utility
3.5
 %
Defense Aerospace
3.2
 %
Paper Products
3.1
 %
Securities Brokerage
3.1
 %
Restaurant
3.0
 %
Medical Technology
2.9
 %
Regional Bank
2.9
 %
Computer Services
2.6
 %
Oil Refiner
2.6
 %
Clothing Stores
2.4
 %
Computer Peripherals
2.0
 %
Multi-Industry Basic
1.9
 %
Airline - Regional
1.8
 %
Financial Services
1.8
 %
Insurance Brokerage
1.8
 %
Office Supplies
1.6
 %
Specialty Retailing
1.6
 %
Undesignated Health
1.6
 %
Apparel
1.5
 %
Home Products
1.5
 %
Multi-Industry Capital Goods
1.5
 %
Defense Electronics
1.4
 %
Electrical Equipment
1.4
 %
Metal Fabrication
1.4
 %
Office Furniture
1.4
 %
Software Packaged/Custom
1.4
 %
Telecommunication Equipment & Services
1.4
 %
Auto Original Equipment Manufacturers
1.3
 %
Multi-Line Insurance
1.3
 %
Oil Well Supply
1.3
 %
Property Liability Insurance
1.3
 %
Commodity Chemicals
1.2
 %
Other Communications Equipment
1.2
 %
Industry
   
 Percentage of
Total Net Assets
Shoes
1.2
 %
Toys & Games
1.2
 %
Specialty Chemicals
1.1
 %
Electrical Test/Measuring Equipment
1.0
 %
Hotels and Motels
1.0
 %
Personal Loans
1.0
 %
Other 2
15.9
 %
Cash Equivalents 3
2.2
 %
Other Assets and Liabilities--Net 4
(1.3
 )%
   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

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--99.1%
Airline - National--0.1%
734 1 Continental Airlines, Inc., Class B
$
 9,887
Airline - Regional--1.8%
2,473 1 Alaska Air Group, Inc.
 65,188
1,269 1 Allegiant Travel Co.
 45,379
1,074 1 Republic Airways Holdings, Inc.
 8,796
795 SkyWest, Inc.
12,442
   TOTAL
131,805
Aluminum--0.4%
1,060 Kaiser Aluminum Corp.
26,330
Apparel--1.5%
8,932 1 Collective Brands, Inc.
 95,304
1,005 1 True Religion Apparel, Inc.
11,467
   TOTAL
106,771
Auto Original Equipment Manufacturers--1.3%
3,423 1 Fuel Systems Solutions, Inc.
89,477
Biotechnology--0.7%
1,538 1 Emergent Biosolutions, Inc.
 33,728
1,354 1 Maxygen, Inc.
 11,590
195 1 Sequenom, Inc.
4,321
   TOTAL
49,639
Clothing Stores--2.4%
4,729 1 Children's Place Retail Stores, Inc.
 88,952
663 1 Gymboree Corp.
 16,244
2,422 1 Jos A. Bank Clothiers, Inc.
66,508
   TOTAL
171,704
Commodity Chemicals--1.2%
993 Compass Minerals International, Inc.
 59,749
1,940 Innophos Holdings, Inc.
29,352
   TOTAL
89,101
Shares
   
   
Value
COMMON STOCKS--continued
Computer Networking--0.9%
4,549 1 Avocent Corp.
$
65,278
Computer Peripherals--2.0%
6,211 1 Synaptics, Inc.
146,393
Computer Services--2.6%
6,308 Fair Isaac & Co., Inc.
 80,112
991 1 Stanley, Inc.
 29,988
3,732 1 Synnex Corp.
 57,286
861 Syntel, Inc.
18,555
   TOTAL
185,941
Computer Stores--0.1%
2,042 1 Insight Enterprises, Inc.
10,578
Construction Machinery--0.1%
638 1 NCI Building System, Inc.
7,394
Contracting--0.8%
2,880 1 Insituform Technologies, Inc., Class A
54,029
Defense Aerospace--3.2%
3,111 1 AAR Corp.
 56,434
731 1 Aerovironment, Inc.
 27,091
822 1 Hawk Corp.
 13,884
580 Kaman Corp., Class A
 11,072
2,587 Triumph Group, Inc.
117,139
   TOTAL
225,620
Defense Electronics--1.4%
4,191 1 FLIR Systems, Inc.
104,649
Discount Department Stores--0.1%
781 1 99 Cents Only Stores
6,545
Diversified Leisure--0.5%
369 1 Bally Technologies, Inc.
 7,450
2,028 1 Life Time Fitness, Inc.
30,035
   TOTAL
37,485
Electrical Test/Measuring Equipment--1.0%
970 MTS Systems Corp.
 25,404
2,531 1 Multi-Fineline Electronix, Inc.
46,899
   TOTAL
72,303
Shares
   
   
Value
COMMON STOCKS--continued
Electric Utility--3.5%
2,471 Northwestern Corp.
 $ 59,823
5,307 1 Pike Electric Corp.
 59,704
1,018 Portland General Electric Co.
 19,800
4,022 UniSource Energy Corp.
113,581
   TOTAL
252,908
Electrical Equipment--1.4%
6,814 Baldor Electric Co.
 95,464
174 1 Powell Industries, Inc.
4,155
   TOTAL
99,619
Electronic Instruments--0.4%
754 1 Axsys Technologies, Inc.
32,196
Financial Services--1.8%
1,402 1 America's Car-Mart, Inc.
 12,744
1,079 1 CBIZ, Inc.
 8,772
8,073 Deluxe Corp.
 93,082
551 Heartland Payment Systems, Inc.
 4,998
841 1 Nelnet, Inc., Class A
11,623
   TOTAL
131,219
Food Wholesaling--0.6%
1,032 Nash Finch Co.
44,407
Furniture--0.4%
779 Ethan Allen Interiors, Inc.
 8,873
2,745 Tempur-Pedic International, Inc.
19,215
   TOTAL
28,088
Grocery Chain--0.4%
1,506 1 The Pantry, Inc.
25,045
Home Health Care--4.5%
4,083 1 Amedisys, Inc.
 168,342
1,594 1 Amerigroup Corp.
 44,584
4,011 1 LHC Group, Inc.
106,733
   TOTAL
319,659
Home Products--1.5%
10,352 1 Jarden Corp.
107,971
Shares
   
   
Value
COMMON STOCKS--continued
Hotels and Motels--1.0%
5,309 Ameristar Casinos, Inc.
 $ 47,622
4,830 1 Boyd Gaming Corp.
23,232
   TOTAL
70,854
Industrial Machinery--0.3%
1,736 1 Columbus McKinnon Corp.
22,082
Insurance Brokerage--1.8%
2,925 AmTrust Financial Services, Inc.
 24,014
340 Employers Holdings, Inc.
 4,604
2,607 Life Partners Holdings, Inc.
99,066
   TOTAL
127,684
Life Insurance--0.7%
3,298 Delphi Financial Group, Inc., Class A
 50,031
1,337 Phoenix Cos., Inc.
2,340
   TOTAL
52,371
Long-Term Care Centers--0.1%
685 1 Sun Healthcare Group, Inc.
7,761
Lumber Products--0.2%
2,595 Officemax, Inc.
14,298
Machine Tools--0.7%
2,251 1 AZZ, Inc.
50,422
Machined Parts Original Equipment Manufacturers--0.1%
540 Titan International, Inc.
4,190
Magazine Publishing--0.7%
3,246 Meredith Corp.
51,839
Maritime--0.3%
1,794 TAL International Group, Inc.
18,801
Medical Supplies--0.7%
517 1 MWI Veterinary Supply, Inc.
 10,821
884 1 Merit Medical Systems, Inc.
 13,605
726 1 PetMed Express, Inc.
 10,483
1,488 1 Quidel Corp.
18,302
   TOTAL
53,211
Shares
   
   
Value
COMMON STOCKS--continued
Medical Technology--2.9%
2,387 1 Cantel Medical Corp.
 $ 35,781
2,723 1 Cyberonics, Inc.
 41,907
1,594 1 Greatbatch Technologies, Inc.
 37,140
3,299 1 Thoratec Laboratories Corp.
95,572
   TOTAL
210,400
Metal Distribution--0.1%
1,011 Castle (A.M.) & Co.
8,553
Metal Fabrication--1.4%
1,156 1 Haynes International, Inc.
 21,120
1,115 1 Ladish Co., Inc.
 12,678
4,718 1 RTI International Metals
62,797
   TOTAL
96,595
Miscellaneous Communications--0.7%
966 1 Bankrate, Inc.
 32,226
612 Harte-Hanks
 3,856
505 Shenandoah Telecommunications Co.
12,312
   TOTAL
48,394
Miscellaneous Food Products--0.6%
1,778 1 Fresh Del Monte Produce, Inc.
 42,850
204 The Anderson's, Inc.
3,344
   TOTAL
46,194
Miscellaneous Machinery--0.0%
80 Graham Corp.
797
Multi-Industry Basic--1.9%
9,552 Olin Corp.
134,206
Multi-Industry Capital Goods--1.5%
3,723 1 Ceradyne, Inc.
 84,959
1,472 1 DXP Enterprises, Inc.
19,990
   TOTAL
104,949
Shares
   
   
Value
COMMON STOCKS--continued
Multi-Line Insurance--1.3%
467 1 Amerisafe, Inc.
 $ 8,747
2,065 FBL Financial Group, Inc., Class A
 21,290
1,409 Harleysville Group, Inc.
 40,072
689 Safety Insurance Group, Inc.
24,129
   TOTAL
94,238
Newspaper Publishing--0.1%
5,056 Belo (A.H.) Corp., Series A
 7,230
3,150 McClatchy Co., Class A
2,079
   TOTAL
9,309
Office Furniture--1.4%
2,847 Knoll, Inc.
 19,417
7,086 Miller Herman, Inc.
77,875
   TOTAL
97,292
Office Supplies--1.6%
1,314 1 Acco Brands Corp.
 2,523
4,001 1 United Stationers, Inc.
112,068
   TOTAL
114,591
Oil Refiner--2.6%
13 Alon USA Energy, Inc.
 153
5,512 World Fuel Services Corp.
186,140
   TOTAL
186,293
Oil Service, Explore & Drill--0.7%
3,386 1 Complete Production Services, Inc.
 21,704
6,439 1 Parker Drilling Co.
 13,651
1,227 1 Superior Well Services, Inc.
11,276
   TOTAL
46,631
Oil Well Supply--1.3%
468 Lufkin Industries, Inc.
 16,357
4,158 1 Oil States International, Inc.
76,133
   TOTAL
92,490
Other Communications Equipment--1.2%
6,147 1 Syniverse Holdings, Inc.
83,353
Shares
   
   
Value
COMMON STOCKS--continued
Packaged Foods--0.7%
3,771 1 Chiquita Brands International
$
52,719
Paint & Related Materials--0.3%
4,851 Ferro Corp.
19,210
Paper Products--3.1%
3,406 1 Buckeye Technologies, Inc.
 9,946
2,836 Glatfelter (P.H.) Co.
 24,702
459 1 Kadant, Inc.
 4,608
5,809 Rock-Tenn Co.
181,067
   TOTAL
220,323
Personal Loans--1.0%
3,705 1 Ezcorp, Inc., Class A
 50,277
1,017 1 World Acceptance Corp.
19,476
   TOTAL
69,753
Printing--0.1%
3,597 1 Valassis Communications, Inc.
4,604
Property Liability Insurance--1.3%
258 American Physicians Capital, Inc.
 10,970
1,311 1 CNA Surety Corp.
 21,697
4,456 Horace Mann Educators Corp.
 41,664
1,627 OneBeacon Insurance Group Ltd.
 13,748
281 Selective Insurance Group, Inc.
4,313
   TOTAL
92,392
Psychiatric Centers--0.4%
1,024 1 Psychiatric Solutions, Inc.
26,624
Regional Bank--2.9%
880 City Holding Co.
 22,625
1,712 First BanCorp
 12,172
3,791 First Midwest Bancorp, Inc.
 37,910
1,918 Oriental Financial Group
 9,686
7,730 Pacific Capital Bancorp
 82,015
2,407 Republic Bancorp, Inc.
43,326
   TOTAL
207,734
Shares
   
   
Value
COMMON STOCKS--continued
Restaurant--3.0%
263 Bob Evans Farms, Inc.
 $ 4,618
4,138 1 CEC Entertainment, Inc.
 96,581
1,500 Cracker Barrel Old Country Store, Inc.
 26,355
2,653 1 Domino's Pizza, Inc.
 17,749
943 1 Green Mountain Coffee, Inc.
 36,079
2,065 1 P. F. Chang's China Bistro, Inc.
36,612
   TOTAL
217,994
Savings & Loan--0.9%
5,305 1 Ocwen Financial Corp.
 47,214
323 WSFS Financial Corp.
 8,333
1,850 Webster Financial Corp. Waterbury
7,733
   TOTAL
63,280
Securities Brokerage--3.1%
4,590 1 Interactive Brokers Group, Inc., Class A
 70,089
6,787 1 Knight Capital Group, Inc., Class A
 122,370
4,437 1 Labranche & Co., Inc.
30,438
   TOTAL
222,897
Services to Medical Professionals--0.7%
662 1 Genoptix, Inc.
 22,442
1,017 1 PharMerica Corp.
 16,719
950 1 Res-Care, Inc.
12,872
   TOTAL
52,033
Shoes--1.2%
1,607 1 Deckers Outdoor Corp.
83,950
Software Packaged/Custom--1.4%
3,302 1 ACI Worldwide, Inc.
 56,101
946 1 CSG Systems International, Inc.
 13,717
453 1 S1 Corp.
 3,022
3,766 1 Wind River Systems, Inc.
30,015
   TOTAL
102,855
Shares
   
   
Value
COMMON STOCKS--continued
Specialty Chemicals--1.1%
598 Chemed Corp.
 $ 23,998
3,562 Koppers Holdings, Inc.
57,704
   TOTAL
81,702
Specialty Machinery--0.4%
1,368 1 Gardner Denver, Inc.
29,781
Specialty Retailing--1.6%
1,169 Asbury Automotive Group, Inc.
 4,185
5,650 1 Hot Topic, Inc.
 48,251
5,486 Regis Corp. Minnesota
 61,717
511 Sonic Automotive, Inc.
1,037
   TOTAL
115,190
Telecommunication Equipment & Services--1.4%
509 1 ADC Telecommunications, Inc.
 2,581
1,506 1 Comtech Telecommunications Corp.
 58,433
1,462 1 GeoEye, Inc.
 25,219
1,217 Plantronics, Inc.
12,353
   TOTAL
98,586
Telephone Utility--0.1%
203 Atlantic Telephone Network, Inc.
4,364
Toys & Games--1.2%
4,129 1 JAKKS Pacific, Inc.
 75,726
1,183 1 RC2 Corp.
6,873
   TOTAL
82,599
Undesignated Consumer Cyclicals--8.3%
1,812 1 American Public Education, Inc.
 70,958
8,296 1 Corinthian Colleges, Inc.
 154,969
9,360 1 Geo Group, Inc.
 138,528
788 1 Kendle International, Inc.
 15,051
10,960 1 Rent-A-Center, Inc.
 162,756
3,371 Speedway Motorsports, Inc.
48,677
   TOTAL
590,939
Shares
   
   
Value
COMMON STOCKS--continued
Undesignated Consumer Staples--0.8%
1,901 Jackson Hewitt Tax Service, Inc.
 $ 25,169
1,398 1 USANA, Inc.
32,448
   TOTAL
57,617
Undesignated Health--1.6%
6,523 1 Healthspring, Inc.
113,631
   TOTAL COMMON STOCKS
(IDENTIFIED COST $9,292,861)
7,090,616
MUTUAL FUND--2.2%
158,417 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
158,417
   TOTAL INVESTMENTS--101.3%
(IDENTIFIED COST $9,451,278) 4
7,249,033
   OTHER ASSETS AND LIABILITIES - NET--(1.3)% 5
(94,335
 )
   TOTAL NET ASSETS--100%
$
 7,154,698

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represents cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$7,249,033
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$7,249,033

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $158,417 of investments in an affiliated issuer (Note 5) (identified cost $9,451,278)
 $ 7,249,033
Income receivable
 978
Receivable for investments sold
 219,421
Receivable for shares sold
473
   TOTAL ASSETS
7,469,905
Liabilities:
Payable for investments purchased
 $ 223,779
Payable for shares redeemed
 44,085
Payable for auditing fees
10,924
Payable for portfolio accounting fees
 12,070
Payable for share registration costs
 11,184
Payable for distribution services fee (Note 5)
 1,701
Payable for shareholder services fee (Note 5)
 732
Accrued expenses
10,732
   TOTAL LIABILITIES
315,207
Net assets for 1,244,104 shares outstanding
$
 7,154,698
Net Assets Consist of:
Paid-in capital
 $ 15,849,580
Net unrealized depreciation of investments
(2,202,245 )
Accumulated net realized loss on investments
(6,457,731 )
Accumulated net investment income (loss)
(34,906
 )
   TOTAL NET ASSETS
$
 7,154,698
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($3,855,202 ÷ 664,225 shares outstanding), no par value, unlimited shares authorized
$5.80
Offering price per share
$5.80
Redemption proceeds per share
$5.80
Class A Shares:
Net asset value per share ($1,667,528 ÷ 289,491 shares outstanding), no par value, unlimited shares authorized
$5.76
Offering price per share (100/94.50 of $5.76)
$6.10
Redemption proceeds per share
$5.76
Class C Shares:
Net asset value per share ($1,631,968 ÷ 290,388 shares outstanding), no par value, unlimited shares authorized
$5.62
Offering price per share
$5.62
Redemption proceeds per share (99.00/100 of $5.62)
$5.56

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $2,242 received from an affiliated issuer and net of foreign taxes withheld of $43)
$
 61,750
Expenses:
Investment adviser fee (Note 5)
 $ 64,337
Administrative personnel and services fee (Note 5)
 115,946
Custodian fees
 12,425
Transfer and dividend disbursing agent fees and expenses
 32,433
Directors'/Trustees' fees
 811
Auditing fees
 10,924
Legal fees
 3,230
Portfolio accounting fees
 38,211
Distribution services fee--Class C Shares (Note 5)
 7,947
Shareholder services fee--Class A Shares (Note 5)
 2,571
Shareholder services fee--Class C Shares (Note 5)
 2,649
Share registration costs
 18,165
Printing and postage
 19,799
Insurance premiums
 2,381
Miscellaneous
1,531
   TOTAL EXPENSES
333,360
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee
 $ (64,337 )
Waiver of administrative personnel and services fee
 (22,629 )
Reimbursement of other operating expenses
(149,738
 )
   TOTAL WAIVERS AND REIMBURSEMENTS
(236,704
 )
Net expenses
96,656
Net investment income (loss)
(34,906
 )
Realized and Unrealized Loss on Investments:
Net realized loss on investments
(5,429,730 )
Net change in unrealized depreciation of investments
(1,098,873
 )
Net realized and unrealized loss on investments
(6,528,603
 )
Change in net assets resulting from operations
$
 (6,563,509
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   

Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)
 $ (34,906 ) $ (92,417 )
Net realized loss on investments
(5,429,730 ) (968,490 )
Net change in unrealized appreciation/depreciation of investments
(1,098,873
 )
(1,160,449
 )
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(6,563,509
 )
(2,221,356
 )
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares
 -- (217,102 )
Class A Shares
 -- (164,846 )
Class C Shares
--
(186,389
 )
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
--
(568,337
 )
Share Transactions:
Proceeds from sale of shares
 2,817,904 11,231,271
Net asset value of shares issued to shareholders in payment of distributions declared
 -- 289,237
Cost of shares redeemed
(4,545,923
 )
(2,591,978
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
(1,728,019
 )
8,928,530
Change in net assets
(8,291,528
 )
6,138,837
Net Assets:
Beginning of period
15,446,226
9,307,389
End of period (including accumulated net investment income (loss) of $(34,906) and $0, respectively)
$
 7,154,698
$
 15,446,226

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

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 U.S. generally accepted accounting principles (GAAP).

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

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.

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 258,491 $ 1,684,599 775,627 $ 8,473,003
Shares issued to shareholders in payment of distributions declared
--


--


5,282



62,326
Shares redeemed
(573,088
 )
(3,688,228
 )
(72,893
 )
(839,798
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS

(314,597
 )

$
 (2,003,629
 )
708,016


$
7,695,531
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 82,410 $ 547,668 127,938 $ 1,534,598
Shares issued to shareholders in payment of distributions declared

--


--


12,340


144,868
Shares redeemed
(49,837
 )
(357,036
 )
(65,972
 )
(737,190
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS
32,573
$
 190,632
74,306
$
 942,276
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 90,597 $ 585,637 103,368 $ 1,223,670
Shares issued to shareholders in payment of distributions declared

--



--


7,110


82,043
Shares redeemed
(76,236
 )
(500,659
 )
(87,328
 )
(1,014,990
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
14,361
$
 84,978
23,150
$
 290,723
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS


(267,663
 )

$
(1,728,019
 )

805,472


$
8,928,530

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $9,451,278. The net unrealized depreciation of investments for federal tax purposes was $2,202,245. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $212,603 and net unrealized depreciation from investments for those securities having an excess of cost over value of $2,414,848.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 1.15% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for each Class of the Fund based on average daily net assets:

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

In addition, subject to the terms described in the Expense Limitation note, the Adviser may also voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser waived $64,261 of its fee and reimbursed $149,738 of other operating expenses.

Administrative Fee

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


Administrative Fee


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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 1.668% of average daily net assets of the Fund. The Fund is currently being charged the minimum administrative fee; therefore the fee as a percentage of average daily net assets is greater than the amounts presented in the chart above. FAS waived $22,629 of its fee.

Distribution Services Fee

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


Share Class Name

Percentage of Average Daily
Net Assets of Class
Class A Shares
0.05%
Class C Shares
0.75%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC retained $2,161 of fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $366 in sales charges from the sale of Class A Shares. FSC also retained $100 of CDSC relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares, to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC did not receive any fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.49%, 1.74% and 2.49%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $76. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund, Institutional Shares
180,688
2,042,044
2,064,315
158,417
$158,417
$2,242

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 12,137,566
Sales
$
 13,846,513

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory Contract - May 2008

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

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

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

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

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

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

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

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

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

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

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

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

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

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

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

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

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R817
Cusip 31421R791

36359 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Small Cap
Core fund

A Portfolio of Federated MDT Series



SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
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)

    Six Months
Ended
(unaudited)		    Year Ended July 31,
   
Period
Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$10.28 $13.28 $11.14 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.02 ) 3 (0.05 ) 3 (0.07 ) 3 (0.10 ) 3
Net realized and unrealized gain (loss) on investments
(4.46
 )
(2.24
 )
2.21
1.24
   TOTAL FROM INVESTMENT OPERATIONS
(4.48
 )
(2.29
 )
2.14
1.14
Less Distributions:
Distributions from net realized gain on investments
--
(0.71
 )
--
--
Net Asset Value, End of Period
$ 5.80
$10.28
$13.28
$11.14
Total Return 4
(43.58
 )%
(17.92
 )%
19.21
 %
11.40
 %
Ratios to Average Net Assets:
Net expenses
1.49
 % 5
1.50
 %
1.50
 %
1.76
 % 5
Net investment income (loss)
(0.38
 )% 5
(0.43
 )%
(0.51
 )%
(0.91
 )% 5
Expense waiver/reimbursement 6
4.14
 % 5
3.55
 %
8.14
 %
9.41
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$3,855
$10,064
$3,595
$784
Portfolio turnover
106
 %
243
 %
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 (unaudited)

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual
$1,000
$ 564.20
$5.87
Hypothetical (assuming a 5% return before expenses)
$1,000
$1,017.69
$7.58

1 Expenses are equal to the Fund's annualized net expense ratio of 1.49%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half-year period).

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Undesignated Consumer Cyclicals
8.3
 %
Home Health Care
4.5
 %
Electric Utility
3.5
 %
Defense Aerospace
3.2
 %
Paper Products
3.1
 %
Securities Brokerage
3.1
 %
Restaurant
3.0
 %
Medical Technology
2.9
 %
Regional Bank
2.9
 %
Computer Services
2.6
 %
Oil Refiner
2.6
 %
Clothing Stores
2.4
 %
Computer Peripherals
2.0
 %
Multi-Industry Basic
1.9
 %
Airline - Regional
1.8
 %
Financial Services
1.8
 %
Insurance Brokerage
1.8
 %
Office Supplies
1.6
 %
Specialty Retailing
1.6
 %
Undesignated Health
1.6
 %
Apparel
1.5
 %
Home Products
1.5
 %
Multi-Industry Capital Goods
1.5
 %
Defense Electronics
1.4
 %
Electrical Equipment
1.4
 %
Metal Fabrication
1.4
 %
Office Furniture
1.4
 %
Software Packaged/Custom
1.4
 %
Telecommunication Equipment & Services
1.4
 %
Auto Original Equipment Manufacturers
1.3
 %
Multi-Line Insurance
1.3
 %

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.

Industry
   
 Percentage of
Total Net Assets
Oil Well Supply
1.3
 %
Property Liability Insurance
1.3
 %
Commodity Chemicals
1.2
 %
Other Communications Equipment
1.2
 %
Shoes
1.2
 %
Toys & Games
1.2
 %
Specialty Chemicals
1.1
 %
Electrical Test/Measuring Equipment
1.0
 %
Hotels and Motels
1.0
 %
Personal Loans
1.0
 %
Other 2
15.9
 %
Cash Equivalents 3
2.2
 %
Other Assets and Liabilities--Net 4
(1.3
 )%
   TOTAL
100.0
%

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

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--99.1%
Airline - National--0.1%
734 1 Continental Airlines, Inc., Class B
$
 9,887
Airline - Regional--1.8%
2,473 1 Alaska Air Group, Inc.
 65,188
1,269 1 Allegiant Travel Co.
 45,379
1,074 1 Republic Airways Holdings, Inc.
 8,796
795 SkyWest, Inc.
12,442
   TOTAL
131,805
Aluminum--0.4%
1,060 Kaiser Aluminum Corp.
26,330
Apparel--1.5%
8,932 1 Collective Brands, Inc.
 95,304
1,005 1 True Religion Apparel, Inc.
11,467
   TOTAL
106,771
Auto Original Equipment Manufacturers--1.3%
3,423 1 Fuel Systems Solutions, Inc.
89,477
Biotechnology--0.7%
1,538 1 Emergent Biosolutions, Inc.
 33,728
1,354 1 Maxygen, Inc.
 11,590
195 1 Sequenom, Inc.
4,321
   TOTAL
49,639
Clothing Stores--2.4%
4,729 1 Children's Place Retail Stores, Inc.
 88,952
663 1 Gymboree Corp.
 16,244
2,422 1 Jos A. Bank Clothiers, Inc.
66,508
   TOTAL
171,704
Commodity Chemicals--1.2%
993 Compass Minerals International, Inc.
 59,749
1,940 Innophos Holdings, Inc.
29,352
   TOTAL
89,101
Shares
   
   
Value
COMMON STOCKS--continued
Computer Networking--0.9%
4,549 1 Avocent Corp.
$
65,278
Computer Peripherals--2.0%
6,211 1 Synaptics, Inc.
146,393
Computer Services--2.6%
6,308 Fair Isaac & Co., Inc.
 80,112
991 1 Stanley, Inc.
 29,988
3,732 1 Synnex Corp.
 57,286
861 Syntel, Inc.
18,555
   TOTAL
185,941
Computer Stores--0.1%
2,042 1 Insight Enterprises, Inc.
10,578
Construction Machinery--0.1%
638 1 NCI Building System, Inc.
7,394
Contracting--0.8%
2,880 1 Insituform Technologies, Inc., Class A
54,029
Defense Aerospace--3.2%
3,111 1 AAR Corp.
 56,434
731 1 Aerovironment, Inc.
 27,091
822 1 Hawk Corp.
 13,884
580 Kaman Corp., Class A
 11,072
2,587 Triumph Group, Inc.
117,139
   TOTAL
225,620
Defense Electronics--1.4%
4,191 1 FLIR Systems, Inc.
104,649
Discount Department Stores--0.1%
781 1 99 Cents Only Stores
6,545
Diversified Leisure--0.5%
369 1 Bally Technologies, Inc.
 7,450
2,028 1 Life Time Fitness, Inc.
30,035
   TOTAL
37,485
Electrical Test/Measuring Equipment--1.0%
970 MTS Systems Corp.
 25,404
2,531 1 Multi-Fineline Electronix, Inc.
46,899
   TOTAL
72,303
Shares
   
   
Value
COMMON STOCKS--continued
Electric Utility--3.5%
2,471 Northwestern Corp.
 $ 59,823
5,307 1 Pike Electric Corp.
 59,704
1,018 Portland General Electric Co.
 19,800
4,022 UniSource Energy Corp.
113,581
   TOTAL
252,908
Electrical Equipment--1.4%
6,814 Baldor Electric Co.
 95,464
174 1 Powell Industries, Inc.
4,155
   TOTAL
99,619
Electronic Instruments--0.4%
754 1 Axsys Technologies, Inc.
32,196
Financial Services--1.8%
1,402 1 America's Car-Mart, Inc.
 12,744
1,079 1 CBIZ, Inc.
 8,772
8,073 Deluxe Corp.
 93,082
551 Heartland Payment Systems, Inc.
 4,998
841 1 Nelnet, Inc., Class A
11,623
   TOTAL
131,219
Food Wholesaling--0.6%
1,032 Nash Finch Co.
44,407
Furniture--0.4%
779 Ethan Allen Interiors, Inc.
 8,873
2,745 Tempur-Pedic International, Inc.
19,215
   TOTAL
28,088
Grocery Chain--0.4%
1,506 1 The Pantry, Inc.
25,045
Home Health Care--4.5%
4,083 1 Amedisys, Inc.
 168,342
1,594 1 Amerigroup Corp.
 44,584
4,011 1 LHC Group, Inc.
106,733
   TOTAL
319,659
Home Products--1.5%
10,352 1 Jarden Corp.
107,971
Shares
   
   
Value
COMMON STOCKS--continued
Hotels and Motels--1.0%
5,309 Ameristar Casinos, Inc.
 $ 47,622
4,830 1 Boyd Gaming Corp.
23,232
   TOTAL
70,854
Industrial Machinery--0.3%
1,736 1 Columbus McKinnon Corp.
22,082
Insurance Brokerage--1.8%
2,925 AmTrust Financial Services, Inc.
 24,014
340 Employers Holdings, Inc.
 4,604
2,607 Life Partners Holdings, Inc.
99,066
   TOTAL
127,684
Life Insurance--0.7%
3,298 Delphi Financial Group, Inc., Class A
 50,031
1,337 Phoenix Cos., Inc.
2,340
   TOTAL
52,371
Long-Term Care Centers--0.1%
685 1 Sun Healthcare Group, Inc.
7,761
Lumber Products--0.2%
2,595 Officemax, Inc.
14,298
Machine Tools--0.7%
2,251 1 AZZ, Inc.
50,422
Machined Parts Original Equipment Manufacturers--0.1%
540 Titan International, Inc.
4,190
Magazine Publishing--0.7%
3,246 Meredith Corp.
51,839
Maritime--0.3%
1,794 TAL International Group, Inc.
18,801
Medical Supplies--0.7%
517 1 MWI Veterinary Supply, Inc.
 10,821
884 1 Merit Medical Systems, Inc.
 13,605
726 1 PetMed Express, Inc.
 10,483
1,488 1 Quidel Corp.
18,302
   TOTAL
53,211
Shares
   
   
Value
COMMON STOCKS--continued
Medical Technology--2.9%
2,387 1 Cantel Medical Corp.
 $ 35,781
2,723 1 Cyberonics, Inc.
 41,907
1,594 1 Greatbatch Technologies, Inc.
 37,140
3,299 1 Thoratec Laboratories Corp.
95,572
   TOTAL
210,400
Metal Distribution--0.1%
1,011 Castle (A.M.) & Co.
8,553
Metal Fabrication--1.4%
1,156 1 Haynes International, Inc.
 21,120
1,115 1 Ladish Co., Inc.
 12,678
4,718 1 RTI International Metals
62,797
   TOTAL
96,595
Miscellaneous Communications--0.7%
966 1 Bankrate, Inc.
 32,226
612 Harte-Hanks
 3,856
505 Shenandoah Telecommunications Co.
12,312
   TOTAL
48,394
Miscellaneous Food Products--0.6%
1,778 1 Fresh Del Monte Produce, Inc.
 42,850
204 The Anderson's, Inc.
3,344
   TOTAL
46,194
Miscellaneous Machinery--0.0%
80 Graham Corp.
797
Multi-Industry Basic--1.9%
9,552 Olin Corp.
134,206
Multi-Industry Capital Goods--1.5%
3,723 1 Ceradyne, Inc.
 84,959
1,472 1 DXP Enterprises, Inc.
19,990
   TOTAL
104,949
Shares
   
   
Value
COMMON STOCKS--continued
Multi-Line Insurance--1.3%
467 1 Amerisafe, Inc.
 $ 8,747
2,065 FBL Financial Group, Inc., Class A
 21,290
1,409 Harleysville Group, Inc.
 40,072
689 Safety Insurance Group, Inc.
24,129
   TOTAL
94,238
Newspaper Publishing--0.1%
5,056 Belo (A.H.) Corp., Series A
 7,230
3,150 McClatchy Co., Class A
2,079
   TOTAL
9,309
Office Furniture--1.4%
2,847 Knoll, Inc.
 19,417
7,086 Miller Herman, Inc.
77,875
   TOTAL
97,292
Office Supplies--1.6%
1,314 1 Acco Brands Corp.
 2,523
4,001 1 United Stationers, Inc.
112,068
   TOTAL
114,591
Oil Refiner--2.6%
13 Alon USA Energy, Inc.
 153
5,512 World Fuel Services Corp.
186,140
   TOTAL
186,293
Oil Service, Explore & Drill--0.7%
3,386 1 Complete Production Services, Inc.
 21,704
6,439 1 Parker Drilling Co.
 13,651
1,227 1 Superior Well Services, Inc.
11,276
   TOTAL
46,631
Oil Well Supply--1.3%
468 Lufkin Industries, Inc.
 16,357
4,158 1 Oil States International, Inc.
76,133
   TOTAL
92,490
Other Communications Equipment--1.2%
6,147 1 Syniverse Holdings, Inc.
83,353
Shares
   
   
Value
COMMON STOCKS--continued
Packaged Foods--0.7%
3,771 1 Chiquita Brands International
$
52,719
Paint & Related Materials--0.3%
4,851 Ferro Corp.
19,210
Paper Products--3.1%
3,406 1 Buckeye Technologies, Inc.
 9,946
2,836 Glatfelter (P.H.) Co.
 24,702
459 1 Kadant, Inc.
 4,608
5,809 Rock-Tenn Co.
181,067
   TOTAL
220,323
Personal Loans--1.0%
3,705 1 Ezcorp, Inc., Class A
 50,277
1,017 1 World Acceptance Corp.
19,476
   TOTAL
69,753
Printing--0.1%
3,597 1 Valassis Communications, Inc.
4,604
Property Liability Insurance--1.3%
258 American Physicians Capital, Inc.
 10,970
1,311 1 CNA Surety Corp.
 21,697
4,456 Horace Mann Educators Corp.
 41,664
1,627 OneBeacon Insurance Group Ltd.
 13,748
281 Selective Insurance Group, Inc.
4,313
   TOTAL
92,392
Psychiatric Centers--0.4%
1,024 1 Psychiatric Solutions, Inc.
26,624
Regional Bank--2.9%
880 City Holding Co.
 22,625
1,712 First BanCorp
 12,172
3,791 First Midwest Bancorp, Inc.
 37,910
1,918 Oriental Financial Group
 9,686
7,730 Pacific Capital Bancorp
 82,015
2,407 Republic Bancorp, Inc.
43,326
   TOTAL
207,734
Shares
   
   
Value
COMMON STOCKS--continued
Restaurant--3.0%
263 Bob Evans Farms, Inc.
 $ 4,618
4,138 1 CEC Entertainment, Inc.
 96,581
1,500 Cracker Barrel Old Country Store, Inc.
 26,355
2,653 1 Domino's Pizza, Inc.
 17,749
943 1 Green Mountain Coffee, Inc.
 36,079
2,065 1 P. F. Chang's China Bistro, Inc.
36,612
   TOTAL
217,994
Savings & Loan--0.9%
5,305 1 Ocwen Financial Corp.
 47,214
323 WSFS Financial Corp.
 8,333
1,850 Webster Financial Corp. Waterbury
7,733
   TOTAL
63,280
Securities Brokerage--3.1%
4,590 1 Interactive Brokers Group, Inc., Class A
 70,089
6,787 1 Knight Capital Group, Inc., Class A
 122,370
4,437 1 Labranche & Co., Inc.
30,438
   TOTAL
222,897
Services to Medical Professionals--0.7%
662 1 Genoptix, Inc.
 22,442
1,017 1 PharMerica Corp.
 16,719
950 1 Res-Care, Inc.
12,872
   TOTAL
52,033
Shoes--1.2%
1,607 1 Deckers Outdoor Corp.
83,950
Software Packaged/Custom--1.4%
3,302 1 ACI Worldwide, Inc.
 56,101
946 1 CSG Systems International, Inc.
 13,717
453 1 S1 Corp.
 3,022
3,766 1 Wind River Systems, Inc.
30,015
   TOTAL
102,855
Shares
   
   
Value
COMMON STOCKS--continued
Specialty Chemicals--1.1%
598 Chemed Corp.
 $ 23,998
3,562 Koppers Holdings, Inc.
57,704
   TOTAL
81,702
Specialty Machinery--0.4%
1,368 1 Gardner Denver, Inc.
29,781
Specialty Retailing--1.6%
1,169 Asbury Automotive Group, Inc.
 4,185
5,650 1 Hot Topic, Inc.
 48,251
5,486 Regis Corp. Minnesota
 61,717
511 Sonic Automotive, Inc.
1,037
   TOTAL
115,190
Telecommunication Equipment & Services--1.4%
509 1 ADC Telecommunications, Inc.
 2,581
1,506 1 Comtech Telecommunications Corp.
 58,433
1,462 1 GeoEye, Inc.
 25,219
1,217 Plantronics, Inc.
12,353
   TOTAL
98,586
Telephone Utility--0.1%
203 Atlantic Telephone Network, Inc.
4,364
Toys & Games--1.2%
4,129 1 JAKKS Pacific, Inc.
 75,726
1,183 1 RC2 Corp.
6,873
   TOTAL
82,599
Undesignated Consumer Cyclicals--8.3%
1,812 1 American Public Education, Inc.
 70,958
8,296 1 Corinthian Colleges, Inc.
 154,969
9,360 1 Geo Group, Inc.
 138,528
788 1 Kendle International, Inc.
 15,051
10,960 1 Rent-A-Center, Inc.
 162,756
3,371 Speedway Motorsports, Inc.
48,677
   TOTAL
590,939
Shares
   
   
Value
COMMON STOCKS--continued
Undesignated Consumer Staples--0.8%
1,901 Jackson Hewitt Tax Service, Inc.
 $ 25,169
1,398 1 USANA, Inc.
32,448
   TOTAL
57,617
Undesignated Health--1.6%
6,523 1 Healthspring, Inc.
113,631
   TOTAL COMMON STOCKS
(IDENTIFIED COST $9,292,861)
7,090,616
MUTUAL FUND--2.2%
158,417 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
158,417
   TOTAL INVESTMENTS--101.3%
(IDENTIFIED COST $9,451,278) 4
7,249,033
   OTHER ASSETS AND LIABILITIES - NET--(1.3)% 5
(94,335
 )
   TOTAL NET ASSETS--100%
$
 7,154,698

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represents cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$7,249,033
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$7,249,033

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $158,417 of investments in an affiliated issuer (Note 5) (identified cost $9,451,278)
 $ 7,249,033
Income receivable
 978
Receivable for investments sold
 219,421
Receivable for shares sold
473
   TOTAL ASSETS
7,469,905
Liabilities:
Payable for investments purchased
 $ 223,779
Payable for shares redeemed
 44,085
Payable for auditing fees
10,924
Payable for portfolio accounting fees
 12,070
Payable for share registration costs
 11,184
Payable for distribution services fee (Note 5)
 1,701
Payable for shareholder services fee (Note 5)
 732
Accrued expenses
10,732
   TOTAL LIABILITIES
315,207
Net assets for 1,244,104 shares outstanding
$
 7,154,698
Net Assets Consist of:
Paid-in capital
 $ 15,849,580
Net unrealized depreciation of investments
(2,202,245 )
Accumulated net realized loss on investments
(6,457,731 )
Accumulated net investment income (loss)
(34,906
 )
   TOTAL NET ASSETS
$
 7,154,698
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($3,855,202 ÷ 664,225 shares outstanding), no par value, unlimited shares authorized
$5.80
Offering price per share
$5.80
Redemption proceeds per share
$5.80
Class A Shares:
Net asset value per share ($1,667,528 ÷ 289,491 shares outstanding), no par value, unlimited shares authorized
$5.76
Offering price per share (100/94.50 of $5.76)
$6.10
Redemption proceeds per share
$5.76
Class C Shares:
Net asset value per share ($1,631,968 ÷ 290,388 shares outstanding), no par value, unlimited shares authorized
$5.62
Offering price per share
$5.62
Redemption proceeds per share (99.00/100 of $5.62)
$5.56

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $2,242 received from an affiliated issuer and net of foreign taxes withheld of $43)
$
 61,750
Expenses:
Investment adviser fee (Note 5)
 $ 64,337
Administrative personnel and services fee (Note 5)
 115,946
Custodian fees
 12,425
Transfer and dividend disbursing agent fees and expenses
 32,433
Directors'/Trustees' fees
 811
Auditing fees
 10,924
Legal fees
 3,230
Portfolio accounting fees
 38,211
Distribution services fee--Class C Shares (Note 5)
 7,947
Shareholder services fee--Class A Shares (Note 5)
 2,571
Shareholder services fee--Class C Shares (Note 5)
 2,649
Share registration costs
 18,165
Printing and postage
 19,799
Insurance premiums
 2,381
Miscellaneous
1,531
   TOTAL EXPENSES
333,360
Waivers and Reimbursements:
Waiver/reimbursement of investment adviser fee
 $ (64,337 )
Waiver of administrative personnel and services fee
 (22,629 )
Reimbursement of other operating expenses
(149,738
 )
   TOTAL WAIVERS AND REIMBURSEMENTS
(236,704
 )
Net expenses
96,656
Net investment income (loss)
(34,906
 )
Realized and Unrealized Loss on Investments:
Net realized loss on investments
(5,429,730 )
Net change in unrealized depreciation of investments
(1,098,873
 )
Net realized and unrealized loss on investments
(6,528,603
 )
Change in net assets resulting from operations
$
 (6,563,509
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   

Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)
 $ (34,906 ) $ (92,417 )
Net realized loss on investments
(5,429,730 ) (968,490 )
Net change in unrealized appreciation/depreciation of investments
(1,098,873
 )
(1,160,449
 )
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(6,563,509
 )
(2,221,356
 )
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares
 -- (217,102 )
Class A Shares
 -- (164,846 )
Class C Shares
--
(186,389
 )
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
--
(568,337
 )
Share Transactions:
Proceeds from sale of shares
 2,817,904 11,231,271
Net asset value of shares issued to shareholders in payment of distributions declared
 -- 289,237
Cost of shares redeemed
(4,545,923
 )
(2,591,978
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
(1,728,019
 )
8,928,530
Change in net assets
(8,291,528
 )
6,138,837
Net Assets:
Beginning of period
15,446,226
9,307,389
End of period (including accumulated net investment income (loss) of $(34,906) and $0, respectively)
$
 7,154,698
$
 15,446,226

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

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 U.S. generally accepted accounting principles (GAAP).

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income, if any, are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

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.

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 258,491 $ 1,684,599 775,627 $ 8,473,003
Shares issued to shareholders in payment of distributions declared
--


--


5,282



62,326
Shares redeemed
(573,088
 )
(3,688,228
 )
(72,893
 )
(839,798
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS

(314,597
 )

$
 (2,003,629
 )
708,016


$
7,695,531
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 82,410 $ 547,668 127,938 $ 1,534,598
Shares issued to shareholders in payment of distributions declared

--


--


12,340


144,868
Shares redeemed
(49,837
 )
(357,036
 )
(65,972
 )
(737,190
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS
32,573
$
 190,632
74,306
$
 942,276
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 90,597 $ 585,637 103,368 $ 1,223,670
Shares issued to shareholders in payment of distributions declared

--



--


7,110


82,043
Shares redeemed
(76,236
 )
(500,659
 )
(87,328
 )
(1,014,990
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
14,361
$
 84,978
23,150
$
 290,723
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS


(267,663
 )

$
(1,728,019
 )

805,472


$
8,928,530

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $9,451,278. The net unrealized depreciation of investments for federal tax purposes was $2,202,245. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $212,603 and net unrealized depreciation from investments for those securities having an excess of cost over value of $2,414,848.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 1.15% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for each Class of the Fund based on average daily net assets:

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

In addition, subject to the terms described in the Expense Limitation note, the Adviser may also voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser waived $64,261 of its fee and reimbursed $149,738 of other operating expenses.

Administrative Fee

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


Administrative Fee


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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 1.668% of average daily net assets of the Fund. The Fund is currently being charged the minimum administrative fee; therefore the fee as a percentage of average daily net assets is greater than the amounts presented in the chart above. FAS waived $22,629 of its fee.

Distribution Services Fee

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


Share Class Name

Percentage of Average Daily
Net Assets of Class
Class A Shares
0.05%
Class C Shares
0.75%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC retained $2,161 of fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $366 in sales charges from the sale of Class A Shares. FSC also retained $100 of CDSC relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares, to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC did not receive any fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.49%, 1.74% and 2.49%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $76. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund, Institutional Shares
180,688
2,042,044
2,064,315
158,417
$158,417
$2,242

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 12,137,566
Sales
$
 13,846,513

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory Contract - May 2008

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

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

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

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

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

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

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

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

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

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

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

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

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

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

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

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

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R783

36363 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Small Cap Growth Fund

Established 2005

A Portfolio of Federated MDT Series

SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Class A Shares
Class B Shares
Class C Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

    Six Months
Ended
(unaudited)		    Year Ended July 31,
    Period Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$11.57 $12.95 $10.59 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.04 ) (0.14 ) 3 (0.14 ) 3 (0.17 ) 3
Net realized and unrealized gain (loss) on investments and foreign currency transactions
(4.58
 )
(1.17
 )
2.50
0.76
   TOTAL FROM INVESTMENT OPERATIONS
(4.62
 )
(1.31
 )
2.36
0.59
Less Distributions:
Distributions from net realized gain on investments
--
(0.07
 )
--
--
Net Asset Value, End of Period
$ 6.95
$11.57
$12.95
$10.59
Total Return 4
(39.93
 )%
(10.20
 )%
22.29
 %
5.90
 %
Ratios to Average Net Assets:
Net expenses
1.75
 % 5
1.75
 %
1.75
 %
2.02
 % 5
Net investment income (loss)
(0.87
 )% 5
(1.20
 )%
(1.16
 )%
(1.50
 )% 5
Expense waiver/reimbursement 6
0.83
 % 5
1.05
 %
25.97
 %
22.65
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$19,670
$31,874
$532
$157
Portfolio turnover
111
 %
212
 %
157
 %
157
 %

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

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

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

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

5 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class B Shares

(For a Share Outstanding Throughout Each Period)

    Six Months
Ended
(unaudited)		    Period
Ended
   
 1/31/2009
   
 7/31/2008
1
Net Asset Value, Beginning of Period
$11.61 $11.26
Income From Investment Operations:
Net investment income (loss)
 (0.12 ) (0.09 ) 2
Net realized and unrealized gain (loss) on investments and foreign currency transactions
(4.54
 )
0.44
   TOTAL FROM INVESTMENT OPERATIONS
(4.66
 )
0.35
Net Asset Value, End of Period
$ 6.95
$11.61
Total Return 3
(40.14
 )%
3.11
 %
Ratios to Average Net Assets:
Net expenses
2.50
 % 4
2.50
 % 4
Net investment income (loss)
(1.61
 )% 4
(1.96
 )% 4
Expense waiver/reimbursement 5
0.83
 % 4
1.05
 % 4
Supplemental Data:
Net assets, end of period (000 omitted)
$3,893
$9,811
Portfolio turnover
111
 %
212
 % 6

1 Reflects operations for the period from March 13, 2008 (date of initial investment) to July 31, 2008.

2 Per share number has been calculated using the average shares method.

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

4 Computed on an annualized basis.

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

6 Portfolio turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended July 31, 2008.

See Notes which are an integral part of the Financial Statements

Financial Highlights - Class C Shares

(For a Share Outstanding Throughout Each Period)

    Six Months
Ended
(unaudited)		    Year Ended July 31,
    Period Ended
1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$11.32 $12.77 $10.52 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.08 ) (0.22 ) 3 (0.23 ) 3 (0.26 ) 3
Net realized and unrealized gain (loss) on investments and foreign currency transactions
(4.47
 )
(1.16
 )
2.48
0.78
   TOTAL FROM INVESTMENT OPERATIONS
(4.55
 )
(1.38
 )
2.25
0.52
Less Distributions:
Distributions from net realized gain on investments
--
(0.07
 )
--
--
Net Asset Value, End of Period
$ 6.77
$11.32
$12.77
$10.52
Total Return 4
(40.19
 )%
(10.89
 )%
21.39
 %
5.20
 %
Ratios to Average Net Assets:
Net expenses
2.50
 % 5
2.47
 %
2.50
 %
2.77
 % 5
Net investment income (loss)
(1.63
 )% 5
(1.93
 )%
(1.92
 )%
(2.25
 )% 5
Expense waiver/reimbursement 6
0.83
 % 5
1.07
 %
27.07
 %
25.65
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$3,471
$6,450
$702
$348
Portfolio turnover
111
 %
212
 %
157
 %
157
 %

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

2 Reflects operations for the period from September 15, 2005 (date of initial 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 (unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual:
Class A Shares
$1,000
$ 600.70
$ 7.06
Class B Shares
$1,000
$ 598.60
$10.07
Class C Shares
$1,000
$ 598.10
$10.07
Hypothetical (assuming a 5% return before expenses):
Class A Shares
$1,000
$1,016.38
$ 8.89
Class B Shares
$1,000
$1,012.60
$12.68
Class C Shares
$1,000
$1,012.60
$12.68

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

Class A Shares
   
 1.75%
Class B Shares
2.50%
Class C Shares
2.50%

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Software Packaged/Custom
9.7%
Biotechnology
6.5%
Undesignated Consumer Cyclicals
6.4%
Medical Supplies
4.9%
Defense Aerospace
4.8%
Miscellaneous Communications
4.2%
Home Health Care
4.1%
Telecommunication Equipment & Services
3.4%
Medical Technology
3.1%
Ethical Drugs
3.0%
Restaurant
2.4%
Specialty Chemicals
2.4%
Securities Brokerage
2.1%
Electrical Equipment
1.8%
Insurance Brokerage
1.7%
Food Wholesaling
1.6%
Grocery Chain
1.6%
Computer Services
1.5%
Cosmetics & Toiletries
1.5%
Clothing Stores
1.4%
Computer Peripherals
1.3%
Regional Bank
1.3%
Auto Original Equipment Manufacturer
1.2%
Discount Department Stores
1.2%
Electric Utility
1.2%
Electronic Instruments
1.2%
Other Communications Equipment
1.2%
Personnel Agency
1.2%
Railroad
1.2%
Semiconductor Distribution
1.2%
Services to Medical Professionals
1.2%
Airline - Regional
1.1%
Apparel
1.1%
Industry
   
 Percentage of
Total Net Assets
Electrical Test/Measuring Equipment
1.1%
Personal Loans
1.1%
Defense Electronics
1.0%
Other 2
10.8%
Cash Equivalents 3
2.3%
Other Assets and Liabilities--Net 4,5
0.0%
   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.

5 Represents less than 0.1%.

Portfolio of Investments

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--97.7%
Airline - National--0.4%
30,217 1 UAL Corp.
$
 285,248
Airline - Regional--1.1%
23,823 1 Allegiant Travel Co.
851,910
Advertising--0.1%
8,849 National CineMedia, Inc.
89,198
Apparel--1.1%
12,519 1 Carter's, Inc.
 212,698
11,665 1 G-III Apparel Group Ltd.
 64,158
48,349 1 True Religion Apparel, Inc.
551,662
   TOTAL
828,518
Auto Original Equipment Manufacturer--1.2%
34,229 1 Fuel Systems Solutions, Inc.
894,746
Biotechnology--6.5%
52,615 1 Alkermes, Inc.
 603,494
44,774 1 Emergent Biosolutions, Inc.
 981,894
2,089 1 Idenix Pharmaceuticals, Inc.
 12,137
9,403 1 Idera Pharmaceuticals, Inc.
 65,821
20,919 1 InterMune, Inc.
 239,313
32,084 1 Luminex Corp.
 653,551
4,371 1 Martek Biosciences Corp.
 115,613
19,383 1 Maxygen, Inc.
 165,918
7,085 Medivation, Inc.
 132,844
9,638 1 Nektar Therapeutics
 39,612
4,343 1 Osiris Therapeutics, Inc.
 87,077
147,025 1 Questcor Pharmaceuticals, Inc.
 948,311
24,283 1 Regeneron Pharmaceuticals, Inc.
 424,467
20,973 1 Sequenom, Inc.
464,762
   TOTAL
4,934,814
Shares
   
   
Value
COMMON STOCKS--continued
Building Materials--0.2%
10,788 1 Trex Co., Inc.
$
159,555
Clothing Stores--1.4%
48,526 Buckle, Inc.
 1,026,325
3,101 1 Children's Place Retail Stores, Inc.
58,330
   TOTAL
1,084,655
Computer Networking--0.4%
21,642 1 NetScout Systems, Inc.
307,749
Computer Peripherals--1.3%
40,633 1 Synaptics, Inc.
957,720
Computer Services--1.5%
30,201 1 Stanley, Inc.
 913,882
9,962 Syntel, Inc.
214,681
   TOTAL
1,128,563
Contracting--0.5%
10,873 1 Baker Michael Corp.
380,120
Cosmetics & Toiletries--1.5%
11,064 1 Chattem, Inc.
 747,926
75,457 1 Sally Beauty Holdings, Inc.
356,912
   TOTAL
1,104,838
Defense Aerospace--4.8%
45,723 1 AAR Corp.
 829,415
26,899 1 Aerovironment, Inc.
 996,877
28,466 1 Hawk Corp.
 480,791
8,541 1 Teledyne Technologies, Inc.
 238,038
24,236 Triumph Group, Inc.
1,097,406
   TOTAL
3,642,527
Defense Electronics--1.0%
24,252 1 FLIR Systems, Inc.
 605,572
11,253 1 La Barge, Inc.
124,571
   TOTAL
730,143
Shares
   
   
Value
COMMON STOCKS--continued
Discount Department Stores--1.2%
111,838 1 99 Cents Only Stores
$
937,202
Diversified Leisure--0.1%
5,211 1 Bally Technologies, Inc.
105,210
Electrical Test/Measuring Equipment--1.1%
43,948 1 Multi-Fineline Electronix, Inc.
814,356
Electric Utility--1.2%
80,510 1 Pike Electric Corp.
905,738
Electrical Equipment--1.8%
12,941 American Science & Engineering, Inc.
 1,009,398
9,503 Franklin Electronics, Inc.
 246,983
3,249 1 Powell Industries, Inc.
77,586
   TOTAL
1,333,967
Electronic Instruments--1.2%
17,637 1 Axsys Technologies, Inc.
 753,100
6,444 Computer Programs & Systems, Inc.
161,938
   TOTAL
915,038
Ethical Drugs--3.0%
5,108 1 Auxilium Pharmaceutical, Inc.
 156,100
28,702 1 Cubist Pharmaceuticals, Inc.
 614,510
44,522 1 Matrixx Initiatives, Inc.
 769,785
71,686 1 Noven Pharmaceuticals, Inc.
711,842
   TOTAL
2,252,237
Financial Services--0.7%
33,803 1 CBIZ, Inc.
 274,818
17,675 1 Riskmetrics Group, Inc.
227,301
   TOTAL
502,119
Food Wholesaling--1.6%
30,103 Calavo Growers, Inc.
 367,257
20,310 Nash Finch Co.
873,939
   TOTAL
1,241,196
Shares
   
   
Value
COMMON STOCKS--continued
Generic Drugs--0.6%
18,606 1 Xenoport, Inc.
$
485,989
Grocery Chain--1.6%
46,379 Casey's General Stores, Inc.
 985,554
8,823 Ruddick Corp.
212,193
   TOTAL
1,197,747
Home Health Care--4.1%
13,002 1 Almost Family, Inc.
 400,982
22,421 1 Amedisys, Inc.
 924,418
35,909 1 Gentiva Health Services, Inc.
 907,780
33,341 1 LHC Group, Inc.
887,204
   TOTAL
3,120,384
Industrial Machinery--0.6%
46,234 1 Blount International, Inc.
 387,441
2,323 Valmont Industries, Inc.
94,267
   TOTAL
481,708
Insurance Brokerage--1.7%
42,267 AmTrust Financial Services, Inc.
 347,012
24,918 Life Partners Holdings, Inc.
946,884
   TOTAL
1,293,896
Internet Services--0.3%
34,111 1 EarthLink Network, Inc.
256,856
Long-Term Care Centers--0.8%
53,810 1 Sun Healthcare Group, Inc.
609,667
Machine Tools--0.4%
14,939 1 AZZ, Inc.
334,634
Maritime--0.0%
1,525 TAL International Group, Inc.
15,982
Shares
   
   
Value
COMMON STOCKS--continued
Medical Supplies--4.9%
27,141 1 Emergency Medical Services Corp., Class A
 $ 909,766
17,597 1 Kensey Nash Corp.
 363,730
51,084 1 Merit Medical Systems, Inc.
 786,183
50,612 1 PetMed Express, Inc.
 730,837
73,839 1 Quidel Corp.
908,220
   TOTAL
3,698,736
Medical Technology--3.1%
63,022 1 Cyberonics, Inc.
 969,909
2,666 1 Neogen Corp.
 69,769
31,547 1 Rochester Medical Corp.
 364,683
31,962 1 Thoratec Laboratories Corp.
925,939
   TOTAL
2,330,300
Miscellaneous Communications--4.2%
28,233 1 Bankrate, Inc.
 941,853
43,555 NTELOS Holdings Corp.
 942,530
35,942 Shenandoah Telecommunications Co.
 876,266
22,129 1 j2 Global Communications, Inc.
433,286
   TOTAL
3,193,935
Multi-Industry Capital Good--0.8%
42,826 1 DXP Enterprises, Inc.
581,577
Oil Service, Explore & Drill--0.0%
5,917 1 Matrix Services Co.
31,301
Other Communications Equipment--1.2%
67,703 1 Syniverse Holdings, Inc.
918,053
Packaged Foods--0.1%
5,583 1 United Natural Foods, Inc.
86,760
Packaging & Containers--0.8%
72,849 1 Bway Holding Co.
616,303
Shares
   
   
Value
COMMON STOCKS--continued
Personal Loans--1.1%
12,889 Cash America International, Inc.
 $ 235,611
29,327 1 Ezcorp, Inc., Class A
 397,967
14,332 1 First Cash Financial Services, Inc.
241,064
   TOTAL
874,642
Personnel Agency--1.2%
59,615 1 Dyncorp International, Inc., Class A
896,610
Railroad--1.2%
34,395 1 Genesee & Wyoming, Inc., Class A
934,512
Recreational Goods--0.1%
12,204 Sport Supply Group, Inc.
98,364
Recreational Vehicles--0.0%
145 Polaris Industries, Inc., Class A
3,084
Regional Bank--1.3%
16,734 Bank of the Ozarks, Inc.
 379,694
43,329 1 Oritani Financial Corp.
646,035
   TOTAL
1,025,729
Restaurant--2.4%
27,529 1 CEC Entertainment, Inc.
 642,527
75,705 CKE Restaurants, Inc.
 628,352
15,147 1 Green Mountain Coffee, Inc.
579,524
   TOTAL
1,850,403
Roofing & Wallboard--0.9%
53,737 1 Beacon Roofing Supply, Inc.
684,072
Savings & Loan--0.6%
44,925 1 Investors Bancorp, Inc.
479,799
Securities Brokerage--2.1%
40,261 1 Interactive Brokers Group, Inc., Class A
 614,785
54,619 1 Knight Capital Group, Inc., Class A
984,781
   TOTAL
1,599,566
Shares
   
   
Value
COMMON STOCKS--continued
Semiconductor Distribution--1.2%
70,437 1 Tyler Technologies, Inc.
$
 886,802
Semiconductor Manufacturing--0.2%
5,558 1 NVE Corp.
180,524
Services to Medical Professionals--1.2%
24,567 1 Genoptix, Inc.
 832,821
18,429 1 eResearch Technology, Inc.
106,704
   TOTAL
939,525
Shoes--0.7%
9,579 1 Deckers Outdoor Corp.
500,407
Software Packaged/Custom--9.7%
55,651 1 ACI Worldwide, Inc.
 945,511
53,526 1 CSG Systems International, Inc.
 776,127
9,230 1 Concur Technologies, Inc.
 227,889
14,773 1 ManTech International Corp., Class A
 792,276
921 1 OPNET Technologies, Inc.
 7,552
29,922 Pegasystems, Inc.
 406,042
143,876 1 S1 Corp.
 959,653
36,846 1 Solera Holdings, Inc.
 887,620
126,080 1 TeleCommunication Systems, Inc., Class A
 902,733
10,376 1 VASCO Data Security International, Inc.
 70,349
6,479 1 Vocus, Inc.
 98,870
43,064 1 Websense, Inc.
 482,317
109,113 1 Wind River Systems, Inc.
869,631
   TOTAL
7,426,570
Specialty Chemicals--2.4%
65,196 1 Calgon Carbon Corp.
 819,514
24,946 Chemed Corp.
1,001,083
   TOTAL
1,820,597
Shares
   
   
Value
COMMON STOCKS--continued
Specialty Retailing--0.3%
5,755 1 Titan Machinery, Inc.
 $ 58,413
4,634 1 Tractor Supply Co.
156,212
   TOTAL
214,625
Telecommunication Equipment & Services--3.4%
5,800 Applied Signal Technology, Inc.
 101,732
12,298 1 Bigband Networks, Inc.
 62,105
20,114 1 Comtech Telecommunications Corp.
 780,423
27,619 1 GeoEye, Inc.
 476,428
12,343 1 NeuStar, Inc., Class A
 168,112
56,597 1 Neutral Tandem, Inc.
 896,496
16,610 1 Switch & Data Facilities Co.
114,277
   TOTAL
2,599,573
Truck Manufacturing--0.3%
43,246 1 Force Protection, Inc.
259,908
Undesignated Consumer Cyclicals--6.4%
21,922 1 American Public Education, Inc.
 858,466
56,942 1 Corinthian Colleges, Inc.
 1,063,677
25,247 Corporate Executive Board Co.
 509,989
4,918 1 Geo Group, Inc.
 72,786
55,186 1 Hillenbrand, Inc.
 1,020,389
37,586 1 Kendle International, Inc.
 717,893
13,351 1 Lincoln Educational Services
 195,192
26,541 1 Sykes Enterprises, Inc.
443,500
   TOTAL
4,881,892
Undesignated Consumer Staples--0.7%
21,554 1 USANA, Inc.
500,268
Undesignated Health--0.2%
16,979 1 HealthSouth Corp.
168,771
   TOTAL COMMON STOCKS
(IDENTIFIED COST $83,158,892)
74,467,438
Shares
   
   
Value
MUTUAL FUND--2.3%
1,709,949 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
$
1,709,949
   TOTAL INVESTMENTS--100.0%
(IDENTIFIED COST $84,868,841) 4
76,177,387
   OTHER ASSETS AND LIABILITIES - NET--0.0% 5
18,605
   TOTAL NET ASSETS--100%
$
 76,195,992

1 Non-income-producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represent cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$76,177,387
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$76,177,387

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $1,709,949 of investments in an affiliated issuer (Note 5) (identified cost $84,868,841)
 $ 76,177,387
Cash
 31,768
Income receivable
 18,414
Receivable for investments sold
 2,119,812
Receivable for shares sold
422,650
   TOTAL ASSETS
78,770,031
Liabilities:
Payable for investments purchased
 $ 2,110,376
Payable for shares redeemed
 350,222
Payable for distribution services fee (Note 5)
 5,217
Payable for shareholder services fee (Note 5)
 14,922
Accrued expenses
93,302
   TOTAL LIABILITIES
2,574,039
Net assets for 10,917,583 shares outstanding
$
 76,195,992
Net Assets Consist of:
Paid-in capital
 $ 191,353,806
Net unrealized depreciation of investments and translation of assets and liabilities in foreign currency
 (8,691,336 )
Accumulated net realized loss on investments
(106,104,046 )
Accumulated net investment income (loss)
(362,432
 )
   TOTAL NET ASSETS
$
 76,195,992

Statement of Assets and Liabilities-continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
      
Institutional Shares:
Net asset value per share ($49,161,481 ÷ 7,013,691 shares outstanding), no par value, unlimited shares authorized
$7.01
Offering price per share
$7.01
Redemption proceeds per share
$7.01
Class A Shares:
Net asset value per share ($19,669,994 ÷ 2,830,869 shares outstanding), no par value, unlimited shares authorized
$6.95
Offering price per share (100/94.50 of $6.95)
$7.35
Redemption proceeds per share
$6.95
Class B Shares:
Net asset value per share ($3,893,028 ÷ 560,467 shares outstanding), no par value, unlimited shares authorized
$6.95
Offering price per share
$6.95
Redemption proceeds per share (94.50/100 of $6.95)
$6.57
Class C Shares:
Net asset value per share ($3,471,489 ÷ 512,556 shares outstanding), no par value, unlimited shares authorized
$6.77
Offering price per share
$6.77
Redemption proceeds per share (99.00/100 of $6.77)
$6.70

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $17,738 received from an affiliated issuer) (Note 5)
$
 378,840
Expenses:
Investment adviser fee (Note 5)
 $ 501,540
Administrative personnel and services fee (Note 5)
 136,110
Custodian fees
 28,494
Transfer and dividend disbursing agent fees and expenses
 241,442
Directors'/Trustees' fees
 972
Auditing fees
 10,724
Legal fees
 3,368
Portfolio accounting fees
 39,985
Distribution services fee--Class B Shares (Note 5)
 23,588
Distribution services fee--Class C Shares (Note 5)
 17,812
Shareholder services fee--Class A Shares (Note 5)
 30,714
Shareholder services fee--Class B Shares (Note 5)
 7,863
Shareholder services fee--Class C Shares (Note 5)
 5,799
Account administration fee--Class A Shares
 161
Account administration fee--Class C Shares
 138
Share registration costs
 27,203
Printing and postage
 23,811
Insurance premiums
 2,398
Miscellaneous
2,301
   TOTAL EXPENSES
1,104,423
Waivers and Reimbursement (Note 5):
Waiver/reimbursement of investment adviser fee
 $ (336,876 )
Waiver of administrative personnel and services fee
(27,289
 )
   TOTAL WAIVERS AND REIMBURSEMENT
(364,165
 )
Net expenses
740,258
Net investment income (loss)
(361,418
 )
Realized and Unrealized Loss on Investments and Foreign Currency Transactions:
Net realized loss on investments
(32,005,906 )
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign currency
(12,580,575
 )
Net realized and unrealized loss on investments and foreign currency transactions
(44,586,481
 )
Change in net assets resulting from operations
$
 (44,947,899
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   
Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)
 $ (361,418 ) $ (628,923 )
Net realized loss on investments
(32,005,906 ) (11,971,658 )
Net change in unrealized appreciation/depreciation of investments and translation of assets and liabilities in foreign currency
(12,580,575
 )
9,435,934
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(44,947,899
 )
(3,164,647
 )
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares
 -- (155,811 )
Class A Shares
 -- (11,057 )
Class C Shares
--
(6,609
 )
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
--
(173,477
 )
Share Transactions:
Proceeds from sale of shares
 31,141,596 73,388,956
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Technology Fund
 -- 44,263,203
Net asset value of shares issued to shareholders in payment of distributions declared
 -- 146,644
Cost of shares redeemed
(20,341,396
 )
(21,595,763
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
10,800,200
96,203,040
Change in net assets
(34,147,699
 )
92,864,916
Net Assets:
Beginning of period
110,343,691
17,478,775
End of period (including accumulated net investment income (loss) of $(362,432) and $(1,014), respectively)
$
 76,195,992
$
 110,343,691

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

Effective March 13, 2008, the Fund began offering Class B Shares.

On March 14, 2008, the Fund received assets from Federated Technology Fund as the result of a tax-free reorganization, as follows:

Shares of
the Fund Issued
   
 Federated
Technology
Fund Net
Assets
Received
   
 Unrealized
Depreciation 1
   
 Net Assets
of the Fund
Immediately
Prior to
Combination
   
 Net Assets
of the Fund
Immediately
After
Combination
3,954,962
$44,263,203
$(6,136,744)
$40,850,828
$85,114,031

1 Unrealized Depreciation is included in the Federated Technology Fund Net Assets Received amount shown above.

2. SIGNIFICANT ACCOUNTING POLICIES

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

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. 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 account administration, distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

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

Foreign Currency Translation

The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies (FCs) are translated into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

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

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:
Six Months Ended
1/31/2009
Year Ended
7/31/2008
Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 3,174,513 $ 25,932,509 4,827,064 $ 59,077,425
Shares issued to shareholders in payment of distributions declared
 -- -- 10,017 133,229
Shares redeemed
(1,497,473
 )
(12,813,723
 )
(747,875
 )
(8,924,748
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS
1,677,040
$
 13,118,786
4,089,206
$
 50,285,906
Six Months Ended
1/31/2009
Year Ended
7/31/2008
Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 467,548 $ 4,012,434 1,014,861 $ 12,172,465
Shares issued in connection with tax-free transfer of assets from Federated Technology Fund
 -- -- 1,965,099 21,986,533
Shares issued to shareholders in payment of distributions declared
 -- -- 766 10,117
Shares redeemed
(391,711
 )
(3,363,136
 )
(266,794
 )
(3,116,808
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS
75,837
$
 649,298
2,713,932
$
 31,052,307
Six Months Ended
1/31/2009
Period Ended
7/31/2008 1
Class B Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 40,070 $ 396,115 12,136 $ 147,178
Shares issued to shareholders in payment of distributions declared
 -- -- 1,540,719 17,345,297
Shares redeemed
(324,623
 )
(2,940,937
 )
(707,835
 )
(8,399,050
 )
   NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS
(284,553
 )
$
 (2,544,822
 )
845,020
$
 9,093,425

1 Reflects operations for the period from March 13, 2008 (date of initial investment) to July 31, 2008.

Six Months Ended
1/31/2009
Year Ended
7/31/2008
Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 93,549 $ 800,538 164,693 $ 1,991,888
Shares issued in connection with tax-free transfer of assets from Federated Technology Fund
 -- -- 449,144 4,931,373
Shares issued to shareholders in payment of distributions declared
 -- -- 254 3,298
Shares redeemed
(150,654
 )
(1,223,600
 )
(99,359
 )
(1,155,157
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
(57,105
 )
$
 (423,062
 )
514,732
$
 5,771,402
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS
1,411,219
$
 10,800,200
8,162,890
$
 96,203,040

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $84,868,841. The net unrealized depreciation of investments for federal tax purposes excluding any unrealized appreciation resulting from foreign currency transactions was $8,691,454. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $2,138,489 and net unrealized depreciation from investments for those securities having an excess of cost over value of 10,829,943.

At July 31, 2008, the Fund had a capital loss carryforward of $62,019,299 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year
   
 Expiration Amount
2009
$59,356,831
2010
$ 2,459,915
2016
$ 202,553

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

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 1.15% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for each Class of the Fund based on average daily net assets:

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

In addition, subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any additional portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser waived $336,263 of its fee.

Administrative Fee

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

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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 0.250% of average daily net assets of the Fund. The Fund is currently being charged the minimum administrative fee; therefore the fee as a percentage of average daily net assets is greater than the amounts presented in the chart above. FAS waived $27,289 of its fee.

Distribution Services Fee

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

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

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC retained $4,815 of fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $965 in sales charges from the sale of Class A Shares. FSC also retained $1,838 of CDSC relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC received $315 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares, Class B Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.50%, 1.75%, 2.50% and 2.50%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $613. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund, Institutional Shares
1,320,459
16,011,023
15,621,533
1,709,949
$1,709,949
$17,738

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 108,208,191
Sales
$
 97,877,532

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT SMALL CAP GROWTH FUND (THE "FUND")

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

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

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

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

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

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

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

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

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

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

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

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

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

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

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

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R775
Cusip 31421R676
Cusip 31421R767

36367 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Small Cap Growth Fund

A Portfolio of Federated MDT Series



SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
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)

Six Months
Ended
(unaudited)		 Year Ended July 31,
Period
Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$11.66 $13.02 $10.61 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.03 ) (0.11 ) 3 (0.13 ) 3 (0.13 ) 3
Net realized and unrealized gain (loss) on investments and foreign currency transactions
(4.62
 )
(1.18
 )
2.54
0.74
   TOTAL FROM INVESTMENT OPERATIONS
(4.65
 )
(1.29
 )
2.41
0.61
Less Distributions:
Distributions from net realized gain on investments
--
(0.07
 )
--
--
Net Asset Value, End of Period
$7.01
$11.66
$13.02
$10.61
Total Return 4
(39.88
 )%
(9.99
 )%
22.71
 %
6.10
 %
Ratios to Average Net Assets:
Net expenses
1.50
 % 5
1.50
 %
1.50
 %
1.77
 % 5
Net investment income (loss)
(0.64
 )% 5
(0.91
 )%
(1.03
 )%
(1.25
 )% 5
Expense waiver/reimbursement 6
0.83
 % 5
1.09
 %
5.58
 %
25.65
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$49,161
$62,209
$16,245
$227
Portfolio turnover
111
 %
212
 %
157
 %
157
 %

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

2 Reflects operations for the period from September 15, 2005 (date of initial 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 (unaudited)

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual
$1,000
$ 601.20
$6.05
Hypothetical (assuming a 5% return before expenses)
$1,000
$1,017.64
$7.63

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 184/365 (to reflect the one-half-year period).

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Software Packaged/Custom
9.7%
Biotechnology
6.5%
Undesignated Consumer Cyclicals
6.4%
Medical Supplies
4.9%
Defense Aerospace
4.8%
Miscellaneous Communications
4.2%
Home Health Care
4.1%
Telecommunication Equipment & Services
3.4%
Medical Technology
3.1%
Ethical Drugs
3.0%
Restaurant
2.4%
Specialty Chemicals
2.4%
Securities Brokerage
2.1%
Electrical Equipment
1.8%
Insurance Brokerage
1.7%
Food Wholesaling
1.6%
Grocery Chain
1.6%
Computer Services
1.5%
Cosmetics & Toiletries
1.5%
Clothing Stores
1.4%
Computer Peripherals
1.3%
Regional Bank
1.3%
Auto Original Equipment Manufacturer
1.2%
Discount Department Stores
1.2%
Electric Utility
1.2%
Electronic Instruments
1.2%
Other Communications Equipment
1.2%
Personnel Agency
1.2%
Railroad
1.2%
Semiconductor Distribution
1.2%
Services to Medical Professionals
1.2%
Airline - Regional
1.1%
Apparel
1.1%
Industry
   
 Percentage of
Total Net Assets
Electrical Test/Measuring Equipment
1.1%
Personal Loans
1.1%
Defense Electronics
1.0%
Other 2
10.8%
Cash Equivalents 3
2.3%
Other Assets and Liabilities--Net 4,5
0.0%
   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.

5 Represents less than 0.1%.

Portfolio of Investments

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--97.7%
Airline - National--0.4%
30,217 1 UAL Corp.
$
 285,248
Airline - Regional--1.1%
23,823 1 Allegiant Travel Co.
851,910
Advertising--0.1%
8,849 National CineMedia, Inc.
89,198
Apparel--1.1%
12,519 1 Carter's, Inc.
 212,698
11,665 1 G-III Apparel Group Ltd.
 64,158
48,349 1 True Religion Apparel, Inc.
551,662
   TOTAL
828,518
Auto Original Equipment Manufacturer--1.2%
34,229 1 Fuel Systems Solutions, Inc.
894,746
Biotechnology--6.5%
52,615 1 Alkermes, Inc.
 603,494
44,774 1 Emergent Biosolutions, Inc.
 981,894
2,089 1 Idenix Pharmaceuticals, Inc.
 12,137
9,403 1 Idera Pharmaceuticals, Inc.
 65,821
20,919 1 InterMune, Inc.
 239,313
32,084 1 Luminex Corp.
 653,551
4,371 1 Martek Biosciences Corp.
 115,613
19,383 1 Maxygen, Inc.
 165,918
7,085 Medivation, Inc.
 132,844
9,638 1 Nektar Therapeutics
 39,612
4,343 1 Osiris Therapeutics, Inc.
 87,077
147,025 1 Questcor Pharmaceuticals, Inc.
 948,311
24,283 1 Regeneron Pharmaceuticals, Inc.
 424,467
20,973 1 Sequenom, Inc.
464,762
   TOTAL
4,934,814
Shares
   
   
Value
COMMON STOCKS--continued
Building Materials--0.2%
10,788 1 Trex Co., Inc.
$
159,555
Clothing Stores--1.4%
48,526 Buckle, Inc.
 1,026,325
3,101 1 Children's Place Retail Stores, Inc.
58,330
   TOTAL
1,084,655
Computer Networking--0.4%
21,642 1 NetScout Systems, Inc.
307,749
Computer Peripherals--1.3%
40,633 1 Synaptics, Inc.
957,720
Computer Services--1.5%
30,201 1 Stanley, Inc.
 913,882
9,962 Syntel, Inc.
214,681
   TOTAL
1,128,563
Contracting--0.5%
10,873 1 Baker Michael Corp.
380,120
Cosmetics & Toiletries--1.5%
11,064 1 Chattem, Inc.
 747,926
75,457 1 Sally Beauty Holdings, Inc.
356,912
   TOTAL
1,104,838
Defense Aerospace--4.8%
45,723 1 AAR Corp.
 829,415
26,899 1 Aerovironment, Inc.
 996,877
28,466 1 Hawk Corp.
 480,791
8,541 1 Teledyne Technologies, Inc.
 238,038
24,236 Triumph Group, Inc.
1,097,406
   TOTAL
3,642,527
Defense Electronics--1.0%
24,252 1 FLIR Systems, Inc.
 605,572
11,253 1 La Barge, Inc.
124,571
   TOTAL
730,143
Shares
   
   
Value
COMMON STOCKS--continued
Discount Department Stores--1.2%
111,838 1 99 Cents Only Stores
$
937,202
Diversified Leisure--0.1%
5,211 1 Bally Technologies, Inc.
105,210
Electrical Test/Measuring Equipment--1.1%
43,948 1 Multi-Fineline Electronix, Inc.
814,356
Electric Utility--1.2%
80,510 1 Pike Electric Corp.
905,738
Electrical Equipment--1.8%
12,941 American Science & Engineering, Inc.
 1,009,398
9,503 Franklin Electronics, Inc.
 246,983
3,249 1 Powell Industries, Inc.
77,586
   TOTAL
1,333,967
Electronic Instruments--1.2%
17,637 1 Axsys Technologies, Inc.
 753,100
6,444 Computer Programs & Systems, Inc.
161,938
   TOTAL
915,038
Ethical Drugs--3.0%
5,108 1 Auxilium Pharmaceutical, Inc.
 156,100
28,702 1 Cubist Pharmaceuticals, Inc.
 614,510
44,522 1 Matrixx Initiatives, Inc.
 769,785
71,686 1 Noven Pharmaceuticals, Inc.
711,842
   TOTAL
2,252,237
Financial Services--0.7%
33,803 1 CBIZ, Inc.
 274,818
17,675 1 Riskmetrics Group, Inc.
227,301
   TOTAL
502,119
Food Wholesaling--1.6%
30,103 Calavo Growers, Inc.
 367,257
20,310 Nash Finch Co.
873,939
   TOTAL
1,241,196
Shares
   
   
Value
COMMON STOCKS--continued
Generic Drugs--0.6%
18,606 1 Xenoport, Inc.
$
485,989
Grocery Chain--1.6%
46,379 Casey's General Stores, Inc.
 985,554
8,823 Ruddick Corp.
212,193
   TOTAL
1,197,747
Home Health Care--4.1%
13,002 1 Almost Family, Inc.
 400,982
22,421 1 Amedisys, Inc.
 924,418
35,909 1 Gentiva Health Services, Inc.
 907,780
33,341 1 LHC Group, Inc.
887,204
   TOTAL
3,120,384
Industrial Machinery--0.6%
46,234 1 Blount International, Inc.
 387,441
2,323 Valmont Industries, Inc.
94,267
   TOTAL
481,708
Insurance Brokerage--1.7%
42,267 AmTrust Financial Services, Inc.
 347,012
24,918 Life Partners Holdings, Inc.
946,884
   TOTAL
1,293,896
Internet Services--0.3%
34,111 1 EarthLink Network, Inc.
256,856
Long-Term Care Centers--0.8%
53,810 1 Sun Healthcare Group, Inc.
609,667
Machine Tools--0.4%
14,939 1 AZZ, Inc.
334,634
Maritime--0.0%
1,525 TAL International Group, Inc.
15,982
Shares
   
   
Value
COMMON STOCKS--continued
Medical Supplies--4.9%
27,141 1 Emergency Medical Services Corp., Class A
 $ 909,766
17,597 1 Kensey Nash Corp.
 363,730
51,084 1 Merit Medical Systems, Inc.
 786,183
50,612 1 PetMed Express, Inc.
 730,837
73,839 1 Quidel Corp.
908,220
   TOTAL
3,698,736
Medical Technology--3.1%
63,022 1 Cyberonics, Inc.
 969,909
2,666 1 Neogen Corp.
 69,769
31,547 1 Rochester Medical Corp.
 364,683
31,962 1 Thoratec Laboratories Corp.
925,939
   TOTAL
2,330,300
Miscellaneous Communications--4.2%
28,233 1 Bankrate, Inc.
 941,853
43,555 NTELOS Holdings Corp.
 942,530
35,942 Shenandoah Telecommunications Co.
 876,266
22,129 1 j2 Global Communications, Inc.
433,286
   TOTAL
3,193,935
Multi-Industry Capital Good--0.8%
42,826 1 DXP Enterprises, Inc.
581,577
Oil Service, Explore & Drill--0.0%
5,917 1 Matrix Services Co.
31,301
Other Communications Equipment--1.2%
67,703 1 Syniverse Holdings, Inc.
918,053
Packaged Foods--0.1%
5,583 1 United Natural Foods, Inc.
86,760
Packaging & Containers--0.8%
72,849 1 Bway Holding Co.
616,303
Shares
   
   
Value
COMMON STOCKS--continued
Personal Loans--1.1%
12,889 Cash America International, Inc.
 $ 235,611
29,327 1 Ezcorp, Inc., Class A
 397,967
14,332 1 First Cash Financial Services, Inc.
241,064
   TOTAL
874,642
Personnel Agency--1.2%
59,615 1 Dyncorp International, Inc., Class A
896,610
Railroad--1.2%
34,395 1 Genesee & Wyoming, Inc., Class A
934,512
Recreational Goods--0.1%
12,204 Sport Supply Group, Inc.
98,364
Recreational Vehicles--0.0%
145 Polaris Industries, Inc., Class A
3,084
Regional Bank--1.3%
16,734 Bank of the Ozarks, Inc.
 379,694
43,329 1 Oritani Financial Corp.
646,035
   TOTAL
1,025,729
Restaurant--2.4%
27,529 1 CEC Entertainment, Inc.
 642,527
75,705 CKE Restaurants, Inc.
 628,352
15,147 1 Green Mountain Coffee, Inc.
579,524
   TOTAL
1,850,403
Roofing & Wallboard--0.9%
53,737 1 Beacon Roofing Supply, Inc.
684,072
Savings & Loan--0.6%
44,925 1 Investors Bancorp, Inc.
479,799
Securities Brokerage--2.1%
40,261 1 Interactive Brokers Group, Inc., Class A
 614,785
54,619 1 Knight Capital Group, Inc., Class A
984,781
   TOTAL
1,599,566
Shares
   
   
Value
COMMON STOCKS--continued
Semiconductor Distribution--1.2%
70,437 1 Tyler Technologies, Inc.
$
 886,802
Semiconductor Manufacturing--0.2%
5,558 1 NVE Corp.
180,524
Services to Medical Professionals--1.2%
24,567 1 Genoptix, Inc.
 832,821
18,429 1 eResearch Technology, Inc.
106,704
   TOTAL
939,525
Shoes--0.7%
9,579 1 Deckers Outdoor Corp.
500,407
Software Packaged/Custom--9.7%
55,651 1 ACI Worldwide, Inc.
 945,511
53,526 1 CSG Systems International, Inc.
 776,127
9,230 1 Concur Technologies, Inc.
 227,889
14,773 1 ManTech International Corp., Class A
 792,276
921 1 OPNET Technologies, Inc.
 7,552
29,922 Pegasystems, Inc.
 406,042
143,876 1 S1 Corp.
 959,653
36,846 1 Solera Holdings, Inc.
 887,620
126,080 1 TeleCommunication Systems, Inc., Class A
 902,733
10,376 1 VASCO Data Security International, Inc.
 70,349
6,479 1 Vocus, Inc.
 98,870
43,064 1 Websense, Inc.
 482,317
109,113 1 Wind River Systems, Inc.
869,631
   TOTAL
7,426,570
Specialty Chemicals--2.4%
65,196 1 Calgon Carbon Corp.
 819,514
24,946 Chemed Corp.
1,001,083
   TOTAL
1,820,597
Shares
   
   
Value
COMMON STOCKS--continued
Specialty Retailing--0.3%
5,755 1 Titan Machinery, Inc.
 $ 58,413
4,634 1 Tractor Supply Co.
156,212
   TOTAL
214,625
Telecommunication Equipment & Services--3.4%
5,800 Applied Signal Technology, Inc.
 101,732
12,298 1 Bigband Networks, Inc.
 62,105
20,114 1 Comtech Telecommunications Corp.
 780,423
27,619 1 GeoEye, Inc.
 476,428
12,343 1 NeuStar, Inc., Class A
 168,112
56,597 1 Neutral Tandem, Inc.
 896,496
16,610 1 Switch & Data Facilities Co.
114,277
   TOTAL
2,599,573
Truck Manufacturing--0.3%
43,246 1 Force Protection, Inc.
259,908
Undesignated Consumer Cyclicals--6.4%
21,922 1 American Public Education, Inc.
 858,466
56,942 1 Corinthian Colleges, Inc.
 1,063,677
25,247 Corporate Executive Board Co.
 509,989
4,918 1 Geo Group, Inc.
 72,786
55,186 1 Hillenbrand, Inc.
 1,020,389
37,586 1 Kendle International, Inc.
 717,893
13,351 1 Lincoln Educational Services
 195,192
26,541 1 Sykes Enterprises, Inc.
443,500
   TOTAL
4,881,892
Undesignated Consumer Staples--0.7%
21,554 1 USANA, Inc.
500,268
Undesignated Health--0.2%
16,979 1 HealthSouth Corp.
168,771
   TOTAL COMMON STOCKS
(IDENTIFIED COST $83,158,892)
74,467,438
Shares
   
   
Value
MUTUAL FUND--2.3%
1,709,949 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
$
1,709,949
   TOTAL INVESTMENTS--100.0%
(IDENTIFIED COST $84,868,841) 4
76,177,387
   OTHER ASSETS AND LIABILITIES - NET--0.0% 5
18,605
   TOTAL NET ASSETS--100%
$
 76,195,992

1 Non-income-producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represent cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$76,177,387
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$76,177,387

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $1,709,949 of investments in an affiliated issuer (Note 5) (identified cost $84,868,841)
 $ 76,177,387
Cash
 31,768
Income receivable
 18,414
Receivable for investments sold
 2,119,812
Receivable for shares sold
422,650
   TOTAL ASSETS
78,770,031
Liabilities:
Payable for investments purchased
 $ 2,110,376
Payable for shares redeemed
 350,222
Payable for distribution services fee (Note 5)
 5,217
Payable for shareholder services fee (Note 5)
 14,922
Accrued expenses
93,302
   TOTAL LIABILITIES
2,574,039
Net assets for 10,917,583 shares outstanding
$
 76,195,992
Net Assets Consist of:
Paid-in capital
 $ 191,353,806
Net unrealized depreciation of investments and translation of assets and liabilities in foreign currency
 (8,691,336 )
Accumulated net realized loss on investments
(106,104,046 )
Accumulated net investment income (loss)
(362,432
 )
   TOTAL NET ASSETS
$
 76,195,992

Statement of Assets and Liabilities-continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
      
Institutional Shares:
Net asset value per share ($49,161,481 ÷ 7,013,691 shares outstanding), no par value, unlimited shares authorized
$7.01
Offering price per share
$7.01
Redemption proceeds per share
$7.01
Class A Shares:
Net asset value per share ($19,669,994 ÷ 2,830,869 shares outstanding), no par value, unlimited shares authorized
$6.95
Offering price per share (100/94.50 of $6.95)
$7.35
Redemption proceeds per share
$6.95
Class B Shares:
Net asset value per share ($3,893,028 ÷ 560,467 shares outstanding), no par value, unlimited shares authorized
$6.95
Offering price per share
$6.95
Redemption proceeds per share (94.50/100 of $6.95)
$6.57
Class C Shares:
Net asset value per share ($3,471,489 ÷ 512,556 shares outstanding), no par value, unlimited shares authorized
$6.77
Offering price per share
$6.77
Redemption proceeds per share (99.00/100 of $6.77)
$6.70

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $17,738 received from an affiliated issuer) (Note 5)
$
 378,840
Expenses:
Investment adviser fee (Note 5)
 $ 501,540
Administrative personnel and services fee (Note 5)
 136,110
Custodian fees
 28,494
Transfer and dividend disbursing agent fees and expenses
 241,442
Directors'/Trustees' fees
 972
Auditing fees
 10,724
Legal fees
 3,368
Portfolio accounting fees
 39,985
Distribution services fee--Class B Shares (Note 5)
 23,588
Distribution services fee--Class C Shares (Note 5)
 17,812
Shareholder services fee--Class A Shares (Note 5)
 30,714
Shareholder services fee--Class B Shares (Note 5)
 7,863
Shareholder services fee--Class C Shares (Note 5)
 5,799
Account administration fee--Class A Shares
 161
Account administration fee--Class C Shares
 138
Share registration costs
 27,203
Printing and postage
 23,811
Insurance premiums
 2,398
Miscellaneous
2,301
   TOTAL EXPENSES
1,104,423
Waivers and Reimbursement (Note 5):
Waiver/reimbursement of investment adviser fee
 $ (336,876 )
Waiver of administrative personnel and services fee
(27,289
 )
   TOTAL WAIVERS AND REIMBURSEMENT
(364,165
 )
Net expenses
740,258
Net investment income (loss)
(361,418
 )
Realized and Unrealized Loss on Investments and Foreign Currency Transactions:
Net realized loss on investments
(32,005,906 )
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign currency
(12,580,575
 )
Net realized and unrealized loss on investments and foreign currency transactions
(44,586,481
 )
Change in net assets resulting from operations
$
 (44,947,899
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   
Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)
 $ (361,418 ) $ (628,923 )
Net realized loss on investments
(32,005,906 ) (11,971,658 )
Net change in unrealized appreciation/depreciation of investments and translation of assets and liabilities in foreign currency
(12,580,575
 )
9,435,934
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(44,947,899
 )
(3,164,647
 )
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares
 -- (155,811 )
Class A Shares
 -- (11,057 )
Class C Shares
--
(6,609
 )
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
--
(173,477
 )
Share Transactions:
Proceeds from sale of shares
 31,141,596 73,388,956
Proceeds from shares issued in connection with the tax-free transfer of assets from Federated Technology Fund
 -- 44,263,203
Net asset value of shares issued to shareholders in payment of distributions declared
 -- 146,644
Cost of shares redeemed
(20,341,396
 )
(21,595,763
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
10,800,200
96,203,040
Change in net assets
(34,147,699
 )
92,864,916
Net Assets:
Beginning of period
110,343,691
17,478,775
End of period (including accumulated net investment income (loss) of $(362,432) and $(1,014), respectively)
$
 76,195,992
$
 110,343,691

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

Effective March 13, 2008, the Fund began offering Class B Shares.

On March 14, 2008, the Fund received assets from Federated Technology Fund as the result of a tax-free reorganization, as follows:

Shares of
the Fund Issued
   
 Federated
Technology
Fund Net
Assets
Received
   
 Unrealized
Depreciation 1
   
 Net Assets
of the Fund
Immediately
Prior to
Combination
   
 Net Assets
of the Fund
Immediately
After
Combination
3,954,962
$44,263,203
$(6,136,744)
$40,850,828
$85,114,031

1 Unrealized Depreciation is included in the Federated Technology Fund Net Assets Received amount shown above.

2. SIGNIFICANT ACCOUNTING POLICIES

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

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. 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 account administration, distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

When-Issued and Delayed Delivery Transactions

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

Foreign Currency Translation

The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies (FCs) are translated into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

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

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:
Six Months Ended
1/31/2009
Year Ended
7/31/2008
Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 3,174,513 $ 25,932,509 4,827,064 $ 59,077,425
Shares issued to shareholders in payment of distributions declared
 -- -- 10,017 133,229
Shares redeemed
(1,497,473
 )
(12,813,723
 )
(747,875
 )
(8,924,748
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS
1,677,040
$
 13,118,786
4,089,206
$
 50,285,906
Six Months Ended
1/31/2009
Year Ended
7/31/2008
Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 467,548 $ 4,012,434 1,014,861 $ 12,172,465
Shares issued in connection with tax-free transfer of assets from Federated Technology Fund
 -- -- 1,965,099 21,986,533
Shares issued to shareholders in payment of distributions declared
 -- -- 766 10,117
Shares redeemed
(391,711
 )
(3,363,136
 )
(266,794
 )
(3,116,808
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS
75,837
$
 649,298
2,713,932
$
 31,052,307
Six Months Ended
1/31/2009
Period Ended
7/31/2008 1
Class B Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 40,070 $ 396,115 12,136 $ 147,178
Shares issued to shareholders in payment of distributions declared
 -- -- 1,540,719 17,345,297
Shares redeemed
(324,623
 )
(2,940,937
 )
(707,835
 )
(8,399,050
 )
   NET CHANGE RESULTING FROM CLASS B SHARE TRANSACTIONS
(284,553
 )
$
 (2,544,822
 )
845,020
$
 9,093,425
Six Months Ended
1/31/2009
Year Ended
7/31/2008
Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 93,549 $ 800,538 164,693 $ 1,991,888
Shares issued in connection with tax-free transfer of assets from Federated Technology Fund
 -- -- 449,144 4,931,373
Shares issued to shareholders in payment of distributions declared
 -- -- 254 3,298
Shares redeemed
(150,654
 )
(1,223,600
 )
(99,359
 )
(1,155,157
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
(57,105
 )
$
 (423,062
 )
514,732
$
 5,771,402
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS
1,411,219
$
 10,800,200
8,162,890
$
 96,203,040

1 Reflects operations for the period from March 13, 2008 (date of initial investment) to July 31, 2008.

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $84,868,841. The net unrealized depreciation of investments for federal tax purposes excluding any unrealized appreciation resulting from foreign currency transactions was $8,691,454. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $2,138,489 and net unrealized depreciation from investments for those securities having an excess of cost over value of 10,829,943.

At July 31, 2008, the Fund had a capital loss carryforward of $62,019,299 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year
   
 Expiration Amount
2009
$59,356,831
2010
$ 2,459,915
2016
$ 202,553

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

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 1.15% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for each Class of the Fund based on average daily net assets:

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

In addition, subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any additional portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser waived $336,263 of its fee.

Administrative Fee

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

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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 0.250% of average daily net assets of the Fund. The Fund is currently being charged the minimum administrative fee; therefore the fee as a percentage of average daily net assets is greater than the amounts presented in the chart above. FAS waived $27,289 of its fee.

Distribution Services Fee

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

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

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC retained $4,815 of fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $965 in sales charges from the sale of Class A Shares. FSC also retained $1,838 of CDSC relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares, Class B Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC received $315 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares, Class B Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.50%, 1.75%, 2.50% and 2.50%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $613. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund, Institutional Shares
1,320,459
16,011,023
15,621,533
1,709,949
$1,709,949
$17,738

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 108,208,191
Sales
$
 97,877,532

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT SMALL CAP GROWTH FUND (THE "FUND")

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

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

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

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

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

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

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

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

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

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

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

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

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

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

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

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

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

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

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R759

36369 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Small Cap Value Fund

Established 2005

A Portfolio of Federated MDT Series

SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Class A Shares
Class C Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

    Six Months
Ended
(unaudited)		    Year Ended July 31,
    Period
Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$10.33 $11.37 $10.61 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.01 ) 3 (0.04 ) 3 (0.05 ) 3 (0.07 ) 3
Net realized and unrealized gain (loss) on investments
(3.89
 )
(0.24
 )
0.81
0.68
   TOTAL FROM INVESTMENT OPERATIONS
(3.90
 )
(0.28
 )
0.76
0.61
Less Distributions:
Distributions from net realized gain on investments
--
(0.76
 )
--
--
Net Asset Value, End of Period
$ 6.43
$10.33
$11.37
$10.61
Total Return 4
(37.75
 )%
(2.69
 )%
7.16
 %
6.10
 %
Ratios to Average Net Assets:
Net expenses
1.75
 % 5
1.75
 %
1.75
 %
2.00
 % 5
Net investment income (loss)
(0.30
 )% 5
(0.32
 )%
(0.44
 )%
(0.59
 )% 5
Expense waiver/reimbursement 6
1.85
 % 5
3.05
 %
4.45
 %
34.07
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$1,949
$3,179
$2,950
$699
Portfolio turnover
126
 %
245
 %
240
 %
124
 %

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

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

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

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

5 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Financial Highlights -- Class C Shares

(For a Share Outstanding Throughout Each Period)

    Six Months
Ended
(unaudited)		      
 Year Ended July 31,
    Period
Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$10.10 $11.21 $10.54 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.04 ) 3 (0.12 ) 3 (0.14 ) 3 (0.15 ) 3
Net realized and unrealized gain (loss) on investments
(3.80
 )
(0.23
 )
0.81
0.69
   TOTAL FROM INVESTMENT OPERATIONS
(3.84
)
(0.35
)
0.67
0.54
Less Distributions:
Distributions from net realized gain on investments
--
(0.76
 )
--
--
Net Asset Value, End of Period
$ 6.26
$10.10
$11.21
$10.54
Total Return 4
(38.02
 )%
(3.38
 )%
6.36
 %
5.40
 %
Ratios to Average Net Assets:
Net expenses
2.50
 % 5
2.50
 %
2.50
 %
2.75
 % 5
Net investment income (loss)
(1.07
 )% 5
(1.11
 )%
(1.20
 )%
(1.34
 )% 5
Expense waiver/reimbursement 6
1.89
 % 5
2.73
 %
4.06
 %
34.07
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$2,756
$3,195
$951
$51
Portfolio turnover
126
 %
245
 %
240
 %
124
 %

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

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

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

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

5 Computed on an annualized basis.

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

See Notes which are an integral part of the Financial Statements

Shareholder Expense Example (unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual:
Class A Shares
$1,000
$ 622.50
$ 7.16
Class C Shares
$1,000
$ 619.80
$10.21
Hypothetical (assuming a 5% return before expenses):
Class A Shares
$1,000
$1,016.38
$ 8.89
Class C Shares
$1,000
$1,012.60
$12.68

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (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%

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Electric Utility
11.2
 %
Property Liability Insurance
8.0
 %
Multi-Line Insurance
6.7
 %
Airline - National
4.2
 %
Airline - Regional
3.7
 %
Oil Refiner
3.3
 %
Financial Services
3.2
 %
Securities Brokerage
3.1
 %
Regional Bank
3.0
 %
Undesignated Consumer Cyclicals
2.7
 %
Contracting
2.4
 %
Defense Aerospace
2.4
 %
Grocery Chain
2.4
 %
Savings & Loan
2.4
 %
Gas Distributor
1.9
 %
Home Health Care
1.8
 %
Insurance Brokerage
1.7
 %
Computer Services
1.5
 %
Life Insurance
1.5
 %
Telecommunication Equipment & Services
1.3
 %
Apparel
1.2
 %
Clothing Stores
1.2
 %
Industry
   
 Percentage of
Total Net Assets
Specialty Retailing
1.2
 %
Biotechnology
1.1
 %
Building Materials
1.1
 %
Medical Technology
1.1
 %
Multi-Industry Basic
1.1
 %
Other Steel Producer
1.1
 %
Cellular Communications
1.0
 %
Food Wholesaling
1.0
 %
Metal Fabrication
1.0
 %
Other 2
17.7
 %
Cash Equivalents 3
2.0
 %
Other Assets and Liabilities--Net 4
(0.2
 )%
   TOTAL
100.0
%

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

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

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

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

Portfolio of Investments

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--98.2%
Airline - National--4.2%
20,215 1 Continental Airlines, Inc., Class B
 $ 272,296
45,834 1 Jet Blue Airways Corp.
 258,045
19,598 1 UAL Corp.
 185,005
17,304 1 US Airways Group, Inc.
98,114
   TOTAL
813,460
Airline - Regional--3.7%
26,475 1 AirTran Holdings, Inc.
 108,548
12,633 1 Alaska Air Group, Inc.
 333,006
3,607 1 Hawaiian Holdings, Inc.
 14,680
11,744 1 Republic Airways Holdings, Inc.
 96,183
10,752 SkyWest, Inc.
168,269
   TOTAL
720,686
Apparel--1.2%
7,241 Columbia Sportswear Co.
 207,961
4,771 1 G-III Apparel Group Ltd.
26,241
   TOTAL
234,202
Auto Original Equipment Manufacturers--0.7%
5,492 1 Fuel Systems Solutions, Inc.
143,561
Baking--0.4%
3,971 Lance, Inc.
74,774
Biotechnology--1.1%
4,357 1 Emergent Biosolutions, Inc.
 95,549
10,447 1 ViroPharma, Inc.
125,364
   TOTAL
220,913
Book Publishing--0.2%
3,346 Scholastic Corp.
36,471
Building Materials--1.1%
903 Insteel Industries, Inc.
 6,953
5,154 Simpson Manufacturing Co., Inc.
 103,441
6,521 1 Trex Co., Inc.
96,445
   TOTAL
206,839
Shares
   
   
Value
COMMON STOCKS--continued
Cellular Communications--1.0%
18,187 1 USA Mobility, Inc.
$
192,237
Clothing Stores--1.2%
2,788 1 Children's Place Retail Stores, Inc.
 52,442
6,514 1 Jos A. Bank Clothiers, Inc.
178,874
   TOTAL
231,316
Commodity Chemicals--0.5%
419 Compass Minerals International, Inc.
 25,211
1,069 Innophos Holdings, Inc.
 16,174
1,534 Newmarket Corp.
48,321
   TOTAL
89,706
Computer Networking--0.9%
63,480 1 3Com Corp.
 147,908
2,286 1 Avocent Corp.
32,804
   TOTAL
180,712
Computer Peripherals--0.5%
2,422 1 Emulex Corp.
 13,830
17,261 1 RadiSys Corp.
81,645
   TOTAL
95,475
Computer Services--1.5%
4,455 1 CACI International, Inc., Class A
 201,143
6,045 1 Synnex Corp.
92,791
   TOTAL
293,934
Construction Machinery--0.0%
92 1 NCI Building System, Inc.
1,066
Contracting--2.4%
6,762 1 Baker Michael Corp.
 236,400
497 Comfort Systems USA, Inc.
 5,084
2,056 Granite Construction, Inc.
 72,412
4,732 1 Insituform Technologies, Inc., Class A
 88,772
2,444 1 Perini Corp.
50,957
   TOTAL
453,625
Shares
   
   
Value
COMMON STOCKS--continued
Cosmetics & Toiletries--0.0%
365 1 Elizabeth Arden, Inc.
$
2,128
Crude Oil & Gas Production--0.2%
7,383 1 Harvest Natural Resources, Inc.
29,532
Defense Aerospace--2.4%
11,251 1 AAR Corp.
 204,093
3,109 Ducommun, Inc.
 58,884
10,053 Kaman Corp., Class A
191,912
   TOTAL
454,889
Discount Department Stores--0.4%
7,616 Freds, Inc.
78,140
Diversified Leisure--0.1%
447 International Speedway Corp., Class A
10,406
Electric & Electric Original Equipment Manufacturer--0.8%
5,710 Cubic Corp.
155,084
Electrical Test/Measuring Equipment--0.1%
708 1 Multi-Fineline Electronix, Inc.
13,119
Electric Utility--11.2%
15,764 Avista Corp.
 300,147
13,838 Cleco Corp.
 316,198
9,615 1 El Paso Electric Co.
 159,032
14,562 Empire Distribution Electric Co.
 258,621
4,273 Idacorp, Inc.
 124,387
8,923 Northwestern Corp.
 216,026
13,611 1 Pike Electric Corp.
 153,124
21,424 Portland General Electric Co.
 416,697
7,452 UniSource Energy Corp.
210,444
   TOTAL
2,154,676
Electrical Equipment--0.4%
1,511 1 EnerSys, Inc.
 13,765
2,204 Franklin Electronics, Inc.
57,282
   TOTAL
71,047
Shares
   
   
Value
COMMON STOCKS--continued
Electronic Instruments--0.1%
326 1 Axsys Technologies, Inc.
$
13,920
Ethical Drugs--0.1%
3,409 1 Salix Pharmaceuticals Ltd.
27,272
Financial Services--3.2%
2,378 AMBAC Assurance Corporation
 2,711
12,840 1 America's Car-Mart, Inc.
 116,716
14,257 Blackrock Kelso Capital Corp.
 120,899
2,350 First Financial Corp.
 77,903
4,457 Hercules Technology Growth Capital, Inc.
 29,104
20,127 1 MBIA Insurance Corp.
 77,690
11,848 1 Nelnet, Inc., Class A
 163,739
2,075 United Financial Bancorp, Inc.
28,448
   TOTAL
617,210
Food Wholesaling--1.0%
4,668 Nash Finch Co.
200,864
Furniture--0.9%
7,361 Aaron Rents, Inc.
 160,911
1,351 Ethan Allen Interiors, Inc.
15,388
   TOTAL
176,299
Gas Distributor--1.9%
14,197 Southwest Gas Corp.
365,715
Generic Drugs--0.2%
1,389 1 Par Pharmaceutical Cos., Inc.
 17,099
506 Perrigo Co.
14,851
   TOTAL
31,950
Greeting Cards--0.0%
1,971 American Greetings Corp., Class A
8,554
Grocery Chain--2.4%
5,164 Casey's General Stores, Inc.
 109,735
4,813 Ruddick Corp.
 115,753
2,825 1 Susser Holdings Corp.
 36,923
11,640 1 The Pantry, Inc.
193,573
   TOTAL
455,984
Shares
   
   
Value
COMMON STOCKS--continued
Home Health Care--1.8%
7,129 1 Amerigroup Corp.
 $ 199,398
3,361 1 Gentiva Health Services, Inc.
 84,966
5,931 1 Odyssey Healthcare, Inc.
58,836
   TOTAL
343,200
Home Products--0.0%
1,388 Blyth Industries, Inc.
4,733
Industrial Machinery--0.2%
3,384 Met-Pro Corp.
37,089
Insurance Brokerage--1.7%
28,798 AmTrust Financial Services, Inc.
 236,432
2,208 Baldwin & Lyons, Inc., Class B
 37,072
4,076 1 Crawford & Co., Class B
 36,562
1,062 1 Texas Capital Bancshares, Inc.
11,990
   TOTAL
322,056
Jewelry Stores--0.3%
7,472 Movado Group, Inc.
57,385
Life Insurance--1.5%
20,673 American Equity Investment Life Holding Co.
 138,302
6,870 Delphi Financial Group, Inc., Class A
 104,218
4,449 1 Universal American Financial Corp.
43,912
   TOTAL
286,432
Long-Term Care Centers--0.3%
4,001 1 Kindred Healthcare, Inc.
54,294
Maritime--0.3%
6,072 TAL International Group, Inc.
63,635
Medical Technology--1.1%
5,410 1 Cantel Medical Corp.
 81,096
3,419 1 Greatbatch Technologies, Inc.
 79,663
3,119 1 Hanger Orthopedic Group, Inc.
42,574
   TOTAL
203,333
Metal Fabrication--1.0%
6,005 1 Ladish Co., Inc.
 68,277
1,506 Mueller Industries, Inc.
 30,301
9,112 Worthington Industries, Inc.
91,667
   TOTAL
190,245
Shares
   
   
Value
COMMON STOCKS--continued
Miscellaneous Communications--0.2%
17,215 1 Internap Network Services Corp.
$
46,308
Miscellaneous Food Products--0.1%
1,479 The Anderson's, Inc.
24,241
Miscellaneous Metals--0.7%
27,572 1 USEC, Inc.
140,341
Money Center Bank--0.2%
1,476 1 Pennsylvania Commerce Bancorp, Inc.
30,258
Multi-Industry Basic--1.1%
17,903 Aceto Corp.
 160,053
3,343 Olin Corp.
46,969
   TOTAL
207,022
Multi-Industry Capital Goods--0.0%
90 1 Ceradyne, Inc.
 2,054
606 1 Gerber Scientific, Inc.
1,903
   TOTAL
3,957
Multi-Line Insurance--6.7%
15,457 1 Amerisafe, Inc.
 289,510
4,316 Donegal Group, Inc., Class A
 60,510
738 FBL Financial Group, Inc., Class A
 7,609
4,741 1 FPIC Insurance Group, Inc.
 184,567
6,409 Harleysville Group, Inc.
 182,272
3,063 Infinity Property & Casualty
 117,619
4,443 1 Navigators Group, Inc.
 228,104
6,198 Safety Insurance Group, Inc.
217,054
   TOTAL
1,287,245
Offshore Driller--0.3%
1,654 1 Hornbeck Offshore Services, Inc.
 29,342
5,204 1 Newpark Resources, Inc.
21,909
   TOTAL
51,251
Oil Refiner--3.3%
3,506 Alon USA Energy, Inc.
 41,371
25,850 Western Refining, Inc.
 301,411
8,849 World Fuel Services Corp.
298,831
   TOTAL
641,613
Shares
   
   
Value
COMMON STOCKS--continued
Oil Service, Explore & Drill--0.3%
12,215 1 Boots & Coots International Well Control, Inc.
 $ 12,581
1,151 1 Gulfmark Offshore, Inc.
 27,555
2,536 1 Superior Well Services, Inc.
23,306
   TOTAL
63,442
Oil Well Supply--0.1%
704 Lufkin Industries, Inc.
24,605
Other Communications Equipment--0.1%
1,755 1 Syniverse Holdings, Inc.
23,798
Other Computer Hardware--0.1%
830 1 EMS Technologies, Inc.
19,920
Other Steel Producer--1.1%
4,370 1 L.B. Foster Co.
 115,324
2,881 1 Northwest Pipe Co.
101,584
   TOTAL
216,908
Packaged Foods--0.4%
1,862 1 Hain Celestial Group, Inc.
 28,340
3,060 1 United Natural Foods, Inc.
47,552
   TOTAL
75,892
Paint & Related Materials--0.1%
3,991 Ferro Corp.
15,804
Paper Products--0.9%
9,262 Glatfelter (P.H.) Co.
 80,672
243 1 Kapstone Paper and Packaging Corp.
 435
2,946 Rock-Tenn Co.
91,827
   TOTAL
172,934
Personal Loans--0.6%
9,138 1 Ezcorp, Inc., Class A
124,003
Personnel Agency--0.2%
4,246 Barrett Business Services, Inc.
41,781
Pollution Control--0.1%
3,811 1 Spectrum Control, Inc.
27,592
Printed Circuit Boards--0.0%
6,795 1 Sanmina-SCI Corp.
2,242
Shares
   
   
Value
COMMON STOCKS--continued
Property Liability Insurance--8.0%
4,311 American Physicians Capital, Inc.
 $ 183,304
8,926 American Physicians Service Group, Inc.
 187,446
14,970 1 CNA Surety Corp.
 247,753
2,819 Horace Mann Educators Corp.
 26,358
7,946 OneBeacon Insurance Group Ltd.
 67,144
10,470 1 PMA Capital Corp.
 57,690
7,812 1 ProAssurance Corp.
 369,195
3,017 RLI Corp.
 170,430
8,190 1 Seabright Insurance Holdings, Inc.
 84,930
7,671 Selective Insurance Group, Inc.
 117,750
1,423 State Auto Financial Corp.
31,448
   TOTAL
1,543,448
Psychiatric Centers--0.7%
3,624 1 Magellan Health Services, Inc.
131,261
Railroad--0.2%
1,392 1 Genesee & Wyoming, Inc., Class A
37,821
Recreational Goods--0.2%
2,596 1 Steinway Musical Instruments
30,010
Regional Bank--3.0%
1,644 Bank of Marin Bancorp
 33,036
1,128 Bank of the Ozarks, Inc.
 25,594
604 City Holding Co.
 15,529
2,351 FNB Corp. (PA)
 18,596
12,956 First BanCorp
 92,117
2,690 First Midwest Bancorp, Inc.
 26,900
1,928 FirstMerit Corp.
 31,176
2,843 National Penn Bancshares, Inc.
 27,520
2,297 Oriental Financial Group
 11,600
2,653 1 Oritani Financial Corp.
 39,556
1,429 Prosperity Bancshares, Inc.
 38,654
4,257 Republic Bancorp, Inc.
 76,626
1,360 Southside Bancshares, Inc.
 25,867
4,632 Susquehanna Bankshares, Inc.
 50,952
2,013 TriCo Bancshares
 40,542
4,033 Wilshire Bancorp, Inc.
27,666
   TOTAL
581,931
Shares
   
   
Value
COMMON STOCKS--continued
Restaurant--0.5%
5,600 Bob Evans Farms, Inc.
 $ 98,336
30 1 CEC Entertainment, Inc.
700
   TOTAL
99,036
Roofing & Wallboard--0.6%
9,323 1 Beacon Roofing Supply, Inc.
118,682
Savings & Loan--2.4%
2,142 First Financial Holdings, Inc.
 32,430
521 Flushing Financial Corp.
 4,126
13,381 1 Investors Bancorp, Inc.
 142,909
674 OceanFirst Financial Corp.
 8,641
21,330 1 Ocwen Financial Corp.
 189,837
2,660 Roma Financial Corp.
 30,271
2,215 WSFS Financial Corp.
57,147
   TOTAL
465,361
Securities Brokerage--3.1%
22,905 1 Knight Capital Group, Inc., Class A
 412,977
24,608 1 Labranche & Co., Inc.
 168,811
1,846 1 Penson Worldwide, Inc.
11,039
   TOTAL
592,827
Semiconductor Manufacturing--0.1%
7,395 1 Triquint Semiconductor, Inc.
14,938
Services to Medical Professionals--0.4%
4,396 1 Molina Healthcare, Inc.
77,106
Shoes--0.5%
3,568 1 Collective Brands, Inc.
 38,071
413 1 Genesco, Inc.
 6,360
2,474 1 Steven Madden Ltd.
42,998
   TOTAL
87,429
Software Packaged/Custom--0.4%
103 Acxiom Corp.
 980
1,959 1 EPIQ Systems, Inc.
 34,713
3,848 1 Macrovision Solutions Corp.
50,447
   TOTAL
86,140
Shares
   
   
Value
COMMON STOCKS--continued
Specialty Chemicals--0.4%
2,246 American Pacific Corp.
 $ 17,586
1,100 Minerals Technologies, Inc.
 41,591
1,107 Sensient Technologies Corp.
23,801
   TOTAL
82,978
Specialty Retailing--1.2%
55 1 Conn's, Inc.
 669
15,152 Finish Line, Inc., Class A
 71,972
5,781 1 Hot Topic, Inc.
 49,370
4,771 Monro Muffler Brake, Inc.
115,792
   TOTAL
237,803
Telecommunication Equipment & Services--1.3%
9,084 1 Anaren Microwave, Inc.
 107,373
5,355 1 GeoEye, Inc.
 92,374
1,253 Plantronics, Inc.
 12,718
1,985 1 ViaSat, Inc.
43,988
   TOTAL
256,453
Toys & Games--0.4%
4,282 1 JAKKS Pacific, Inc.
78,532
Trucking--0.4%
3,940 1 Marten Transport Ltd.
69,580
Undesignated Consumer Cyclicals--2.7%
10,120 1 Career Education Corp.
 220,616
7,804 1 Cornell Corrections, Inc.
 119,089
1,210 1 LECG Corp.
 3,957
2,078 1 Lincoln Educational Services
 30,380
2,291 Speedway Motorsports, Inc.
 33,082
6,026 1 Universal Technical Institute, Inc.
105,636
   TOTAL
512,760
Shares
   
   
Value
COMMON STOCKS--continued
Undesignated Health--0.5%
5,022 1 Healthspring, Inc.
$
87,483
Uniforms--0.1%
973 Unifirst Corp.
25,531
Water Utility--0.3%
1,279 California Water Service Group
55,637
   TOTAL COMMON STOCKS
(IDENTIFIED COST $20,303,956)
18,932,072
MUTUAL FUND--2.0%
381,296 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
381,296
   TOTAL INVESTMENTS--100.2%
(IDENTIFIED COST $20,685,252) 4
19,313,368
   OTHER ASSETS AND LIABILITIES - NET--(0.2)% 5
(47,108
 )
   TOTAL NET ASSETS--100%
$
 19,266,260

1 Non-income producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represents cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$19,313,368
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$19,313,368

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $381,296 of investments in an affiliated issuer (Note 5) (identified cost $20,685,252)
 $ 19,313,368
Cash
 252
Income receivable
 4,791
Receivable for investments sold
 613,470
Receivable for shares sold
18,820
   TOTAL ASSETS
19,950,701
Liabilities:
Payable for investments purchased
 $ 606,960
Payable for shares redeemed
 31,280
Payable for portfolio accounting fees
 12,662
Payable for distribution services fee (Note 5)
 1,911
Payable for shareholder services fee (Note 5)
 2,849
Accrued expenses
28,779
   TOTAL LIABILITIES
684,441
Net assets for 2,988,308 shares outstanding
$
 19,266,260
Net Assets Consist of:
Paid-in capital
 $ 32,295,247
Net unrealized depreciation of investments
(1,371,884 )
Accumulated net realized loss on investments
(11,631,802 )
Accumulated net investment income (loss)
(25,301
 )
   TOTAL NET ASSETS
$
 19,266,260
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($14,561,066 ÷ 2,244,600 shares outstanding), no par value, unlimited shares authorized
$6.49
Offering price per share
$6.49
Redemption proceeds per share
$6.49
Class A Shares:
Net asset value per share ($1,949,290 ÷ 303,321 shares outstanding), no par value, unlimited shares authorized
$6.43
Offering price per share (100/94.50 of $6.43)
$6.80
Redemption proceeds per share
$6.43
Class C Shares:
Net asset value per share ($2,755,904 ÷ 440,387 shares outstanding), no par value, unlimited shares authorized
$6.26
Offering price per share
$6.26
Redemption proceeds per share (99.00/100 of $6.26)
$6.20

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $4,894 received from an affiliated issuer (Note 5) and net of foreign taxes withheld of $501)
$
 167,743
Expenses:
Investment adviser fee (Note 5)
 $ 133,591
Administrative personnel and services fee (Note 5)
 115,946
Custodian fees
 18,212
Transfer and dividend disbursing agent fees and expenses
 30,807
Directors'/Trustees' fees
 788
Auditing fees
 10,924
Legal fees
 2,946
Portfolio accounting fees
 38,910
Distribution services fee--Class C Shares (Note 5)
 11,636
Shareholder services fee--Class A Shares (Note 5)
 3,214
Shareholder services fee--Class C Shares (Note 5)
 3,879
Share registration costs
 17,977
Printing and postage
 17,087
Insurance premiums
 2,431
Miscellaneous
1,370
   TOTAL EXPENSES
409,718
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee
 $ (133,591 )
Waiver of administrative personnel and services fee
 (22,569 )
Reimbursement of other operating expenses
(60,514
 )
   TOTAL WAIVERS AND REIMBURSEMENTS
(216,674
 )
Net expenses
193,044
Net investment income (loss)
(25,301
 )
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments
(9,503,343 )
Net change in unrealized appreciation of investments
(1,688,790
 )
Net realized and unrealized loss on investments
(11,192,133
 )
Change in net assets resulting from operations
$
 (11,217,434
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   

Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)
 $ (25,301 ) $ (34,816 )
Net realized loss on investments
(9,503,343 ) (2,063,606 )
Net change in unrealized appreciation/depreciation of investments
(1,688,790
 )
950,455
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(11,217,434
 )
(1,147,967
 )
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares
 -- (638,272 )
Class A Shares
 -- (198,621 )
Class C Shares
--
(63,763
 )
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
--
(900,656
 )
Share Transactions:
Proceeds from sale of shares
 7,000,546 21,054,023
Net asset value of shares issued to shareholders in payment of distributions declared
 -- 316,054
Cost of shares redeemed
(4,271,707
 )
(6,659,980
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
2,728,839
14,710,097
Change in net assets
(8,488,595
 )
12,661,474
Net Assets:
Beginning of period
27,754,855
15,093,381
End of period (including accumulated net investment income (loss) of $(25,301) and $0, respectively)
$
 19,266,260
$
 27,754,855

See Notes which are an integral part of the Financial Statements

Notes To Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

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 U.S. generally accepted accounting principles (GAAP).

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

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.

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 593,820 $ 5,067,251 1,548,526 $ 16,894,234
Shares issued to shareholders in payment of distributions declared
--


--


7,094


75,830
Shares redeemed
(402,145
 )
(3,446,494
 )
(482,513
 )
(5,241,402
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS

191,675


$
1,620,757

1,073,107


$
11,728,662
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 63,207 $ 539,950 134,417 $ 1,472,044
Shares issued to shareholders in payment of distributions declared

--


--


17,137



182,165
Shares redeemed
(67,574
 )
(511,986
 )
(103,407
 )
(1,103,930
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS
(4,367
 )
$
 27,964
48,147
$
 550,279
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 169,826 $ 1,393,345 256,136 $ 2,687,745
Shares issued to shareholders in payment of distributions declared

--



--


5,566


58,059
Shares redeemed
(45,827
 )
(313,227
 )
(30,126
 )
(314,648
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
123,999
$
 1,080,118
231,576
$
 2,431,156
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS
311,307
$
 2,728,839
1,352,830
$
 14,710,097

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $20,685,252. The net unrealized depreciation of investments for federal tax purposes was $1,371,884. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $1,006,682 and net unrealized depreciation from investments for those securities having an excess of cost over value of $2,378,566.

At July 31, 2008, the Fund had a capital loss carryforward of $176,370 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire in 2016.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 1.15% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to waive all or a portion of the advisory fee and/or reimburse certain operating expenses excluding (interest, taxes and brokerage commissions) to no more than the following annual percentages for each Class of the Fund based on average daily net assets:

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

In addition, subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any additional portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser waived $133,429 of its fee and reimbursed $60,514 of other operating expenses.

Administrative Fee

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

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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 0.804% of average daily net assets of the Fund. The Fund is currently being charged the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above. FAS waived $22,569 of its fee.

Distribution Services Fee

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

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

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC retained $8,491 of fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Fund's Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $466 in sales charges from the sale of Class A Shares. FSC also retained $1,239 of CDSC relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC did not receive any fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.50%, 1.75% and 2.50%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $162. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund, Institutional Shares
382,184
6,303,135
6,304,023
381,296
$381,296
$4,894

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 32,001,972
Sales
$
 29,399,678

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT SMALL CAP VALUE FUND (THE "FUND")

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

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

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

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

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

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

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

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

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

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

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

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

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

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing ole 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.

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund or its agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R742
Cusip 31421R734

36365 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Small Cap Value Fund

A Portfolio of Federated MDT Series



SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
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)

    Six Months
Ended
(unaudited)		    Year Ended July 31,
    Period
Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$10.41 $11.42 $10.64 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.00 ) 3,4 (0.01 ) 3 (0.02 ) 3 (0.03 ) 3
Net realized and unrealized gain (loss) on investments
(3.92
 )
(0.24
 )
0.80
0.67
   TOTAL FROM INVESTMENT OPERATIONS
(3.92
 )
(0.25
 )
0.78
0.64
Less Distributions:
Distributions from net realized gain on investments
--
(0.76
 )
--
--
Net Asset Value, End of Period
$6.49
$10.41
$11.42
$10.64
Total Return 5
(37.66
 )%
(2.41
 )%
7.33
 %
6.40
 %
Ratios to Average Net Assets:
Net expenses
1.50
 % 6
1.50
 %
1.50
 %
1.75
 % 6
Net investment income (loss)
(0.06
 )% 6
(0.08
 )%
(0.17
 )%
(0.34
 )% 6
Expense waiver/reimbursement 7
1.86
 % 6
2.80
 %
3.75
 %
34.07
 % 6
Supplemental Data:
Net assets, end of period (000 omitted)
$14,561
$21,381
$11,192
$599
Portfolio turnover
126
 %
245
 %
240
 %
124
 %

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

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

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

4 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 (unaudited)

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual
$1,000
$ 623.40
$6.14
Hypothetical (assuming a 5% return before expenses)
$1,000
$1,017.64
$7.63

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 184/365 (to reflect the one-half-year period).

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Electric Utility
11.2
 %
Property Liability Insurance
8.0
 %
Multi-Line Insurance
6.7
 %
Airline - National
4.2
 %
Airline - Regional
3.7
 %
Oil Refiner
3.3
 %
Financial Services
3.2
 %
Securities Brokerage
3.1
 %
Regional Bank
3.0
 %
Undesignated Consumer Cyclicals
2.7
 %
Contracting
2.4
 %
Defense Aerospace
2.4
 %
Grocery Chain
2.4
 %
Savings & Loan
2.4
 %
Gas Distributor
1.9
 %
Home Health Care
1.8
 %
Insurance Brokerage
1.7
 %
Computer Services
1.5
 %
Life Insurance
1.5
 %
Telecommunication Equipment & Services
1.3
 %
Apparel
1.2
 %
Clothing Stores
1.2
 %

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.

Industry
   
 Percentage of
Total Net Assets
Specialty Retailing
1.2
 %
Biotechnology
1.1
 %
Building Materials
1.1
 %
Medical Technology
1.1
 %
Multi-Industry Basic
1.1
 %
Other Steel Producer
1.1
 %
Cellular Communications
1.0
 %
Food Wholesaling
1.0
 %
Metal Fabrication
1.0
 %
Other 2
17.7
 %
Cash Equivalents 3
2.0
 %
Other Assets and Liabilities--Net 4
(0.2
 )%
   TOTAL
100.0
%

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

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--98.2%
Airline - National--4.2%
20,215 1 Continental Airlines, Inc., Class B
 $ 272,296
45,834 1 Jet Blue Airways Corp.
 258,045
19,598 1 UAL Corp.
 185,005
17,304 1 US Airways Group, Inc.
98,114
   TOTAL
813,460
Airline - Regional--3.7%
26,475 1 AirTran Holdings, Inc.
 108,548
12,633 1 Alaska Air Group, Inc.
 333,006
3,607 1 Hawaiian Holdings, Inc.
 14,680
11,744 1 Republic Airways Holdings, Inc.
 96,183
10,752 SkyWest, Inc.
168,269
   TOTAL
720,686
Apparel--1.2%
7,241 Columbia Sportswear Co.
 207,961
4,771 1 G-III Apparel Group Ltd.
26,241
   TOTAL
234,202
Auto Original Equipment Manufacturers--0.7%
5,492 1 Fuel Systems Solutions, Inc.
143,561
Baking--0.4%
3,971 Lance, Inc.
74,774
Biotechnology--1.1%
4,357 1 Emergent Biosolutions, Inc.
 95,549
10,447 1 ViroPharma, Inc.
125,364
   TOTAL
220,913
Book Publishing--0.2%
3,346 Scholastic Corp.
36,471
Building Materials--1.1%
903 Insteel Industries, Inc.
 6,953
5,154 Simpson Manufacturing Co., Inc.
 103,441
6,521 1 Trex Co., Inc.
96,445
   TOTAL
206,839
Shares
   
   
Value
COMMON STOCKS--continued
Cellular Communications--1.0%
18,187 1 USA Mobility, Inc.
$
192,237
Clothing Stores--1.2%
2,788 1 Children's Place Retail Stores, Inc.
 52,442
6,514 1 Jos A. Bank Clothiers, Inc.
178,874
   TOTAL
231,316
Commodity Chemicals--0.5%
419 Compass Minerals International, Inc.
 25,211
1,069 Innophos Holdings, Inc.
 16,174
1,534 Newmarket Corp.
48,321
   TOTAL
89,706
Computer Networking--0.9%
63,480 1 3Com Corp.
 147,908
2,286 1 Avocent Corp.
32,804
   TOTAL
180,712
Computer Peripherals--0.5%
2,422 1 Emulex Corp.
 13,830
17,261 1 RadiSys Corp.
81,645
   TOTAL
95,475
Computer Services--1.5%
4,455 1 CACI International, Inc., Class A
 201,143
6,045 1 Synnex Corp.
92,791
   TOTAL
293,934
Construction Machinery--0.0%
92 1 NCI Building System, Inc.
1,066
Contracting--2.4%
6,762 1 Baker Michael Corp.
 236,400
497 Comfort Systems USA, Inc.
 5,084
2,056 Granite Construction, Inc.
 72,412
4,732 1 Insituform Technologies, Inc., Class A
 88,772
2,444 1 Perini Corp.
50,957
   TOTAL
453,625
Shares
   
   
Value
COMMON STOCKS--continued
Cosmetics & Toiletries--0.0%
365 1 Elizabeth Arden, Inc.
$
2,128
Crude Oil & Gas Production--0.2%
7,383 1 Harvest Natural Resources, Inc.
29,532
Defense Aerospace--2.4%
11,251 1 AAR Corp.
 204,093
3,109 Ducommun, Inc.
 58,884
10,053 Kaman Corp., Class A
191,912
   TOTAL
454,889
Discount Department Stores--0.4%
7,616 Freds, Inc.
78,140
Diversified Leisure--0.1%
447 International Speedway Corp., Class A
10,406
Electric & Electric Original Equipment Manufacturer--0.8%
5,710 Cubic Corp.
155,084
Electrical Test/Measuring Equipment--0.1%
708 1 Multi-Fineline Electronix, Inc.
13,119
Electric Utility--11.2%
15,764 Avista Corp.
 300,147
13,838 Cleco Corp.
 316,198
9,615 1 El Paso Electric Co.
 159,032
14,562 Empire Distribution Electric Co.
 258,621
4,273 Idacorp, Inc.
 124,387
8,923 Northwestern Corp.
 216,026
13,611 1 Pike Electric Corp.
 153,124
21,424 Portland General Electric Co.
 416,697
7,452 UniSource Energy Corp.
210,444
   TOTAL
2,154,676
Electrical Equipment--0.4%
1,511 1 EnerSys, Inc.
 13,765
2,204 Franklin Electronics, Inc.
57,282
   TOTAL
71,047
Shares
   
   
Value
COMMON STOCKS--continued
Electronic Instruments--0.1%
326 1 Axsys Technologies, Inc.
$
13,920
Ethical Drugs--0.1%
3,409 1 Salix Pharmaceuticals Ltd.
27,272
Financial Services--3.2%
2,378 AMBAC Assurance Corporation
 2,711
12,840 1 America's Car-Mart, Inc.
 116,716
14,257 Blackrock Kelso Capital Corp.
 120,899
2,350 First Financial Corp.
 77,903
4,457 Hercules Technology Growth Capital, Inc.
 29,104
20,127 1 MBIA Insurance Corp.
 77,690
11,848 1 Nelnet, Inc., Class A
 163,739
2,075 United Financial Bancorp, Inc.
28,448
   TOTAL
617,210
Food Wholesaling--1.0%
4,668 Nash Finch Co.
200,864
Furniture--0.9%
7,361 Aaron Rents, Inc.
 160,911
1,351 Ethan Allen Interiors, Inc.
15,388
   TOTAL
176,299
Gas Distributor--1.9%
14,197 Southwest Gas Corp.
365,715
Generic Drugs--0.2%
1,389 1 Par Pharmaceutical Cos., Inc.
 17,099
506 Perrigo Co.
14,851
   TOTAL
31,950
Greeting Cards--0.0%
1,971 American Greetings Corp., Class A
8,554
Grocery Chain--2.4%
5,164 Casey's General Stores, Inc.
 109,735
4,813 Ruddick Corp.
 115,753
2,825 1 Susser Holdings Corp.
 36,923
11,640 1 The Pantry, Inc.
193,573
   TOTAL
455,984
Shares
   
   
Value
COMMON STOCKS--continued
Home Health Care--1.8%
7,129 1 Amerigroup Corp.
 $ 199,398
3,361 1 Gentiva Health Services, Inc.
 84,966
5,931 1 Odyssey Healthcare, Inc.
58,836
   TOTAL
343,200
Home Products--0.0%
1,388 Blyth Industries, Inc.
4,733
Industrial Machinery--0.2%
3,384 Met-Pro Corp.
37,089
Insurance Brokerage--1.7%
28,798 AmTrust Financial Services, Inc.
 236,432
2,208 Baldwin & Lyons, Inc., Class B
 37,072
4,076 1 Crawford & Co., Class B
 36,562
1,062 1 Texas Capital Bancshares, Inc.
11,990
   TOTAL
322,056
Jewelry Stores--0.3%
7,472 Movado Group, Inc.
57,385
Life Insurance--1.5%
20,673 American Equity Investment Life Holding Co.
 138,302
6,870 Delphi Financial Group, Inc., Class A
 104,218
4,449 1 Universal American Financial Corp.
43,912
   TOTAL
286,432
Long-Term Care Centers--0.3%
4,001 1 Kindred Healthcare, Inc.
54,294
Maritime--0.3%
6,072 TAL International Group, Inc.
63,635
Medical Technology--1.1%
5,410 1 Cantel Medical Corp.
 81,096
3,419 1 Greatbatch Technologies, Inc.
 79,663
3,119 1 Hanger Orthopedic Group, Inc.
42,574
   TOTAL
203,333
Metal Fabrication--1.0%
6,005 1 Ladish Co., Inc.
 68,277
1,506 Mueller Industries, Inc.
 30,301
9,112 Worthington Industries, Inc.
91,667
   TOTAL
190,245
Shares
   
   
Value
COMMON STOCKS--continued
Miscellaneous Communications--0.2%
17,215 1 Internap Network Services Corp.
$
46,308
Miscellaneous Food Products--0.1%
1,479 The Anderson's, Inc.
24,241
Miscellaneous Metals--0.7%
27,572 1 USEC, Inc.
140,341
Money Center Bank--0.2%
1,476 1 Pennsylvania Commerce Bancorp, Inc.
30,258
Multi-Industry Basic--1.1%
17,903 Aceto Corp.
 160,053
3,343 Olin Corp.
46,969
   TOTAL
207,022
Multi-Industry Capital Goods--0.0%
90 1 Ceradyne, Inc.
 2,054
606 1 Gerber Scientific, Inc.
1,903
   TOTAL
3,957
Multi-Line Insurance--6.7%
15,457 1 Amerisafe, Inc.
 289,510
4,316 Donegal Group, Inc., Class A
 60,510
738 FBL Financial Group, Inc., Class A
 7,609
4,741 1 FPIC Insurance Group, Inc.
 184,567
6,409 Harleysville Group, Inc.
 182,272
3,063 Infinity Property & Casualty
 117,619
4,443 1 Navigators Group, Inc.
 228,104
6,198 Safety Insurance Group, Inc.
217,054
   TOTAL
1,287,245
Offshore Driller--0.3%
1,654 1 Hornbeck Offshore Services, Inc.
 29,342
5,204 1 Newpark Resources, Inc.
21,909
   TOTAL
51,251
Oil Refiner--3.3%
3,506 Alon USA Energy, Inc.
 41,371
25,850 Western Refining, Inc.
 301,411
8,849 World Fuel Services Corp.
298,831
   TOTAL
641,613
Shares
   
   
Value
COMMON STOCKS--continued
Oil Service, Explore & Drill--0.3%
12,215 1 Boots & Coots International Well Control, Inc.
 $ 12,581
1,151 1 Gulfmark Offshore, Inc.
 27,555
2,536 1 Superior Well Services, Inc.
23,306
   TOTAL
63,442
Oil Well Supply--0.1%
704 Lufkin Industries, Inc.
24,605
Other Communications Equipment--0.1%
1,755 1 Syniverse Holdings, Inc.
23,798
Other Computer Hardware--0.1%
830 1 EMS Technologies, Inc.
19,920
Other Steel Producer--1.1%
4,370 1 L.B. Foster Co.
 115,324
2,881 1 Northwest Pipe Co.
101,584
   TOTAL
216,908
Packaged Foods--0.4%
1,862 1 Hain Celestial Group, Inc.
 28,340
3,060 1 United Natural Foods, Inc.
47,552
   TOTAL
75,892
Paint & Related Materials--0.1%
3,991 Ferro Corp.
15,804
Paper Products--0.9%
9,262 Glatfelter (P.H.) Co.
 80,672
243 1 Kapstone Paper and Packaging Corp.
 435
2,946 Rock-Tenn Co.
91,827
   TOTAL
172,934
Personal Loans--0.6%
9,138 1 Ezcorp, Inc., Class A
124,003
Personnel Agency--0.2%
4,246 Barrett Business Services, Inc.
41,781
Pollution Control--0.1%
3,811 1 Spectrum Control, Inc.
27,592
Printed Circuit Boards--0.0%
6,795 1 Sanmina-SCI Corp.
2,242
Shares
   
   
Value
COMMON STOCKS--continued
Property Liability Insurance--8.0%
4,311 American Physicians Capital, Inc.
 $ 183,304
8,926 American Physicians Service Group, Inc.
 187,446
14,970 1 CNA Surety Corp.
 247,753
2,819 Horace Mann Educators Corp.
 26,358
7,946 OneBeacon Insurance Group Ltd.
 67,144
10,470 1 PMA Capital Corp.
 57,690
7,812 1 ProAssurance Corp.
 369,195
3,017 RLI Corp.
 170,430
8,190 1 Seabright Insurance Holdings, Inc.
 84,930
7,671 Selective Insurance Group, Inc.
 117,750
1,423 State Auto Financial Corp.
31,448
   TOTAL
1,543,448
Psychiatric Centers--0.7%
3,624 1 Magellan Health Services, Inc.
131,261
Railroad--0.2%
1,392 1 Genesee & Wyoming, Inc., Class A
37,821
Recreational Goods--0.2%
2,596 1 Steinway Musical Instruments
30,010
Regional Bank--3.0%
1,644 Bank of Marin Bancorp
 33,036
1,128 Bank of the Ozarks, Inc.
 25,594
604 City Holding Co.
 15,529
2,351 FNB Corp. (PA)
 18,596
12,956 First BanCorp
 92,117
2,690 First Midwest Bancorp, Inc.
 26,900
1,928 FirstMerit Corp.
 31,176
2,843 National Penn Bancshares, Inc.
 27,520
2,297 Oriental Financial Group
 11,600
2,653 1 Oritani Financial Corp.
 39,556
1,429 Prosperity Bancshares, Inc.
 38,654
4,257 Republic Bancorp, Inc.
 76,626
1,360 Southside Bancshares, Inc.
 25,867
4,632 Susquehanna Bankshares, Inc.
 50,952
2,013 TriCo Bancshares
 40,542
4,033 Wilshire Bancorp, Inc.
27,666
   TOTAL
581,931
Shares
   
   
Value
COMMON STOCKS--continued
Restaurant--0.5%
5,600 Bob Evans Farms, Inc.
 $ 98,336
30 1 CEC Entertainment, Inc.
700
   TOTAL
99,036
Roofing & Wallboard--0.6%
9,323 1 Beacon Roofing Supply, Inc.
118,682
Savings & Loan--2.4%
2,142 First Financial Holdings, Inc.
 32,430
521 Flushing Financial Corp.
 4,126
13,381 1 Investors Bancorp, Inc.
 142,909
674 OceanFirst Financial Corp.
 8,641
21,330 1 Ocwen Financial Corp.
 189,837
2,660 Roma Financial Corp.
 30,271
2,215 WSFS Financial Corp.
57,147
   TOTAL
465,361
Securities Brokerage--3.1%
22,905 1 Knight Capital Group, Inc., Class A
 412,977
24,608 1 Labranche & Co., Inc.
 168,811
1,846 1 Penson Worldwide, Inc.
11,039
   TOTAL
592,827
Semiconductor Manufacturing--0.1%
7,395 1 Triquint Semiconductor, Inc.
14,938
Services to Medical Professionals--0.4%
4,396 1 Molina Healthcare, Inc.
77,106
Shoes--0.5%
3,568 1 Collective Brands, Inc.
 38,071
413 1 Genesco, Inc.
 6,360
2,474 1 Steven Madden Ltd.
42,998
   TOTAL
87,429
Software Packaged/Custom--0.4%
103 Acxiom Corp.
 980
1,959 1 EPIQ Systems, Inc.
 34,713
3,848 1 Macrovision Solutions Corp.
50,447
   TOTAL
86,140
Shares
   
   
Value
COMMON STOCKS--continued
Specialty Chemicals--0.4%
2,246 American Pacific Corp.
 $ 17,586
1,100 Minerals Technologies, Inc.
 41,591
1,107 Sensient Technologies Corp.
23,801
   TOTAL
82,978
Specialty Retailing--1.2%
55 1 Conn's, Inc.
 669
15,152 Finish Line, Inc., Class A
 71,972
5,781 1 Hot Topic, Inc.
 49,370
4,771 Monro Muffler Brake, Inc.
115,792
   TOTAL
237,803
Telecommunication Equipment & Services--1.3%
9,084 1 Anaren Microwave, Inc.
 107,373
5,355 1 GeoEye, Inc.
 92,374
1,253 Plantronics, Inc.
 12,718
1,985 1 ViaSat, Inc.
43,988
   TOTAL
256,453
Toys & Games--0.4%
4,282 1 JAKKS Pacific, Inc.
78,532
Trucking--0.4%
3,940 1 Marten Transport Ltd.
69,580
Undesignated Consumer Cyclicals--2.7%
10,120 1 Career Education Corp.
 220,616
7,804 1 Cornell Corrections, Inc.
 119,089
1,210 1 LECG Corp.
 3,957
2,078 1 Lincoln Educational Services
 30,380
2,291 Speedway Motorsports, Inc.
 33,082
6,026 1 Universal Technical Institute, Inc.
105,636
   TOTAL
512,760
Shares
   
   
Value
COMMON STOCKS--continued
Undesignated Health--0.5%
5,022 1 Healthspring, Inc.
$
87,483
Uniforms--0.1%
973 Unifirst Corp.
25,531
Water Utility--0.3%
1,279 California Water Service Group
55,637
   TOTAL COMMON STOCKS
(IDENTIFIED COST $20,303,956)
18,932,072
MUTUAL FUND--2.0%
381,296 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
381,296
   TOTAL INVESTMENTS--100.2%
(IDENTIFIED COST $20,685,252) 4
19,313,368
   OTHER ASSETS AND LIABILITIES - NET--(0.2)% 5
(47,108
 )
   TOTAL NET ASSETS--100%
$
 19,266,260

1 Non-income-producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represents cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$19,313,368
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$19,313,368

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $381,296 of investments in an affiliated issuer (Note 5) (identified cost $20,685,252)
 $ 19,313,368
Cash
 252
Income receivable
 4,791
Receivable for investments sold
 613,470
Receivable for shares sold
18,820
   TOTAL ASSETS
19,950,701
Liabilities:
Payable for investments purchased
 $ 606,960
Payable for shares redeemed
 31,280
Payable for portfolio accounting fees
 12,662
Payable for distribution services fee (Note 5)
 1,911
Payable for shareholder services fee (Note 5)
 2,849
Accrued expenses
28,779
   TOTAL LIABILITIES
684,441
Net assets for 2,988,308 shares outstanding
$
 19,266,260
Net Assets Consist of:
Paid-in capital
 $ 32,295,247
Net unrealized depreciation of investments
(1,371,884 )
Accumulated net realized loss on investments
(11,631,802 )
Accumulated net investment income (loss)
(25,301
 )
   TOTAL NET ASSETS
$
 19,266,260
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($14,561,066 ÷ 2,244,600 shares outstanding), no par value, unlimited shares authorized
$6.49
Offering price per share
$6.49
Redemption proceeds per share
$6.49
Class A Shares:
Net asset value per share ($1,949,290 ÷ 303,321 shares outstanding), no par value, unlimited shares authorized
$6.43
Offering price per share (100/94.50 of $6.43)
$6.80
Redemption proceeds per share
$6.43
Class C Shares:
Net asset value per share ($2,755,904 ÷ 440,387 shares outstanding), no par value, unlimited shares authorized
$6.26
Offering price per share
$6.26
Redemption proceeds per share (99.00/100 of $6.26)
$6.20

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $4,894 received from an affiliated issuer (Note 5) and net of foreign taxes withheld of $501)
$
 167,743
Expenses:
Investment adviser fee (Note 5)
 $ 133,591
Administrative personnel and services fee (Note 5)
 115,946
Custodian fees
 18,212
Transfer and dividend disbursing agent fees and expenses
 30,807
Directors'/Trustees' fees
 788
Auditing fees
 10,924
Legal fees
 2,946
Portfolio accounting fees
 38,910
Distribution services fee--Class C Shares (Note 5)
 11,636
Shareholder services fee--Class A Shares (Note 5)
 3,214
Shareholder services fee--Class C Shares (Note 5)
 3,879
Share registration costs
 17,977
Printing and postage
 17,087
Insurance premiums
 2,431
Miscellaneous
1,370
   TOTAL EXPENSES
409,718
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee
 $ (133,591 )
Waiver of administrative personnel and services fee
 (22,569 )
Reimbursement of other operating expenses
(60,514
 )
   TOTAL WAIVERS AND REIMBURSEMENTS
(216,674
 )
Net expenses
193,044
Net investment income (loss)
(25,301
 )
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments
(9,503,343 )
Net change in unrealized appreciation of investments
(1,688,790
 )
Net realized and unrealized loss on investments
(11,192,133
 )
Change in net assets resulting from operations
$
 (11,217,434
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   

Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)
 $ (25,301 ) $ (34,816 )
Net realized loss on investments
(9,503,343 ) (2,063,606 )
Net change in unrealized appreciation/depreciation of investments
(1,688,790
 )
950,455
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(11,217,434
 )
(1,147,967
 )
Distributions to Shareholders:
Distributions from net realized gain on investments
Institutional Shares
 -- (638,272 )
Class A Shares
 -- (198,621 )
Class C Shares
--
(63,763
 )
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
--
(900,656
 )
Share Transactions:
Proceeds from sale of shares
 7,000,546 21,054,023
Net asset value of shares issued to shareholders in payment of distributions declared
 -- 316,054
Cost of shares redeemed
(4,271,707
 )
(6,659,980
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
2,728,839
14,710,097
Change in net assets
(8,488,595
 )
12,661,474
Net Assets:
Beginning of period
27,754,855
15,093,381
End of period (including accumulated net investment income (loss) of $(25,301) and $0, respectively)
$
 19,266,260
$
 27,754,855

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

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 U.S. generally accepted accounting principles (GAAP).

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

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.

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 593,820 $ 5,067,251 1,548,526 $ 16,894,234
Shares issued to shareholders in payment of distributions declared
--


--


7,094


75,830
Shares redeemed
(402,145
 )
(3,446,494
 )
(482,513
 )
(5,241,402
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS

191,675


$
1,620,757

1,073,107


$
11,728,662
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 63,207 $ 539,950 134,417 $ 1,472,044
Shares issued to shareholders in payment of distributions declared

--


--


17,137



182,165
Shares redeemed
(67,574
 )
(511,986
 )
(103,407
 )
(1,103,930
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS
(4,367
 )
$
 27,964
48,147
$
 550,279
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 169,826 $ 1,393,345 256,136 $ 2,687,745
Shares issued to shareholders in payment of distributions declared

--



--


5,566


58,059
Shares redeemed
(45,827
 )
(313,227
 )
(30,126
 )
(314,648
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS
123,999
$
 1,080,118
231,576
$
 2,431,156
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS
311,307
$
 2,728,839
1,352,830
$
 14,710,097

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $20,685,252. The net unrealized depreciation of investments for federal tax purposes was $1,371,884. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $1,006,682 and net unrealized depreciation from investments for those securities having an excess of cost over value of $2,378,566.

At July 31, 2008, the Fund had a capital loss carryforward of $176,370 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire in 2016.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 1.15% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to waive all or a portion of the advisory fee and/or reimburse certain operating expenses excluding (interest, taxes and brokerage commissions) to no more than the following annual percentages for each Class of the Fund based on average daily net assets:

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

In addition, subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any additional portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser waived $133,429 of its fee and reimbursed $60,514 of other operating expenses.

Administrative Fee

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

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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 0.804% of average daily net assets of the Fund. The Fund is currently being charged the minimum administrative fee; therefore the fee as a percentage of average aggregate daily net assets is greater than the amounts presented in the chart above. FAS waived $22,569 of its fee.

Distribution Services Fee

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

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

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC retained $8,491 of fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Fund's Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $466 in sales charges from the sale of Class A Shares. FSC also retained $1,239 of CDSC relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC did not receive any fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.50%, 1.75% and 2.50%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $162. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund, Institutional Shares
382,184
6,303,135
6,304,023
381,296
$381,296
$4,894

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 32,001,972
Sales
$
 29,399,678

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT SMALL CAP VALUE FUND (THE "FUND")

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

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

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

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

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

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

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

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

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

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

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

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

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

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing ole 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.

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund or its agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R726

36368 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Tax
Aware/All Cap Core Fund

Established 2005

A Portfolio of Federated MDT Series

SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Class A Shares
Class C Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE

Not FDIC Insured * May Lose Value * No Bank Guarantee

Financial Highlights - Class A Shares

(For a Share Outstanding Throughout Each Period)

Six Months
Ended
(unaudited)		 Year Ended July 31,
Period
Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$10.84 $11.65 $10.35 $10.00
Income From Investment Operations:
Net investment income (loss)
 0.01 3 (0.00 ) 3,4 (0.02 ) 3 (0.05 ) 3
Net realized and unrealized gain (loss) on investments
(4.24
 )
(0.81
 )
1.32
0.40
   TOTAL FROM INVESTMENT OPERATIONS
(4.23
 )
(0.81
 )
1.30
0.35
Less Distributions:
Distributions from net investment income
(0.00
 ) 4
--
--
--
Net Asset Value, End of Period
$ 6.61
$10.84
$11.65
$10.35
Total Return 5
(38.98
 )%
(6.95
 )%
12.56
 %
3.50
 %
Ratios to Average Net Assets:
Net expenses
1.65
 % 6
1.65
 %
1.65
 %
2.01
 % 6
Net investment income (loss)
0.31
 % 6
(0.02
 )%
(0.14
 )%
(0.50
 )% 6
Expense waiver/reimbursement 7
3.13
 % 6
3.12
 %
5.81
 %
3.71
 % 6
Supplemental Data:
Net assets, end of period (000 omitted)
$4,716
$6,862
$3,903
$2,061
Portfolio turnover
148
 %
183
 %
154
 %
182
 %

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

2 Reflects operations for the period from September 15, 2005 (date of initial 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)

Six Months
Ended
(unaudited)		 Year Ended July 31,
Period
Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$10.60 $11.47 $10.27 $10.00
Income From Investment Operations:
Net investment income (loss)
 (0.02 ) 3 (0.08 ) 3 (0.10 ) 3 (0.13 ) 3
Net realized and unrealized gain (loss) on investments
(4.14
 )
(0.79
 )
1.30
0.40
   TOTAL FROM INVESTMENT OPERATIONS
(4.16
 )
(0.87
 )
1.20
0.27
Net Asset Value, End of Period
$ 6.44
$10.60
$11.47
$10.27
Total Return 4
(39.25
 )%
(7.59
 )%
11.68
 %
2.70
 %
Ratios to Average Net Assets:
Net expenses
2.40
 % 5
2.37
 %
2.40
 %
2.76
 % 5
Net investment income (loss)
(0.52
 )% 5
(0.73
 )%
(0.89
 )%
(1.25
 )% 5
Expense waiver/reimbursement 6
3.08
 % 5
3.19
 %
5.70
 %
3.71
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$2,011
$3,587
$3,007
$1,329
Portfolio turnover
148
 %
183
 %
154
 %
182
 %

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

2 Reflects operations for the period from September 15, 2005 (date of initial 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 (unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase or redemption payments; and (2) ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual:
Class A Shares
$1,000
$ 610.20
$ 6.70
Class C Shares
$1,000
$ 607.50
$ 9.72
Hypothetical (assuming a 5% return before expenses):
Class A Shares
$1,000
$1,016.89
$ 8.39
Class C Shares
$1,000
$1,013.11
$12.18

1 Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half-year period). The annualized net expense ratios are as follows:

Class A Shares
   
 1.65%
Class C Shares
2.40%

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Electric Utility
8.1
 %
Biotechnology
6.3
 %
Railroad
4.8
 %
Agricultural Chemicals
4.6
 %
Property Liability Insurance
4.5
 %
Undesignated Consumer Cyclicals
4.5
 %
Computers - Midrange
4.4
 %
Miscellaneous Food Products
4.2
 %
Computers - High End
4.0
 %
Multi-Line Insurance
3.6
 %
Copper
3.4
 %
Ethical Drugs
3.4
 %
Home Building
2.7
 %
Department Stores
2.4
 %
Integrated International Oil
2.3
 %
Software Packaged/Custom
2.3
 %
Services to Medical Professionals
2.1
 %
AT&T Divestiture
2.0
 %
Diversified Leisure
1.9
 %
Gas Distributor
1.3
 %
Regional Bank
1.3
 %
Defense Aerospace
1.2
 %
Money Center Bank
1.2
 %
Airline - Regional
1.0
 %
Defense Electronics
1.0
 %
Life Insurance
1.0
 %
Medical Technology
1.0
 %
Multi-Industry Capital Goods
1.0
 %
Other 2
16.7
 %
Cash Equivalents 3
2.6
 %
Other Assets and Liabilities - Net 4
(0.8
 )%
   TOTAL
100.0
%

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

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

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

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

Portfolio of Investments

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--98.2%
Advertising--0.2%
712 Omnicom Group, Inc.
$
 18,434
Agricultural Chemicals--4.6%
324 FMC Corp.
 14,457
5,681 Monsanto Co.
 432,097
1,792 Mosaic Co. (The)
63,921
   TOTAL
510,475
Agricultural Machinery--0.7%
2,325 Deere & Co.
80,771
Airline - Regional--1.0%
2,113 1 Alaska Air Group, Inc.
 55,699
377 SkyWest, Inc.
 5,900
7,551 Southwest Airlines Co.
53,084
   TOTAL
114,683
Apparel--0.3%
509 V.F. Corp.
28,514
AT&T Divestiture--2.0%
8,822 AT&T, Inc.
217,198
Auto Original Equipment Manufacturer--0.2%
1,440 Johnson Controls, Inc.
 18,014
633 Superior Industries International, Inc.
6,501
   TOTAL
24,515
Auto Rentals--0.1%
327 1 AMERCO
10,055
Biotechnology--6.3%
158 1 Affymetrix, Inc.
 502
225 1 Alexion Pharmaceuticals, Inc.
 8,296
1,400 1 Amgen, Inc.
 76,790
496 1 Cephalon, Inc.
 38,281
94 1 Charles River Laboratories International, Inc.
 2,294
10,734 1 Gilead Sciences, Inc.
 544,965
Shares
   
   
Value
COMMON STOCKS--continued
Biotechnology--continued
213 1 Hospira, Inc.
 $ 5,304
176 1 Myriad Genetics, Inc.
 13,124
1,118 1 Questcor Pharmaceuticals, Inc.
7,211
   TOTAL
696,767
Broadcasting--0.3%
845 1 American Tower Systems Corp.
 25,637
1,452 News Corp., Inc.
9,278
   TOTAL
34,915
Building Materials--0.3%
227 Ameron, Inc.
 11,316
1,697 1 Owens Corning, Inc.
 22,638
205 Universal Forest Products, Inc.
4,305
   TOTAL
38,259
Cable TV--0.4%
1,721 1 Discovery Communications Inc.
 24,955
1,599 1 Viacom, Inc., Class B
23,585
   TOTAL
48,540
Cement--0.1%
690 Texas Industries, Inc.
15,670
Clothing Stores--0.7%
847 1 Children's Place Retail Stores, Inc.
 15,932
2,729 Gap (The), Inc.
 30,783
1,000 1 Jos A. Bank Clothiers, Inc.
27,460
   TOTAL
74,175
Commodity Chemicals--0.2%
119 Compass Minerals International, Inc.
 7,160
1,078 Westlake Chemical Corp.
14,736
   TOTAL
21,896
Computer Peripherals--0.3%
710 Imation Corp.
 6,915
2,279 1 Sandisk Corp.
26,049
   TOTAL
32,964
Computer Services--0.0%
68 1 Stanley, Inc.
2,058
Shares
   
   
Value
COMMON STOCKS--continued
Computer Stores--0.1%
406 1 Tech Data Corp.
$
7,353
Computers - High End--4.0%
4,864 IBM Corp.
445,786
Computers - Low End--0.2%
2,340 1 Dell, Inc.
22,230
Computers - Midrange--4.4%
14,158 Hewlett-Packard Co.
491,991
Construction Machinery--0.5%
1,674 Caterpillar, Inc.
 51,643
398 Joy Global, Inc.
8,290
   TOTAL
59,933
Contracting--0.1%
129 Harsco Corp.
 3,060
86 1 IHS, Inc., Class A
3,767
   TOTAL
6,827
Copper--3.4%
14,771 Freeport-McMoRan Copper & Gold, Inc.
371,343
Crude Oil & Gas Production--0.3%
280 1 Swift Energy Co.
 4,290
1,906 W&T Offshore, Inc.
23,958
   TOTAL
28,248
Defense Aerospace--1.2%
251 1 AAR Corp.
 4,553
2,729 Boeing Co.
 115,464
184 General Dynamics Corp.
 10,438
63 Triumph Group, Inc.
2,853
   TOTAL
133,308
Defense Electronics--1.0%
491 1 First Solar, Inc.
 70,115
274 Northrop Grumman Corp.
 13,185
443 Raytheon Co.
22,425
   TOTAL
105,725
Shares
   
   
Value
COMMON STOCKS--continued
Department Stores--2.4%
1,098 Dillards, Inc., Class A
 $ 4,776
4,636 Penney (J.C.) Co., Inc.
 77,653
1,670 1 Saks, Inc.
 4,208
4,290 1 Sears Holdings Corp.
175,547
   TOTAL
262,184
Discount Department Stores--0.4%
693 1 99 Cents Only Stores
 5,807
729 1 Dollar Tree, Inc.
 31,136
340 Family Dollar Stores, Inc.
9,442
   TOTAL
46,385
Diversified Leisure--1.9%
10,599 Carnival Corp.
 192,796
1,160 1 Gaylord Entertainment Co.
 12,296
756 1 Pinnacle Entertainment, Inc.
5,126
   TOTAL
210,218
Electric & Electrical Original Equipment Manufacturers--0.1%
769 Molex, Inc.
10,281
Electric Utility--8.1%
5,068 CMS Energy Corp.
 59,549
13,426 Edison International
 437,285
750 Idacorp, Inc.
 21,832
202 OGE Energy Corp.
 4,985
265 Pinnacle West Capital Corp.
 8,870
1,531 Public Service Enterprises Group, Inc.
 48,334
6,390 Sempra Energy
 280,138
1,675 TECO Energy, Inc.
 20,117
528 UniSource Energy Corp.
14,911
   TOTAL
896,021
Electrical Equipment--0.1%
151 American Science & Engineering, Inc.
11,778
Electronic Testing/Measuring Equipment--0.0%
155 1 Multi-Fineline Electronix, Inc.
2,872
Shares
   
   
Value
COMMON STOCKS--continued
Ethical Drugs--3.4%
3,259 Eli Lilly & Co.
 $ 119,996
2,514 1 Forest Laboratories, Inc., Class A
 62,951
5,509 Merck & Co., Inc.
 157,282
357 1 Noven Pharmaceuticals, Inc.
 3,545
2,234 Pfizer, Inc.
32,572
   TOTAL
376,346
Food Wholesaling--0.1%
429 SUPERVALU, Inc.
 7,525
201 1 Winn-Dixie Stores, Inc.
2,762
   TOTAL
10,287
Furniture--0.0%
557 Furniture Brands International, Inc.
1,142
Gas Distributor--1.3%
2,456 Energen Corp.
 71,740
77 New Jersey Resources Corp.
 3,087
214 ONEOK, Inc.
 6,253
1,454 Questar Corp.
 49,407
923 1 Southern Union Co.
11,897
   TOTAL
142,384
Grocery Chain--0.1%
418 Safeway, Inc.
8,958
Home Building--2.7%
2,709 Centex Corp.
 23,054
4,597 D. R. Horton, Inc.
 27,398
3,509 Lennar Corp., Class A
 26,984
194 1 M/I Schottenstein Homes, Inc.
 1,715
7,910 Pulte Homes, Inc.
 80,287
1,451 Ryland Group, Inc.
 22,636
7,104 1 Toll Brothers, Inc.
120,910
   TOTAL
302,984
Home Health Care--0.7%
985 1 Amedisys, Inc.
 40,611
752 1 Amerigroup Corp.
 21,033
582 1 LHC Group, Inc.
15,487
   TOTAL
77,131
Shares
   
   
Value
COMMON STOCKS--continued
Home Products--0.1%
107 1 Energizer Holdings, Inc.
$
 5,096
Hospitals--0.1%
395 Universal Health Services, Inc., Class B
14,951
Household Appliances--0.1%
301 Whirlpool Corp.
10,062
Industrial Machinery--0.2%
345 Flowserve Corp.
18,392
Insurance Brokerage--0.2%
345 Odyssey Re Holdings Corp.
16,232
Integrated International Oil--2.3%
3,678 Chevron Corp.
259,373
Internet Services--0.3%
797 1 NetFlix, Inc.
28,804
Jewelry Stores--0.0%
140 Movado Group, Inc.
1,075
Life Insurance--1.0%
230 Aflac, Inc.
 5,338
615 American Equity Investment Life Holding Co.
 4,114
587 Delphi Financial Group, Inc., Class A
 8,905
43 MetLife, Inc.
 1,235
4,099 Old Republic International Corp.
 42,302
1,662 Torchmark Corp.
49,860
   TOTAL
111,754
Long-Term Care Centers--0.0%
286 1 Kindred Healthcare, Inc.
3,881
Lumber Products--0.0%
1,254 1 Louisiana-Pacific Corp.
2,608
Maritime--0.1%
315 Overseas Shipholding Group, Inc.
11,245
Medical Supplies--0.3%
67 1 Haemonetics Corp.
 3,963
153 1 Kinetic Concepts, Inc.
 3,687
500 McKesson HBOC, Inc.
 22,100
261 1 PetMed Express, Inc.
3,769
   TOTAL
33,519
Shares
   
   
Value
COMMON STOCKS--continued
Medical Technology--1.0%
311 1 Cantel Medical Corp.
 $ 4,662
735 1 Cyberonics, Inc.
 11,312
60 1 Edwards Lifesciences Corp.
 3,449
178 1 Gen-Probe, Inc.
 8,014
265 1 ResMed, Inc.
 10,574
1,627 1 Thoratec Laboratories Corp.
 47,134
794 1 Zimmer Holdings, Inc.
28,902
   TOTAL
114,047
Metal Containers--0.2%
370 Ball Corp.
 14,186
301 1 Crown Holdings, Inc.
5,644
   TOTAL
19,830
Metal Fabrication--0.0%
218 Timken Co.
3,246
Miscellaneous Components--0.4%
888 AVX Corp.
 8,099
683 1 Cree, Inc.
 13,612
1,596 1 International Rectifier Corp.
21,738
   TOTAL
43,449
Miscellaneous Food Products--4.2%
14,787 Archer-Daniels-Midland Co.
 404,868
2,505 1 Fresh Del Monte Produce, Inc.
60,371
   TOTAL
465,239
Miscellaneous Machinery--0.1%
202 Parker-Hannifin Corp.
 7,718
257 Rockwell Automation, Inc.
6,692
   TOTAL
14,410
Miscellaneous Metals--0.1%
1,423 1 USEC, Inc.
7,243
Money Center Bank--1.2%
3,658 Bank of New York Mellon Corp.
 94,157
2,601 U.S. Bancorp
38,599
   TOTAL
132,756
Shares
   
   
Value
COMMON STOCKS--continued
Mortgage and Title--0.1%
400 Stewart Information Services Corp.
$
 5,936
Motion Pictures--0.2%
893 Walt Disney Co.
18,467
Multi-Industry Capital Goods--1.0%
1,989 Honeywell International, Inc.
 65,259
3,029 KBR, Inc.
 42,891
701 Textron, Inc.
6,330
   TOTAL
114,480
Multi-Line Insurance--3.6%
6,740 Allstate Corp.
 146,056
283 1 Amerisafe, Inc.
 5,301
458 Cincinnati Financial Corp.
 10,044
153 Infinity Property & Casualty
 5,875
16,138 UNUMProvident Corp.
228,514
   TOTAL
395,790
Office Equipment--0.1%
649 Pitney Bowes, Inc.
14,447
Offshore Driller--0.4%
715 1 Transocean Ltd.
39,053
Oil Refiner--0.9%
1,179 Sunoco, Inc.
 54,611
1,753 Western Refining, Inc.
 20,440
668 World Fuel Services Corp.
22,558
   TOTAL
97,609
Oil Service, Explore & Drill--0.1%
1,265 Patterson-UTI Energy, Inc.
12,093
Oil Well Supply--0.1%
188 Baker Hughes, Inc.
 6,264
358 1 Dril-Quip, Inc.
8,771
   TOTAL
15,035
Packaged Foods--0.1%
690 ConAgra Foods, Inc.
 11,799
112 Hershey Foods Corp.
4,175
   TOTAL
15,974
Shares
   
   
Value
COMMON STOCKS--continued
Paper Products--0.4%
3,335 MeadWestvaco Corp.
$
 38,819
Personal Loans--0.5%
2,484 Capital One Financial Corp.
 39,347
1,192 1 Ezcorp, Inc., Class A
16,175
   TOTAL
55,522
Personnel Agency--0.0%
274 Kelly Services, Inc., Class A
2,482
Pollution Control--0.0%
63 1 Stericycle, Inc.
3,082
Printing--0.0%
363 Donnelley (R.R.) & Sons Co.
3,543
Property Liability Insurance--4.5%
2,605 Berkley, W. R. Corp.
 68,980
334 1 CNA Surety Corp.
 5,528
3,064 Chubb Corp.
 130,465
461 Employers Holdings, Inc.
 6,242
939 HCC Insurance Holdings, Inc.
 21,982
1,331 Progressive Corp., OH
 16,172
6,463 The Travelers Cos., Inc.
249,730
   TOTAL
499,099
Railroad--4.8%
9,512 CSX Corp.
 275,468
3,186 Norfolk Southern Corp.
 122,215
2,992 Union Pacific Corp.
131,020
   TOTAL
528,703
Recreational Goods--0.3%
563 Callaway Golf Co.
 4,284
1,220 1 WMS Industries, Inc.
27,108
   TOTAL
31,392
Recreational Vehicles--0.0%
1,335 Brunswick Corp.
3,711
Shares
   
   
Value
COMMON STOCKS--continued
Regional Bank--1.3%
1,559 BB&T Corp.
 $ 30,853
333 Central Pacific Financial Corp.
 2,241
707 East West Bancorp, Inc.
 6,709
2,612 Marshall & Ilsley Corp.
 14,914
295 PNC Financial Services Group
 9,593
2,231 Popular, Inc.
 6,113
243 Regions Financial Corp.
 841
519 South Financial Group, Inc.
 976
5,268 SunTrust Banks, Inc.
 64,586
212 Whitney Holding Corp.
 2,754
521 Wintrust Financial Corp.
6,966
   TOTAL
146,546
Restaurant--0.3%
136 1 CEC Entertainment, Inc.
 3,174
454 Darden Restaurants, Inc.
 11,904
258 1 Green Mountain Coffee, Inc.
 9,871
66 1 Panera Bread Co.
3,101
   TOTAL
28,050
Roofing & Wallboard--0.2%
383 1 Beacon Roofing Supply, Inc.
 4,876
2,197 1 USG Corp.
14,302
   TOTAL
19,178
Rubber--0.0%
782 Cooper Tire & Rubber Co.
3,652
Savings & Loan--0.2%
2,002 Hudson City Bancorp, Inc.
23,223
Securities Brokerage--0.5%
996 1 Interactive Brokers Group, Inc., Class A
 15,209
242 1 Knight Capital Group, Inc., Class A
 4,363
362 1 Labranche & Co., Inc.
 2,483
1,574 Raymond James Financial, Inc.
29,135
   TOTAL
51,190
Shares
   
   
Value
COMMON STOCKS--continued
Semiconductor Distribution--0.8%
2,872 1 Arrow Electronics, Inc.
 $ 54,769
839 1 Avnet, Inc.
 16,629
854 1 FormFactor, Inc.
13,288
   TOTAL
84,686
Semiconductor Manufacturing--0.3%
502 1 ATMI, Inc.
 6,782
5,481 1 Micron Technology, Inc.
 20,389
311 1 Plexus Corp.
4,497
   TOTAL
31,668
Semiconductor Manufacturing Equipment--0.3%
2,582 1 Novellus Systems, Inc.
35,606
Services to Medical Professionals--2.1%
984 1 Centene Corp.
 17,446
326 1 Coventry Health Care, Inc.
 4,932
207 1 Genoptix, Inc.
 7,017
1,000 1 Humana, Inc.
 37,930
280 1 Medco Health Solutions, Inc.
 12,580
588 Omnicare, Inc.
 16,440
4,903 UnitedHealth Group, Inc.
 138,902
83 1 Wellpoint, Inc.
3,440
   TOTAL
238,687
Shoes--0.1%
382 1 Genesco, Inc.
5,883
Soft Drinks--0.2%
408 1 Dr. Pepper Snapple Group, Inc.
 6,712
609 The Pepsi Bottling Group, Inc.
11,748
   TOTAL
18,460
Software Packaged/Custom--2.3%
664 1 Computer Sciences Corp.
 24,462
875 1 DST Systems, Inc.
 27,799
4,212 1 F5 Networks, Inc.
 93,380
4,007 Microsoft Corp.
 68,520
699 1 Solera Holdings, Inc.
 16,839
1,756 1 Symantec Corp.
26,919
   TOTAL
257,919
Shares
   
   
Value
COMMON STOCKS--continued
Specialty Chemicals--0.6%
372 Air Products & Chemicals, Inc.
 $ 18,712
596 Albemarle Corp.
 13,261
189 1 Calgon Carbon Corp.
 2,376
243 Chemed Corp.
 9,752
249 Cytec Industries, Inc.
 5,090
95 Lubrizol Corp.
 3,241
896 1 OM Group, Inc.
17,364
   TOTAL
69,796
Specialty Retailing--0.3%
1,477 1 CarMax, Inc.
 12,215
2,252 Williams-Sonoma, Inc.
17,836
   TOTAL
30,051
Stainless Steel Producer--0.5%
2,549 Allegheny Technologies, Inc.
56,307
Telecommunication Equipment & Services--0.2%
5,703 Motorola, Inc.
25,264
Tools And Hardware--0.1%
233 Snap-On, Inc.
7,032
Toys & Games--0.1%
727 1 JAKKS Pacific, Inc.
13,333
Trucking--0.0%
192 Arkansas Best Corp.
4,491
Undesignated Consumer Cyclicals--4.5%
532 1 Apollo Group, Inc., Class A
 43,337
3,175 1 Corinthian Colleges, Inc.
 59,309
833 DeVRY, Inc.
 44,632
2,677 1 ITT Educational Services, Inc.
 327,959
536 Speedway Motorsports, Inc.
 7,740
69 Strayer Education, Inc.
14,934
   TOTAL
497,911
Shares
   
   
Value
COMMON STOCKS--continued
Uniforms--0.0%
80 Unifirst Corp.
$
 2,099
Water Utility--0.1%
625 Aqua America, Inc.
12,962
   TOTAL COMMON STOCKS
(IDENTIFIED COST $11,622,394)
10,878,047
MUTUAL FUND--2.6%
285,275 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
285,275
   TOTAL INVESTMENTS--100.8%
(IDENTIFIED COST $11,907,669) 4
11,163,322
   OTHER ASSETS AND LIABILITIES - NET--(0.8)% 5
(87,884
 )
   TOTAL NET ASSETS--100%
$
 11,075,438

1 Non-income-producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represents cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$11,163,322
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$11,163,322

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $285,275 of investments in an affiliated issuer (Note 5) (identified cost $11,907,669)
 $ 11,163,322
Income receivable
 9,798
Receivable for investments sold
 331,021
Receivable for shares sold
71,912
   TOTAL ASSETS
11,576,053
Liabilities:
Payable for investments purchased
 $ 336,123
Payable for shares redeemed
 118,239
Payable for auditing fees
 10,924
Payable for portfolio accounting fees
 12,070
Payable for distribution services fee (Note 5)
 2,140
Payable for shareholder services fee (Note 5)
 3,885
Accrued expenses
17,234
   TOTAL LIABILITIES
500,615
Net assets for 1,680,838 shares outstanding
$
 11,075,438
Net Assets Consist of:
Paid-in capital
 $ 18,819,159
Net unrealized depreciation of investments
(744,347 )
Accumulated net realized loss on investments
(6,994,454 )
Distributions in excess of net investment income
(4,920
 )
   TOTAL NET ASSETS
$
 11,075,438

Statement of Assets and Liabilities - continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($4,348,372 ÷ 655,234 shares outstanding), no par value, unlimited shares authorized
$6.64
Offering price per share
$6.64
Redemption proceeds per share
$6.64
Class A Shares:
Net asset value per share ($4,716,100 ÷ 713,347 shares outstanding), no par value, unlimited shares authorized
$6.61
Offering price per share (100/94.50 of $6.61)
$6.99
Redemption proceeds per share
$6.61
Class C Shares:
Net asset value per share ($2,010,966 ÷ 312,257 shares outstanding), no par value, unlimited shares authorized
$6.44
Offering price per share
$6.44
Redemption proceeds per share (99.00/100 of $6.44)
$6.38

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $3,389 received from an affiliated issuer (Note 5) and net of foreign taxes withheld of $40)
$
 133,216
Expenses:
Investment adviser fee (Note 5)
 $ 62,904
Administrative personnel and services fee (Note 5)
 115,946
Custodian fees
 15,053
Transfer and dividend disbursing agent fees and expenses
 28,581
Directors'/Trustees' fees
 805
Auditing fees
 10,924
Legal fees
 3,188
Portfolio accounting fees
 40,148
Distribution services fee--Class C Shares (Note 5)
 10,104
Shareholder services fee--Class A Shares (Note 5)
 9,336
Shareholder services fee--Class C Shares (Note 5)
 3,368
Share registration costs
 17,220
Printing and postage
 17,115
Insurance premiums
 2,383
Interest expense
 229
Miscellaneous
1,412
   TOTAL EXPENSES
338,716
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee
 $ (62,904 )
Waiver of administrative personnel and services fee
 (22,615 )
Reimbursement of other operating expenses
(132,309
 )
   TOTAL WAIVERS AND REIMBURSEMENTS
(217,828
 )
Net expenses
120,888
Net investment income
12,328
Realized and Unrealized Loss on Investments:
Net realized loss on investments
(5,310,298 )
Net change in unrealized appreciation of investments
(1,830,677
 )
Net realized and unrealized loss on investments
(7,140,975
 )
Change in net assets resulting from operations
$
 (7,128,647
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   
Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)
 $ 12,328 $ (10,751 )
Net realized loss on investments
(5,310,298 ) (1,609,068 )
Net change in unrealized appreciation/depreciation of investments
(1,830,677
 )
260,269
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(7,128,647
 )
(1,359,550
 )
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares
 (12,123 ) --
Class A Shares
 (5,125 ) --
Class C Shares
--
--
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
(17,248
 )
--
Share Transactions:
Proceeds from sale of shares
 10,679,729 11,846,604
Net asset value of shares issued to shareholders in payment of distributions declared
 11,952 --
Cost of shares redeemed
(7,802,391
 )
(5,710,298
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
2,889,290
6,136,306
Change in net assets
(4,256,605
 )
4,776,756
Net Assets:
Beginning of period
15,332,043
10,555,287
End of period (including distributions in excess of net investment income of $(4,920) and $0, respectively)
$
 11,075,438
$
 15,332,043

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

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 U.S. generally accepted accounting principles (GAAP).

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

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.

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 439,256 $ 3,123,076 549,863 $ 6,491,359
Shares issued to shareholders in payment of distributions declared
976
6,958
--
--
Shares redeemed
(232,979
 )
(1,849,603
 )
(413,746
 )
(4,792,720
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS

207,253


$
1,280,431

136,117


$
1,698,639
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 835,966 $ 7,099,928 353,832 $ 4,174,842
Shares issued to shareholders in payment of distributions declared
703
4,994
--
--
Shares redeemed
(756,364
 )
(5,311,516
 )
(55,720
 )
(639,826
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS


80,305


$
1,793,406


298,112


$
3,535,016
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 60,965 $ 456,725 100,386 $ 1,180,403
Shares redeemed
(87,199
 )
(641,272
 )
(23,958
 )
(277,752
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS


(26,234
 )

$
(184,547
 )

76,428


$
902,651
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS


261,324


$
2,889,290


510,657


$
6,136,306

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $11,907,669. The net unrealized depreciation of investments for federal tax purposes was $744,347. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $595,542 and net unrealized depreciation from investments for those securities having an excess of cost over value of $1,339,889.

At July 31, 2008, the Fund had a capital loss carryforward of $10,826 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire in 2015.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.90% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for each class of the Fund based on average daily net assets:


Share Class Name


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

In addition, subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser waived $62,793 of its fee and reimbursed $132,309 of other operating expenses.

Administrative Fee

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


Administrative Fee


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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 1.335% of average daily net assets of the Fund. The Fund is currently being charged the minimum administrative fee; therefore the fee as a percentage of average daily net assets is greater than the amounts presented in the chart above. FAS waived $22,615 of its fee.

Distribution Services Fee

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


Share Class Name


   
 Percentage of Average Daily
Net Assets of Class
Class A Shares
0.05%
Class C Shares
0.75%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC retained $2,405 of fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $330 in sales charges from the sale of Class A Shares. FSC also retained $123 of CDSC relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC received $243 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.40%, 1.65% and 2.40%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $111. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund, Institutional Shares
240,412
6,331,467
6,286,604
285,275
$285,275
$3,389

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 23,276,191
Sales
$
 20,523,432

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

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

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT TAX AWARE/ALL CAP CORE FUND (THE "FUND")

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

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

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

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

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

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

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

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

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

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

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

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

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

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

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

Voting Proxies on Fund Portfolio Securities

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

Quarterly Portfolio Schedule

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

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other g4overnment 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.

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R403
Cusip 31421R502

36402 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Federated
World-Class Investment Manager

Federated MDT Tax Aware/All Cap Core Fund

A Portfolio of Federated MDT Series



SEMI-ANNUAL SHAREHOLDER REPORT

January 31, 2009

Institutional Shares

FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
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
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)

Six Months
Ended
(unaudited)		 Year Ended July 31,
Period
Ended
   
 1/31/2009
   
 2008
   
 2007
1
   
 7/31/2006
2
Net Asset Value, Beginning of Period
$10.90 $11.69 $10.36 $10.00
Income From Investment Operations:
Net investment income (loss)
 0.02 3 0.03 3 0.01 3 (0.03 ) 3
Net realized and unrealized gain (loss) on investments
(4.26
 )
(0.82
 )
1.32
0.39
   TOTAL FROM INVESTMENT OPERATIONS
(4.24
 )
(0.79
 )
1.33
0.36
Less Distributions:
Distributions from net investment income
(0.02
 )
--
--
--
Net Asset Value, End of Period
$ 6.64
$10.90
$11.69
$10.36
Total Return 4
(38.90
 )%
(6.76
 )%
12.84
 %
3.60
 %
Ratios to Average Net Assets:
Net expenses
1.40
 % 5
1.40
 %
1.40
 %
1.76
 % 5
Net investment income (loss)
0.40
 % 5
0.27
 %
0.12
 %
(0.25
 )% 5
Expense waiver/reimbursement 6
3.10
 % 5
3.03
 %
5.47
 %
3.71
 % 5
Supplemental Data:
Net assets, end of period (000 omitted)
$4,348
$4,883
$3,645
$1,383
Portfolio turnover
148
 %
183
 %
154
 %
182
 %

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

2 Reflects operations for the period from September 15, 2005 (date of initial 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 (unaudited)

As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from August 1, 2008 to January 31, 2009.

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
8/1/2008
   
 Ending
Account Value
1/31/2009
   
 Expenses Paid
During Period 1
Actual
$1,000
$ 611.00
$5.68
Hypothetical (assuming a 5% return before expenses)
$1,000
$1,018.15
$7.12

1 Expenses are equal to the Fund's annualized net expense ratio of 1.40%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half-year period).

Portfolio of Investments Summary Table (unaudited)

At January 31, 2009, the Fund's industry composition 1 was as follows:

Industry
   
 Percentage of
Total Net Assets
Electric Utility
8.1
 %
Biotechnology
6.3
 %
Railroad
4.8
 %
Agricultural Chemicals
4.6
 %
Property Liability Insurance
4.5
 %
Undesignated Consumer Cyclicals
4.5
 %
Computers - Midrange
4.4
 %
Miscellaneous Food Products
4.2
 %
Computers - High End
4.0
 %
Multi-Line Insurance
3.6
 %
Copper
3.4
 %
Ethical Drugs
3.4
 %
Home Building
2.7
 %
Department Stores
2.4
 %
Integrated International Oil
2.3
 %
Software Packaged/Custom
2.3
 %
Services to Medical Professionals
2.1
 %
AT&T Divestiture
2.0
 %
Diversified Leisure
1.9
 %
Gas Distributor
1.3
 %
Regional Bank
1.3
 %
Defense Aerospace
1.2
 %
Money Center Bank
1.2
 %
Airline - Regional
1.0
 %
Defense Electronics
1.0
 %
Life Insurance
1.0
 %
Medical Technology
1.0
 %
Multi-Industry Capital Goods
1.0
 %
Other 2
16.7
 %
Cash Equivalents 3
2.6
 %
Other Assets and Liabilities--Net 4
(0.8
 )%
   TOTAL
100.0
%

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

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

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

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

Portfolio of Investments

January 31, 2009 (unaudited)

Shares
   
   
Value
COMMON STOCKS--98.2%
Advertising--0.2%
712 Omnicom Group, Inc.
$
 18,434
Agricultural Chemicals--4.6%
324 FMC Corp.
 14,457
5,681 Monsanto Co.
 432,097
1,792 Mosaic Co. (The)
63,921
   TOTAL
510,475
Agricultural Machinery--0.7%
2,325 Deere & Co.
80,771
Airline - Regional--1.0%
2,113 1 Alaska Air Group, Inc.
 55,699
377 SkyWest, Inc.
 5,900
7,551 Southwest Airlines Co.
53,084
   TOTAL
114,683
Apparel--0.3%
509 V.F. Corp.
28,514
AT&T Divestiture--2.0%
8,822 AT&T, Inc.
217,198
Auto Original Equipment Manufacturer--0.2%
1,440 Johnson Controls, Inc.
 18,014
633 Superior Industries International, Inc.
6,501
   TOTAL
24,515
Auto Rentals--0.1%
327 1 AMERCO
10,055
Biotechnology--6.3%
158 1 Affymetrix, Inc.
 502
225 1 Alexion Pharmaceuticals, Inc.
 8,296
1,400 1 Amgen, Inc.
 76,790
496 1 Cephalon, Inc.
 38,281
94 1 Charles River Laboratories International, Inc.
 2,294
10,734 1 Gilead Sciences, Inc.
 544,965
Shares
   
   
Value
COMMON STOCKS--continued
Biotechnology--continued
213 1 Hospira, Inc.
 $ 5,304
176 1 Myriad Genetics, Inc.
 13,124
1,118 1 Questcor Pharmaceuticals, Inc.
7,211
   TOTAL
696,767
Broadcasting--0.3%
845 1 American Tower Systems Corp.
 25,637
1,452 News Corp., Inc.
9,278
   TOTAL
34,915
Building Materials--0.3%
227 Ameron, Inc.
 11,316
1,697 1 Owens Corning, Inc.
 22,638
205 Universal Forest Products, Inc.
4,305
   TOTAL
38,259
Cable TV--0.4%
1,721 1 Discovery Communications Inc.
 24,955
1,599 1 Viacom, Inc., Class B
23,585
   TOTAL
48,540
Cement--0.1%
690 Texas Industries, Inc.
15,670
Clothing Stores--0.7%
847 1 Children's Place Retail Stores, Inc.
 15,932
2,729 Gap (The), Inc.
 30,783
1,000 1 Jos A. Bank Clothiers, Inc.
27,460
   TOTAL
74,175
Commodity Chemicals--0.2%
119 Compass Minerals International, Inc.
 7,160
1,078 Westlake Chemical Corp.
14,736
   TOTAL
21,896
Computer Peripherals--0.3%
710 Imation Corp.
 6,915
2,279 1 Sandisk Corp.
26,049
   TOTAL
32,964
Computer Services--0.0%
68 1 Stanley, Inc.
2,058
Shares
   
   
Value
COMMON STOCKS--continued
Computer Stores--0.1%
406 1 Tech Data Corp.
$
7,353
Computers - High End--4.0%
4,864 IBM Corp.
445,786
Computers - Low End--0.2%
2,340 1 Dell, Inc.
22,230
Computers - Midrange--4.4%
14,158 Hewlett-Packard Co.
491,991
Construction Machinery--0.5%
1,674 Caterpillar, Inc.
 51,643
398 Joy Global, Inc.
8,290
   TOTAL
59,933
Contracting--0.1%
129 Harsco Corp.
 3,060
86 1 IHS, Inc., Class A
3,767
   TOTAL
6,827
Copper--3.4%
14,771 Freeport-McMoRan Copper & Gold, Inc.
371,343
Crude Oil & Gas Production--0.3%
280 1 Swift Energy Co.
 4,290
1,906 W&T Offshore, Inc.
23,958
   TOTAL
28,248
Defense Aerospace--1.2%
251 1 AAR Corp.
 4,553
2,729 Boeing Co.
 115,464
184 General Dynamics Corp.
 10,438
63 Triumph Group, Inc.
2,853
   TOTAL
133,308
Defense Electronics--1.0%
491 1 First Solar, Inc.
 70,115
274 Northrop Grumman Corp.
 13,185
443 Raytheon Co.
22,425
   TOTAL
105,725
Shares
   
   
Value
COMMON STOCKS--continued
Department Stores--2.4%
1,098 Dillards, Inc., Class A
 $ 4,776
4,636 Penney (J.C.) Co., Inc.
 77,653
1,670 1 Saks, Inc.
 4,208
4,290 1 Sears Holdings Corp.
175,547
   TOTAL
262,184
Discount Department Stores--0.4%
693 1 99 Cents Only Stores
 5,807
729 1 Dollar Tree, Inc.
 31,136
340 Family Dollar Stores, Inc.
9,442
   TOTAL
46,385
Diversified Leisure--1.9%
10,599 Carnival Corp.
 192,796
1,160 1 Gaylord Entertainment Co.
 12,296
756 1 Pinnacle Entertainment, Inc.
5,126
   TOTAL
210,218
Electric & Electrical Original Equipment Manufacturers--0.1%
769 Molex, Inc.
10,281
Electric Utility--8.1%
5,068 CMS Energy Corp.
 59,549
13,426 Edison International
 437,285
750 Idacorp, Inc.
 21,832
202 OGE Energy Corp.
 4,985
265 Pinnacle West Capital Corp.
 8,870
1,531 Public Service Enterprises Group, Inc.
 48,334
6,390 Sempra Energy
 280,138
1,675 TECO Energy, Inc.
 20,117
528 UniSource Energy Corp.
14,911
   TOTAL
896,021
Electrical Equipment--0.1%
151 American Science & Engineering, Inc.
11,778
Electronic Testing/Measuring Equipment--0.0%
155 1 Multi-Fineline Electronix, Inc.
2,872
Shares
   
   
Value
COMMON STOCKS--continued
Ethical Drugs--3.4%
3,259 Eli Lilly & Co.
 $ 119,996
2,514 1 Forest Laboratories, Inc., Class A
 62,951
5,509 Merck & Co., Inc.
 157,282
357 1 Noven Pharmaceuticals, Inc.
 3,545
2,234 Pfizer, Inc.
32,572
   TOTAL
376,346
Food Wholesaling--0.1%
429 SUPERVALU, Inc.
 7,525
201 1 Winn-Dixie Stores, Inc.
2,762
   TOTAL
10,287
Furniture--0.0%
557 Furniture Brands International, Inc.
1,142
Gas Distributor--1.3%
2,456 Energen Corp.
 71,740
77 New Jersey Resources Corp.
 3,087
214 ONEOK, Inc.
 6,253
1,454 Questar Corp.
 49,407
923 1 Southern Union Co.
11,897
   TOTAL
142,384
Grocery Chain--0.1%
418 Safeway, Inc.
8,958
Home Building--2.7%
2,709 Centex Corp.
 23,054
4,597 D. R. Horton, Inc.
 27,398
3,509 Lennar Corp., Class A
 26,984
194 1 M/I Schottenstein Homes, Inc.
 1,715
7,910 Pulte Homes, Inc.
 80,287
1,451 Ryland Group, Inc.
 22,636
7,104 1 Toll Brothers, Inc.
120,910
   TOTAL
302,984
Home Health Care--0.7%
985 1 Amedisys, Inc.
 40,611
752 1 Amerigroup Corp.
 21,033
582 1 LHC Group, Inc.
15,487
   TOTAL
77,131
Shares
   
   
Value
COMMON STOCKS--continued
Home Products--0.1%
107 1 Energizer Holdings, Inc.
$
 5,096
Hospitals--0.1%
395 Universal Health Services, Inc., Class B
14,951
Household Appliances--0.1%
301 Whirlpool Corp.
10,062
Industrial Machinery--0.2%
345 Flowserve Corp.
18,392
Insurance Brokerage--0.2%
345 Odyssey Re Holdings Corp.
16,232
Integrated International Oil--2.3%
3,678 Chevron Corp.
259,373
Internet Services--0.3%
797 1 NetFlix, Inc.
28,804
Jewelry Stores--0.0%
140 Movado Group, Inc.
1,075
Life Insurance--1.0%
230 Aflac, Inc.
 5,338
615 American Equity Investment Life Holding Co.
 4,114
587 Delphi Financial Group, Inc., Class A
 8,905
43 MetLife, Inc.
 1,235
4,099 Old Republic International Corp.
 42,302
1,662 Torchmark Corp.
49,860
   TOTAL
111,754
Long-Term Care Centers--0.0%
286 1 Kindred Healthcare, Inc.
3,881
Lumber Products--0.0%
1,254 1 Louisiana-Pacific Corp.
2,608
Maritime--0.1%
315 Overseas Shipholding Group, Inc.
11,245
Medical Supplies--0.3%
67 1 Haemonetics Corp.
 3,963
153 1 Kinetic Concepts, Inc.
 3,687
500 McKesson HBOC, Inc.
 22,100
261 1 PetMed Express, Inc.
3,769
   TOTAL
33,519
Shares
   
   
Value
COMMON STOCKS--continued
Medical Technology--1.0%
311 1 Cantel Medical Corp.
 $ 4,662
735 1 Cyberonics, Inc.
 11,312
60 1 Edwards Lifesciences Corp.
 3,449
178 1 Gen-Probe, Inc.
 8,014
265 1 ResMed, Inc.
 10,574
1,627 1 Thoratec Laboratories Corp.
 47,134
794 1 Zimmer Holdings, Inc.
28,902
   TOTAL
114,047
Metal Containers--0.2%
370 Ball Corp.
 14,186
301 1 Crown Holdings, Inc.
5,644
   TOTAL
19,830
Metal Fabrication--0.0%
218 Timken Co.
3,246
Miscellaneous Components--0.4%
888 AVX Corp.
 8,099
683 1 Cree, Inc.
 13,612
1,596 1 International Rectifier Corp.
21,738
   TOTAL
43,449
Miscellaneous Food Products--4.2%
14,787 Archer-Daniels-Midland Co.
 404,868
2,505 1 Fresh Del Monte Produce, Inc.
60,371
   TOTAL
465,239
Miscellaneous Machinery--0.1%
202 Parker-Hannifin Corp.
 7,718
257 Rockwell Automation, Inc.
6,692
   TOTAL
14,410
Miscellaneous Metals--0.1%
1,423 1 USEC, Inc.
7,243
Money Center Bank--1.2%
3,658 Bank of New York Mellon Corp.
 94,157
2,601 U.S. Bancorp
38,599
   TOTAL
132,756
Shares
   
   
Value
COMMON STOCKS--continued
Mortgage and Title--0.1%
400 Stewart Information Services Corp.
$
 5,936
Motion Pictures--0.2%
893 Walt Disney Co.
18,467
Multi-Industry Capital Goods--1.0%
1,989 Honeywell International, Inc.
 65,259
3,029 KBR, Inc.
 42,891
701 Textron, Inc.
6,330
   TOTAL
114,480
Multi-Line Insurance--3.6%
6,740 Allstate Corp.
 146,056
283 1 Amerisafe, Inc.
 5,301
458 Cincinnati Financial Corp.
 10,044
153 Infinity Property & Casualty
 5,875
16,138 UNUMProvident Corp.
228,514
   TOTAL
395,790
Office Equipment--0.1%
649 Pitney Bowes, Inc.
14,447
Offshore Driller--0.4%
715 1 Transocean Ltd.
39,053
Oil Refiner--0.9%
1,179 Sunoco, Inc.
 54,611
1,753 Western Refining, Inc.
 20,440
668 World Fuel Services Corp.
22,558
   TOTAL
97,609
Oil Service, Explore & Drill--0.1%
1,265 Patterson-UTI Energy, Inc.
12,093
Oil Well Supply--0.1%
188 Baker Hughes, Inc.
 6,264
358 1 Dril-Quip, Inc.
8,771
   TOTAL
15,035
Packaged Foods--0.1%
690 ConAgra Foods, Inc.
 11,799
112 Hershey Foods Corp.
4,175
   TOTAL
15,974
Shares
   
   
Value
COMMON STOCKS--continued
Paper Products--0.4%
3,335 MeadWestvaco Corp.
$
 38,819
Personal Loans--0.5%
2,484 Capital One Financial Corp.
 39,347
1,192 1 Ezcorp, Inc., Class A
16,175
   TOTAL
55,522
Personnel Agency--0.0%
274 Kelly Services, Inc., Class A
2,482
Pollution Control--0.0%
63 1 Stericycle, Inc.
3,082
Printing--0.0%
363 Donnelley (R.R.) & Sons Co.
3,543
Property Liability Insurance--4.5%
2,605 Berkley, W. R. Corp.
 68,980
334 1 CNA Surety Corp.
 5,528
3,064 Chubb Corp.
 130,465
461 Employers Holdings, Inc.
 6,242
939 HCC Insurance Holdings, Inc.
 21,982
1,331 Progressive Corp., OH
 16,172
6,463 The Travelers Cos., Inc.
249,730
   TOTAL
499,099
Railroad--4.8%
9,512 CSX Corp.
 275,468
3,186 Norfolk Southern Corp.
 122,215
2,992 Union Pacific Corp.
131,020
   TOTAL
528,703
Recreational Goods--0.3%
563 Callaway Golf Co.
 4,284
1,220 1 WMS Industries, Inc.
27,108
   TOTAL
31,392
Recreational Vehicles--0.0%
1,335 Brunswick Corp.
3,711
Shares
   
   
Value
COMMON STOCKS--continued
Regional Bank--1.3%
1,559 BB&T Corp.
 $ 30,853
333 Central Pacific Financial Corp.
 2,241
707 East West Bancorp, Inc.
 6,709
2,612 Marshall & Ilsley Corp.
 14,914
295 PNC Financial Services Group
 9,593
2,231 Popular, Inc.
 6,113
243 Regions Financial Corp.
 841
519 South Financial Group, Inc.
 976
5,268 SunTrust Banks, Inc.
 64,586
212 Whitney Holding Corp.
 2,754
521 Wintrust Financial Corp.
6,966
   TOTAL
146,546
Restaurant--0.3%
136 1 CEC Entertainment, Inc.
 3,174
454 Darden Restaurants, Inc.
 11,904
258 1 Green Mountain Coffee, Inc.
 9,871
66 1 Panera Bread Co.
3,101
   TOTAL
28,050
Roofing & Wallboard--0.2%
383 1 Beacon Roofing Supply, Inc.
 4,876
2,197 1 USG Corp.
14,302
   TOTAL
19,178
Rubber--0.0%
782 Cooper Tire & Rubber Co.
3,652
Savings & Loan--0.2%
2,002 Hudson City Bancorp, Inc.
23,223
Securities Brokerage--0.5%
996 1 Interactive Brokers Group, Inc., Class A
 15,209
242 1 Knight Capital Group, Inc., Class A
 4,363
362 1 Labranche & Co., Inc.
 2,483
1,574 Raymond James Financial, Inc.
29,135
   TOTAL
51,190
Shares
   
   
Value
COMMON STOCKS--continued
Semiconductor Distribution--0.8%
2,872 1 Arrow Electronics, Inc.
 $ 54,769
839 1 Avnet, Inc.
 16,629
854 1 FormFactor, Inc.
13,288
   TOTAL
84,686
Semiconductor Manufacturing--0.3%
502 1 ATMI, Inc.
 6,782
5,481 1 Micron Technology, Inc.
 20,389
311 1 Plexus Corp.
4,497
   TOTAL
31,668
Semiconductor Manufacturing Equipment--0.3%
2,582 1 Novellus Systems, Inc.
35,606
Services to Medical Professionals--2.1%
984 1 Centene Corp.
 17,446
326 1 Coventry Health Care, Inc.
 4,932
207 1 Genoptix, Inc.
 7,017
1,000 1 Humana, Inc.
 37,930
280 1 Medco Health Solutions, Inc.
 12,580
588 Omnicare, Inc.
 16,440
4,903 UnitedHealth Group, Inc.
 138,902
83 1 Wellpoint, Inc.
3,440
   TOTAL
238,687
Shoes--0.1%
382 1 Genesco, Inc.
5,883
Soft Drinks--0.2%
408 1 Dr. Pepper Snapple Group, Inc.
 6,712
609 The Pepsi Bottling Group, Inc.
11,748
   TOTAL
18,460
Software Packaged/Custom--2.3%
664 1 Computer Sciences Corp.
 24,462
875 1 DST Systems, Inc.
 27,799
4,212 1 F5 Networks, Inc.
 93,380
4,007 Microsoft Corp.
 68,520
699 1 Solera Holdings, Inc.
 16,839
1,756 1 Symantec Corp.
26,919
   TOTAL
257,919
Shares
   
   
Value
COMMON STOCKS--continued
Specialty Chemicals--0.6%
372 Air Products & Chemicals, Inc.
 $ 18,712
596 Albemarle Corp.
 13,261
189 1 Calgon Carbon Corp.
 2,376
243 Chemed Corp.
 9,752
249 Cytec Industries, Inc.
 5,090
95 Lubrizol Corp.
 3,241
896 1 OM Group, Inc.
17,364
   TOTAL
69,796
Specialty Retailing--0.3%
1,477 1 CarMax, Inc.
 12,215
2,252 Williams-Sonoma, Inc.
17,836
   TOTAL
30,051
Stainless Steel Producer--0.5%
2,549 Allegheny Technologies, Inc.
56,307
Telecommunication Equipment & Services--0.2%
5,703 Motorola, Inc.
25,264
Tools And Hardware--0.1%
233 Snap-On, Inc.
7,032
Toys & Games--0.1%
727 1 JAKKS Pacific, Inc.
13,333
Trucking--0.0%
192 Arkansas Best Corp.
4,491
Undesignated Consumer Cyclicals--4.5%
532 1 Apollo Group, Inc., Class A
 43,337
3,175 1 Corinthian Colleges, Inc.
 59,309
833 DeVRY, Inc.
 44,632
2,677 1 ITT Educational Services, Inc.
 327,959
536 Speedway Motorsports, Inc.
 7,740
69 Strayer Education, Inc.
14,934
   TOTAL
497,911
Shares
   
   
Value
COMMON STOCKS--continued
Uniforms--0.0%
80 Unifirst Corp.
$
 2,099
Water Utility--0.1%
625 Aqua America, Inc.
12,962
   TOTAL COMMON STOCKS
(IDENTIFIED COST $11,622,394)
10,878,047
MUTUAL FUND--2.6%
285,275 2,3 Prime Value Obligations Fund, Institutional Shares, 1.75%
(AT NET ASSET VALUE)
285,275
   TOTAL INVESTMENTS--100.8%
(IDENTIFIED COST $11,907,669) 4
11,163,322
   OTHER ASSETS AND LIABILITIES - NET--(0.8)% 5
(87,884
 )
   TOTAL NET ASSETS--100%
$
 11,075,438

1 Non-income-producing security.

2 Affiliated company.

3 7-Day net yield.

4 Also represents cost for federal tax purposes.

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

Note: The categories of investments are shown as a percentage of total net assets at January 31, 2009.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1--quoted prices in active markets for identical securities

Level 2--other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3--significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used, as of January 31, 2009, in valuing the Fund's assets carried at fair value:

Valuation Inputs
   
 Investments
in Securities
Level 1--Quoted Prices and Investments in Mutual Funds
$11,163,322
Level 2--Other Significant Observable Inputs
--
Level 3--Significant Unobservable Inputs
--
   TOTAL
$11,163,322

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

January 31, 2009 (unaudited)

Assets:
      
Total investments in securities, at value including $285,275 of investments in an affiliated issuer (Note 5) (identified cost $11,907,669)
 $ 11,163,322
Income receivable
 9,798
Receivable for investments sold
 331,021
Receivable for shares sold
71,912
   TOTAL ASSETS
11,576,053
Liabilities:
Payable for investments purchased
 $ 336,123
Payable for shares redeemed
 118,239
Payable for auditing fees
 10,924
Payable for portfolio accounting fees
 12,070
Payable for distribution services fee (Note 5)
 2,140
Payable for shareholder services fee (Note 5)
 3,885
Accrued expenses
17,234
   TOTAL LIABILITIES
500,615
Net assets for 1,680,838 shares outstanding
$
 11,075,438
Net Assets Consist of:
Paid-in capital
 $ 18,819,159
Net unrealized depreciation of investments
(744,347 )
Accumulated net realized loss on investments
(6,994,454 )
Distributions in excess of net investment income
(4,920
 )
   TOTAL NET ASSETS
$
 11,075,438

Statement of Assets and Liabilities - continued

Net Asset Value, Offering Price and Redemption Proceeds Per Share
Institutional Shares:
Net asset value per share ($4,348,372 ÷ 655,234 shares outstanding), no par value, unlimited shares authorized
$6.64
Offering price per share
$6.64
Redemption proceeds per share
$6.64
Class A Shares:
Net asset value per share ($4,716,100 ÷ 713,347 shares outstanding), no par value, unlimited shares authorized
$6.61
Offering price per share (100/94.50 of $6.61)
$6.99
Redemption proceeds per share
$6.61
Class C Shares:
Net asset value per share ($2,010,966 ÷ 312,257 shares outstanding), no par value, unlimited shares authorized
$6.44
Offering price per share
$6.44
Redemption proceeds per share (99.00/100 of $6.44)
$6.38

See Notes which are an integral part of the Financial Statements

Statement of Operations

Six Months Ended January 31, 2009 (unaudited)

Investment Income:
         
Dividends (including $3,389 received from an affiliated issuer (Note 5) and net of foreign taxes withheld of $40)
$
 133,216
Expenses:
Investment adviser fee (Note 5)
 $ 62,904
Administrative personnel and services fee (Note 5)
 115,946
Custodian fees
 15,053
Transfer and dividend disbursing agent fees and expenses
 28,581
Directors'/Trustees' fees
 805
Auditing fees
 10,924
Legal fees
 3,188
Portfolio accounting fees
 40,148
Distribution services fee--Class C Shares (Note 5)
 10,104
Shareholder services fee--Class A Shares (Note 5)
 9,336
Shareholder services fee--Class C Shares (Note 5)
 3,368
Share registration costs
 17,220
Printing and postage
 17,115
Insurance premiums
 2,383
Interest expense
 229
Miscellaneous
1,412
   TOTAL EXPENSES
338,716
Waivers and Reimbursements (Note 5):
Waiver/reimbursement of investment adviser fee
 $ (62,904 )
Waiver of administrative personnel and services fee
 (22,615 )
Reimbursement of other operating expenses
(132,309
 )
   TOTAL WAIVERS AND REIMBURSEMENTS
(217,828
 )
Net expenses
120,888
Net investment income
12,328
Realized and Unrealized Loss on Investments:
Net realized loss on investments
(5,310,298 )
Net change in unrealized appreciation of investments
(1,830,677
 )
Net realized and unrealized loss on investments
(7,140,975
 )
Change in net assets resulting from operations
$
 (7,128,647
 )

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

   
Six Months
Ended
(unaudited)
1/31/2009
   
Year Ended
7/31/2008
Increase (Decrease) in Net Assets
Operations:
Net investment income (loss)
 $ 12,328 $ (10,751 )
Net realized loss on investments
(5,310,298 ) (1,609,068 )
Net change in unrealized appreciation/depreciation of investments
(1,830,677
 )
260,269
   CHANGE IN NET ASSETS RESULTING FROM OPERATIONS
(7,128,647
 )
(1,359,550
 )
Distributions to Shareholders:
Distributions from net investment income
Institutional Shares
 (12,123 ) --
Class A Shares
 (5,125 ) --
Class C Shares
--
--
   CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS
(17,248
 )
--
Share Transactions:
Proceeds from sale of shares
 10,679,729 11,846,604
Net asset value of shares issued to shareholders in payment of distributions declared
 11,952 --
Cost of shares redeemed
(7,802,391
 )
(5,710,298
 )
   CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS
2,889,290
6,136,306
Change in net assets
(4,256,605
 )
4,776,756
Net Assets:
Beginning of period
15,332,043
10,555,287
End of period (including distributions in excess of net investment income of $(4,920) and $0, respectively)
$
 11,075,438
$
 15,332,043

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

January 31, 2009 (unaudited)

1. ORGANIZATION

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

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 U.S. generally accepted accounting principles (GAAP).

Investment Valuation

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

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

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

Fair Valuation and Significant Events Procedures

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

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

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

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

Repurchase Agreements

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

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

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

Investment Income, Gains and Losses, Expenses and Distributions

Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividends are recorded on the ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions of net investment income are declared and paid annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average daily net assets, except that each class may bear certain expenses unique to that class such as distribution services and shareholder services fees. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization

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

Federal Taxes

It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. The Fund complies with the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." As of and during the six months ended January 31, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of January 31, 2009, tax years 2006 through 2008 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America and the Commonwealth of Massachusetts.

The Fund may be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or gains are earned.

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.

Other

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.

3. SHARES OF BENEFICIAL INTEREST

The following tables summarize share activity:

   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Institutional Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 439,256 $ 3,123,076 549,863 $ 6,491,359
Shares issued to shareholders in payment of distributions declared
976
6,958
--
--
Shares redeemed
(232,979
 )
(1,849,603
 )
(413,746
 )
(4,792,720
 )
   NET CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS

207,253


$
1,280,431

136,117


$
1,698,639
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class A Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 835,966 $ 7,099,928 353,832 $ 4,174,842
Shares issued to shareholders in payment of distributions declared
703
4,994
--
--
Shares redeemed
(756,364
 )
(5,311,516
 )
(55,720
 )
(639,826
 )
   NET CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS


80,305


$
1,793,406


298,112


$
3,535,016
   
 Six Months Ended
1/31/2009
   
 Year Ended
7/31/2008
Class C Shares:
   
 Shares
   
Amount
   
 Shares
   
Amount
Shares sold
 60,965 $ 456,725 100,386 $ 1,180,403
Shares redeemed
(87,199
 )
(641,272
 )
(23,958
 )
(277,752
 )
   NET CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS


(26,234
 )

$
(184,547
 )

76,428


$
902,651
   NET CHANGE RESULTING FROM SHARE TRANSACTIONS


261,324


$
2,889,290


510,657


$
6,136,306

4. FEDERAL TAX INFORMATION

At January 31, 2009, the cost of investments for federal tax purposes was $11,907,669. The net unrealized depreciation of investments for federal tax purposes was $744,347. This consists of net unrealized appreciation from investments for those securities having an excess of value over cost of $595,542 and net unrealized depreciation from investments for those securities having an excess of cost over value of $1,339,889.

At July 31, 2008, the Fund had a capital loss carryforward of $10,826 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. Pursuant to the Code, such capital loss carryforward will expire in 2015.

5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Adviser Fee

Federated MDTA LLC is the Fund's investment adviser (the "Adviser"). The advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.90% of the Fund's average daily net assets. Prior to December 8, 2008, the Adviser agreed to waive all or a portion of the advisory fee and/or reimburse certain operating expenses (excluding interest, taxes and brokerage commissions) in order to contractually limit the Fund's aggregate annual operating expenses to no more than the following annual percentages for each class of the Fund based on average daily net assets:


Share Class Name


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

In addition, subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive and/or reimburse any additional portion of its fee. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. For the six months ended January 31, 2009, the Adviser waived $62,793 of its fee and reimbursed $132,309 of other operating expenses.

Administrative Fee

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


Administrative Fee


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

The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. Subject to the terms described in the Expense Limitation note, FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended January 31, 2009, the net fee paid to FAS was 1.335% of average daily net assets of the Fund. The Fund is currently being charged the minimum administrative fee; therefore the fee as a percentage of average daily net assets is greater than the amounts presented in the chart above. FAS waived $22,615 of its fee.

Distribution Services Fee

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. (FSC), the principal distributor, from the daily net assets of the Fund's Class A Shares and Class C Shares to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses at the following percentages of average daily net assets annually, to compensate FSC:


Share Class Name


   
 Percentage of Average Daily
Net Assets of Class
Class A Shares
0.05%
Class C Shares
0.75%

Subject to the terms described in the Expense Limitation note, FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended January 31, 2009, FSC retained $2,405 of fees paid by the Fund. For the six months ended January 31, 2009, the Fund's Class A Shares did not incur a distribution services fee; however it may begin to incur this fee upon approval of the Trustees. On November 15, 2007, the Trustees approved an amendment to the Plan to reduce the distribution services fee for the Fund's Class A Shares from 0.25% to 0.05%. The amendment to the Plan became effective for the Fund on March 31, 2008.

Sales Charges

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the six months ended January 31, 2009, FSC retained $330 in sales charges from the sale of Class A Shares. FSC also retained $123 of CDSC relating to redemptions of Class C Shares.

Shareholder Services Fee

The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Class A Shares and Class C Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended January 31, 2009, FSSC received $243 of fees paid by the Fund.

Expense Limitation

The Adviser and its affiliates (which may include FSC, FAS and FSSC) have voluntarily agreed to waive their fees and/or reimburse expenses so that the total operating expenses (as shown in the financial highlights) paid by the Fund's Institutional Shares, Class A Shares and Class C Shares (after the voluntary waivers and reimbursements) will not exceed 1.40%, 1.65% and 2.40%, respectively, for the fiscal year ending July 31, 2009. Although these actions are voluntary, the Adviser and its affiliates have agreed to continue these waivers and/or reimbursements at least through September 30, 2009.

General

Certain 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 six months ended January 31, 2009, the Adviser reimbursed $111. Transactions with the affiliated company during the six months ended January 31, 2009 were as follows:

Affiliate
   
 Balance of
Shares Held
7/31/2008
   
 Purchases/
Additions
   
 Sales/
Reductions
   
 Balance of
Shares Held
1/31/2009
   
 Value
   
 Dividend
Income
Prime Value Obligations Fund, Institutional Shares
240,412
6,331,467
6,286,604
285,275
$285,275
$3,389

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, for the six months ended January 31, 2009, were as follows:

Purchases
   
 $
 23,276,191
Sales
$
 20,523,432

7. LINE OF CREDIT

The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate of 0.65% over the federal funds rate. As of January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, 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 January 31, 2009, there were no outstanding loans. During the six months ended January 31, 2009, the program was not utilized.

9. LEGAL PROCEEDINGS

Since October 2003, Federated Investors, Inc. and related entities (collectively, "Federated") and various Federated funds ("Federated Funds") have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General ("NYAG") and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds and their respective counsel have been defending this litigation and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses, and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.

Evaluation and Approval of Advisory
Contract - May 2008

FEDERATED MDT TAX AWARE/ALL CAP CORE FUND (THE "FUND")

The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2008. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.

In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.

During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize "economies of scale" as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.

The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or "peer group" funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace.

With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons with other similar mutual funds more heavily than non-mutual fund products or services because, simply put, they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; and different portfolio management techniques made necessary by different cash flows. The Senior Officer did not consider these fee schedules to be significant in determining the appropriateness of mutual fund advisory contracts.

The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees. He also observed that certain funds may exhibit important differences in their objectives and management techniques when compared to other funds placed in the same peer group by ranking organizations, noting in this connection that the Fund's quantitative investment program is of such a type.

For the one-year period ending December 31, 2007, the Fund's performance was above the median of the relevant peer group. In addition, the Board was informed by the Adviser that, for the same period, the Fund outperformed its benchmark index for the one-year period.

The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate.

Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.

The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.

The Senior Officer's evaluation also discussed the notion of possible realization of "economies of scale" as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with "breakpoints" that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.

It was noted in the materials for the Board meeting that for the Fund's most recently completed fiscal year, the Fund's investment advisory fee was waived in its entirety. The Board reviewed the contractual fee rate and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive.

The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.

In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.

The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.

Voting Proxies on Fund Portfolio Securities

A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's website at FederatedInvestors.com. To access this information from the "Products" section of the website, click on the "Prospectuses and Regulatory Reports" link under "Related Information," then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Prospectuses and Regulatory Reports" link. Form N-PX filings are also available at the SEC's website at www.sec.gov.

Quarterly Portfolio Schedule

The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on "Form N-Q." These filings are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the "Products" section of Federated's website at FederatedInvestors.com by clicking on "Portfolio Holdings" under "Related Information," then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the "Portfolio Holdings" link.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.

IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY

In an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called "householding"), as permitted by applicable rules. The Fund's "householding" program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the "householding" program. The Fund is also permitted to treat a shareholder as having given consent ("implied consent") if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to "household" at least sixty (60) days before it begins "householding" and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to "opt out" of "householding." Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of "householding" at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.

Federated Securities Corp., Distributor

Cusip 31421R601

36405 (3/09)

Federated is a registered mark of Federated Investors, Inc. 2009 (c)Federated Investors, Inc.

Item 2.                      Code of Ethics

Not Applicable
 
Item 3.                      Audit Committee Financial Expert

Not Applicable
 
Item 4.                      Principal Accountant Fees and Services

Not Applicable

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
March 23, 2009
   
   
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
March 23, 2009
   
   
By
/S/ Richard A. Novak
 
Richard A. Novak, Principal Financial Officer
Date
March 23, 2009