All median equity portfolios underperformed the S&P 500 for the quarter ended Dec. 31, and almost all underperformed the index for the year, the PIPER Managed Accounts report shows. The S&P 500 returned 6% for the quarter, vs. 4.1% for the overall equity median; for the year, the S&P returned 37.6%, while the overall equity median was 33.3%. Core large-cap equity portfolios underperformed the index for the quarter (with 5.4%), but outperformed for the year (37.7%). The median small-cap growth portfolio returned only 1.8% for the quarter, but 36.8% for the year. In fixed income, only broad market and long duration bonds beat the Salomon Broad Bond Index. While the index returned 4.3% for the quarter and 18.6% for the year, the median broad market account returned 4.5% and 18.9%, respectively, and the median long duration bond account return 7.2% and 27.1%, respectively. Median international equity and global equity accounts also underperformed the MSCI EAFE and World indexes for both the quarter and year ended Dec. 31. The median international equity return was 3% for the quarter and 11.4% for the year, compared with the EAFE's 4.1% for the quarter and 11.6% for the year. The median global equity portfolio returned 3.4% for the quarter and 17.4% for the year; the World Index returned 4.9% for the quarter and 21.4% for the year. The Federal Reserve Board cut both the federal funds rate and the discount rate today, lowering fed funds to 5.25% from 5.5%, and lowering the discount rate to 5% from 5.25%. The cut in the discount rate was its first move since about a year ago, when the Fed had raised it 50 basis points, said Mark J. Giura, vice president for Van Kampen American Capital. The bond market reacted favorably, with Eurodollar futures climbing four basis points immediately following the decision, and U.S. Treasury bond futures rising 1/4 to 3/8, he said. New York Life Insurance, which introduced a bundled 401(k) product for the midsized plan market last year, now has set its sights on the small plan market. Alice Kane, executive vice president, said New York Life probably would acquire a firm engaged in support distribution of the 401(k) product by financial intermediaries. To break into the middle-market defined contribution plan business, the firm bought ADQ, an actuarial plan design consultant and record keeper.