The Massachusetts state pension fund�??s investment portfolio lost 23.6 per cent in the fiscal year ended June 30 - its worst annual decline ever.

State officials say the Massachusetts Pension Reserves Investment Trust (PRIT) lost $12.8bn, due primarily to heavy exposure to foreign stocks.

�??The second half of 2008 was probably the most difficult economic period since the Depression, so anybody who had exposure to the market felt deep losses,�?� said Michael Travaglini, the pension fund�??s executive director.

PRIT still has $37.8bn in investments - plenty of money to pay benefits for the foreseeable future. However, the recent losses could eventually require an increase in the roughly $1.4bn that the state contributes to PRIT each year.