UPDATE 1-Massachusetts pension fund little changed in past year

* Mass. pension fund lost 0.08 percent for fiscal 2012

* Investments in stocks, natural resources declined

* Bonds, private equity investments gained

BOSTON, Aug 10 (Reuters) - The state pension fund of Massachusetts, with nearly $50 billion in assets, posted just about flat performance for the year ended June 30, as losses on stocks and natural resources offset gains on bonds and other investments.

The Pension Reserves Investment Trust, which invests on behalf of state workers and teachers, lost 0.08 percent for the year, according to a report released on Friday. That was far below the 8.25 percent rate the fund set as its targeted return.

Other large state funds have posted similar weak returns for the latest fiscal year, including the giant California Public Employees' Retirement System, which gained just 1 percent. Most funds had more money invested in tumultuous global stock markets than in the world's rising bond markets.

The Massachusetts fund's global equities portfolio, with 43 percent of assets, lost 5.88 percent for the year, and a 4 percent allocation to timber and other natural resources dropped 7.95 percent.

By contrast, core fixed income gained 8.10 percent and value-added fixed income gained 3.71 percent. But together, the two categories made up less than one-quarter of the fund's assets.

Private equity investments gained 11.39 percent and real estate investments rose 9.95 percent.

The weak overall returns of large, public pension funds this year has led some to call for lowering the assumed future returns used to calculate the funds' potential liabilities.

In Massachusetts, Treasurer Steve Grossman has called for the fund to lower its expected annual return to 8 percent from the 8.25 percent rate currently targeted. Over the past 10 years, the fund has averaged a 7.25 percent annual gain.

The accounting organization for public finance - the Governmental Accounting Standards Board - has begun requiring states and cities with large pension funding gaps to lower the projected rates of return on their retirement investments.

The Massachusetts fund was $19 billion, or 29 percent, underfunded as of Jan. 1, 2011, according to the fund's most recent annual report.