The super fund has been hit by turmoil in world financial markets.

However, the Government's underlying accounts continued to perform better than forecast in last May's budget and even than in the December update.

The operating financial surplus for the five months was $1.284 billion, $506m or 28.3% below forecast.

The NZ Super fund lost $143m, instead of making the $395m forecast surplus.

Treasury noted the decline in return was driven in large by the recent slowing in US economic activity and uncertainty generated by the fallout in the US sub-prime lending market.

The Government's operating balance excluding gains and losses (OBEGAL), which strips out unrealised investment gains, was $2.161 billion, $240m, or 12.5%, higher than forecast as operating expenses ran below expectation.

Net government debt stood at $2.547b, which was, $171m lower than forecast, equating to 1.5% of gross domestic product.

The Government's net cash position, the difference between all income and spending -- operational and capital -- was a surplus of $774m compared with a forecast surplus of $566m.

This was mainly due to tax receipts being $90m ahead of forecast and core capital spending being $138m below forecast.

In December, Treasury forecast an operating surplus of $7.388b for the fiscal year to June 30, 2008.