Final answer:
State governments managing multi-government investment pools use fiduciary funds to maintain the investment portion, which represents assets managed on behalf of external parties requiring careful management and accountability.
Step-by-step explanation:
State governments that manage multi-government investment pools should maintain the investment portion in a fiduciary fund. Fiduciary funds are used to account for assets held by a government in a trustee or agency capacity for others. The investment portion of these funds is critical because it represents the assets that are being managed on behalf of external parties, including other governments, and must be accounted for and managed with due care to preserve principal and generate returns as appropriate.