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By comparison,there are also government investment pools with the investment objective of maximizing return. These pools invest in longer-term securities, subjecting their portfolios and their • participants to greater market price volatility. These pools are variable Net Asset Value(NAV)pools and introduce market risk to the investor through a fluctuating NAV. The principal invested in the pool may not be the same principal returned to the investor depending on the movement of interest rates. These pools would not be appropriate for funds that must be liquid and stable. They may be appropriate for lo nger-term strategies. Some other differences among pools include their legal structure,authorized investments,procedures for depositing and withdrawing money, and their services. Each pool has a process that a participant must complete,including documents to be signed and banking information to be provided,in order to establish an account. Sources of information for evaluating pools may include a pool offering statement, investment policy or audited financial statements. Ratings for LGIPs: Investors should remember that LGIPs are not registered with the Securities and Exchange Commission(SEC) and are exempt from SEC regulatory requirements because they fall under a governmental exclusion clause. While this exemption allows pools greater flexibility,it also reduces investor protection. Investments in these pools are not insured or guaranteed and substantial losses have occurred in the past. Some rating agencies rate LGIPs using the same criteria as money market mutual funds. These ratings are based on safety of principal and ability to maintain a NAV of$1. Pool ratings can provide an additional method of due diligence. Recommendation. The Government Finance Officers Association(GFOA)makes the following recommendations to government investors when using Local Government Investment Pools(LGIPs): 1. Government investors should confirm LGIPs are eligible investments under governing law • and the government's investment policy. 2. Government investors should fully understand the investment objectives, legal structure and operating procedures of the investment pool before they place any money in the pool. When evaluating an LGIP, investors should read the pool's offering statement,investment policy, audited financial statements carefully. 3. Particular attention must be paid to the investment objectives of a pool to determine whether a pool seeks to maintain a constant NAV of$1.00 or could have a fluctuating NAV. This information is essential in order to determine which pools are appropriate for liquidity strategies(constant NAV) and which ones are only appropriate for longer-term strategies (fluctuating NAV). 4. The pool's list of eligible securities should be reviewed to determine compliance with the participating government's investment policy. Portfolio maturity restrictions and diversification policies should be evaluated to determine potential market and credit risks. 5. Portfolio pricing practices should be evaluated. 6. Custodial policies(e.g.,delivery versus payment) should be reviewed. 7. The qualifications and experience of the portfolio manager,management team and/or investment adviser should be evaluated. 8. The earnings performance history should be studied and reviewed relative to other investment alternatives. On constant NAV LGIP funds,the current yield of the portfolio can be compared with competitive institutional money market funds,or overnight repurchase agreement rates. Standard& Poor's releases an index of LGIPs on a weekly basis that reports the average 7-and 30-day yields and average maturities of LGIPs holding its highest ratings i