Complex derivatives are unnerving that part of the accounting industry that audits mutual funds.

Principal-only SMBSs - stripped mortgage-backed securities that entitle the owner to a return based on the repayment of the principal from home mortgages - was one type of a handful of derivatives in the Piper Institutional Government Income Fund in the early 1990s. The fund's ownership of those derivatives proved to be unfortunate because the investments were particularly sensitive to rising interest rates. When rates rose in 1994, the derivatives lost value.

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