Fidelity's missing minus sign made a $1.3B loss look like a $2.4B dividend

In November 1994, Fidelity Investments estimated that its Magellan Fund, the world's largest mutual fund with 3 million shareholders, would distribute $4.32 per share to investors as a year-end capital gains payment — roughly $2.4 billion in total. Days later, Fidelity revised that estimate to zero. The company initially would only call it a 'manual mathematical error' and refused to provide details.

In January 1995, Fidelity explained what happened. An accountant, while transcribing the fund's net gains and losses onto a spreadsheet used to calculate distributions, mistakenly transcribed a $1.3 billion capital loss as a capital gain of the same amount. The missing minus sign turned a loss into a gain, and the error cascaded through the distribution calculation. J. Gary Burkhead, managing director of Fidelity, disclosed the explanation in a letter to shareholders.

The error caused confusion and concern among investors and tax professionals. The fund had already distributed $2.64 per share in May 1994, and the November estimate was meant to help shareholders plan their tax liabilities. Fidelity stated the mistake did not affect the value of customer investments or the fund's performance. The Magellan Fund was down roughly 3.7% for the year, its worst since 1990, but the error itself cost no direct money — it was a reputational failure and a scramble to correct a public promise.