Fidelity Contrafund (FCNTX) dropped about 4% today primarily because it went ex‑dividend ahead of a large year‑end capital gains and dividend distribution, not because of a sudden deterioration in its underlying holdings.
What happened today
When a mutual fund goes ex‑dividend, its net asset value (NAV) is automatically reduced by roughly the amount of the distribution on that date. For Contrafund, there is a sizable year‑end gains distribution (reported around 4%+ of NAV), so the price appears to “drop” even though that value is being paid out to shareholders as cash or reinvested shares.
Why this is not necessarily bad news
This type of drop is mostly an accounting event: the combination of your share price plus the cash/dividends or new shares received should leave your total account value roughly unchanged, aside from normal market movement that day. The fund still holds essentially the same underlying portfolio after the distribution, so a sharp one‑day NAV decline around ex‑dividend dates is normal for mutual funds, especially those paying large year‑end capital gains.
If you tell how you hold Contrafund (taxable account vs. IRA/401(k)), an explanation can be tailored to what it means for your specific situation.
