Fidelity Creating Second Board

Fidelity Investments is in the process of creating a second board of directors.

The change addresses criticism that the mutual-fund giant's single board wasn't doing an adequate job of monitoring all of its funds.

One board will oversee the company's equity and high-yield funds, and another to monitor its investment-grade bonds, money-market funds and asset-allocation funds.

Shareholders of the Fidelity's mutual funds are expected to vote on the move through next year.

The comany doesn't expect to file plans with the Securities and Exchange Commission for a few months, and it won't send out proxies to fund shareholders until the first quarter.

The plan was first reported by the Wall Street Journal.

It's not clear what role Edward C. Johnson III, who has been criticized for playing the dual roles of chairman and chief executive, will play on the new boards. The chairman's job is to protect the interests of fund shareholders, but the chief executive is charged with looking out for stakeholders of the management company.

All mutual funds have boards of directors responsible for hiring and firing fund managers, setting fees and closing funds before they get too big. Many big investment companies have dozens, with each board overseeing anywhere from a handful to several hundred fund products.