Johnsons get new posts on Fidelity board

Fidelity Investments yesterday disclosed new posts for two children of its 76-year-old chairman, Edward C. Johnson III, positioning them to have a greater say in the future of the Boston mutual fund giant founded by the Johnson family in 1946.

In its annual report for 2006, Fidelity disclosed it has given the new title of vice chairman to Johnson's daughter, Abigail P. Johnson, and that it has installed her younger brother Edward C. Johnson IV, a Fidelity real estate executive, on what is now a seven-member board of directors.

The report to shareholders, which Fidelity publishes voluntarily each year, also disclosed that profit at privately held Fidelity fell to $1.2 billion in 2006 from $1.3 billion the previous year, but that revenue and total assets under management rose as it worked to grow beyond its traditional businesses.

People who follow Fidelity say the ascension of the younger Johnsons may be the more significant development for the firm, whose voting stock is split almost evenly between employees and the Johnson family. Though the elder Johnson has discussed no immediate plans to retire, he is seen as a force for stability and the company could be sold or broken up upon his departure, said James Lowell, who edits a newsletter for Fidelity investors.

"Everyone at Fidelity knows there's a huge transition issue that is a transformation issue as well, and that can't be too far down the line," Lowell said.

Abigail Johnson, 45, has long been viewed as her father's heir apparent, and she has moved through a number of high-profile jobs throughout the company. Elevating her to become one of three vice chairmen of the board of FMR Corp., the umbrella company for Fidelity's holdings, reaffirms her status in the company. Edward Johnson IV, according to Lowell, lacks the broad business experience to be a likely immediate successor, but his presence on the board will give the family even more influence on the company's most important board.

None of the Johnsons were available for interviews yesterday. Asked about succession, Fidelity spokeswoman Anne Crowley said, "Our chairman is active and fully engaged in the running of the company. As to speculation of sales, we don't have any intention to go public or sell out to another company."

A company biography describes Edward C. Johnson IV, 42, as senior vice president for Fidelity's Pembroke real estate unit and says he oversees all its development and acquisitions in North America.

A graduate of Northeastern University, he also has been taking on a more public profile lately as a trustee of the New England Aquarium and serving on a committee planning for uses of the space where the Central Artery once stood downtown. A third child, Elizabeth Johnson, 43, isn't a Fidelity employee.

Like other fund companies Fidelity is grappling with the challenge of keeping baby boomers as customers as they retire, and faces tougher competition in the mutual fund business.

At the same time Fidelity has been reaching into new areas like retirement services. In the report the elder Johnson called the results "solid," crediting rising markets, strong flows into money market funds, and growing services revenues.

Profits were dragged down by the company's rising head count, new business growth and advertising costs. The company had 42,100 employees at the end of January, up from 36,900 at the end of 2005.

In all Fidelity's funds beat 58 percent of peer funds on an asset-weighted basis in 2006, versus 70 percent in 2005. Large growth stocks in which Fidelity was heavily invested struggled in 2006, leading to middling performance from flagship funds like Magellan and Contrafund.

But Johnson cited progress in other areas such as its myPlan retirement savings program, and said growing client assets in its brokerage division, $1.7 trillion, now make it the country's largest.

Total revenue reached a record $12.9 billion in 2006, up from $11.1 billion in 2005, Fidelity said.

Assets under management rose to $1.4 trillion from $1.2 trillion in 2005.

At the unit now run by Abigail Johnson, Fidelity Employer Services Co., the total number of 401(k)-style savings plans administered for other businesses rose to 15,467 plans in 2006, up from 14,020 plans in 2005.

Ross Kerber can be reached at kerber@globe.com.