BOSTON (Reuters) - Fidelity Investments, the world's biggest mutual fund company, plans to cut 2.9 percent of its staff, or about 1,288 jobs, this month, followed by more lay-offs in the first three months of 2009, it said yesterday.

Beset by a slide in asset values and a loss of investors during the financial crisis, Fidelity said details of the second round of cuts will be finalised in coming weeks.

"These are extraordinary times," Fidelity said in a statement. "Prudent management warrants that we carefully examine all of our costs to make certain we come out of this economic downturn in a position to capitalize on opportunities for our customers."

Boston-based Fidelity, which employs 44,400 people globally, has already reduced its work force by about 1,000 jobs in three rounds of cuts in the past year, but there have been no cuts in its main money management business. It has offices in Bermuda.

Ignites, a mutual fund industry newsletter, said in October that Fidelity may cut a total of up to 4,000 jobs. Fidelity declined to comment then, calling the report speculation. Earlier yesterday, Fidelity President Rodger Lawson sent an e-mail to staff that said lay-offs would come this month and in the first quarter of next year, according to a source close to Fidelity.

Fidelity and other fund companies, including Legg Mason Inc and Janus Capital Group Inc are scrambling to cut costs as investors pull record amounts of money from mutual funds during the financial crisis.

The industry generates the bulk of its revenue from fees based on a percentage of assets under management, which have withered.

Fidelity's assets under management fell about $100 billion in September and stood at $1.4 trillion at the end of that month. Fidelity has not revealed October asset numbers.

Loren Fox, senior research analyst at Strategic Insight, a mutual fund consulting and research firm, said the 2.9 percent November reduction meant Fidelity was using a "scalpel rather than a hatchet".

"Being privately held, there's far less pressure on Fidelity to meet quarterly numbers," Fox said.