Fidelity has also started a series of target date muni bond funds:
https://www.fidelity.com/mutual-funds/news-analysis/defined-maturity-fundsWhile I suspect that any of the funds mentioned would meet your needs, I believe none of them meet your stated requirement that they don't trade or sell bonds.
The American Century funds are zero coupon funds. But because interest is imputed, they must distribute dividends. If all investors "let it ride" (reinvested the dividends), this would be a non-event (except for tax purposes), and the funds' portfolios would remain static. But if any investor were to take a dividend in cash, the fund would be forced to sell some bonds to pay out that dividend. This might explain the 40% turnover reported in the
prospectus for the
2020 fund.
Open end funds in general (this would include the Fidelity funds also) have portfolios that grow and shrink, as people buy more shares (by adding money, or simply reinvesting real - not phantom - interest payments from the bonds), or redeem them. The Fidelity 2019 fund reports a turnover of 4%. (Since turnover is the
lesser of the purchases and sales, the low figure could be an artifact of people really holding to maturity and taking only interest payments, so there are virtually no redemptions/sales; in contrast, the AmCentury Zeros must redeem simply to pay out dividends, resulting in the higher turnover.)
ETFs don't have "regular" investors buying shares, but they still have the problem of what to do with the interest received on the bonds in the portfolio. Like open end funds, they buy more bonds as the interest comes in. (Then they have to sell some bonds to pay out the quarterly or monthly dividends to shareholders.) Also, when the market price dips below the NAV, authorized participants make their move - buying shares on the open market, and redeeming them for the actual bonds in the portfolio. Thus the ETF is technically selling the bonds it gives to the authorized participants in exchange for shares. (It's not really much different from an open end fund redeeming shares, except that the payment for the shares is "in kind" - rather than selling the bonds and turning over cash to the former shareholder, the ETF skips the selling step and just hands the bonds over to the authorized participant.)
The only investment structure I know of where there truly is no trading is a unit investment trust. The UIT sells a fixed number of shares (like a closed end fund), purchases bonds fitting a general profile described in the prospectus, and then holds the bonds until call or maturity. As the bonds make interest payments, these payments are passed through to the shareholders. As the bonds mature, the proceeds are likewise passed through to the shareholders. The portfolio may take a year or two to wind down, as the bonds don't necessarily mature altogether (especially if some are called early). Unlike a mutual fund (or ETF) that has flexibility to buy replacement bonds in the event of an early call, UITs just pay out the money a bit early.
Does any of this matter? IMHO, only if you want to know exactly what's in the portfolio at all times, and only if you want something that almost exactly matches the bonds' returns, rather than approximating it (fairly well), due to inflows/outflows, and the buying/selling of creation units (ETFs).
