The third quarter of 2025 proved to be a robust period for investment-grade tax-exempt municipal bonds, largely fueled by a resurgence in investor demand and a crucial interest-rate cut in September. This positive market environment significantly bolstered the performance of the Fidelity Intermediate Municipal Income Fund, reflecting broader trends in the fixed-income landscape.
During this quarter, the fund's strategy, which emphasizes fundamental credit analysis and strategic yield-curve positioning, successfully navigated market dynamics. The impressive returns underscore the importance of such an approach in capitalizing on favorable economic shifts and policy changes.
Specifically, long-duration securities within the fund's portfolio demonstrated the strongest gains. Bonds with maturities ranging from 10 to 22-plus years recorded returns between 3.03% and 3.82%. This performance highlights the sensitivity of longer-dated municipal bonds to interest rate movements and investor sentiment.
From a sector-specific viewpoint, revenue bonds and general obligation bonds exhibited comparable performance, both hovering around a 3% return. This indicates a balanced strength across different types of municipal debt, reinforcing the diversified nature of the fund's holdings.
The Fidelity Intermediate Municipal Income Fund's core investment philosophy centers on a diversified national municipal bond strategy. It primarily invests in intermediate-maturity general obligation and revenue-backed securities, leveraging meticulous fundamental credit analysis, precise yield-curve positioning, and comprehensive market insights to deliver consistent returns.
The strong third-quarter results for 2025 illustrate the fund's effective management in a dynamic market, demonstrating its capacity to generate favorable outcomes for investors by diligently applying its established investment principles and adapting to economic catalysts like interest rate adjustments and renewed market confidence.
