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Ginnie Mae's and other govt entity Mortgage backed securities pay both interest and can periodically return capital. This combination can make for lumpy semi annual payments.

The way these generally work is you buy 10,000 worth of the bond at X% coupon/interest rate. What you have purchased in a portion of a debt pool backed by mortgages. As people refinance, payoff or other ways terminate the loan that % of face value is returned to you. Your interest is paid on the remaining portion of the "face" value that has not been returned to you. These bonds often offer a steady stream of income that diminishes over time.

This is a really simplified explanation, does that help?

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