[1][2] It is usually organized through a trust or partnership, rather than a corporation, to obtain more efficient flow through tax consequences in relation to the income that it earns and distributes.
Typically, they hold stocks with a good history of paying dividends.
In fact, a typical income fund holds both stocks and bonds to gain some of the strengths of both.
The point in any case is that the investor is more interested in income than capital gains, perhaps with the intention the fund will never be sold.
At some point past the target date, the target-date fund may be merged into the income fund, which is then owned by all investors whose target dates are some time in the past.