Participants read sentences in which novel and lexicalised two-constituent compound words appeared while their eye movements were measured. The frequency of the first constituent of the compounds was also varied factorially and the frequency of the lexicalised compounds was equated over the two conditions. The sentence frames prior to the target word were matched across conditions. Both lexicality and first constituent frequency had large and significant effects on gaze durations on the target word; moreover, the constituent frequency effect was significantly larger for the novel words. These results indicate that first constituent frequency has an effect in two stages: In the initial encoding of the compound and in the construction of meaning for the novel compound. The difference between this pattern of results and those for English prefixed words (Pollatsek, Slattery, & Juhasz, 2008) is apparently due to differences in the construction of meaning stage. A general model of the relationship of the processing of polymorphemic words to how they are fixated is presented.