The mechanics are a repeated buy-write on an index or a basket. The fund collects premium, distributes it, and gives up the portion of upside above the strike. Over long periods that trade underperforms the index in strong markets and cushions moderate declines, which is exactly what the structure implies.
Two things get misread. The headline yield is largely a return of the fund's own upside rather than income in the conventional sense, and the strategy is short-volatility-trade exposure in a fund wrapper — it is at its most attractive when volatility is high and its least when premiums are thin.
Example: a fund holding an index and writing 30-day calls 2% out of the money collects roughly 0.8% a month in calm conditions. In a 6% monthly rally it keeps 2% plus the premium and forgoes the rest; in a 10% decline the premium offsets less than a tenth of the loss.
Related: buy-write, covered-call, short-volatility-trade, variance-risk-premium