Money market mutual funds, CD's and Treasury yields are extremely low right now.  It's painful for everyone-especially retiree's and most financial pundits I've listened to recently don't anticipate the Fed hiking interest rates until later this year.  So a lot of investors will use bond funds in their IRA and 401k portfolio's to earn some extra yield. 

We found a great article from the Wall Street Journal folks to help us understand the important numbers for bond fund investors: 30-day or SEC yield, distribution rate, and total return.

The best way to get a handle on a bond funds income prospects, most industry experts agree, is to look at a standard gauge called the SEC yield. This measure approximates the total yield that would be received annually for all of the bonds in a funds portfolio for the past 30 days assuming that each bond is held until maturity, and that all dividends are reinvested. It also accounts for fees and expenses. The methodology is spelled out by the Securities and Exchange Commission, hence the name.

Other ways of calculating bond-fund income yields include distribution yield, which is how much income a fund produced in the most recent 30-day period, projected as an annualized figure and divided by a recent fund-share price.

If that sounds complicated, it is. Both of these methods also rely on historical data, which means that only when interest rates are particularly stable are they likely to be a useful guide to what the fund might earn next month.

Of course, income is only part of the return an investor earns from a bond fund. Total return reflects both income and the change in the funds share price.

WSJ.com Deciphering Fund Yields