Total return encompasses everything we have discussed thus far: changes in NAV caused by appreciation or depreciation of the underlying portfolio, payment of any income (yield) or capital-gains distributions, and reinvestment of those distributions.
Here's how it works. Say you buy 10 shares of Fund A at $9 per share. After a few months, the fund's NAV rises to $12. The fund sells some of its winning stocks and makes a $2 per-share capital-gains distribution. It makes no income distributions. As a result, the fund's NAV falls to $10. Your distribution of $20 ($2 x 10 shares) is used to buy two more shares at the new $10 price. Finally, say the fund's NAV rises again, this time to $11 share.
So what is the yield on this investment? Zero, because it has not paid out any income. What about your overall return? Well, if you used only your NAV to calculate return, your shares would be worth the fund's final $11 NAV times your initial 10 shares, or $110. That's an NAV return of 22% on your original investment.
But that figure would be inaccurate, because you need to factor in the capital-gains distribution that you reinvested. Add that back in and you'll find your investment is actually worth that $110 plus the $22 your two new shares are worth, for a grand total of $132. Your total return is really 47%. Not too shabby.