Why Calendar Year returns do not add up to the Total Return for the period?

Average or annualized returns are not the arithmetic mean (average) of the annual returns, but the geometric mean. In other words, they are computed on a compound-interest basis, the way money grows in an interest-bearing account at a bank.

At the end of
each period (month or year), the return gets added to the initial principal and
then the __entire__ amount earns a return during the next period and so on
and so forth. That is why one cannot add the individual period returns to come
up with the total and average returns, as the growth of an investment is an
exponential and not a linear function.