There are several reasons why fat supplementation improves reproductive performance:
1) Cows fed with supplemental fat will have additional energy which reduces the cow's negative energy status. Hence, the cow will return to estrus earlier after calving and is more fertile at insemination.
2) Modern day lactating dairy cows have fatty acid deficiency. Feeding additional fats that contains these essential fatty acid will help to alleviate this problem.
3) Cows that are fed supplemental fat will develop larger ovarian follicles that develop into larger corpus lutea (CL). Larger CL will help to produce more progesterone, which is a hormone necessary for coordinating nutrients for developing embryo as well as maintaining pregnancy until calving period.
4) There are certain individual fatty acids that help inhibit the production of prostaglandin F2α by the uterus when the embryo is around 2.5 weeks old. This will prevent regression of corpus luteum on the ovary so that the progesterone continues to be produced and the newly formed embryo survives.
5) Supplemental fat helps to improve fertilisation rate as well as embryo development.
6) Feeding supplemental fat improves the immune system of the cow, thus reducing chances of the cows being infected by disease. This will improve the odds of the cows being pregnant.