NAV Error Clause Samples

A NAV Error clause defines the procedures and responsibilities in the event of an error in calculating the Net Asset Value (NAV) of a fund or investment product. Typically, this clause outlines how errors are identified, the process for correcting the NAV, and the method for compensating affected investors if the error results in a material misstatement. For example, if a miscalculation leads to investors buying or selling at incorrect prices, the clause will specify how adjustments or reimbursements are handled. Its core function is to ensure fairness and transparency by providing a clear framework for addressing and remedying NAV calculation mistakes.
NAV Error. For a fund that prices its shares to the nearest penny (e.g., $10.00) for transaction purposes, an NAV Error is any misstatement of the NAV that is a difference of at least one full penny per share (without rounding) between the originally computed NAV and the correct NAV. · For a fund that prices its shares to the fourth decimal place (e.g., $1.0000) for transaction purposes, an NAV Error is any misstatement of the NAV that is a difference of at least 1/100th of a penny per share (without rounding) between the originally computed NAV and the correct NAV. An NAV Error can result from an error (something done wrong), omission (something not done), or reliance on incorrect data.
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NAV Error. Identification If a NAV error is less than $.01 per share on a given day, it is immaterial, and no corrective action is necessary. If the error equals or exceeds $.01 per share, then it is considered material and corrective action must be taken. The procedure for analyzing the per share impact of an error will be to divide the amount of error by shares outstanding on each day the error exists. The analysis to determine if an error is material is completed on the day the error is discovered. If there are multiple errors on any day, the cumulative effect of all errors on that day is used to determine materiality. Once corrective action is taken to resolve an error, the effect of the error is not used in subsequent error determinations.
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Related to NAV Error

  • Trade Errors The Sub-Advisor will notify the Manager of any Trade Error(s), regardless of materiality, promptly upon the discovery such Trade Error(s) by the Sub-Advisor. Notwithstanding Section 5, the Sub-Advisor shall be liable to the Manager, the Fund or its shareholders for any loss suffered by the Manager or the Fund resulting from Trade Errors due to negligence, misfeasance, or disregard of duties of the Sub Advisor or any of its directors, officers, employees, agents (excluding any broker-dealer selected by the Sub-Advisor), or affiliates. For purposes under this Section 6, “Trade Errors” are defined as errors due to (i) erroneous orders by the Sub-Advisor for the Series that result in the purchase or sale of securities that were not intended to be purchased or sold; (ii) erroneous orders by the Sub-Advisor that result in the purchase or sale of securities for the Series in an unintended amount or price; or (iii) purchases or sales of financial instruments which violate the investment limitations or restrictions disclosed in the Fund’s registration statement and/or imposed by applicable law or regulation (calculated at the Sub-Advisor’s portfolio level), unless otherwise agreed to in writing.