NAV stands for realized & unrealized gains & losses in net asset value in MSA.

It would be unethical and potentially illegal to book only realized losses and not report losses on open positions in order to make the maximum drawdown appear smaller. This is known as window dressing and is a form of financial fraud. It misrepresents the true performance of the investment, which can lead to investors making poor decisions based on false information. This type of behavior is also prohibited by securities laws and regulations, and can result in penalties and fines for the individuals or firms involved.

Investment managers have a fiduciary duty to their clients to provide accurate and transparent information about the performance of their investments. This includes reporting both realized and unrealized gains and losses, as well as accurately calculating and reporting metrics like maximum drawdown. Misrepresenting performance information in any way is a violation of this duty and can result in legal and reputational consequences for the investment manager.