Custom fallback mesh LODs for Nanite-enabled meshes not working

Creating a custom fallback mesh with LOD for Nanite-enabled meshes with multiple materials, results in mesh LODs with errors. As the number of material sections (material slots) decreases with coarser LOD levels, some slots get the wrong materials assigned to them.

The included repro project follows the custom fallback LOD mesh workflow (described in [Link Removed]), i.e. setting the Fallback Triangle Percent to 0, import LOD Level 1 from the LOD Settings and setting the Minimum LOD to 1 under the LOD Settings. Forcing the LOD level by setting Forced Lod Model on the mesh instance (SM_Test_BaseLod1) or picking specific LOD s in the LOD Picker section in the mesh's Details panel will show that materials assigned to some slots in the coarser LOD levels are not correct.