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The fault coverage of existing functional tests can be enhanced by additional observation points. For a given set of functional tests, this paper proposes an efficient fault-dropping fault simulation method for selecting a subset of observation points at a small fraction of the cost of non-fault-dropping fault simulation. Experimental results on industrial circuits demonstrate the effectiveness of the method in achieving close to optimal results in the size of the selected subset with an order of magnitude less time, without losing achievable coverage. The technique is particularly applicable to industrial designs where fault-simulation times can be prohibitively expensive, even when only a sample of faults is simulated using distributed techniques.