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(2) The total investment income of the subsidiary, or in the case of a non-investment company subsidiary, the net income, exceeds

5% of the total investment income of the registrant as shown by the income statement of the registrant filed herewith for the last

fiscal year.

(b) For the purpose of this instruction, the term “investment income” means the aggregate of net operating income or loss from real

estate and gross income from interest, dividends and all other sources, exclusive of profit or loss on sales of securities or other

properties.

3. Predecessor of Registrant

(a) If during the last three fiscal years preceding the filing of the registration statement, the registrant has either (i) emerged from

insolvency proceedings (such emergence being deemed a succession, for the purpose of this paragraph), or (ii) succeeded to one or

more predecessors and the total assets of the registrant prior to such succession was less than 50% of the total assets immediately

thereafter, the following additional financial statements shall be filed:

(1) Individual and combined balance sheets of the registrant and predecessors as of the status immediately before the transfer of

assets or emergence from insolvency proceedings;

(2) A balance sheet of the registrant immediately after the transfer of assets or emergence from insolvency proceedings (this balance

sheet need not be accompanied by schedules);

(3) Income statements related to each balance sheet filed pursuant to (1). The income statements of the registrant and predecessors

prior to emergence or transfer shall be for such periods as, when added to the periods covered by the registrant’s income statements

subsequent to emergence or transfer, will cover the equivalent of three fiscal years preceding the date of the registrant’s most

recent balance sheet filed.

The balance sheets required by this instruction shall be set forth in such form, preferably columnar, as to show in related manner

the balance sheets of the registrant and the predecessors, the elimination of inter-company items, the combined balance sheet of

the registrant and all of the predecessors, the changes effected in the succession, and the balance sheet of the registrant after giving

effect to the changes of the succession. By note or otherwise, a brief explanation of the eliminations and changes shall be made.

(b) Notwithstanding the provisions of paragraph (a) the financial statements therein required need not be furnished if both the following

conditions exist:

(1) The predecessors of the registrant were totally-held subsidiaries of the registrant, or the registrant having no assets other than

nominal ones succeeded to a single predecessor or to a group of companies consisting of a parent and one or more subsidiaries;

and

(2) The balance sheet of the registrant immediately after succession was substantially the same as the balance sheet of the single

predecessor, or the consolidated balance sheet of the group of predecessors, immediately before succession, except for changes

resulting from the substitution of issuers incident to the succession or from adjustments of an insignificant aggregate amount.

For the purpose of meeting the requirements of paragraph (a) with respect to successions of the types specified in (1) and (2) of paragraph

(b), the financial statements of a single predecessor or consolidated financial statements of a group of predecessors shall, for any period

preceding the transfer of accounts, be considered financial statements of the registrant.

4. Form and Content of Financial Statements — Application of Regulation S-X

The form and content of financial statements of investment companies, including supplementary schedules, shall be governed by Articles

2, 3, 4, 6B, 11 and 12 of Regulation S-X promulgated under the Securities Act of 1933 and the Securities Exchange Act of 1934; for non-

investment company subsidiaries, the appropriate Articles of Regulation S-X shall govern.

5. Certification

All financial statements required by the foregoing instructions to be filed shall be certified by an independent public accountant or

accountants in accordance with Article 2 of Regulation S-X.

Special Provisions

If, in any case, the statements herein required are inadequate or inappropriate, the Commission may, upon the informal written request

of the registrant, permit the omission of one or more of the statements herein required and the filing in substitution therefor of appropriate

statements of comparable character. The Commission may also by informal written notice require the filing of other statements in addition to,

or in substitution for, the statements herein required in any case where such statements are necessary for a proper presentation of the financial

condition of any person for which financial statements are required, or for which such statements are otherwise necessary for the protection

of investors.

Form N-8b-4 - Registration Statement Of Face-Amount Certificate Companies - Securities And Exchange Commission Page 20

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