UNALLOCATED RESERVE AND DISTRIBUTIONS

9 Months Ended

Oct. 31, 2011

UNALLOCATED RESERVE AND DISTRIBUTIONS

UNALLOCATED RESERVE AND DISTRIBUTIONS

Note 5. The Trustees have determined that the unallocated cash and U.S. Government securities portion of the Unallocated Reserve should be maintained at a prudent level, usually within the range of $500,000 to $1,000,000, to meet present or future liabilities of the Trust.  Accordingly, although the actual amount of the Unallocated Reserve will fluctuate from time to time, and may increase or decrease from its current level, it is currently intended that future distributions will be highly dependent upon royalty payments received quarterly and the level of Trust expenses that the Trustees anticipate the Trust will incur in subsequent quarters.

As of October 31, 2011 and January 31, 2011, the cash and U.S. Government securities portion of the Unallocated Reserve totaled $610,468 and $755,016, respectively. Pursuant to the Agreement of Trust, the Trust makes decisions on cash distributions to Unitholders based on the royalty payments actually received from Northshore, taking into account the Trust’s expenses and any historical and potential future pricing adjustments, rather than as royalty income is recorded in accordance with the Trust’s revenue recognition policy.

A reconciliation of the Trust’s Unallocated Reserve from January 31, 2011 to October 31, 2011 is as follows:

Unallocated Reserve, January 31, 2011	$	987,802
Net income	26,951,882
Distributions declared	(23,222,418		)
Unallocated Reserve, October 31, 2011	$	4,717,266