UNALLOCATED RESERVE AND DISTRIBUTIONS

9 Months Ended

Oct. 31, 2012

UNALLOCATED RESERVE AND DISTRIBUTIONS

UNALLOCATED RESERVE AND DISTRIBUTIONS

Note 4.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 occurring in subsequent quarters.  Pursuant to the Agreement of Trust, the Trust makes cash distributions to Unitholders based on the royalty payments it receives from Northshore when received, rather than as royalty income is recorded in accordance with the Trust’s revenue recognition policy.  Refer to Note 3 for further information.

As of October 31, 2012 and January 31, 2012, the unallocated cash and U.S. Government securities portion of the Trust’s Unallocated Reserve was comprised of the following components:

	October 31, 2012  (unaudited)			January 31, 2012
Cash and U.S. Government securities	$	15,644,899		$	10,727,290
Distribution payable	(14,825,611		)	(9,971,208		)
Unallocated cash and U.S. Government securities	$	819,288		$	756,082

A reconciliation of the Trust’s Unallocated Reserve from January 31, 2012 to October 31, 2012 is as follows:

Unallocated Reserve, January 31, 2012	$	1,031,508
Net income, nine months ended October 31, 2012	25,867,203
Distributions declared	(24,075,218		)
Unallocated Reserve, October 31, 2012	$	2,823,493