Note 5. Each quarter, as authorized by the Agreement of Trust, the Trustees evaluate all relevant factors including all costs, expenses, obligations, and present and future liabilities of the Trust (whether known or contingent) in determining the prudent level of unallocated reserve in light of the unpredictable nature of the iron ore industry and current economic conditions. 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 expected that future distributions will be highly dependent upon royalty payments, if any, received in the prior quarter, and the level of Trust expenses that the Trustees anticipate will occur in subsequent quarters. Pursuant to the Agreement of Trust, the Trustees make decisions about 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 April 30, 2016 and January 31, 2016, the unallocated cash and U.S. Government securities portion of the Trust’s Unallocated Reserve was comprised of the following components:

	April 30, 2016 (unaudited)			January 31, 2016
Cash and U.S. Government securities	$	8,831,289		$	8,783,882
Distribution payable	(2,624,002		)	(656,001		)


Unallocated cash and U.S. Government securities	$	6,207,287		$	8,127,881

A reconciliation of the Trust’s Unallocated Reserve from January 31, 2016 to April 30, 2016 is as follows:

Unallocated Reserve, January 31, 2016	$	8,989,164

Net loss	(430,252		)
Distributions declared	(2,624,002		)


Unallocated Reserve, April 30, 2016	$	5,934,910