Note 4. On July 27, 2017, the Trustees received the quarterly royalty report of iron ore product shipments from Silver Bay, Minnesota during the quarter ended June 30, 2017 from Cleveland-Cliffs Inc., formerly known as Cliffs Natural Resources Inc. (“Cleveland-Cliffs”), the parent company of Northshore Mining Company (“Northshore”). On July 14, 2017, the Trustees declared a distribution of sixteen cents ($0.16) per Unit of Beneficial Interest payable on August 20, 2017 to Mesabi Trust Unitholders of record at the close of business on July 30, 2017.

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 fixed 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.

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 July 31, 2017 and January 31, 2017, the unallocated cash and U.S. Government securities portion of the Trust’s Unallocated Reserve was comprised of the following components:


	July 31, 2017 (unaudited)		January 31, 2017
Cash and U.S. Government securities	$	13,163,944	$	14,151,226
Distribution payable		(2,099,202)		(1,836,801)

Unallocated cash and U.S. Government securities	$	11,064,742	$	12,314,425

A reconciliation of the Trust’s Unallocated Reserve from January 31, 2017 to July 31, 2017 is as follows:


Unallocated Reserve, January 31, 2017	$	10,205,470

Net income		16,475,842
Distributions declared		(9,315,208)

Unallocated Reserve, July 31, 2017	$	17,366,104