Note 4. On October 26, 2018, the Trustees received the quarterly royalty report of iron ore product shipments from Silver Bay, Minnesota during the calendar quarter ended September 30, 2018 from Cleveland-Cliffs Inc., formerly known as Cliffs Natural Resources Inc. (“Cleveland-Cliffs”), the parent company of Northshore. On October 11, 2018, the Trustees declared a distribution of $0.94 per Unit of Beneficial Interest payable on November 20, 2018 to Mesabi Trust Unitholders of record at the close of business on October 30, 2018.

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 October 31, 2018 and January 31, 2018, the unallocated cash and U.S. Government securities portion of the Trust’s Unallocated Reserve was comprised of the following components:


	October 31, 2018 (unaudited)		January 31, 2018
Cash and U.S. Government securities	$	33,176,860	$	24,112,286
Distribution payable		(12,332,809)		(15,481,612)

Unallocated cash and U.S. Government securities	$	20,844,051	$	8,630,674

A reconciliation of the Trust’s Unallocated Reserve from January 31, 2018 to October 31, 2018 is as follows:


Unallocated Reserve, January 31, 2018	$	10,606,675

Net income		38,772,365
Distributions declared		(21,123,216)

Unallocated Reserve, October 31, 2018	$	28,255,824