EXHIBIT 13


                               GREAT NORTHERN IRON
                                 ORE PROPERTIES




                            ------------------------




                                  NINETY-FIRST
                          ANNUAL REPORT OF THE TRUSTEES
                             TO CERTIFICATE HOLDERS




                                       FOR
                          YEAR ENDED DECEMBER 31, 1997

<PAGE>


                       GREAT NORTHERN IRON ORE PROPERTIES
                       W-1290 First National Bank Building
                              332 Minnesota Street
                        Saint Paul, Minnesota 55101-1361

                                 (612) 224-2385
                               Fax (612) 224-2387

                                ----------------

         TRUSTEES                         OFFICERS

         HARRY L. HOLTZ                   HARRY L. HOLTZ
          President of the Trustees        Chief Executive Officer

         JOSEPH S. MICALLEF*              THOMAS A. JANOCHOSKI
          Consultant and Director          Vice President and Secretary
          Fiduciary Counselling, Inc.      Chief Financial Officer

         ROGER W. STAEHLE*                ROGER P. JOHNSON
          Adjunct Professor                Manager of Mines
          University of Minnesota          Chief Engineer

         ROBERT A. STEIN*
          Executive Director
          American Bar Association


                                *Audit Committee

                                ----------------
                SHAREHOLDER RELATIONS DEPARTMENT, TRANSFER OFFICE
                                  AND REGISTRAR

                           Norwest Shareowner Services
                                 P.O. Box 64854
                        Saint Paul, Minnesota 55164-0854

                            Toll-free: 1-800-468-9716

                            MESABI IRON RANGE OFFICE

                             801 East Howard Street
                          Hibbing, Minnesota 55746-0429

                                 (218) 262-3886
                               Fax (218) 262-4295

<PAGE>


                       GREAT NORTHERN IRON ORE PROPERTIES

                              SUMMARY OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31
                                                     ---------------------------------------------------------------------------
                                                         1997           1996            1995            1994            1993
                                                     -------------   -----------     -----------     -----------     -----------
<S>                                                  <C>             <C>             <C>             <C>             <C>
Shipments from our mines (tons) ...................    5,363,234       5,979,527       5,997,347       4,209,551       4,140,260
Royalty income ....................................  $ 9,416,979     $ 9,978,603     $ 9,160,966     $ 7,113,730     $ 6,467,389
Other income ......................................      613,164         551,597         495,338         460,891         398,810
Net income ........................................    8,488,075       8,988,486       8,149,287       6,203,645       5,485,051
Total assets ......................................   16,179,624      17,066,649      16,335,426      15,304,722      14,489,943
Average shares outstanding ........................    1,500,000       1,500,000       1,500,000       1,500,000       1,500,000
Basic earnings per share, based on weighted-average
  shares outstanding during year ..................  $      5.66     $      5.99     $      5.43     $      4.14     $      3.66
Declared distributions per share ..................  $      6.00(1)  $      5.80(2)  $      5.00(3)  $      4.00(4)  $      3.65(5)

</TABLE>

                                ----------------
  (1) $1.50 pd 4/30/97; $1.50 pd 7/31/97; $1.50 pd 10/31/97; $1.50 pd 1/30/98
  (2) $1.35 pd 4/30/96; $1.15 pd 7/31/96; $1.60 pd 10/31/96; $1.70 pd 1/31/97
  (3) $1.15 pd 4/28/95; $1.15 pd 7/31/95; $1.30 pd 10/31/95; $1.40 pd 1/31/96
  (4) $ .80 pd 4/29/94; $ .90 pd 7/29/94; $1.15 pd 10/31/94; $1.15 pd 1/31/95
  (5) $1.10 pd 4/30/93; $1.10 pd 7/30/93; $ .70 pd 10/29/93; $ .75 pd 1/31/94

   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                                   OPERATIONS

Results of Operations: "Royalty income" for 1997 was less than that of 1996
primarily due to less taconite production from Trust lands offset in part by a
higher average earned royalty rate attained and increased net advance royalties.
"Royalty income" for 1996 was greater than that of 1995 primarily due to a
higher average earned royalty rate attained. "Other income" for 1997 exceeded
that of 1996 mainly due to the sale of stockpile material. "Other income" for
1996 exceeded that of 1995 mainly due to increased interest income resulting
from continually improved yields on our funds available for investment. Please
refer to Note A of the Financial Statements which provides general information
about Great Northern Iron Ore Properties.

Liquidity: In the interest of preservation of principal of Court-approved
reserves and guided by the restrictive provisions of Section 646 of the Tax
Reform Act of 1986, as amended, monies are invested primarily in U.S. Treasury
securities with maturity dates not to exceed three years and, along with cash
flows from operations, are deemed adequate to meet currently foreseeable
liquidity needs.

                                       2

<PAGE>


To Certificate Holders:

     The Trustees of Great Northern Iron Ore Properties ("Trust") own fee title
to certain mineral and nonmineral lands situated on the Mesabi Iron Range of
Minnesota. Many of these properties are leased to companies that mine the ores.
The Trust has no subsidiaries.

     During 1997, the major source of income to the Trust was royalty derived
from taconite production and minimum royalties. Accumulated advance royalties
received and taken into income on ore not yet mined amounted to $1,351,481 on
December 31, 1997. These advance royalties collected involve no liabilities on
the part of the Trust except to permit the mining of the ore from leases on
which the advance royalties have been paid.

     Reasonably stable taconite production and an overall higher average earned
royalty rate attained in 1997 resulted in another good year for the Trust. Most
of the Trust's primary lessees continued to operate at or near capacity during
the year. A Summary of Shipments is tabulated on the last page of this report.

     The Trustees declared four quarterly distributions in 1997 totaling $6.00
per share. The first, in the amount of $1.50 per share, was paid on April 30,
1997, to certificate holders of record on March 31, 1997; the second, in the
amount of $1.50 per share, was paid on July 31, 1997, to certificate holders of
record on June 30, 1997; the third, in the amount of $1.50 per share, was paid
on October 31, 1997, to certificate holders of record on September 30, 1997; and
the fourth, in the amount of $1.50 per share, was paid on January 30, 1998, to
certificate holders of record on December 31, 1997.

     The Trustees declared four quarterly distributions in 1996 totaling $5.80
per share. The first, in the amount of $1.35 per share, was paid on April 30,
1996, to certificate holders of record on March 29, 1996; the second, in the
amount of $1.15 per share, was paid on July 31, 1996, to certificate holders of
record on June 28, 1996; the third, in the amount of $1.60 per share, was paid
on October 31, 1996, to certificate holders of record on September 30, 1996; and
the fourth, in the amount of $1.70 per share, was paid on January 31, 1997, to
certificate holders of record on December 31, 1996.

     The Trustees intend to continue quarterly distributions and set the record
date as of the last business day of each quarter. The next distribution will be
paid in late April 1998 to certificate holders of record on March 31, 1998.

                                        3

<PAGE>


     Shares of beneficial interest in the Trust are traded on the New York Stock
Exchange under the ticker symbol "GNI." There were 2,645 certificate holders of
record on December 31, 1997. The high and low prices for the quarterly periods
commencing January l, 1996 through December 31, 1997 were as follows:

                                      1997                       1996
                               -----------------         -------------------
QUARTER                        HIGH          LOW           HIGH          LOW
-------                        ----          ---           ----          ---
First ......................   $59 1/2       $51           $49 5/8       $44
Second .....................    61 3/4        54 3/4        51            46 5/8
Third ......................    67            58            51 1/2        46
Fourth .....................    67 3/4        63            55 1/2        47
               
     The following is a summary of quarterly results of operations (unaudited)
for the years ended December 31, 1997 and 1996 (in thousands of dollars, except
per share amounts):

                                               QUARTER ENDED
                               ----------------------------------------------
                               MARCH 31     JUNE 30     SEPT. 30      DEC. 31
                               --------     -------     --------      -------
1997
  Royalty income ...........    $2,269       $2,294       $2,806       $2,048
  Interest and other income        184          139          131          159
                                ------       ------       ------       ------
  Gross income .............     2,453        2,433        2,937        2,207
  Expenses .................       420          360          385          377
                                ------       ------       ------       ------
  Net income ...............    $2,033       $2,073       $2,552       $1,830
                                ======       ======       ======       ======
  Basic earnings per share      $ 1.36       $ 1.38       $ 1.70       $ 1.22
                                ======       ======       ======       ======
1996
  Royalty income ...........    $2,477       $1,543       $3,159       $2,800
  Interest and other income        135          144          133          139
                                ------       ------       ------       ------
  Gross income .............     2,612        1,687        3,292        2,939
  Expenses .................       438          360          374          370
                                ------       ------       ------       ------
  Net income ...............    $2,174       $1,327       $2,918       $2,569
                                ======       ======       ======       ======
  Basic earnings per share      $ 1.45       $  .88       $ 1.95       $ 1.71
                                ======       ======       ======       ======

     The terms of the Great Northern Iron Ore Properties Trust Agreement,
created December 7, 1906, state that the Trust shall continue for twenty years
after the death of the last surviving of eighteen named in the Trust Agreement.
The last survivor of these eighteen named in the Trust Agreement died April 6,
1995. According to the terms of the Trust Agreement, the Trust now terminates
twenty (20) years from April 6, 1995. At that time, all monies remaining in the
hands of the Trustees (after paying and providing for all expenses and
obligations of the Trust) shall be distributed ratably among the certificate
holders, while all property other than monies shall be conveyed and transferred
to the reversioner.

                                        4

<PAGE>


     As previously reported, Section 646 of the Tax Reform Act of 1986, as
amended, provided a special elective provision under which the Trust was allowed
to convert from taxation as a corporation to that of a grantor trust. Pursuant
to an Order of the Ramsey County District Court, the Trustees filed the Section
646 election with the Internal Revenue Service on December 30, 1988. For years
1989 and thereafter, certificate holders are taxed on their allocable share of
the Trust's income whether or not the income is distributed.

     A Tax Return Guide was mailed in January 1998 to all "record date"
certificate holders shown on our stock transfer agent's records during 1997.
This guide was intended to assist the investor in addressing many of the issues
that arise in reporting the Trust operations for federal and state income tax
purposes due to Section 646.

     We will, upon request, be happy to furnish certificate holders an Annual
Report on Form 10-K for any recent year.

                                        Respectfully submitted,


                                        Harry L. Holtz       Roger W. Staehle
                                        Joseph S. Micallef   Robert A. Stein

Saint Paul, Minnesota
March 13, 1998

                                        5

<PAGE>


                       GREAT NORTHERN IRON ORE PROPERTIES

                              STATEMENTS OF INCOME

                                                  YEAR ENDED DECEMBER 31
                                         ---------------------------------------
                                             1997          1996          1995
                                         -----------   -----------   -----------
INCOME
  Royalties ..........................   $ 9,416,979   $ 9,978,603   $ 9,160,966
  Interest earned ....................       524,229       527,456       455,939
  Rent and other .....................        88,935        24,141        39,399
                                         -----------   -----------   -----------
                                          10,030,143    10,530,200     9,656,304
EXPENSES
  Royalties ..........................         4,623         4,623         4,623
  Real estate and payroll taxes ......       122,577       129,977       135,363
  Inspection and care of property ....       367,954       384,362       387,140
  Administrative and general .........       863,881       853,126       847,187
  Provision for depreciation and
   amortization ......................       183,033       169,626       132,704
                                         -----------   -----------   -----------
                                           1,542,068     1,541,714     1,507,017
                                         -----------   -----------   -----------
NET INCOME ...........................   $ 8,488,075   $ 8,988,486   $ 8,149,287
                                         ===========   ===========   ===========
BASIC EARNINGS PER SHARE .............   $      5.66   $      5.99   $      5.43
                                         ===========   ===========   ===========



                       STATEMENTS OF BENEFICIARIES' EQUITY

                                                YEAR ENDED DECEMBER 31
                                         ---------------------------------------
                                             1997          1996          1995
                                         -----------   -----------   -----------
Balance at beginning of year .........   $14,331,393   $14,042,907   $13,393,620
Net income for the year ..............     8,488,075     8,988,486     8,149,287
                                         -----------   -----------   -----------
                                          22,819,468    23,031,393    21,542,907
Deduct declaration of distributions
 on shares of beneficial interest, per
 share: 1997 - $6.00; 1996 - $5.80;
 1995 - $5.00 ........................     9,000,000     8,700,000     7,500,000
                                         -----------   -----------   -----------
Balance at end of year ...............   $13,819,468   $14,331,393   $14,042,907
                                         ===========   ===========   ===========

                             See accompanying notes.

                                        6

<PAGE>


                       GREAT NORTHERN IRON ORE PROPERTIES

                                 BALANCE SHEETS

                                     ASSETS

                                                           DECEMBER 31
                                                     ------------------------
                                                         1997         1996
                                                     -----------  -----------
CURRENT ASSETS
  Cash and cash equivalents .......................  $   496,447  $   448,008
  United States Treasury securities (NOTE B) ......    3,378,688    3,394,514
  Royalties receivable ............................    1,897,554    2,649,880
  Prepaid expenses ................................        4,938        3,180
                                                     -----------  -----------
TOTAL CURRENT ASSETS ..............................    5,777,627    6,495,582

NONCURRENT ASSETS
  United States Treasury Notes (NOTE B) ...........    4,862,604    5,124,451
  Prepaid pension expense (NOTE E) ................      270,570      254,726
                                                     -----------  -----------
                                                       5,133,174    5,379,177
PROPERTIES
  Mineral lands (NOTES B AND C) ...................   38,055,311   37,838,536
  Less allowances for depletion and amortization ..   32,898,721   32,737,201
                                                     -----------  -----------
                                                       5,156,590    5,101,335
  Building and equipment - at cost, less
   allowances for accumulated depreciation
   (1997 - $147,299; 1996 - $127,730) .............      112,233       90,555
                                                     -----------  -----------
                                                       5,268,823    5,191,890
                                                     -----------  -----------
                                                     $16,179,624  $17,066,649
                                                     ===========  ===========

                     LIABILITIES AND BENEFICIARIES' EQUITY

CURRENT LIABILITIES
  Accounts payable and accrued expenses ...........  $   110,156  $   105,256
  Distributions ...................................    2,250,000    2,630,000
                                                     -----------  -----------
TOTAL CURRENT LIABILITIES .........................    2,360,156    2,735,256

BENEFICIARIES' EQUITY, including certificate
 holders' equity, represented by 1,500,000 shares
 of beneficial interest authorized and outstanding,
 and reversionary interest (NOTES A AND D) ........   13,819,468   14,331,393
                                                     -----------  -----------
                                                     $16,179,624  $17,066,649
                                                     ===========  ===========

                             See accompanying notes.

                                        7

<PAGE>


                       GREAT NORTHERN IRON ORE PROPERTIES

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31
                                              ----------------------------------------
                                                  1997           1996          1995
                                              ------------   -----------   -----------
<S>                                           <C>            <C>           <C>
OPERATING ACTIVITIES
  Cash received from royalties and rents ...  $ 10,041,465   $ 9,454,204   $ 8,280,147
  Cash paid to suppliers and employees .....    (1,371,737)   (1,377,546)   (1,357,293)
  Interest received ........................       526,902       573,954       471,125
                                              ------------   -----------   -----------
    NET CASH PROVIDED BY
     OPERATING ACTIVITIES ..................     9,196,630     8,650,612     7,393,979
INVESTING ACTIVITIES
  U.S. Treasury securities purchased .......    (3,050,000)   (4,699,297)   (3,025,000)
  U.S. Treasury securities matured .........     3,325,000     4,511,172     2,950,000
  Net expenditures for equipment ...........       (43,191)      (27,004)      (33,316)
                                              ------------   -----------   -----------
    NET CASH PROVIDED BY (USED IN)
     INVESTING ACTIVITIES ..................       231,809      (215,129)     (108,316)
FINANCING ACTIVITIES
  Distributions paid .......................    (9,380,000)   (8,250,000)   (7,135,000)
                                              ------------   -----------   -----------
    NET CASH USED IN FINANCING ACTIVITIES ..    (9,380,000)   (8,250,000)   (7,135,000)
                                              ------------   -----------   -----------
NET INCREASE IN CASH
 AND CASH EQUIVALENTS ......................        48,439       185,483       150,663
CASH AND CASH EQUIVALENTS
 AT BEGINNING OF YEAR ......................       448,008       262,525       111,862
                                              ------------   -----------   -----------
CASH AND CASH EQUIVALENTS
 AT END OF YEAR ............................  $    496,447   $   448,008   $   262,525
                                              ============   ===========   ===========
RECONCILIATION OF NET INCOME TO NET
 CASH PROVIDED BY OPERATING ACTIVITIES
  Net income ...............................  $  8,488,075   $ 8,988,486   $ 8,149,287
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and amortization ..........       183,033       169,626       132,704
    Net (increase) decrease in assets:
      Accrued interest .....................         2,673        46,498        15,186
      Royalties receivable .................       752,326      (335,540)     (361,718)
      Prepaid expenses .....................       (17,602)        1,805           603
      Surface lands ........................      (216,775)     (213,000)     (558,500)
    Net increase (decrease) in liabilities:
      Accrued liabilities ..................         4,900        (7,263)       16,417
                                              ------------   -----------   -----------
       NET CASH PROVIDED BY
        OPERATING ACTIVITIES ...............  $  9,196,630   $ 8,650,612   $ 7,393,979
                                              ============   ===========   ===========
</TABLE>

                             See accompanying notes.

                                        8

<PAGE>


                       GREAT NORTHERN IRON ORE PROPERTIES

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

NOTE A - BUSINESS AND TERMINATION OF THE TRUST
         AND LEGAL PROCEEDINGS

     The Trust is presently involved solely with the leasing and maintenance of
mineral lands owned by the Trust on the Mesabi Iron Range of Minnesota. Royalty
income is derived from taconite production and minimums. Royalty income (which
is not in direct ratio to tonnage shipped) from significant operating lessees
was as follows: 1997 -- $4,954,000 and $4,069,000; 1996 -- $4,713,000,
$3,454,000 and $1,759,000; and 1995 -- $5,279,000, $2,862,000 and $968,000.

     The Trust Agreement, dated December 7, 1906, provides that upon expiration
of twenty years next following the death of the last survivor of the persons by
whose lives the term of the Trust is determined, unless sooner terminated, all
monies remaining in the hands of the Trustees (after paying and providing for
all expenses and obligations of the Trust) shall be distributed ratably among
the certificate holders (term beneficiaries), while all property other than
monies shall be conveyed and transferred to the Lake Superior Company, Limited
(reversionary beneficiary), or its successors or assigns (Glacier Park Company,
a wholly owned subsidiary of Burlington Resources, Inc.). The last survivor of
the persons named in the Trust Agreement died April 6, 1995. According to the
terms of the Trust Agreement, the Trust now terminates twenty (20) years from
April 6, 1995.

     In proceedings commenced in 1972, the Minnesota Supreme Court determined
that while by the terms of the Trust, the Trustees are given discretionary
powers to convert Trust assets to cash and to distribute the proceeds to
certificate holders, they are limited in their exercise of those powers by the
legal duty imposed by well established law of trusts to serve the interests of
both term beneficiaries and the reversionary beneficiary with impartiality.
Thus, the Trustees have no duty to exercise the powers of sale and distribution
unless required to do so to serve both term and reversionary interests; and if
the need arises, the Trustees may petition the District Court of Ramsey County,
Minnesota, for further instructions defining what is required in a particular
case to balance the interests of certificate holders and reversioner. Also, the
Court, in effect, held that the Trust is a conventional trust, rather than a
business trust, and must operate within the framework of well established trust
law.

     By a letter dated April 29, 1997, certificate holders of record as of March
31, 1997 and the reversioner were notified of a hearing on May 14, 1997 in
Ramsey County Courthouse, Saint Paul, Minnesota, for the purpose of settling and
allowing the Trust accounts for the year 1996. By Court Order signed and dated
May 14, 1997, the said accounts were settled and allowed in all respects. By

                                        9

<PAGE>


NOTE A - BUSINESS AND TERMINATION OF THE TRUST
         AND LEGAL PROCEEDINGS (CONTINUED)

previous Orders, the Court settled and allowed the accounts of the Trustees for
preceding years of the Trust.

     By a letter dated December 5, 1997, certificate holders of record as of
September 30, 1997 and the reversioner were notified of a hearing on December
31, 1997 in Ramsey County Courthouse, Saint Paul, Minnesota, for the purpose of
requesting a fee increase in Trustees' compensation of $10,000 each beginning in
1998. By Court Order signed and dated December 31, 1997, the said fee increase
was granted with an effective date of January 1, 1998.

     As previously reported, Section 646 of the Tax Reform Act of 1986, as
amended, provided a special elective provision under which the Trust was allowed
to convert from taxation as a corporation to that of a grantor trust. Pursuant
to an Order of the Ramsey County District Court, the Trustees filed the Section
646 election with the Internal Revenue Service on December 30, 1988. On January
1, 1989, the Trust became exempt from federal and Minnesota corporate income
taxes. For years 1989 and thereafter, certificate holders are taxed on their
allocable share of the Trust's income whether or not the income is distributed.
For certificate holder tax purposes, the Trust's income is determined on an
annual basis, one-fourth then being allocated to each quarterly record date.

     The Trustees provided annual income tax information in January 1998 to
certificate holders of record with holdings on any of the four quarterly record
dates during 1997. This information included a:

     SUBSTITUTE FORM 1099-MISC -- This form reported one's 1997 allocable share
     of income from the Trust, distributions declared and any taxes withheld.
     (Foreign certificate holders received a Form 1042S.)

     TRUST SUPPLEMENTAL STATEMENT -- This statement reported the number of units
     (shares) held on any of the four quarterly record dates in 1997.

     TAX RETURN GUIDE -- This guide instructed the certificate holders as to the
     preparation of their income tax returns with respect to income allocated
     from the Trust and various deductions allowable.

                                       10

<PAGE>


NOTE B - SIGNIFICANT ACCOUNTING POLICIES

     CASH AND CASH EQUIVALENTS: For purposes of the statements of cash flows,
the Trust considers all highly liquid debt instruments purchased with a maturity
of three months or less to be cash equivalents.

     SECURITIES: United States Treasury securities are classified as
"held-to-maturity" securities and are carried at cost, adjusted for amortization
of premium and accrued interest. Securities listed as noncurrent assets will
mature in 1999 and 2000. Following is an analysis of the securities as of
December 31:

                                 CURRENT                     NONCURRENT
                       --------------------------    --------------------------
                           1997           1996           1997           1996
                       -----------    -----------    -----------    -----------
Aggregate fair value.. $ 3,355,234    $ 3,332,883    $ 4,793,656    $ 5,061,750
Gross unrealized
 holding gains .......      (5,125)        (2,628)       (18,985)       (11,123)
Gross unrealized
 holding losses ......       1,438          4,124           --            8,281
                       -----------    -----------    -----------    -----------
Amortized cost basis     3,351,547      3,334,379      4,774,671      5,058,908
Accrued interest .....      27,141         60,135         87,933         65,543
                       -----------    -----------    -----------    -----------
                       $ 3,378,688    $ 3,394,514    $ 4,862,604    $ 5,124,451
                       ===========    ===========    ===========    ===========

     MINERAL LANDS: Mineral lands, including surface lands, are carried at
amounts which represent, principally, either cost at acquisition or values on
March 1, 1913. The value of the merchantable ore deposits was established on
March 1, 1913 for federal income tax purposes. No value has been estimated or
recorded for taconite deposits held on March 1, 1913, since they were not then
thought to be merchantable. The cost of surface lands acquired to facilitate
mining operations was amortized (noncash expense) in the amounts of $161,520,
$149,880 and $117,669 for the years 1997, 1996 and 1995, respectively (see Note
C).

     ROYALTY INCOME: Royalties from mineral leases are taken into income as
earned. Accumulated advance royalties received and taken into income on ore not
yet mined amounted to $1,351,481 on December 31, 1997 and $918,962 on December
31, 1996. The advance royalties collected involve no liabilities on the part of
the Trust except to permit the mining of the ore from leases on which the
advance royalties have been paid.

     USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from the
estimates.

     BASIC EARNINGS PER SHARE: In 1997, the Financial Accounting Standards
Board issued Statement No. 128, "Earnings per Share." All earnings per share
amounts for all periods presented conform to SFAS No. 128 which the Trust
adopted in 1997. Basic earnings per share is determined by dividing net income
for

                                       11

<PAGE>


NOTE B - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

the period by the number of weighted-average shares of beneficial interest
outstanding. Weighted-average shares outstanding were 1,500,000 as of December
31, 1997 and 1996.

NOTE C - LAND ACQUISITION

     A mining agreement dated January 1, 1959 with United States Steel
Corporation provides that one-half of annual earned royalty income, after
satisfaction of minimum royalty payments, shall be applied to reimburse the
lessee for its cost of acquisition of surface lands overlying the leased mineral
deposits, which surface lands are then conveyed to the Trustees (see Note B).
There are surface lands yet to be purchased, the costs of which are yet unknown
and will not be known until the actual purchases are made.

NOTE D - PRINCIPAL CHARGES ACCOUNT

     Pursuant to the Court Order of November 29, 1982, the Trustees were
directed to create and maintain an account designated as "Principal Charges."
This account constitutes a first and prior lien between the certificate holders
and the reversioner, and reflects an allocation of beneficiaries' equity between
the certificate holders and the reversioner. The balance in this account
consists of attorneys' fees and expenses of counsel for adverse parties pursuant
to Court Order in connection with litigation commenced in 1972 relating to the
Trustees' powers and duties under the Trust Instrument and the cost of surface
lands acquired in accordance with provisions of a lease with United States Steel
Corporation, net of an allowance to amortize the cost of the land based on
actual shipments of taconite and net of a credit for disposition of tangible
assets. Following is an analysis of this account as of December 31:


                                                    1997            1996
                                                 ----------      ----------
Attorneys' fees and expenses ................    $1,024,834      $1,024,834
Cost of surface lands .......................     5,181,569       4,964,794
Shipment credits (cumulative) ...............      (543,806)       (470,811)
Asset disposition credits ...................       (18,500)        (18,500)
                                                 ----------      ----------
Principal Charges account ...................    $5,644,097      $5,500,317
                                                 ==========      ==========

     Upon termination of the Trust, the Trustees shall either sell tangible
assets or obtain a loan with tangible assets as security to provide monies for
distribution to the certificate holders in the amount of the Principal Charges
account balance.

NOTE E - PENSION PLAN

     The Trust has a noncontributory defined benefit plan which covers all
employees. The Trustees are not eligible for pension benefits under the plan
based on services as Trustees. A pension benefit under the plan is based on an
employee's years of service, compensation and the type of benefit payment option
selected. Plan assets,

                                       12

<PAGE>


NOTE E - PENSION PLAN (CONTINUED)

as managed by the pension plan trustee, are comprised mostly of fixed income and
common stock investments. The Trust's funding policy is to make annual
contributions of not less than the minimum required by Internal Revenue Service
regulations.

     A summary of the components of net periodic pension cost (benefit), a
noncash item, for 1997, 1996 and 1995 is as follows:

                                               1997        1996        1995
                                            ---------   ---------   ---------
Service cost -- benefits earned during the
 year ....................................  $  72,395   $  63,717   $  41,691
Interest cost on projected benefit
 obligation ..............................    185,912     195,071     182,570
Actual return on plan assets .............   (653,596)   (350,351)   (702,080)
Net amortization and deferral ............    379,445      92,154     484,929
                                            ---------   ---------   ---------
Net pension cost (benefit) ...............  $ (15,844)  $     591   $   7,110
                                            =========   =========   =========

     Assumptions used in accounting for the defined benefit plan were:

                                                                 1997    1996
                                                                 ----    ----
Weighted-average discount rate ...........................       7.00%   7.50%
Rate of increase in compensation levels ..................       3.50%   3.50%

     The expected long-term rate of return on assets was 8.00% in each of the
three years presented.

     The following table sets forth the plan's funded status and amounts
recognized in the balance sheets at December 31:

                                                         1997          1996
                                                     -----------   -----------
Actuarial present value of benefit obligations:
  Vested benefit obligation .......................  $ 2,492,821   $ 2,313,406
  Nonvested benefit obligation ....................       15,153        11,196
                                                     -----------   -----------
  Accumulated benefit obligation ..................    2,507,974     2,324,602
  Effect of estimated future salary increases .....      305,423       245,508
                                                     -----------   -----------
  Projected benefit obligation ....................    2,813,397     2,570,110
Plan assets at fair value .........................    3,720,057     3,249,027
                                                     -----------   -----------
Plan assets in excess of projected benefit
 obligation .......................................      906,660       678,917
Unrecognized net gain .............................     (606,004)     (375,487)
Prior service cost ................................      152,803       179,909
Remaining net obligation at transition ............     (182,889)     (228,613)
                                                     -----------   -----------
Net pension asset in balance sheet ................  $   270,570   $   254,726
                                                     ===========   ===========

                                       13

<PAGE>


NOTE F - INCOME TAXES

     The Trustees filed an election under Section 646 of the Tax Reform Act of
1986, as amended. As discussed in Note A, beginning in 1989 the Trust is no
longer subject to federal or Minnesota corporate income taxes provided the
requirements of Section 646 are met. The principal requirements are:

     The Trust must be exclusively engaged in the leasing of mineral properties
     and activities incidental thereto.

     The Trust must not acquire any additional property other than permissible
     acquisitions as provided by Section 646.

     If these requirements are violated, the Trust will be treated as a
corporation for the taxable year in which the violation occurs and for all
subsequent taxable years. Since the election of Section 646, the Trust has
remained in compliance with these requirements.

NOTE G - LEASE COMMITMENTS

     The Trust leases office facilities in Saint Paul, Minnesota. These leases
include various renewal options and exclude any contingent rental provisions.
Rental expense for these operating leases amounted to $43,736, $42,156 and
$52,962 for the years 1997, 1996 and 1995, respectively.

                                       14

<PAGE>


                          REPORT OF ERNST & YOUNG LLP,

                              INDEPENDENT AUDITORS



To the Trustees
Great Northern Iron Ore Properties

     We have audited the accompanying balance sheets of Great Northern Iron Ore
Properties as of December 31, 1997 and 1996, and the related statements of
income, beneficiaries' equity and cash flows for each of the three years in the
period ended December 31, 1997. These financial statements are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Great Northern Iron Ore
Properties at December 31, 1997 and 1996, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1997, in conformity with generally accepted accounting principles.


                                                 /s/ Ernst & Young LLP


Minneapolis, Minnesota
January 30, 1998

                                       15

<PAGE>


                       GREAT NORTHERN IRON ORE PROPERTIES

                              SUMMARY OF SHIPMENTS

<TABLE>
<CAPTION>
                                                              FULL TONS SHIPPED
                                               -------------------------------------------------
                                                                                       TOTAL TO
                                   OWNERSHIP                                          JANUARY 1,
NO.              MINE              INTEREST       1997        1996        1995           1998
---   ---------------------------  ---------   ---------   ---------    ---------    -----------
<S>   <C>                             <C>      <C>         <C>          <C>          <C>
 1.   Mahoning ..................     100%     1,981,727     785,911      945,130    145,539,306
 2.   Ontario ...................     do.        421,251     757,554      809,320      8,664,009
 3.   Ontario ...................      50%       204,354     347,044    1,626,607     15,123,718
 4.   Section 18 ................     100%        13,068         492       40,073     27,911,499
 5.   South Stevenson ...........     do.             --     497,647      241,961      5,317,268
 6.   Stevenson .................     do.         30,496     525,754      104,648     35,091,562
 7.   Russell Annex .............      50%       306,278     325,511      592,443      1,467,263
 8.   Wentworth .................     100%        29,120          --           --      5,883,514
 9.   Minntac ...................     do.      2,376,940   2,739,614    1,637,165     24,643,556
                                               ---------   ---------    ---------    -----------
                                               5,363,234   5,979,527    5,997,347    269,641,695
      Shipments from inactive
       mines and those
       exhausted, surrendered
       or sold prior to this year                     --          --           --    318,137,777
                                               ---------   ---------    ---------    -----------
        TOTAL ...................              5,363,234   5,979,527    5,997,347    587,779,472
                                               =========   =========    =========    ===========
</TABLE>

NO.              OPERATING INTEREST
---     -------------------------------------
1-3     Hibbing Taconite Company
4-7     National Steel Corporation
  8     LTV Steel Mining Company
  9     United States Steel Corporation (USX)

                                       16

<PAGE>


GREAT NORTHERN IRON ORE PROPERTIES                                 FIRST CLASS
W-1290 FIRST NATIONAL BANK BUILDING                                U.S. POSTAGE
      332 MINNESOTA STREET                                             PAID
 SAINT PAUL, MINNESOTA 55101-1361                                   PERMIT #43
                                                                 MINNEAPOLIS, MN



FIRST CLASS MAIL