GREAT NORTHERN IRON
                                ORE PROPERTIES




                                  NINETIETH
                        ANNUAL REPORT OF THE TRUSTEES
                            TO CERTIFICATE HOLDERS



                                     FOR
                         YEAR ENDED DECEMBER 31, 1996





                       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

                       GREAT NORTHERN IRON ORE PROPERTIES
                              SUMMARY OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                      YEAR ENDED DECEMBER 31
                                                                                      ----------------------
                                                                   1996          1995          1994          1993         1992
                                                                   ----          ----          ----          ----         ----
<S>                                                           <C>           <C>           <C>           <C>           <C>
Shipments from our mines (tons) ..............................   5,979,527     5,997,347     4,209,551     4,140,260     5,721,426
Royalty income ............................................... $ 9,978,603   $ 9,160,966   $ 7,113,730   $ 6,467,389   $ 9,295,830
Other income .................................................     551,597       495,338       460,891       398,810       530,143
Net income ...................................................   8,988,486     8,149,287     6,203,645     5,485,051     8,380,697
Total assets .................................................  17,066,649    16,335,426    15,304,722    14,489,943    15,373,081
Average shares outstanding ...................................   1,500,000     1,500,000     1,500,000     1,500,000     1,500,000
Net income per share, based on average shares outstanding
 during year .................................................     $5.99         $5.43         $4.14         $3.66         $5.59
Declared distributions per share .............................     $5.80(1)      $5.00(2)      $4.00(3)      $3.65(4)      $5.75(5)
</TABLE>

                         ------------------------------
   (1) $1.35 pd 4/30/96; $1.15 pd 7/31/96; $1.60 pd 10/31/96; $1.70 pd 1/31/97
   (2) $1.15 pd 4/28/95; $1.15 pd 7/31/95; $1.30 pd 10/31/95; $1.40 pd 1/31/96
   (3) $ .80 pd 4/29/94; $ .90 pd 7/29/94; $1.15 pd 10/31/94; $1.15 pd 1/31/95
   (4) $1.10 pd 4/30/93; $1.10 pd 7/30/93; $ .70 pd 10/29/93; $ .75 pd 1/31/94
   (5) $1.55 pd 4/30/92; $1.45 pd 7/31/92; $1.40 pd 10/30/92; $1.35 pd 1/29/93

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

Results of Operations: "Royalty income" for 1996 was greater than that of 1995
primarily due to a higher average earned royalty rate attained. "Royalty income"
for 1995 was greater than that of 1994 primarily due to overall improved
taconite production. "Other income" for 1996 exceeded that of 1995, which also
exceeded that of 1994, due mainly 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


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 1996, 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 $918,962 on
December 31, 1996. 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.

Continued good taconite production and an overall higher average earned royalty
rate attained in 1996 resulted in another favorable year for the Trust. All 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 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 declared four quarterly distributions in 1995 totaling $5.00 per
share. The first, in the amount of $1.15 per share, was paid on April 28, 1995,
to certificate holders of record on March 31, 1995; the second, in the amount of
$1.15 per share, was paid on July 31, 1995, to certificate holders of record on
June 30, 1995; the third, in the amount of $1.30 per share, was paid on October
31, 1995, to certificate holders of record on September 29, 1995; and the
fourth, in the amount of $1.40 per share, was paid on January 31, 1996, to
certificate holders of record on December 29, 1995. Earnings exceeded
distributions in 1995 due mainly to significant nondistributable surface land
purchases required during the year. See Notes C and D.

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 1997 to certificate holders of record on March 31, 1997.


                                       3


Shares of beneficial interest in the Trust are traded on the New York Stock
Exchange under the ticker symbol "GNI." There were 2,842 certificate holders of
record on December 31, 1996. The high and low prices for the quarterly periods
commencing January 1, 1995 through December 31, 1996 were as follows:

                  1996                     1995
            ------------------     ------------------
QUARTER       HIGH     LOW           HIGH       LOW
-------     -------    -------     -------    -------

First       $49-5/8    $44         $45-1/2    $41-1/2
Second       51         46-5/8      44-1/2     39-7/8
Third        51-1/2     46          49-1/4     42-1/4
Fourth       55-1/2     47          48-1/2     44-1/2


The following is a summary of quarterly results of operations (unaudited) for
the years ended December 31, 1996 and 1995 (in thousands of dollars, except per
share amounts):


                                            QUARTER ENDED
                                            -------------
                              MARCH 31    JUNE 30    SEPT. 30     DEC. 31
                              --------    -------    --------     -------

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
                               ======      ======     ======      ======
  Net income per share ......   $1.45      $ .88       $1.95       $1.71
                                =====      =====       =====       =====

1995
  Royalty income ............  $1,935      $2,264     $2,647      $2,315
  Interest and other income .     132         111        122         130
                               ------      ------     ------      ------
  Gross income ..............   2,067       2,375      2,769       2,445
  Expenses ..................     384         384        362         377
                               ------      ------     ------      ------
  Net income ................  $1,683      $1,991     $2,407      $2,068
                               ======      ======     ======      ======
  Net income per share ......   $1.12      $1.33       $1.60       $1.38
                                =====      =====       =====       =====


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


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 1997 to all "record date" certificate
holders shown on our stock transfer agent's records during 1996. 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 14, 1997


                                       5


                       GREAT NORTHERN IRON ORE PROPERTIES
                              STATEMENTS OF INCOME

                                           YEAR ENDED DECEMBER 31
                                     ----------------------------------
                                     1996           1995           1994
                                     ----           ----           ----

INCOME
  Royalties ....................  $ 9,978,603  $ 9,160,966  $ 7,113,730
  Interest earned ..............      527,456      455,939      383,967
  Rent and other ...............       24,141       39,399       76,924
                                  -----------  -----------  -----------
                                   10,530,200    9,656,304    7,574,621
EXPENSES
  Royalties ....................        4,623        4,623        4,623
  Real estate and payroll
   taxes .......................      129,977      135,363      127,482
  Inspection and care of
   property ....................      384,362      387,140      355,043
  Administrative and general ...      853,126      847,187      768,039
  Provision for depreciation and
   amortization ................      169,626      132,704      115,789
                                  -----------  -----------  -----------
                                    1,541,714    1,507,017    1,370,976
                                  -----------  -----------  -----------
NET INCOME .....................  $ 8,988,486  $ 8,149,287  $ 6,203,645
                                  ===========  ===========  ===========
NET INCOME PER SHARE ...........  $      5.99  $      5.43  $      4.14
                                  ===========  ===========  ===========



                       STATEMENTS OF BENEFICIARIES' EQUITY

                                                 YEAR ENDED DECEMBER 31
                                        -------------------------------------
                                            1996         1995         1994
                                        -----------  -----------  -----------

Balance at beginning of year .........  $14,042,907  $13,393,620  $13,189,975
Net income for the year ..............    8,988,486    8,149,287    6,203,645
                                        -----------  -----------  -----------
                                         23,031,393   21,542,907   19,393,620
Deduct declaration of distributions
 on shares of beneficial interest, per
 share: 1996 - $5.80; 1995 - $5.00;
 1994 - $4.00 ........................    8,700,000    7,500,000    6,000,000
                                        -----------  -----------  -----------
Balance at end of year ...............  $14,331,393  $14,042,907  $13,393,620
                                        ===========  ===========  ===========

                            See accompanying notes.


                                       6


                      GREAT NORTHERN IRON ORE PROPERTIES
                                BALANCE SHEETS

                                     ASSETS
                                                            DECEMBER 31
                                                     ------------------------
                                                         1996        1995
                                                     -----------  -----------

CURRENT ASSETS
  Cash and cash equivalents .......................  $   448,008  $   262,525
  United States Treasury securities (NOTE B) ......    3,394,514    4,603,942
  Royalties receivable ............................    2,649,880    2,314,340
  Prepaid expenses ................................        3,180        4,394
                                                     -----------  -----------
TOTAL CURRENT ASSETS ..............................    6,495,582    7,185,201
NONCURRENT ASSETS
  United States Treasury Notes (NOTE B) ...........    5,124,451    3,773,396
  Prepaid pension expense (NOTE E) ................      254,726      255,317
                                                     -----------  -----------
                                                       5,379,177    4,028,713
PROPERTIES
  Mineral lands (NOTES B AND C) ...................   37,838,536   37,625,536
  Less allowances for depletion and amortization ..   32,737,201   32,587,321
                                                     -----------  -----------
                                                       5,101,335    5,038,215
  Building and equipment - at cost, less
   allowances for accumulated depreciation
   (1996 - $127,730; 1995 - $128,734) .............       90,555       83,297
                                                     -----------  -----------
                                                       5,191,890    5,121,512
                                                     -----------  -----------
                                                     $17,066,649  $16,335,426
                                                     ===========  ===========

                      LIABILITIES AND BENEFICIARIES' EQUITY

CURRENT LIABILITIES
  Accounts payable and accrued expenses ...........  $   105,256  $   112,519
  Distributions ...................................    2,630,000    2,180,000
                                                     -----------  -----------
TOTAL CURRENT LIABILITIES .........................    2,735,256    2,292,519

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) ........   14,331,393   14,042,907
                                                     -----------  -----------
                                                     $17,066,649  $16,335,426
                                                     ===========  ===========

                            See accompanying notes.


                                       7


<TABLE>
<CAPTION>
                       GREAT NORTHERN IRON ORE PROPERTIES
                            STATEMENTS OF CASH FLOWS

                                                       YEAR ENDED DECEMBER 31
                                             ---------------------------------------
                                                 1996          1995          1994
                                             -----------   -----------   -----------
<S>                                         <C>           <C>           <C>        
OPERATING ACTIVITIES
  Cash received from royalties and rents ..  $ 9,454,204   $ 8,280,147   $ 6,574,142
  Cash paid to suppliers and employees ....   (1,377,546)   (1,357,293)   (1,270,552)
  Interest received .......................      573,954       471,125       380,860
                                             -----------   -----------   -----------
    NET CASH PROVIDED BY
     OPERATING ACTIVITIES .................    8,650,612     7,393,979     5,684,450
INVESTING ACTIVITIES
  U.S. Treasury securities purchased ......   (4,699,297)   (3,025,000)   (5,943,604)
  U.S. Treasury securities matured ........    4,511,172     2,950,000     5,627,745
  Net expenditures for building
   and equipment ..........................      (27,004)      (33,316)      (41,736)
                                             -----------   -----------   -----------
    NET CASH USED IN INVESTING ACTIVITIES .     (215,129)     (108,316)     (357,595)
FINANCING ACTIVITIES
  Distributions paid ......................   (8,250,000)   (7,135,000)   (5,407,000)
                                             -----------   -----------   -----------
    NET CASH USED IN FINANCING ACTIVITIES .   (8,250,000)   (7,135,000)   (5,407,000)

NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS .....................      185,483       150,663       (80,145)
CASH AND CASH EQUIVALENTS
 AT BEGINNING OF YEAR .....................      262,525       111,862       192,007
                                             -----------   -----------   -----------
CASH AND CASH EQUIVALENTS
 AT END OF YEAR ...........................  $   448,008   $   262,525   $   111,862
                                             ===========   ===========   ===========
RECONCILIATION OF NET INCOME TO NET
 CASH PROVIDED BY OPERATING ACTIVITIES
  Net income ..............................  $ 8,988,486   $ 8,149,287   $ 6,203,645
  Adjustments to reconcile net income to
   net
   cash provided by operating activities:
    Depreciation and amortization .........      169,626       132,704       115,789
    Net (increase) decrease in assets:
      Accrued interest ....................       46,498        15,186        (3,107)
      Royalties receivable ................     (335,540)     (361,718)     (503,012)
      Prepaid expenses ....................        1,805           603       (33,499)
      Surface lands .......................     (213,000)     (558,500)     (113,500)
    Net increase (decrease) in liabilities:
      Accrued liabilities .................       (7,263)       16,417        18,134
                                             -----------   -----------   -----------
       NET CASH PROVIDED BY
        OPERATING ACTIVITIES ..............  $ 8,650,612   $ 7,393,979   $ 5,684,450
                                             ===========   ===========   ===========

</TABLE>
                            See accompanying notes.


                                       8


                       GREAT NORTHERN IRON ORE PROPERTIES
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1996

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: 1996 - $4,713,000, $3,454,000 and $1,759,000; 1995 - $5,279,000,
$2,862,000 and $968,000; and 1994 - $4,949,000 and $1,840,000.

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 March 22, 1996, certificate holders of record as of March 6,
1996 and the reversioner were notified of a hearing on April 16, 1996 in Ramsey
County Courthouse, Saint Paul, Minnesota, for the purpose of settling and
allowing the Trust accounts for the year 1995. By Court Order signed and dated
April 16, 1996, the said accounts were settled and allowed in all respects. By 

                                       9

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

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 1997 to
certificate holders of record with holdings on any of the four quarterly record
dates during 1996. This information included a:

         SUBSTITUTE FORM 1099 - MISC - This form reported one's 1996 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 1996.

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

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 1998 and 1999. Following is an analysis of the
securities as of December 31:

                                       10


                           CURRENT                    NONCURRENT
                  -------------------------   -------------------------
                      1996          1995          1996          1995
                  -----------   -----------   -----------   -----------

Aggregate fair
 value .......... $ 3,332,883   $ 4,548,742   $ 5,061,750   $ 3,755,554
Gross unrealized
 holding gains ..      (2,628)      (22,367)      (11,123)      (51,809)
Gross unrealized
 holding losses..       4,124         5,645         8,281          --
                  -----------   -----------   -----------   -----------
Amortized cost
 basis ..........   3,334,379     4,532,020     5,058,908     3,703,745
Accrued interest       60,135        71,922        65,543        69,651
                  -----------   -----------   -----------   -----------
                  $ 3,394,514   $ 4,603,942   $ 5,124,451   $ 3,773,396
                  ===========   ===========   ===========   ===========


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 $149,880, $117,669
and $102,684 for the years 1996, 1995 and 1994, 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 $918,962 on December 31, 1996 and $600,027 on December 31,
1995. 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.

NET INCOME PER SHARE: Net income per share is determined by dividing net
income for the year by the 1,500,000 shares of beneficial interest
outstanding.

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.


                                       11


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:


                                  1996          1995
                              -----------   -----------

Attorneys' fees and expenses  $ 1,024,834   $ 1,024,834
Cost of surface lands ......    4,964,794     4,751,794
Shipment credits
 (cumulative) ..............     (470,811)     (395,159)
Asset disposition credits ..      (18,500)      (18,500)
                              -----------   -----------
Principal Charges account ..  $ 5,500,317   $ 5,362,969
                              ===========   ===========


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, 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.


                                       12


A summary of the components of net periodic pension cost (benefit), a noncash
item, for 1996, 1995 and 1994 is as follows:

                                       1996        1995        1994
                                    ---------   ---------   ---------

Service cost - benefits earned
 during the year .................  $  63,717   $  41,691   $  47,488
Interest cost on projected benefit
 obligation ......................    195,071     182,570     163,112
Actual return on plan assets .....   (350,351)   (702,080)     38,791
Net amortization and deferral ....     92,154     484,929    (279,749)
                                    ---------   ---------   ---------
Net pension cost (benefit) .......  $     591   $   7,110   $ (30,358)
                                    =========   =========   =========

Assumptions used in accounting for the defined benefit plan were:

                                      1996    1995
                                      ----    ----

Weighted average discount rate ..     7.50%   7.00%
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:


                                                  1996         1995
                                              -----------   -----------
Actuarial present value of benefit
 obligations:
 Vested benefit obligation .................  $ 2,313,406   $ 2,646,090
 Nonvested benefit obligation ..............       11,196        12,348
                                              -----------   -----------
 Accumulated benefit obligation ............    2,324,602     2,658,438
 Effect of estimated future salary increases      245,508       226,951
                                              -----------   -----------
 Projected benefit obligation ..............    2,570,110     2,885,389
Plan assets at fair value ..................    3,249,027     3,093,404
                                              -----------   -----------
Plan assets in excess of projected benefit
 obligation ................................      678,917       208,015
Unrecognized net (gain) loss ...............     (375,487)      114,624
Prior service cost .........................      179,909       207,015
Remaining net obligation at transition .....     (228,613)     (274,337)
                                              -----------   -----------
Net pension asset in balance sheet .........  $   254,726   $   255,317
                                              ===========   ===========


                                       13


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 $42,156, $52,962 and
$51,416 for the years 1996, 1995 and 1994, respectively.


                                       14


                          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, 1996 and 1995, and the related statements of
income, beneficiaries' equity and cash flows for each of the three years in the
period ended December 31, 1996. 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, 1996 and 1995, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.


                                                       /s/ Ernst & Young LLP



Minneapolis, Minnesota
January 31, 1997


                                       15


                       GREAT NORTHERN IRON ORE PROPERTIES
                              SUMMARY OF SHIPMENTS

<TABLE>
<CAPTION>
                                                             FULL TONS SHIPPED
                                                 ---------------------------------------------
                                                                                     TOTAL TO
                                   OWNERSHIP                                        JANUARY 1,
 NO.               MINE            INTEREST      1996        1995         1994         1997
 ---               ----            --------      ----        ----         ----         ----
<S> <C>                             <C>      <C>         <C>          <C>         <C>
 1   Mahoning ....................   100%      785,911      945,130      819,159   143,557,579
 2   Ontario .....................   do.       757,554      809,320      925,832     8,242,758
 3   Ontario .....................    50%      347,044    1,626,607    1,208,036    14,919,364
 4   Section 18 ..................   100%          492       40,073         --      27,898,431
 5   South Stevenson .............   do.       497,647      241,961         --       5,317,268
 6   Stevenson ...................   do.       525,754      104,648          311    35,061,066
 7   Russell Annex ...............    50%      325,511      592,443      115,270     1,160,985
 8   Wentworth ...................   100%         --           --         22,807     5,854,394
 9   Minntac .....................   do.     2,739,614    1,637,165    1,118,136    22,266,616
                                             ---------    ---------    ---------   -----------
                                             5,979,527    5,997,347    4,209,551   264,278,461
     Shipments from inactive
      mines and those
      exhausted, surrendered
      or sold prior to this year                    --           --           --  318,137,777
                                             ---------    ---------    ---------  -----------
        TOTAL ....................           5,979,527    5,997,347    4,209,551  582,416,238
                                             =========    =========    =========  ===========
</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




    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