EXHIBIT 13


                              GREAT NORTHERN IRON

                                 ORE PROPERTIES



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



                                 NINETY-SECOND
                         ANNUAL REPORT OF THE TRUSTEES
                             TO CERTIFICATE HOLDERS



                                      FOR
                          YEAR ENDED DECEMBER 31, 1998

<PAGE>


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


                                 (651) 224-2385
                              Fax (651) 224-2387

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

TRUSTEES                                       OFFICERS

HARRY L. HOLTZ                                 HARRY L. HOLTZ
  President of the Trustees(2)                   Chief Executive Officer(2)

JOSEPH S. MICALLEF(1)(3)                       THOMAS A. JANOCHOSKI
  Consultant and Director                        Vice President and Secretary
  Fiduciary Counselling, Inc.(2)                 Chief Financial Officer

ROGER W. STAEHLE(1)                            ROGER P. JOHNSON
  Adjunct Professor                              Manager of Mines
  University of Minnesota                        Chief Engineer

ROBERT A. STEIN(1)
  Executive Director
  American Bar Association

                              (1) Audit Committee
                         (2) Through December 31, 1998
           (3) President of the Trustees and Chief Executive Officer
                           effective January 1, 1999

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

               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
                                             ----------------------------------------------------------------------------------
                                                 1998              1997             1996              1995              1994
                                             -----------       -----------      -----------       -----------       -----------
<S>                                          <C>               <C>              <C>               <C>               <C>
Shipments from our mines (tons) .........      6,384,226         5,363,234        5,979,527         5,997,347         4,209,551
Royalty income ..........................    $11,234,050       $ 9,416,979      $ 9,978,603       $ 9,160,966       $ 7,113,730
Other income ............................        548,707           613,164          551,597           495,338           460,891
Net income ..............................     10,152,100         8,488,075        8,988,486         8,149,287         6,203,645
Total assets ............................     17,341,024        16,179,624       17,066,649        16,335,426        15,304,722
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 the year .......................    $      6.77       $      5.66      $      5.99       $      5.43       $      4.14
Declared distributions per share ........    $      6.30(1)    $      6.00(2)   $      5.80(3)    $      5.00(4)    $      4.00(5)
</TABLE>

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

   (1) $1.20 pd 4/30/98; $1.50 pd 7/31/98; $1.80 pd 10/30/98; $1.80 pd 1/29/99
   (2) $1.50 pd 4/30/97; $1.50 pd 7/31/97; $1.50 pd 10/31/97; $1.50 pd 1/30/98
   (3) $1.35 pd 4/30/96; $1.15 pd 7/31/96; $1.60 pd 10/31/96; $1.70 pd 1/31/97
   (4) $1.15 pd 4/28/95; $1.15 pd 7/31/95; $1.30 pd 10/31/95; $1.40 pd 1/31/96
   (5) $ .80 pd 4/29/94; $ .90 pd 7/29/94; $1.15 pd 10/31/94; $1.15 pd 1/31/95


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

Results of Operations: "Royalty income" for 1998 was greater than that of 1997
primarily due to increased taconite production from Trust lands. "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. "Other income" for 1998 was
less than that of 1997 mainly due to the sale of stockpile material in 1997.
"Other income" for 1997 exceeded that of 1996 for essentially the same reason.
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 1998, 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 $2,203,051 on
December 31, 1998. 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.

     Strong taconite production, particularly in the second half of 1998,
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.

     As previously reported, Joseph S. Micallef will succeed Harry L. Holtz as
President and Chief Executive Officer effective January 1, 1999.

     Mr. Micallef has been a Trustee since 1976 and has chaired many of the
Trust's committees during his tenure. His business and trust background
includes over 25 years experience as President and Chief Executive Officer of
Fiduciary Counselling, Inc. whose principal business is providing accounting,
tax, financial and investment services to trusts, individuals and other
entities. He remains active in the community, serving on a number of corporate
and charitable boards as a director or trustee. Mr. Micallef is also a member
of the Minnesota Bar. He graduated with a B.A. from the University of St.
Thomas in 1958 and with a J.D. from William Mitchell College of Law in 1962.

     Mr. Holtz became a Trustee in 1971 and was appointed President and Chief
Executive Officer in 1982. He served for 39 years with First Trust Company of
Saint Paul, the last 22 of which he was President and Chief Executive Officer
and finally Chairman of the Board. At the request of the other three Trustees,
Mr. Holtz has agreed to stay on as a Trustee for an indefinite period.

     The Trustees declared four quarterly distributions in 1998 totaling $6.30
per share. The first, in the amount of $1.20 per share, was paid on April 30,
1998, to certificate holders of record on March 31, 1998; the second, in the
amount of $1.50 per share, was paid on July 31, 1998, to certificate holders of
record on June 30, 1998; the third, in the amount of $1.80 per share, was paid
on October 30, 1998, to certificate holders of record on September 30, 1998; and
the fourth, in the amount of $1.80 per share, was paid on January 29, 1999, to
certificate holders of record on December 31, 1998.

     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


                                       3

<PAGE>


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 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 1999 to certificate holders of record on March 31, 1999.

     Shares of beneficial interest in the Trust are traded on the New York Stock
Exchange under the ticker symbol "GNI." There were 2,474 certificate holders of
record on December 31, 1998. The high and low prices for the quarterly periods
commencing January 1, 1997 through December 31, 1998 were as follows:

                                           1998                   1997
                                    -------------------    -------------------
QUARTER                               HIGH        LOW        HIGH        LOW
-------                             -------     -------    -------     -------
First ...........................   $65 1/2     $50        $59 1/2     $51
Second ..........................    59 1/2      50 1/4     61 3/4      54 3/4
Third ...........................    60 1/2      53 1/4     67          58
Fourth ..........................    59          51         67 3/4      63

     The following is a summary of quarterly results of operations (unaudited)
for the years ended December 31, 1998 and 1997 (in thousands of dollars, except
per share amounts):

                                                  QUARTER ENDED
                                ------------------------------------------------
                                MARCH 31      JUNE 30      SEPT. 30      DEC. 31
                                -------       -------      -------       -------
1998
  Royalty income .............. $ 2,017       $ 2,826      $ 3,756       $ 2,635
  Interest and other income ...     149           137          131           132
                                -------       -------      -------       -------
  Gross income ................   2,166         2,963        3,887         2,767
  Expenses ....................     434           428          411           358
                                -------       -------      -------       -------
  Net income .................. $ 1,732       $ 2,535      $ 3,476       $ 2,409
                                =======       =======      =======       =======
  Basic earnings per share .... $  1.15       $  1.69      $  2.32       $  1.61
                                =======       =======      =======       =======
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
                                =======       =======      =======       =======


                                       4

<PAGE>


     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, that being April 6, 2015. The termination
of the Trust on April 6, 2015 means that there will be no trading of the Trust's
1,500,000 certificates of beneficial interest (shares) on the New York Stock
Exchange beyond that date. At the end of the Trust, 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 reversionary beneficiary (formerly Lake Superior
Company, Limited), or its successors or assigns (Glacier Park Company, a wholly
owned subsidiary of Burlington Resources, Inc.). By the terms of a District
Court Order dated November 29, 1982, the reversioner is required to pay to a
Principal Charges account (as explained in Note D of the Financial Statements)
the cost of acquiring homes and land parcels on the iron formation that are in
the way of mining by U.S. Steel Corporation under its 1959 lease with the
Trustees. This account balance, which may increase or decrease, will be added to
the cash distributable to the then certificate holders at the termination 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. 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 1999 to all "record date"
certificate holders shown on our stock transfer agent's records during 1998.
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 and a Tax Return Guide for any recent year.

                                        Respectfully submitted,


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


Saint Paul, Minnesota
March 12, 1999


                                       5

<PAGE>


                      GREAT NORTHERN IRON ORE PROPERTIES

                              STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31
                                          ---------------------------------------------
                                              1998             1997             1996
                                          -----------      -----------      -----------
<S>                                       <C>              <C>              <C>
INCOME
  Royalties ...........................   $11,234,050      $ 9,416,979      $ 9,978,603
  Interest earned .....................       489,581          524,229          527,456
  Rent and other ......................        59,126           88,935           24,141
                                          -----------      -----------      -----------
                                           11,782,757       10,030,143       10,530,200
EXPENSES
  Royalties ...........................         4,623            4,623            4,623
  Real estate and payroll taxes .......       126,484          122,577          129,977
  Inspection and care of property .....       369,338          367,954          384,362
  Administrative and general ..........       928,707          863,881          853,126
  Provision for depreciation and
   amortization .......................       201,505          183,033          169,626
                                          -----------      -----------      -----------
                                            l,630,657        1,542,068        1,541,714
                                          -----------      -----------      -----------
NET INCOME ............................   $10,152,100      $ 8,488,075      $ 8,988,486
                                          ===========      ===========      ===========
BASIC EARNINGS PER SHARE ..............   $      6.77      $      5.66      $      5.99
                                          ===========      ===========      ===========
</TABLE>


                      STATEMENTS OF BENEFICIARIES' EQUITY
<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31
                                          ---------------------------------------------
                                              1998             1997             1996
                                          -----------      -----------      -----------
<S>                                       <C>              <C>              <C>
Balance at beginning of year ..........   $13,819,468      $14,331,393      $14,042,907
Net income for the year ...............    10,152,100        8,488,075        8,988,486
                                          -----------      -----------      -----------
                                           23,971,568       22,819,468       23,031,393
Deduct declaration of distributions
 on shares of beneficial interest, per
 share: 1998 - $6.30; 1997 - $6.00;
 1996 - $5.80 .........................     9,450,000        9,000,000        8,700,000
                                          -----------      -----------      -----------
Balance at end of year ................   $14,521,568      $13,819,468      $14,331,393
                                          ===========      ===========      ===========
</TABLE>

                            See accompanying notes.


                                       6

<PAGE>


                      GREAT NORTHERN IRON ORE PROPERTIES

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                     ASSETS
                                                                  DECEMBER 31
                                                         ---------------------------
                                                              1998            1997
                                                         -----------     -----------
<S>                                                      <C>             <C>
CURRENT ASSETS
  Cash and cash equivalents ..........................   $   941,071     $   496,447
  United States Treasury securities (NOTE B) .........     4,227,268       3,378,688
  Royalties receivable ...............................     2,485,333       1,897,554
  Prepaid expenses ...................................         3,755           4,938
                                                         -----------     -----------
TOTAL CURRENT ASSETS .................................     7,657,427       5,777,627

NONCURRENT ASSETS
  United States Treasury Notes (NOTE B) ..............     4,083,331       4,862,604
  Prepaid pension expense (NOTE E) ...................       317,518         270,570
                                                         -----------     -----------
                                                           4,400,849       5,133,174
PROPERTIES
  Mineral lands (NOTES B AND C) ......................    38,246,311      38,055,311
  Less allowances for depletion and amortization .....    33,072,841      32,898,721
                                                         -----------     -----------
                                                           5,173,470       5,156,590
  Building and equipment - at cost, less
   allowances for accumulated depreciation
   (1998 - $166,137; 1997 - $147,299) ................       109,278         112,233
                                                         -----------     -----------
                                                           5,282,748       5,268,823
                                                         -----------     -----------
                                                         $17,341,024     $16,179,624
                                                         ===========     ===========

                      LIABILITIES AND BENEFICIARIES' EQUITY
CURRENT LIABILITIES
  Accounts payable and accrued expenses ..............   $   119,456     $   110,156
  Distributions ......................................     2,700,000       2,250,000
                                                         -----------     -----------
TOTAL CURRENT LIABILITIES ............................     2,819,456       2,360,156

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) ...........    14,521,568      13,819,468
                                                         -----------     -----------
                                                         $17,341,024     $16,179,624
                                                         ===========     ===========
</TABLE>

                            See accompanying notes.


                                       7

<PAGE>


                      GREAT NORTHERN IRON ORE PROPERTIES

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                            YEAR ENDED DECEMBER 31
                                                 -------------------------------------------
                                                      1998           1997            1996
                                                 ------------    ------------   ------------
<S>                                              <C>             <C>            <C>
OPERATING ACTIVITIES
  Cash received from royalties and rents ......  $ 10,514,397    $ 10,041,465   $  9,454,204
  Cash paid to suppliers and employees ........    (1,465,617)     (1,371,737)    (1,377,546)
  Interest received ...........................       470,274         526,902        573,954
                                                 ------------    ------------   ------------
    NET CASH PROVIDED BY
     OPERATING ACTIVITIES .....................     9,519,054       9,196,630      8,650,612
INVESTING ACTIVITIES
  U.S. Treasury securities purchased ..........    (3,400,000)     (3,050,000)    (4,699,297)
  U.S. Treasury securities matured ............     3,350,000       3,325,000      4,511,172
  Net expenditures for equipment ..............       (24,430)        (43,191)       (27,004)
                                                 ------------    ------------   ------------
    NET CASH (USED IN) PROVIDED BY
     INVESTING ACTIVITIES .....................       (74,430)        231,809       (215,129)
FINANCING ACTIVITIES
  Distributions paid ..........................    (9,000,000)     (9,380,000)    (8,250,000)
                                                 ------------    ------------   ------------
    NET CASH USED IN FINANCING ACTIVITIES .....    (9,000,000)     (9,380,000)    (8,250,000)
                                                 ------------    ------------   ------------
NET INCREASE IN CASH
 AND CASH EQUIVALENTS .........................       444,624          48,439        185,483
CASH AND CASH EQUIVALENTS
 AT BEGINNING OF YEAR .........................       496,447         448,008        262,525
                                                 ------------    ------------   ------------
CASH AND CASH EQUIVALENTS
 AT END OF YEAR ...............................  $    941,071    $    496,447   $    448,008
                                                 ============    ============   ============
RECONCILIATION OF NET INCOME TO NET
 CASH PROVIDED BY OPERATING ACTIVITIES
  Net income ..................................  $ 10,152,100    $  8,488,075   $  8,988,486
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and amortization .............       201,505         183,033        169,626
    Net (increase) decrease in assets:
      Accrued interest ........................       (19,307)          2,673         46,498
      Royalties receivable ....................      (587,779)        752,326       (335,540)
      Prepaid expenses ........................       (45,765)        (17,602)         1,805
      Surface lands ...........................      (191,000)       (216,775)      (213,000)
    Net increase (decrease) in liabilities:
      Accrued liabilities .....................         9,300           4,900         (7,263)
                                                 ------------    ------------   ------------
       NET CASH PROVIDED BY
        OPERATING ACTIVITIES ..................  $  9,519,054    $  9,196,630   $  8,650,612
                                                 ============    ============   ============
</TABLE>

                            See accompanying notes.


                                       8

<PAGE>


                      GREAT NORTHERN IRON ORE PROPERTIES

                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1998

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: 1998 -- $5,426,000 and $4,821,000; 1997 -- $4,954,000 and
$4,069,000; and 1996 -- $4,713,000, $3,454,000 and $1,759,000.

     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, that being April 6, 2015. The termination
of the Trust on April 6, 2015 means that there will be no trading of the Trust's
1,500,000 certificates of beneficial interest (shares) on the New York Stock
Exchange beyond that date. At the end of the Trust, 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 reversionary beneficiary (formerly Lake Superior
Company, Limited), or its successors or assigns (Glacier Park Company, a wholly
owned subsidiary of Burlington Resources, Inc.). By the terms of a District
Court Order dated November 29, 1982, the reversioner is required to pay to a
Principal Charges account (see Note D) the cost of acquiring homes and land
parcels on the iron formation that are in the way of mining by U.S. Steel
Corporation under its 1959 lease with the Trustees. This account balance, which
may increase or decrease, will be added to the cash distributable to the then
certificate holders at the termination of the Trust.

     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


                                       9

<PAGE>


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

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 1, 1998, certificate holders of record as of March
31, 1998 and the reversioner were notified of a hearing on April 29, 1998 in
Ramsey County Courthouse, Saint Paul, Minnesota, for the purpose of settling and
allowing the Trust accounts for the year 1997. By Court Order signed and dated
May 1, 1998, the said accounts were settled and allowed in all respects. By
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 1999 to
certificate holders of record with holdings on any of the four quarterly record
dates during 1998. This information included a:

     SUBSTITUTE FORM 1099-MISC -- This form reported one's 1998 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 1998.

     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 2000. Following is an analysis of the securities as of December 31:


<TABLE>
<CAPTION>
                                            CURRENT                       NONCURRENT
                                  --------------------------      --------------------------
                                      1998            1997            1998            1997
                                  ----------      ----------      ----------      ----------
<S>                               <C>             <C>             <C>             <C>       
Aggregate fair value .........    $4,181,609      $3,355,234      $4,060,594      $4,793,656
Gross unrealized
 holding gains ...............       (19,552)         (5,125)        (23,094)        (18,985)
Gross unrealized
 holding losses ..............         1,688           1,438           6,221              --
                                  ----------      ----------      ----------      ----------
Amortized cost basis .........     4,163,745       3,351,547       4,043,721       4,774,671
Accrued interest .............        63,523          27,141          39,610          87,933
                                  ----------      ----------      ----------      ----------
                                  $4,227,268      $3,378,688      $4,083,331      $4,862,604
                                  ==========      ==========      ==========      ==========
</TABLE>

     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 $174,120,
$161,520 and $149,880 for the years 1998, 1997 and 1996, 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 $2,203,051 on December 31, 1998 and $1,351,481 on December
31, 1997. 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: Basic earnings per share is determined by
dividing net income for 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, 1998, 1997 and 1996.


                                       11

<PAGE>


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:

                                               1998            1997
                                            ----------      ----------

Attorneys' fees and expenses ...........    $1,024,834      $1,024,834
Cost of surface lands ..................     5,372,569       5,181,569
Shipment credits (cumulative) ..........      (628,698)       (543,806)
Asset disposition credits ..............       (20,000)        (18,500)
                                            ----------      ----------
Principal Charges account ..............    $5,748,705      $5,644,097
                                            ==========      ==========

     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.


                                       12

<PAGE>


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 summary of the components of net periodic
pension cost (benefit), a noncash item, for 1998, 1997 and 1996 is as follows:

                                           1998           1997           1996
                                        ---------      ----------      ---------

Service cost ........................   $ 85,758       $  72,395       $ 63,717
Interest cost .......................    190,787         185,912        195,071
Expected return on assets ...........   (290,575)       (252,620)      (239,579)
Net amortization ....................    (32,918)        (21,531)       (18,618)
                                        --------       ---------       --------
Net pension cost (benefit) ..........   $(46,948)      $ (15,844)      $    591
                                        ========       =========       ========

     Weighted-average assumptions used in the measurement of the benefit
obligation as of December 31 were:

                                                            1998         1997
                                                         ----------   ----------

Discount rate ........................................       6.75%        7.00%
Rate of compensation increase ........................       3.50%        3.50%
Expected return on plan assets .......................       8.00%        8.00%

     The following table sets forth the change in benefit obligation:

                                                         1998            1997
                                                    -------------   ------------

Obligation at January 1 .........................    $2,813,397      $2,570,110
Service cost ....................................        85,758          72,395
Interest cost ...................................       190,787         185,912
Actuarial loss ..................................        91,701         167,546
Benefit payments ................................      (194,294)       (182,566)
                                                     ----------      ----------
Obligation at December 31 .......................    $2,987,349      $2,813,397
                                                     ==========      ==========

     The following table sets forth the change in the fair value of plan assets:

                                                         1998            1997
                                                    ------------    ------------

Fair value of plan assets at January l ..........    $3,720,057      $3,249,027
Actual return on plan assets ....................       732,293         653,596
Benefit payments ................................      (194,294)       (182,566)
                                                     ----------      ----------
Fair value of plan assets at December 31 ........    $4,258,056      $3,720,057
                                                     ==========      ==========


                                       13

<PAGE>


NOTE E - PENSION PLAN (CONTINUED)

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

                                                         1998           1997
                                                      ----------     ----------

Benefit obligation ................................   $2,987,349     $2,813,397
Fair value of plan assets .........................    4,258,056      3,720,057
                                                      ----------     ----------
Plan assets in excess of benefit obligation .......    1,270,707        906,660
Unrecognized net gain .............................     (941,721)      (606,004)
Unrecognized prior service cost ...................      125,697        152,803
Unrecognized net transition asset .................     (137,165)      (182,889)
                                                      ----------     ----------
Prepaid pension expense ...........................   $  317,518     $  270,570
                                                      ==========     ==========

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 $44,968, $43,736 and
$42,156 for the years 1998, 1997 and 1996, 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, 1998 and 1997, and the related statements of
beneficiaries' equity, income and cash flows for each of the three years in the
period ended December 31, 1998. 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, 1998 and 1997, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1998, in conformity with generally accepted accounting principles.


                                        /s/ ERNST & YOUNG LLP


Minneapolis, Minnesota
January 29, 1999


                                       15

<PAGE>


                      GREAT NORTHERN IRON ORE PROPERTIES

                              SUMMARY OF SHIPMENTS

<TABLE>
<CAPTION>
                                                                FULL TONS SHIPPED
                                               -------------------------------------------------
                                                                                       TOTAL TO
                                    OWNERSHIP                                         JANUARY 1,
  NO.              MINE              INTEREST      1998        1997        1996          1999
------ --------------------------- ----------- ----------- ----------- ------------ ------------
<S>    <C>                         <C>         <C>         <C>         <C>          <C>
  1.   Mahoning ..................     100%    2,623,282   1,981,727      785,911   148,162,588
  2.   Ontario ...................     100%       63,638     421,251      757,554     8,727,647
  3.   Ontario ...................      50%       52,859     204,354      347,044    15,176,577
  4.   Section 18 ................     100%          130      13,068          492    27,911,629
  5.   South Stevenson ...........     100%           --          --      497,647     5,317,268
  6.   Stevenson .................     100%           --      30,496      525,754    35,091,562
  7.   Russell Annex .............      50%      656,034     306,278      325,511     2,123,297
  8.   Wentworth .................     100%      154,752      29,120           --     6,038,266
  9.   Minntac ...................     100%    2,833,531   2,376,940    2,739,614    27,477,087
                                               ---------   ---------    ---------   -----------
                                               6,384,226   5,363,234    5,979,527   276,025,921
       Shipments from inactive
        mines and those
        exhausted, surrendered
        or sold prior to this year                    --          --           --   318,137,777
                                               ---------   ---------    ---------   -----------
        TOTAL ....................             6,384,226   5,363,234    5,979,527   594,163,698
                                               =========   =========    =========   ===========
</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