<Page>

                                                                    EXHIBIT 13.1

                                  ANNUAL REPORT
                               OF THE TRUSTEES OF
                                  MESABI TRUST
                       For the Year Ended January 31, 2002

ADDRESS

Mesabi Trust
c/o Deutsche Bank Trust Company Americas
Corporate Trust & Agency Services - GDS
P.O. Box 318
Church Street Station
New York, NY 10008-0318
(615) 835-2749 (telephone)

COUNSEL

Oppenheimer Wolff & Donnelly LLP, General Counsel

TRANSFER AGENT

Deutsche Bank Trust Company Americas

REGISTRAR

Deutsche Bank Trust Company Americas

     Mesabi Trust will provide, upon the written request of any certificate
holder addressed to the Trustees at the above address and without charge to such
certificate holder, a copy of Mesabi Trust's Annual Report on Form 10-K for the
fiscal year ended January 31, 2002 as filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.

FORWARD-LOOKING INFORMATION

     Certain statements contained in this document are forward-looking,
including specifically those statements estimating 2002 production or shipments.
All such forward-looking statements are based on input from the lessee/operator.
The Trust has no control over the operations and activities of the
lessee/operator except within the framework of current agreements. Actual
results could differ materially from those indicated in such statements. For
important factors that could cause actual results to differ materially, see
"Important Factors Affecting Mesabi Trust," below.

                                        1
<Page>

                             SELECTED FINANCIAL DATA

<Table>
<Caption>
Years Ended On January 31         2002              2001              2000               1999              1998
-------------------------      ----------        ----------       -----------         ----------        ----------

<S>                            <C>               <C>               <C>                <C>               <C>
Royalty and interest income    $3,984,721        $5,753,650        $5,359,893         $5,988,143        $6,860,369
Trust expenses                    340,315           407,505           389,465            353,386           362,373
                               ----------        ----------       -----------         ----------        ----------
Net income(a)                  $3,644,406        $5,346,145        $4,970,428         $5,634,757        $6,497,996
                               ==========        ==========        ==========         ==========        ==========
Net income per Unit(b)         $      .28        $      .41        $      .38         $      .43        $      .50
                               ==========        ==========        ==========         ==========        ==========
Distributions declared
  per unit(b)(c)               $      .26        $      .41        $      .38         $      .43        $      .49
                               ==========        ==========        ==========         ==========        ==========

AT JANUARY 31
Total Assets                   $2,218,736        $2,556,754        $3,179,863         $2,790,042        $4,286,758
                               ==========        ==========        ==========         ==========        ==========
</Table>

----------
(a)  The Trust, as a grantor trust, is exempt from federal and state income
     taxes.

(b)  Based on 13,120,010 Units of Beneficial Interest outstanding during all
     years.

(c)  During the fiscal year ended January 31, 2002, the Trustees distributed
     $.305 per Unit (including $.13 per Unit declared in fiscal 2001 and
     distributed in February 2001) and declared an additional distribution of
     $.08 per Unit, payable in February 2002. During the fiscal year ended
     January 31, 2001, the Trustees distributed $.455 per Unit (including $.18
     per Unit declared in fiscal 2000 and distributed in February 2000) and
     declared an additional distribution of $.13 per Unit, payable in February
     2001. During the fiscal year ended January 31, 2000, the Trustees
     distributed $.35 per Unit (including $.155 per Unit declared in fiscal 1999
     and distributed in February 1999) and declared an additional distribution
     of $.18 per Unit, payable in February 2000. During the fiscal year ended
     January 31, 1999, the Trustees distributed $.54 per Unit (including $.265
     per Unit declared in fiscal 1998 and distributed in February 1998) and
     declared an additional distribution of $.155 per Unit, payable in February
     1999. During the fiscal year ended January 31, 1998, the Trustees
     distributed $.37 per Unit (including $.145 per Unit declared in fiscal 1997
     and distributed in February 1997) and declared an additional distribution
     of $.265 per Unit, payable in February 1998. See "Reserves and
     Distributions" on page 13 of this Annual Report.

                 TRUSTEES' DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

GENERAL

     Mesabi Trust ("Mesabi Trust" or the "Trust"), formed pursuant to an
Agreement of Trust dated July 18, 1961 (the "Agreement of Trust"), is a trust
organized under the laws of the State of New York. Mesabi Trust holds all of the
interests formerly owned by Mesabi Iron Company, including all right, title and
interest in the Amended Assignment of Peters Lease, the Amended Assignment of
Cloquet Lease, the beneficial interest in the Mesabi Land Trust and all other
assets and property identified in the Agreement of Trust. The Amended Assignment
of Peters Lease relates to an Indenture made as of April 30, 1915 among East
Mesaba Iron Company, Dunka River Iron Company and Claude W. Peters (the "Peters
Lease") and the Amended Assignment of Cloquet Lease relates to an Indenture made
May 1, 1916 between Cloquet Lumber Company and Claude W. Peters (the "Cloquet
Lease").

     The Trust will terminate twenty-one (21) years after the death of the
survivor of twenty-five (25) persons named in an exhibit to the Agreement of
Trust. The youngest person on this exhibit is now 41 years old.

                                        2
<Page>

     The Agreement of Trust specifically prohibits the Trustees from entering
into or engaging in any business. This prohibition applies even to business
activities the Trustees deem necessary or proper for the preservation and
protection of the Trust Estate. Accordingly, the Trustees' activities in
connection with the administration of Trust assets are limited to collecting
income, paying expenses and liabilities, distributing net income and protecting
and conserving the assets held.

     Pursuant to a ruling from the Internal Revenue Service, which ruling was
based on the terms of the Agreement of Trust including the prohibition against
entering into any business, the Trust is not taxable as a corporation for
Federal income tax purposes. Instead, the holders of the Units of Beneficial
Interest (the "Unitholders") are considered as "owners" of the Trust and the
Trust's income is taxable directly to the Unitholders.

     Leasehold royalty income constitutes the principal source of the Trust's
revenue. Royalty rates are determined in accordance with the terms of Mesabi
Trust's leases and assignments of leases. Three types of royalties comprise the
Trust's leasehold royalty income:

     -   Overriding royalties, which constitute the majority of Mesabi Trust's
         royalty income, are determined by both the volume and selling price of
         iron ore products shipped.

     -   Fee royalties, historically a smaller component of the Trust's royalty
         income, are payable to Mesabi Land Trust, a Minnesota land trust of
         which Mesabi Trust is the sole beneficiary ("Mesabi Land Trust"), and
         are based on the amount of crude ore mined. Currently, the fee royalty
         on crude ore is based on an agreed price per ton, subject to certain
         indexing. Crude ore is used to produce iron ore pellets and other
         products.

     -   Minimum advance royalties, the third type of royalty, are discussed
         below.

     Until August 17, 1989, the overriding royalty was based on the quantity and
iron content of pellets shipped by Reserve Mining Company ("Reserve") from
Mesabi Trust lands, although Mesabi Trust did not receive any royalty income
from May 1986 until July 1990 because Reserve filed a Chapter 11 bankruptcy
petition and suspended its operations.

     On August 17, 1989, Cyprus Northshore Mining Corporation ("Cyprus NMC")
purchased substantially all of Reserve's assets, including Reserve's interest in
the Mesabi Trust lands. In connection with the purchase, Mesabi Trust, Reserve's
Chapter 11 trustee and Cyprus NMC entered into the Amendment of Assignment,
Assumption and Further Assignment of Peters Lease (the "Amended Assignment of
Peters Lease"), the Amendment of Assignment, Assumption and Further Assignment
of Cloquet Lease (the "Amended Assignment of Cloquet Lease") and the Assumption
and Assignment of Mesabi Lease (together with the Amended Assignment of Peters
Lease and the Amended Assignment of Cloquet Lease Assignment, the "Amended
Assignment Agreements"). The Amended Assignment Agreements modified the method
of calculating overriding royalties payable to Mesabi Trust and transferred
Reserve's interest in the Mesabi Trust lands to Cyprus NMC. Pursuant to the
Amended Assignment Agreements, overriding royalties are determined by both the
volume and selling price of iron ore products shipped.

     In 1994, Cyprus NMC was sold by its parent corporation to Cleveland-Cliffs
Inc. ("CCI") and renamed Northshore Mining Corporation ("Northshore"). CCI
operates Northshore as a wholly-owned subsidiary.

     Fee royalties payable to Mesabi Land Trust, a Minnesota land trust of which
Mesabi Trust is the sole beneficiary ("Mesabi Land Trust"), are based on the
amount of crude ore mined. Crude ore is used

                                        3
<Page>

to produce iron ore pellets and other products. Under the Amended Assignment
Agreements, overriding royalties are determined by both the volume and selling
price of iron ore products sold.

     With respect to the volume component of royalty calculation, Northshore is
obligated to pay Mesabi Trust base overriding royalties in varying amounts. The
volume component of overriding royalties constitutes a percentage of the gross
proceeds of iron ore products produced at Mesabi Trust lands (and to a limited
extent other lands) and shipped from Silver Bay, Minnesota. The percentage
ranges from 2-1/2% of the gross proceeds (for the first one million tons of iron
ore products so shipped annually) to 6% of the gross proceeds (for all iron ore
products in excess of 4 million tons so shipped annually).

     With respect to the selling price component of overriding royalty
calculation, Northshore is obligated to pay royalty bonuses to Mesabi Trust. The
royalty bonus is a percentage of the gross proceeds of product shipped from
Silver Bay, and sold at prices above a threshold price. The threshold price is
adjusted on an annual basis for inflation and deflation (but not below $30). The
threshold price was $38.22 for calendar year 2000, was $39.82 for calendar year
2001 and will be $40.61 for calendar year 2002. The royalty bonus percentage
ranges from 1/2 of 1% of the gross proceeds (on all tonnage shipped for sale at
prices between the threshold price and $2.00 above the threshold price) to 3% of
the gross proceeds (on all tonnage shipped for sale at prices $10.00 or more
above the threshold price). No royalty bonus has been paid to date.

     Generally, Northshore's obligation to pay base overriding royalties and
royalty bonuses with respect to the sale of iron ore products accrues upon the
shipment of those products from Silver Bay. However, regardless of whether any
shipment has occurred, Northshore is obligated to pay to Mesabi Trust a minimum
advance royalty. Each year, the amount of the minimum advance royalty is
adjusted for inflation and deflation (but not below $500,000 per annum). Advance
royalties payable were $647,282 for calendar year 2000, were $663,682 for
calendar year 2001 and are $676,814 for calendar year 2002. Until overriding
royalties (and royalty bonuses, if any) for a particular year equal or exceed
the minimum advance royalty for the year, Northshore must make quarterly
payments of up to 25% of the minimum advance royalty for the year. Because
advance minimum royalties are essentially prepayments of base overriding and
bonus royalties earned each year, any advance minimum royalties paid in a fiscal
quarter are recouped by credits against base overriding and bonus royalties
earned in later fiscal quarters during the year. Historically, advance minimum
royalties have been paid in the first fiscal quarter and recouped in the second
fiscal quarter.

     Northshore is obligated to make quarterly royalty payments in January,
April, July and October of each year. In the case of base overriding royalties
and royalty bonuses, these quarterly royalty payments are to be made whether or
not the related proceeds of sale have been received by Northshore by the time
such payments become due.

     Under the relevant documents, Northshore may mine and ship iron ore
products from lands other than Mesabi Trust lands. To encourage the use of iron
ore products from Mesabi Trust lands, Mesabi Trust receives royalties on stated
percentages of iron ore shipped from Silver Bay, whether or not the iron ore
products are from Mesabi Trust lands. Mesabi Trust receives royalties at the
greater of (i) the aggregate quantity of iron ore products shipped that were
from Mesabi Trust lands, and (ii) a portion of the aggregate quantity of all
iron ore products shipped that were from any lands, such portion being 90% of
the first four million tons shipped during such year, 90% of the next two
million tons shipped during such year, and 25% of all tonnage shipped during
such year in excess of six million tons.

     Leasehold royalty income constitutes the principal source of the Trust's
revenue, which comprised 98.7%, 99.2% and 99.2% of the total revenue of the
Trust in 2002, 2001 and 2000,

                                        4
<Page>

respectively. A more complete discussion of royalty rates and the manner in
which they are determined is set forth on pages 3 and 4 of this Annual Report.

     In the beginning of 2001, CCI made several announcements of reductions in
iron ore pellet production at the Northshore's pellet plant at Silver Bay,
Minnesota, which processes iron ore produced at Mesabi Trust's Peter Mitchell
Mine. Most recently, on November 7, 2001, CCI announced that a previously
scheduled eight-week curtailment in pellet production, which would result in an
additional reduction of iron ore production of 500,000 tons at Northshore, would
be extended one additional week. As a result of this extension, Northshore
operations did not resume until December 15, 2001. As a result of these
production curtailments, Northshore's iron ore pellet production was
approximately 2.8 million tons in the fiscal year ended 2002. As reasons for
each production cutback, CCI cited the impact on their customers of perceived
unfairly traded imports and the general deterioration in overall steel demand in
North America.

     Northshore has advised the Trustees that total calendar year 2002
production may be approximately 3.0 million tons of iron ore pellets. Northshore
has not provided the Trust with an estimate for total calendar year 2002
shipments. (See description of the uncertainty of market conditions in the iron
ore and steel industry under "Important Factors Affecting Mesabi Trust" below.)
During calendar years 2001, 2000, 1999, 1998 and 1997, the percentage of
shipments of iron ore products from Mesabi Trust lands was approximately 99.2%,
99.8%, 98.9%, 99.3% and 98.3%, respectively, of total shipments. Northshore has
not advised the Trustees as to the percentage of iron ore products it
anticipates shipping from Mesabi Trust lands.

     In an effort to conserve cash in the deteriorating market for iron ore, CCI
announced on January 8, 2002, that where possible, it would challenge and reduce
excessive administrative and operating expenses. As a result of this effort, CCI
suspended its quarterly dividend on common shares of $.10, which is forecast to
save approximately $4 million annually, and also stated that it plans to leave
its Trinidad and Tobago plant (which produces hot briquetted iron (HBI)) idle
until the market improves and thus warrants resuming operations.

     On November 14, 2001, CCI announced that it entered into a Memorandum of
Understanding with Mesabi Nugget LLC and other parties to participate in the
Mesabi Nugget Project. The project's objective is to develop a new iron making
technology (Kobe Steel's Itmk3 process) for converting iron ore into nearly pure
iron nugget form. The project's initial phase, Phase I, is currently in
progress. It includes permitting and preliminary engineering for a pilot
demonstration plant, development of project agreements, and due diligence
reviews by the project participants. On January 8, 2002, the Board of Directors
of CCI approved CCI's involvement in and investment of $4.5 million ($500,000 in
cash, with the residual in materials, other property and personnel) through
Phase II of this project. During Phase II, a test plant will be constructed at
Northshore to test the Kobe Steel Itmk3 process and its ability to convert iron
ore into nearly pure iron nugget form.

     On March 2, 2002, Skillings Mining Review reported that the Iron Range
Resources and Rehabilitation Board (IRRRB) unanimously voted to provide a $7.5
million loan (which is in addition to the $500,000 previously committed by the
IRRRB) to assist in the funding of Phase II of the Mesabi Nugget Project. The
March 2, 2002 issue of Skillings Mining Review also reported that the IRRRB's
loan is to be matched with a loan of $8.0 million by the Minnesota Department of
Trade and Economic Development. Furthermore, on April 4, 2002, CCI issued a
press release stating that one of its subsidiaries, IronUnits LLC, had signed an
agreement committing itself through Phase II of the project. According to a
January 8, 2002 press release issued by CCI, construction of the pilot plant at
Northshore is planned to commence in May 2002, with operations possibly
commencing in the early part of 2003.

                                        5
<Page>

     Although Mesabi Trust is not a direct party to this project and its
involvement in this project was not solicited, it appears that because the plant
will be located at the Northshore facility, the project will probably involve
the use of iron ore from the Mesabi Trust lands. CCI indicated that iron nuggets
from this new process would be used as an alternative or supplement to pig iron
in the steel making process. Based on the information available to the Mesabi
Trustees at this time, the Trustees are not able to appropriately project the
impact on royalties that would be received by the Mesabi Trust in the future,
even if the iron nugget project successfully achieves commercialization. CCI has
not reported any update on its several years old announcement that it was
evaluating whether to build a facility at Northshore's Silver Bay location to
produce premium grade pig iron through a direct reduced iron process.

IMPORTANT FACTORS AFFECTING MESABI TRUST

     The Agreement of Trust specifically prohibits the Trustees from entering
into or engaging in any business. This prohibition seemingly applies even to
business activities the Trustees deem necessary or proper for the preservation
and protection of the Trust Estate. Accordingly, the Trustees' activities in
connection with the administration of Trust assets are limited to collecting
income, paying expenses and liabilities, distributing net income and protecting
and conserving the assets held.

     Accordingly, the income of the Trust is highly dependent upon the
activities and operations of Northshore, and the terms and conditions of the
Amended Assignment Agreements. The Trust and the Trustees have no control over
the operations and activities of Northshore, except within the framework of the
Amended Assignment Agreements.

     Due to winter weather, and the increasing royalty percentages based on
tonnage shipped in a calendar year, results for a particular calendar quarter
are typically not indicative of results for future quarters or the year as a
whole. Factors which can impact the results of the Trust in any quarter or year
include:

1.  SHIPPING CONDITIONS IN THE GREAT LAKES. Shipping activity by Northshore is
    dependent upon when the Great Lakes shipping lanes freeze for the winter
    months (typically in January) and when they re-open in the spring (typically
    late-March or April). Base overriding royalties to Mesabi Trust are based on
    shipments made in a calendar quarter. Because there typically is little or
    no shipping activity in the first calendar quarter, the Trust typically
    receives only the minimum royalty for that period.

2.  OPERATIONS OF NORTHSHORE. Because the primary portion of the Trust's
    revenues derive from iron ore product shipped by Northshore from Silver Bay,
    Northshore's processing and shipping activities directly impact the Trust's
    revenues in each quarter and for each year. In turn, a myriad of factors
    affect Northshore shipment volume. These factors include economic conditions
    in the iron ore industry, pricing by domestic and international competitors,
    long-term customer contracts or arrangements by Northshore or its
    competitors, availability of ore boats, production at Northshore's mining
    operations, and production at the pelletizing/processing facility. If any
    pelletizing line becomes idle for any reason, production and shipments (and,
    consequently, Trust income) could be adversely impacted.

3.  INCREASING ROYALTIES. As described elsewhere in this Report, the royalty
    percentage paid to the Trust increases as the aggregate tonnage of iron ore
    products shipped, attributable to the Trust, in any calendar year increases.
    Assuming a consistent sales price per ton throughout a calendar year,
    shipments of iron ore product attributable to the Trust later in the year
    generate a higher royalty to the Trust.

                                        6
<Page>

4.  PERCENTAGE OF MESABI TRUST ORE. As described elsewhere in this Report,
    Northshore has the ability to process and ship iron ore products from lands
    other than Mesabi Trust lands. In certain circumstances, the Trust may be
    entitled to royalties on those other shipments, but not in all cases. In
    general, the Trust will receive higher royalties (assuming all other factors
    are equal) if a higher percentage of shipments are from Mesabi Trust lands.
    The percentages of shipments that came from Mesabi Trust lands were 99.2%,
    99.8%, 98.9%, 99.3% and 98.3% in calendar years 2001, 2000, 1999, 1998 and
    1997, respectively.

5.  UNCERTAINTY OF MARKET CONDITIONS IN THE STEEL AND IRON ORE INDUSTRY.
    Following from a weak second half in fiscal year 2000 in the North American
    steel market, steel industry fundamentals continued to deteriorate in fiscal
    year 2001. Weak steel demand, steel industry consolidation, price decreases
    attributable to slowing economies in the United States and Canada and high
    volumes of steel imports have caused uncertainty in the North American steel
    industry. Notwithstanding the President's March 5, 2002 tariff measures on
    various imported steel products, it is nevertheless uncertain the degree to
    which such measures will improve the weak domestic steel market. As such,
    current conditions in the steel industry could nevertheless have an adverse
    impact on the royalties that will be paid to the Trust during fiscal year
    2003.

COMPARISON OF FISCAL YEARS ENDED JANUARY 31, 2002 AND JANUARY 31, 2001

     Mesabi Trust's gross income for the fiscal year ended January 31, 2002 was
$3,984,721, a decrease of $1,768,929 (or approximately 30.7%) from the gross
income of $5,753,650 for the fiscal year ended January 31, 2001. The decrease in
gross income primarily was due to decreased pellet shipments. Mesabi Trust's
expenses of $340,315 for the fiscal year ended January 31, 2002 decreased
$67,190 (or approximately 16.5%) from expenses of $407,505 for the fiscal year
ended January 31, 2001. Total expenses, by category, for each of the last three
fiscal years is set forth under "Income and Expense" on page 13 of this Annual
Report. Decreased income and expenses resulted in net income of $3,644,406 for
the fiscal year ended January 31, 2002, a decrease of $1,701,739 from the net
income of $5,346,145 for the fiscal year ended January 31, 2001.

     Mesabi Trust's Unallocated Reserve aggregated $1,094,721 at January 31,
2002, as compared with an Unallocated Reserve of $795,918 at January 31, 2001.
During the fiscal year ended January 31, 2002, the Trustees distributed $.305
per Unit of Beneficial Interest. These distributions to Unitholders totaled
$4,001,603.

     The following chart summarizes Mesabi Trust's royalty income for the fiscal
years ended January 31, 2002 and January 31, 2001, respectively:

<Table>
<Caption>
                                          Fiscal Years Ended on January 31
                                         2002                          2001
                                      -----------                 -----------
       <S>                            <C>                         <C>
       Base overriding royalties      $ 3,709,014                 $ 5,376,626
       Bonus royalties                         --                          --
       Minimum advance
         Royalty paid (recouped)               --                          --
       Fee royalties                      224,857                     330,139
                                      -----------                 -----------
         Total royalty income         $ 3,933,871                 $ 5,706,765
                                      ===========                 ===========
</Table>

                                        7
<Page>

COMPARISON OF FISCAL YEARS ENDED JANUARY 31, 2001 AND JANUARY 31, 2000

     Mesabi Trust's gross income for the fiscal year ended January 31, 2001 was
$5,753,650, an increase of $393,757 (or approximately 7.3%) from the gross
income of $5,359,893 for the fiscal year ended January 31, 2000. The increase in
gross income primarily was due to increased pellet shipments plus a higher
average sales price per ton. Mesabi Trust's expenses of $407,505 for the fiscal
year ended January 31, 2001 increased $18,040 (or approximately 4.6%) from
expenses of $389,465 for the fiscal year ended January 31, 2000. Total expenses,
by category, for each of the last three fiscal years is set forth under "Income
and Expense" on page 13 of this Annual Report. Increased income and expenses
resulted in net income of $5,346,145 for the fiscal year ended January 31, 2001,
an increase of $375,717 from the net income of $4,970,428 for the fiscal year
ended January 31, 2000.

     Mesabi Trust's Unallocated Reserve aggregated $795,918 at January 31, 2001,
as compared with an Unallocated Reserve of $763,377 at January 31, 2000. During
the fiscal year ended January 31, 2001, the Trustees distributed $.455 per Unit
of Beneficial Interest. These distributions to Unitholders totaled $5,969,605.

     The following chart summarizes Mesabi Trust's royalty income for the fiscal
years ended January 31, 2001 and January 31, 2000, respectively:

<Table>
<Caption>
                                          Fiscal Years Ended on January 31
                                         2001                         2000
                                      -----------                 -----------
       <S>                            <C>                         <C>
       Base overriding royalties      $ 5,376,626                 $ 5,005,190
       Bonus royalties                         --                          --
       Minimum advance
         Royalty paid (recouped)               --                          --
       Fee royalties                      330,139                     311,016
                                      -----------                 -----------
         Total royalty income         $ 5,706,765                 $ 5,316,206
                                      ===========                 ===========
</Table>


                                TO THE HOLDERS OF
                     CERTIFICATES OF BENEFICIAL INTEREST IN
                                  MESABI TRUST

MESABI TRUST

     Mesabi Trust was created in 1961 upon the liquidation of Mesabi Iron
Company. The sole purpose of the Trust, as set forth in the Agreement of Trust
dated as of July 18, 1961 (the "Agreement of Trust"), is to conserve and protect
the Trust Estate and to collect and distribute the income and proceeds therefrom
to the Trust's Certificate Holders after the payment of, or provision for,
expenses and liabilities. The Agreement of Trust prohibits the Trust from
engaging in any business.

THE TRUST ESTATE

     The principal assets of Mesabi Trust consist of two different interests in
certain properties in the Mesabi Iron Range: (i) Mesabi Trust's interest as
assignor in the Amended Assignment of Peters and the Amended Assignment of
Cloquet Lease, which together cover properties aggregating approximately 9,750
contiguous acres in St. Louis County, Minnesota (the "Peters Lease Lands" and
the "Cloquet Lease Lands," respectively, and collectively, the "Peters and
Cloquet Lease Lands"), and (ii) Mesabi Trust's ownership of the entire
beneficial interest in Mesabi Land Trust, which has a 20% interest as fee owner
in

                                        8
<Page>

the Peters Lease Lands and a 100% fee ownership in certain non-mineral-bearing
lands adjacent to the Peters and Cloquet Lease Lands (the "Mesabi Lease Lands").

     The Peters and Cloquet Lease Lands are located at the eastern end of the
Mesabi Iron Range and contain low-grade iron ore known as taconite,
approximately three tons of which must be beneficiated to produce one ton of
high-grade pellets. The Trustees have not had any surveys or test drillings
performed to ascertain the iron ore reserves on the Peters and Cloquet Lease
Lands. However, initial surveys and test drillings made by Mesabi Iron Company
many years ago indicated that these lands contained accessible taconite reserves
capable of yielding approximately 500 million tons of high grade iron ore
pellets. In CCI's 2001 Annual Report, CCI estimated that there currently remains
enough ore reserve in the Peters and Cloquet Lease Lands to produce, at current
extraction rates, concentrated product for 80 years of mining. The Mesabi Lease
Lands provide an area for location of service roads, supporting plants and
equipment and dump sites for overburden.

     Under the Amended Assignment Agreements, Northshore produces iron ore from
the Peters and Cloquet Lease Lands for the manufacture of pellets to be sold to
various users, and Mesabi Trust receives royalties on the crude ore extracted
from such Lands and the pellets produced from such crude ore.

LEASEHOLD ROYALTIES

     Northshore is obligated to pay to Mesabi Trust base overriding royalties
and royalty bonuses on all pellets (and other iron ore products) produced from
the Peters and Cloquet Lease Lands ("Mesabi Ore") and shipped from Silver Bay,
Minnesota in each calendar year. The royalties are based on prices per unit of
product, volumes of product shipped and where on the escalating scale of
royalties--2% on the first million tons to 6% on shipments above four million
tons per year--each shipment falls.

     Base overriding royalties are calculated on the basis of an escalating
scale of percentages of gross sales proceeds of iron ore shipped. The applicable
percentage is determined by reference to the tonnage of pellets previously
shipped in the then current calendar year, as follows:

<Table>
<Caption>
                                                                     Applicable royalty
             Tons of iron ore products                         (expressed as a percentage
             shipped in calendar year                            of gross sales proceeds
             -------------------------                             within each tranche)
                                                               ---------------------------

     <S>                                                                 <C>
     one million or less                                                 2-1/2%
     more than one but not more than two million                         3-1/2%
     more than two but not more than three million                           5%
     more than three but not more than four million                      5-1/2%
     more than four million                                                  6%
</Table>

                                        9
<Page>

     For example, assume that no shipments of iron ore products were made during
the first calendar quarter of 2002 and further assume that pellets were shipped
from Silver Bay, Minnesota in the second and third calendar quarters of 2002 in
the following tonnage quantities and rendering the following gross proceeds:

<Table>
<Caption>
                                                Tonnage               Gross Proceeds
                                                -------               --------------
                   <S>                        <C>                       <C>
                   2nd Quarter:                 500,000                 $14,000,000
                   3rd Quarter:                 500,000                 $14,000,000
                                              1,000,000                 $27,000,000
                                              1,000,000                 $26,000,000
                                              1,000,000                 $25,000,000
                                              1,500,000                 $37,500,000
</Table>

In this example, the base overriding royalties payable in respect of the second
and third calendar quarters of 2002 would be as follows:

<Table>
                   <S>                      <C>                            <C>
                   2nd Quarter:             $14,000,000 X 2-1/2%           ($  350,000)
                   3rd Quarter:             $14,000,000 X 2-1/2%           ($  350,000)
                                            $27,000,000 X 3-1/2%           ($  945,000)
                                            $26,000,000 X     5%           ($1,300,000)
                                            $25,000,000 X 5-1/2%           ($1,375,000)
                                            $37,500,000 X     6%           ($2,250,000)
</Table>

Based on the same example, the percentage applicable for all iron ore products
shipped in the fourth calendar quarter of 2002 would be 6%, because more than
four million tons were shipped during the first three quarters.

     The above figures are provided only to illustrate the method for
calculating base overriding royalties and do not indicate the amount of base
overriding royalties the Trustees expect Mesabi Trust to earn calendar 2002 or
any other calendar or fiscal year. Accordingly, the foregoing example
illustrating the calculation of base overriding royalties should not be
considered a prediction of the amount of base overriding royalties Mesabi Trust
will receive.

     Royalty bonuses are payable on all iron ore products sold at prices above a
threshold price (the "Adjusted Threshold Price"). The Adjusted Threshold Price
was $38.22 per ton for calendar year 2000, $39.82 per ton for calendar 2001, and
will be $40.61 per ton for calendar 2002. The Adjusted Threshold Price is
subject to adjustment (but not below $30 per ton) for inflation and deflation
and is determined each year on the basis of the change in a broad based index of
inflation and deflation published quarterly by the U.S. Department of Commerce.

     The amount of royalty bonuses payable for any period is calculated on the
basis of an escalating scale of percentages of the gross sales proceeds to
Northshore of pellets sold at prices above the Adjusted Threshold Price. The
applicable percentage is determined by reference to the amount by which the
sales prices for a particular quantity of pellets exceeds the Adjusted Threshold
Price, as follows:

                                       10
<Page>

<Table>
<Caption>
           Amount by which
             sales price per ton
             exceeds Adjusted                                   Applicable
             Threshold Price                                    Percentage
           ---------------------                                ----------
           <S>                                                    <C>
           $2 or less                                             1/2 of 1%
           more than $2 but not more than $4                             1%
           more than $4 but not more than $6                         1-1/2%
           more than $6 but not more than $8                             2%
           more than $8 but not more than $10                        2-1/2%
           more than $10                                                3%
</Table>

     For example, assume an Adjusted Threshold Price of $40.61 is assumed for
calendar year 2002 and that two million tons of iron ore products were shipped
in the second calendar quarter of 2002 at the following prices:

                       1,000,000 tons @ $39.00/ton
                         300,000 tons @ $41.00/ton
                         300,000 tons @ $44.00/ton
                         100,000 tons @ $46.00/ton
                         100,000 tons @ $48.00/ton
                         100,000 tons @ $50.00/ton
                          50,000 tons @ $52.00/ton
                          50,000 tons @ $56.00/ton

In this example, the following royalty bonuses would be payable on shipments of
iron ore products on the second calendar quarter of 2002 as follows:

                       1,000,000 tons @ $39.00/ton             No bonus
                         300,000 tons @ $41.00/ton               1/2%
                         300,000 tons @ $44.00/ton                 1%
                         100,000 tons @ $46.00/ton             1-1/2%
                         100,000 tons @ $48.00/ton                 2%
                         100,000 tons @ $50.00/ton             2-1/2%
                          50,000 tons @ $52.00/ton                 3%
                          50,000 tons @ $56.00/ton                 3%

     The above figures are provided only to illustrate the method for
calculating royalty bonuses and do not indicate the amount of royalty bonuses,
if any, the Trustees expect Mesabi Trust to earn in calendar 2002 or any other
calendar or fiscal year. Accordingly, the foregoing example illustrating the
calculation of royalty bonuses should not be considered a prediction of the
amount, if any, of royalty bonuses Mesabi Trust will receive. In fact, no
royalty bonus has been paid to the Trust for several years.

     Northshore also must pay base overriding royalties and royalty bonuses on
pellets produced from lands other than Mesabi Lease Lands ("Other Ore") to the
extent necessary to assure payment of base overriding royalties and royalty
bonuses on at least 90% of the first four million tons of pellets shipped from
Silver Bay in each calendar year, at least 85% of the next two million tons of
pellets shipped therefrom in each calendar year, and at least 25% of all tonnage
of pellets shipped therefrom in each calendar year in excess of six million
tons. Base overriding royalties and royalty bonuses payable on Other Ore can be
recouped by Northshore out of base overriding royalties and royalty bonuses paid
on Mesabi Ore. The amount of Other Ore royalties and Other Ore royalty bonuses
which can be recouped on

                                       11
<Page>

any payment date cannot, however, exceed 20% of the amount of Mesabi Ore
royalties and royalty bonuses which are otherwise payable on that payment date.

     Northshore is obligated to pay to Mesabi Trust advance royalties in equal
quarterly installments. The advance royalty was $647,282 for the calendar year
2000, $663,682 for the calendar year 2001, and is $676,814 for the calendar year
2002. The amount of advance royalties payable is subject to adjustment (but not
below $500,000 per annum) for inflation and deflation and is determined each
year in the same manner as the Adjusted Threshold Price. All payments of advance
royalties are credited against payments of base overriding royalties and royalty
bonuses payable on Mesabi Ore until fully recouped. The amount of advance
royalties payable in respect of each calendar quarter constitutes the minimum
overriding royalty amount payable by Northshore in respect of that calendar
quarter.

     Base overriding royalties and royalty bonuses are payable quarterly and
accrue upon shipment, whether or not the actual sales proceeds for any shipment
are received by Northshore. The amount of base overriding royalties and royalty
bonuses payable with respect to the first three quarters in any calendar year
are determined on the basis of tonnage shipped during each such calendar quarter
and the actual sales proceeds of such shipments, with an adjustment made to the
royalties payable with respect to the last quarter in any calendar year to
account for errors, adjustments and returns.

     In addition, in the event that Northshore commences mining and production
of quarry stone for shipment, Northshore must pay base overriding royalties on
all quarry stone so shipped on the basis of the same scale of percentages used
in calculating base overriding royalties payable on pellets and other iron ore
product. Northshore has not informed Mesabi Trust of any present intention to
commence mining and production of quarry stone.

LAND TRUST AND FEE ROYALTIES

     Mesabi Land Trust holds a 20% interest as fee owner in the Peters Lease
Lands and a 100% interest as fee owner in the Mesabi Lease Lands as lessor of
the Mesabi Lease. Mesabi Trust holds the entire beneficial interest in Mesabi
Land Trust and is entitled to receive the net income of Mesabi Land Trust after
payment of expenses. Northshore is not obligated to pay royalties or rental to
Mesabi Land Trust as fee owner of the non-mineral bearing Mesabi Lease Lands, a
consideration having been paid in that respect at the inception of the Mesabi
Lease.

     Northshore is required to pay a base royalty to the fee owners in an amount
which, at its option, is either (a) 11-2/3 CENTS per gross ton of crude ore it
mines from the Peters Lease Lands, or (b) $.0056 for each 1% of metallic iron
ore natural contained in each gross ton of pellets it produces from the Peters
Lease Lands and ships. The base fee royalty rate is adjusted up or down each
quarter (but not below the base royalty specified above) by addition or
subtraction of an amount to be determined by reference to changes in Lower Lake
Mesabi Range pellet prices and the All Commodities Producer Price Index. The
adjustment factor is computed by multiplying the base fee royalty rate specified
above by a percentage that is the sum of (a) one-half of the percentage change,
if any, by which the then prevailing price per iron unit of Mesabi Range
taconite pellets delivered by rail or vessel at Lower Lake Erie ports exceeds
80.5 CENTS (the price per iron unit in effect in January 1982), plus (b)
one-half of the percentage change, if any, by which the All Commodities Producer
Price Index exceeds 295.8 (the level of the Index for December 1981).

     Fee royalties aggregating $224,857 with respect to crude ore mined by
Northshore were earned by Mesabi Land Trust during the fiscal year ended January
31, 2002.

                                       12
<Page>

INCOME AND EXPENSE

     Total income for Mesabi Trust for the fiscal year ended January 31, 2002
was $3,984,721, consisting of $50,850 in interest earned on the investment of
the Unallocated Reserve, $224,857 in fee income, $0 in minimum advance royalty
income, and $3,709,014 in overriding royalty income compared with $5,753,650 in
total income for the previous fiscal year. Total expenses for the fiscal year
were $340,315, compared with $407,505 in total expenses for the previous fiscal
year. There were distributions paid per Unit of Beneficial Interest totaling
$.305 for the fiscal year ended January 31, 2002, compared with distributions
paid for the fiscal year ended January 31, 2001 of $.455 per Unit.

     Total expenses by categories were as follows:

<Table>
<Caption>
                                                    Fiscal Years ended on January 31
                                              -------------------------------------------
                                                2002              2001             2000
                                              --------          --------         --------
<S>                                           <C>               <C>              <C>
Compensation of Trustees                      $131,767          $136,325         $130,046
Fees and Disbursements
  Administrative                                62,500            62,500           65,983
  Accounting                                    32,155            33,230           34,629
  Inspection trips, travel and
    other expenses of Trustees                  31,684            41,664           31,138
  Legal                                         39,590            53,038           42,038
  Mining consultant and field
    Representatives                             14,217            14,480           16,194
  Printing of annual and quarterly
    reports, and letters to
    certificate holders                            267            35,004           31,168
  Transfer Agent and Registrar                  18,635            21,335           23,537
  Transfer Agent miscellaneous
    Disbursements                                9,500             9,929           10,586
  Other miscellaneous expenses                      --                --            4,146
                                              --------          --------         --------
                                              $340,315          $407,505         $389,465
                                              ========          ========         ========
</Table>

     Pursuant to an Amendment to the Agreement of Trust (the "Amendment") dated
October 25, 1982, each Individual Trustee receives annual compensation for
services as Trustee of $20,000, adjusted up or down (but not below $20,000) in
accordance with changes from the November 1981 level of 295.5 (the "1981
Escalation Level") in the All Commodities Producer Price Index (with 1967 = 100
as a base), which is published by the U.S. Department of Labor. The adjustment
is made at the end of each fiscal year and is calculated on the basis of the
proportion between (a) the level of such index for the November preceding the
end of such fiscal year, and (b) the 1981 Escalation Level.

RESERVES AND DISTRIBUTIONS

     Mesabi Trust's Unallocated Reserve aggregated $1,094,721 at January 31,
2002, compared with an Unallocated Reserve of $795,918 at January 31, 2001. The
Trustees have determined that the Unallocated Reserve should be maintained at a
prudent level. Accordingly, although the actual amount of the Unallocated
Reserve will fluctuate from time to time, and may increase or decrease from its
current level, it is currently intended that future distributions will be highly
dependent upon royalty income as it is received and the level of Trust expenses.
The amount of future royalty income available for distribution will be subject
to the volume of iron ore product shipments and the dollar level of sales by
Northshore. Shipping activity is greatly reduced during the winter months and
economic conditions,

                                       13
<Page>

particularly those affecting the steel industry, may adversely affect the amount
and timing of such future shipments and sales.

     The Trustees will continue to monitor the economic circumstances of the
Trust to strike a responsible balance between distributions to Unitholders and
the need to maintain adequate reserves at a prudent level, given the
unpredictable nature of the iron ore industry, the Trust's dependence on the
actions of the lessee/operator, and the fact the Trust essentially has no other
liquid assets.

     Payments to Unitholders during the fiscal year ended January 31, 2001
totaled $5,969,605 and payments to Unitholders during the fiscal year ended
January 31, 2002 totaled $4,001,603.

CERTIFICATES OF BENEFICIAL INTEREST

     The Certificates of Beneficial Interest are traded on the New York Stock
Exchange. During the past two fiscal years, the market ranges of the
certificates for each quarterly period and the distributions declared for such
quarterly periods were as follows:

<Table>
<Caption>
Fiscal Quarter Ended            High           Low             Amount Declared          Per Unit
--------------------            -----          ----            ---------------         ----------
<S>                             <C>            <C>               <C>                   <C>
April 30, 2001                  3.13           2.85              $         --          $       --
July 31, 2001                   3.45           2.92                   918,401                .070
October 31, 2001                3.02           2.50                 1,377,601                .105
January 31, 2002                3.26           2.47                 1,049,601                .080
                                                                 ------------          ----------
                                                                 $  3,345,603          $     .255
                                                                 ============          ==========

<Caption>
Fiscal Quarter Ended            High            Low            Amount Declared         Per Unit
--------------------            -----          -------         ---------------         ----------
<S>                             <C>            <C>               <C>                   <C>
April 30, 2000                      3            2 5/8           $         --          $       --
July 31, 2000                   3 5/8          2 13/16              1,312,001               0.100
October 31, 2000                    4           3 5/16              2,296,002               0.175
January 31, 2001                3 1/2            2 3/4              1,705,601               0.130
                                                                 ------------          ----------
                                                                 $  4,313,604          $    0.405
                                                                 ============          ==========
</Table>

     As of the close of business on April 15, 2002, the beneficial interest in
Mesabi Trust was represented by 13,120,010 Units registered in the names of
approximately 2,143 individuals holding of record approximately 2,193,085 Units,
and in the names of approximately 127 brokers, nominees, or fiduciaries
holding of record approximately 10,926,925 Units.

                                       14
<Page>

THE TRUSTEES

     The name and address of each Trustee and the principal occupation of each
individual Trustee are as follows:

<Table>
<Caption>
      Name and Address of Trustee              Principal Occupation
      ---------------------------              --------------------

      <S>                                      <C>
      Deutsche Bank Trust Company Americas     Trust Company
      Corporate Trustee
      Four Albany Street
      New York, New York 10015

      David J. Hoffman                         Mining geologist
      Individual Trustee
      P.O. Box 10444
      Sedona, Arizona 86339

      Richard G. Lareau                        Partner in the law firm of
      Individual Trustee                       Oppenheimer Wolff & Donnelly LLP
      Oppenheimer Wolff & Donnelly LLP
      3400 Plaza VII
      45 South Seventh Street
      Minneapolis, Minnesota 55402

      Ira A. Marshall, Jr.                     Private investor; Self-employed
      Individual Trustee                       petroleum engineer
      12 Fincher Way
      Rancho Mirage, California

      Norman F. Sprague III                    Private investor; Orthopedic
      Individual Trustee                       surgeon
      11600 Wilshire Boulevard
      Los Angeles, California 90025
</Table>

                                            Respectfully submitted,

                                            DEUTSCHE BANK TRUST COMPANY AMERICAS
                                            DAVID J. HOFFMAN
      New York, New York                    RICHARD G. LAREAU
      April 15, 2002                        IRA A. MARSHALL, JR.
                                            NORMAN F. SPRAGUE III

                                       15
<Page>

                          INDEPENDENT AUDITOR'S REPORT


To the Trustees
Mesabi Trust
New York, New York

     We have audited the accompanying balance sheets of Mesabi Trust as of
January 31, 2002 and 2001, and the related statements of income, unallocated
reserve and trust corpus and cash flows for the years ended January 31, 2002 and
2001. 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. The financial statements of Mesabi Trust, as of
January 31, 2000, were audited by other auditors whose report dated March 8,
2000, expressed an unqualified opinion on those statements.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 Mesabi Trust as of January
31, 2002 and 2001, and the results of its income and its cash flows for the
years ended January 31, 2002 and 2001, in conformity with accounting principles
generally accepted in the United States of America.


                                                   EIDE BAILLY LLP
Fargo, North Dakota
March 11, 2002
                                                   /s/ Eide Bailly LLP

                                       F-1
<Page>

                          INDEPENDENT AUDITOR'S REPORT

To the Trustees
Mesabi Trust
New York, New York

     We have audited the accompanying balance sheet of Mesabi Trust as of
January 31, 2000 and 1999, and the related statements of income, unallocated
reserve and trust corpus and cash flows for each of the three years in the
period ended January 31, 2000. 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 provides 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 Mesabi Trust as of January
31, 2000 and 1999, and the results of its operations and its cash flows for each
of the three years in the period ended January 31, 2000, in conformity with
generally accepted accounting principles.

                                               MCGLADREY & PULLEN LLP
New York, New York
April 19, 2001
                                               /s/ McGladrey & Pullen, LLP

                                       F-2
<Page>

                                  MESABI TRUST

                                 BALANCE SHEETS

<Table>
<Caption>
                                                                            Years ended on January 31
                                                                       ------------------------------------
                                                                           2002                    2001
                                                                       ------------           -------------
<S>                                                                    <C>                    <C>
                           ASSETS

Cash                                                                   $  1,223,246           $   1,947,696
U.S. Government securities,
       at amortized cost (which approximates market)                        892,916                 505,815
Accrued income                                                               98,224                  98,893
Prepaid insurance                                                             4,347                   4,347
                                                                       ------------           -------------
                                                                          2,218,733               2,556,751

Fixed property, including intangibles, at nominal values:
       Assignments of leased property:
            Amended Assignment of Peters Lease                                    1                       1
            Assignment of Cloquet Lease                                           1                       1

       Certificate of beneficial
       Interest for 13,120,010 units
                of Land Trust                                                     1                       1
                                                                       ------------           -------------
                                                                                  3                       3
                                                                       ------------           -------------
                                                                       $  2,218,736           $   2,556,754
                                                                       ============           =============

                LIABILITIES, UNALLOCATED RESERVE AND TRUST CORPUS

Liabilities:
    Distribution payable                                               $  1,049,601           $   1,705,601
    Accrued expenses                                                         74,411                  55,232
                                                                       ------------           -------------
                                                                          1,124,012               1,760,833

Unallocated reserve                                                       1,094,721                 795,918

Trust Corpus                                                                      3                       3
                                                                       -------------          -------------
                                                                       $  2,218,736           $   2,556,754
                                                                       =============          =============
</Table>

See Notes to Financial Statements.

                                       F-3
<Page>

                                  MESABI TRUST

                              STATEMENTS OF INCOME

<Table>
<Caption>
                                                                     Years ended on January 31
                                                         ----------------------------------------------------
                                                             2002                  2001               2000
                                                         -----------           ------------       -----------
<S>                                                      <C>                   <C>                <C>
REVENUE

   Royalties under amended
         lease agreements                                $ 3,709,014           $  5,376,626       $ 5,005,190
   Royalties under Peters
         Lease fee                                           224,857                330,139           311,016
   Interest                                                   50,850                 46,885            43,687
                                                         -----------           ------------       -----------

                 Total revenue                             3,984,721              5,753,650         5,359,893
                                                         -----------           ------------       -----------

EXPENSES

   Compensation of Trustees                                  131,767                136,325           130,046
   Corporate Trustee's administrative fees                    62,500                 62,500            65,983
   Professional fees and expenses:
         Legal and accounting                                 71,745                 86,268            76,667
         Mining consultant and field
         representatives                                      14,217                 14,480            16,194
   Transfer agent's and registrar's fees                      18,635                 21,335            23,537
   Other Trust expenses                                       41,451                 86,597            77,038
                                                         -----------           ------------       -----------

                 Total expenses                              340,315                407,505           389,465
                                                         -----------           ------------       -----------

Net income                                               $ 3,644,406           $  5,346,145       $ 4,970,428
                                                        ============           ============       ===========

Weighted average number of units outstanding
                                                          13,120,010             13,120,010        13,120,010

Net income per unit                                      $       .28           $        .41       $       .38
                                                         ===========           ============       ===========
</Table>

See Notes to Financial Statements.

                                       F-4
<Page>

                                  MESABI TRUST

               STATEMENTS OF UNALLOCATED RESERVE AND TRUST CORPUS
                   YEARS ENDED JANUARY 31, 2002, 2001 AND 2000

<Table>
<Caption>
                                                                               Unallocated Reserve
                                                                               -------------------
                                                               Number of                            Trust
                                                                 Units               Amount        Corpus
                                                              -----------         ------------     -------

<S>                                                            <C>                <C>              <C>
Balance, January 31, 1999                                      13,120,010         $    712,952     $     3
                                                              -----------         ------------     -------

     Net income                                                        --            4,970,428          --
         Distribution paid August 20, 1999,
         $.080 per unit                                                --           (1,049,600)         --
         Distribution paid November 20, 1999,
         $.115 per unit                                                --           (1,508,801)         --
         Distribution declared January 20, 2000,
         paid February 20, 2000,
         $.180 per unit                                                --           (2,361,602)         --
                                                              -----------         ------------     -------
Balance, January 31, 2000                                      13,120,010         $    763,377     $     3
                                                              -----------         ------------     -------

     Net income                                                        --            5,346,145          --
         Distribution paid August 20, 2000,
         $.100 per unit                                                --           (1,312,001)         --
         Distribution paid November 20, 2000,
         $.175 per unit                                                --           (2,296,002)         --
         Distribution declared January 18, 2001,
         paid February 20, 2001,
         $.130 per unit                                                --           (1,705,601)         --
                                                              -----------         ------------     -------
Balance, January 31, 2001                                      13,120,010         $    795,918     $     3
                                                              -----------         ------------     -------

     Net income                                                                      3,664,406          --
         Distribution paid August 20, 2001,
         $.070 per unit                                                --             (918,401)         --
         Distribution paid November 20, 2001,
         $.105 per unit                                                --           (1,377,601)         --
         Distribution declared January 16, 2002,
         paid February 20, 2002,
         $.080 per unit                                                --           (1,049,601)         --
                                                              -----------         ------------     -------
Balance, January 31, 2002                                      13,120,010         $  1,094,721     $     3
                                                              ===========         ============     =======
</Table>

See Notes to Financial Statements.

                                       F-5
<Page>

                                  MESABI TRUST

                            STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                       Years ended on January 31
                                                         ---------------------------------------------------------
                                                           2002                   2001                   2000
                                                         -----------            -----------         --------------
<S>                                                      <C>                    <C>                 <C>
Cash flows from operating activities:
     Royalties received                                  $ 3,941,797            $ 5,843,339         $    5,216,513
     Interest received                                        43,593                 46,473                 43,315
     Expenses paid                                          (321,136)              (406,725)              (377,983)
                                                         -----------            -----------         --------------
       Net cash provided by operating activities           3,664,254              5,483,087              4,881,845
                                                         -----------             ----------         --------------
Cash flows from investing activities:
     Maturities of U.S. Government securities              5,010,366              6,975,801              6,191,645
     Purchases of U.S. Government securities              (5,397,467)            (4,592,669)            (8,545,678)
                                                         -----------            -----------         --------------
     Net cash (used in) provided by investing activities    (387,101)             2,383,132             (2,354,033)
                                                         -----------            -----------         --------------
Cash flows from financing activities:
     Net cash (used in) financing activities,
     distributions to unitholders                         (4,001,603)            (5,969,605)            (4,592,003)
                                                         ------------           -----------         --------------

Net increase (decrease) in cash                             (724,450)             1,896,614             (2,064,191)

Cash, beginning of year                                    1,947,696                 51,082              2,115,273
                                                         -----------            ------------        --------------

Cash, end of year                                        $ 1,223,246            $ 1,947,696         $       51,082
                                                         ===========            ===========         ==============

Reconciliation of net income to net cash provided
       by operating activities:
       Net income                                        $ 3,644,406            $ 5,346,145         $    4,970,428
       Decrease (increase) in accrued income                     669                136,163               (100,065)
       Decrease in prepaid insurance                              --                    428                     86
       Increase in accrued expenses                           19,179                    351                11,396
                                                         -----------            -----------          -------------
     Net cash provided by operating activities           $ 3,664,254            $ 5,483,087         $    4,881,845
                                                         -----------            -----------         --------------
</Table>

See Notes to Financial Statements.

                                       F-6

<Page>

                         JANUARY 31, 2002, 2001 AND 2000

NOTE 1. NATURE OF BUSINESS AND ORGANIZATION

         Nature of business:

               Mesabi Trust was created in 1961 upon the liquidation of Mesabi
               Iron Company. The sole purpose of the Trust, as set forth in the
               Agreement of Trust dated as of July 18, 1961, is to conserve and
               protect the Trust Estate and to collect and distribute the income
               and proceeds therefrom to the Trust's certificate holders after
               the payment of, or provision for, expenses and liabilities. The
               Agreement of Trust prohibits the Trust from engaging in any
               business.

               The lessee/operator of Mesabi Trust's mineral interests is
               Northshore Mining Corporation (NMC), a subsidiary of
               Cleveland-Cliffs Inc. (CCI). CCI is among the world's largest
               producers of iron ore products. Prior to September 30, 1994, the
               lessee/operator had been a subsidiary of Cyprus Amax Minerals
               Company and was named Cyprus Northshore Mining Corporation
               (Cyprus NMC).

         Organization:

               The beneficial interest in Mesabi Trust is represented by
               13,120,010 transferable units distributed on July 27, 1961 to
               shareholders of Mesabi Iron Company.

               The Trust's status as a grantor trust was confirmed by letter
               ruling addressed to Mesabi Iron Company from the Internal Revenue
               Service in 1961. As a grantor trust, Mesabi is exempt from
               Federal income taxes and its income is taxable directly to the
               Unitholders.

NOTE 2. A SUMMARY OF MESABI TRUST'S SIGNIFICANT ACCOUNTING POLICIES FOLLOWS:

         Investments:

               The Trust invests solely in U.S. Government securities.
               Management determines the appropriate classifications of the
               securities at the time they are acquired and evaluates the
               appropriateness of such classifications as of each balance sheet
               date.

               The U.S. Government securities are classified as held-to-maturity
               securities as the Trust has the positive intent and ability to
               hold to maturity and are stated at amortized cost.

                                       F-7

<Page>

NOTE 2. A SUMMARY OF MESABI TRUST'S SIGNIFICANT ACCOUNTING POLICIES FOLLOWS
        (CONTINUED)

         Revenue recognition:

               Royalty income under the amended lease agreements with NMC
               (Cyprus NMC through September 30, 1994) is recognized as it is
               earned. Under such agreements, royalties are earned upon
               shipment, regardless of whether the actual sales proceeds for any
               shipment are received by NMC.

               Royalty income under the Peters Lease fee agreement also is
               recognized as it is earned. Under such agreement, however,
               royalties are earned (at the option of NMC (Cyprus NMC through
               September 30, 1994)) either upon mining of crude ore from Peters
               Lease lands or upon shipment of iron ore product produced from
               Peters Lease lands.

         Fixed property, including intangibles:

               The Trust's fixed property, including intangibles, is recorded at
               nominal values and includes the following:

                  (1) The entire beneficial interest as assignor in the Amended
                      Peters Lease Assignment and the Amended Cloquet Lease
                      Assignment covering taconite properties in Minnesota which
                      are leased to NMC (Cyprus NMC through September 30, 1994).

                  (2) The entire beneficial interest in Mesabi Land Trust which
                      owns a 20% fee interest in the lands subject to the Peters
                      Lease and the entire fee interest in other properties in
                      Minnesota.

         Accounting estimates:

               The preparation of financial statements in conformity with
               generally accepted accounting principles requires management to
               make estimates and assumptions that affect the reported amounts
               of assets and liabilities and disclosure of contingent assets and
               liabilities at the date of the financial statements and the
               reported amounts of revenues and expenses during the reporting
               period. Actual results could differ from those estimates.

         Fair value of financial instruments:

               The carrying amounts of financial instruments including cash,
               distributions payable and accrued expenses approximated fair
               value as of January 31, 2002 and 2001 because of the relative
               short maturity of these instruments.

                                       F-8
<Page>

NOTE 3. U.S. GOVERNMENT SECURITIES

         U.S. government securities at January 31, 2002 and 2001 are classified
         as held-to-maturity and mature as follows:

<Table>
<Caption>
                                         January 31, 2002                       January 31, 2001
                                         ----------------                       ----------------

                                 Carrying Value        Fair Value        Carrying Value         Fair Value
                                 --------------        ----------        --------------         ----------
         <S>                        <C>                 <C>                 <C>                  <C>
         Due within one year        $102,176            $100,344            $ 97,782             $100,031
         Due after one year
         through six years           790,740             806,197             408,033              415,532
                                    --------            --------            --------             --------
                                    $892,916            $905,541            $505,815             $515,563
                                    ========            ========            ========             ========
</Table>

NOTE 4. UNALLOCATED RESERVE

         Leasehold royalty income constitutes the principal source of revenue to
         Mesabi Trust. Prior to August 17, 1989, royalties were based on the
         quantity and iron content of pellets shipped by the then lessee,
         Reserve Mining Company ("Reserve"), from Mesabi Trust properties. From
         May 1986 until July 1990, however, Mesabi Trust did not have any
         royalty income, due principally to the filing of a Chapter 11
         bankruptcy petition by Reserve and the suspension of Reserve's
         operations in 1986.

         On August 17, 1989, Cyprus NMC purchased substantially all of Reserve's
         assets, including Reserve's interest in the Mesabi Trust lands, and
         Mesabi Trust entered into agreements with Reserve's Chapter 11 Trustee
         and Cyprus NMC, which modified the method of calculating royalties
         payable to Mesabi Trust and transferred the interest of Reserve in the
         Mesabi Trust lands to Cyprus NMC. Royalties are now determined by both
         the volume and selling price of iron ore pellets and other products
         sold.

         On September 30, 1994, Cyprus Amax Minerals Company sold its iron ore
         operations, including Cyprus NMC, to Cleveland-Cliffs Inc. (CCI). CCI
         renamed the operation Northshore Mining Corporation (NMC). CCI is among
         the world's largest producers of iron ore products.

         Pursuant to the amended assignment agreements, NMC (Cyprus NMC through
         September 30, 1994) is obligated to pay Mesabi Trust base overriding
         royalties, in varying amounts constituting a percentage of the gross
         proceeds of shipments, from Silver Bay, Minnesota, of iron ore product
         produced from Mesabi Trust lands or, to a limited extent, other lands.
         NMC (Cyprus NMC through September 30, 1994) is obligated to make
         payments of overriding royalties on product shipments within 30 days
         following the calendar quarter in which such shipments occur. NMC
         (Cyprus NMC through September 30, 1994) resumed mining operations and
         shipping product from Silver Bay in the second calendar quarter of
         1990, and the first payment of overriding royalties was made in July
         1990.

                                       F-9
<Page>

NOTE 4. UNALLOCATED RESERVE (CONTINUED)

         NMC (Cyprus NMC through September 30, 1994) also is obligated to pay to
         Mesabi Trust a minimum advance royalty of $500,000 per annum, subject
         to adjustment for inflation and deflation (but not below $500,000),
         which is credited against base overriding royalties and royalty
         bonuses. NMC (Cyprus NMC through September 30, 1994) is obligated to
         make quarterly payments of the minimum advance royalty in January,
         April, July and October of each year. For the calendar year ending
         December 31, 2002, the minimum advance royalty is $676,814. The minimum
         annual advance royalty was $663,862, $647,282, and $637,044 for the
         calendar years ended December 31, 2001, 2000, and 1999, respectively.

         The unallocated reserve aggregated $1,094,721, at January 31, 2002, as
         compared with an unallocated reserve of $795,918 and $763,377 at
         January 31, 2001 and 2000, respectively. During the fiscal years ended
         January 31, 2002, 2001 and 2000 the Trustees distributed cash payments
         totaling $4,001,603 (of $.305 per Unit), $5,969,605 (of $.455 per Unit)
         and $4,592,003 (of $.35 per Unit), respectively, of beneficial interest
         in Mesabi Trust. In addition, in January 2002 the Trustees declared a
         distribution of $.08 per unit of beneficial interest, which was paid in
         February 2002.

NOTE 5. SUMMARY OF QUARTERLY EARNINGS (UNAUDITED)

The quarterly results of operations for the years ended January 31, 2002 and
2001 are presented below:

<Table>
<Caption>
                                                          Year ended January 31, 2002
                                        -------------------------------------------------------------
                                            First          Second            Third         Fourth
                                           Quarter         Quarter          Quarter        Quarter
                                        ------------    -------------   --------------   -----------

        <S>                             <C>             <C>             <C>              <C>
        Revenue                         $    489,122    $   1,040,694   $    1,654,022   $   800,882
        Expenses                              66,565           60,982           79,660       133,108
                                        ------------    -------------   --------------   -----------
        Net income                      $    422,557    $     979,712   $    1,574,362   $   667,774
                                        ============    =============   ==============   ===========

        Net income per unit             $      0.03     $        0.08   $         0.12   $      0.05
                                        ============    =============   ==============   ===========

<Caption>
                                                          Year ended January 31, 2002
                                        -------------------------------------------------------------

                                            First           Second           Third          Fourth
                                            Quarter         Quarter          Quarter        Quarter
                                        ------------    -------------   --------------   -----------
<S>                                     <C>             <C>             <C>              <C>
        Revenue                         $    443,827    $   1,554,610   $    2,577,808   $ 1,177,405
        Expenses                              91,618           89,358           80,682       145,848
                                        ------------    -------------   --------------   -----------
        Net income                      $    352,209    $   1,465,252   $    2,497,126   $ 1,031,557
                                        ============    =============   ==============   ===========

        Net income per unit             $       0.03    $        0.11   $         0.19   $      0.08
                                        ============    =============   ==============   ===========
</Table>

                                      F-10