Scottish Mortgage - A history of the Trust

Scottish Mortgage was the first client of Baillie Gifford & Co and was formed in Edinburgh in 1909 under the name of "The Straits Mortgage and Trust Company Ltd.".  The Straits referred to were the Straits of Malacca which divide Malaysia from Sumatra.  The main objective of the company was to invest in mortgages (with conversion rights into ordinary shares) on rubber estates in Malaysia and Ceylon.  There had been a boom in rubber, peaking in 1909, as a result of demand for motor car tyres - the first 15 million Model T Fords were produced from an assembly line in 1908.  The first balance sheet showed subscribed capital of just over £50,000.

The narrow investment policy proved to be somewhat restrictive and within a few years the company became a typical orthodox investment company with holdings in fixed interest securities and ordinary shares.  Geographical focus was moved from South East Asia to include the United States as investment moved away from solely rubber interests.  For example, in 1910 £1,000 of ordinary shares in Union Pacific Railroad Company were acquired.  In recognition of the redirection of focus, the name was changed in 1913 to the more general title of "The Scottish Mortgage and Trust Company Limited."

Up until the Second World War there were a number of further issues of ordinary shares and issues of preference and debenture stocks and a substantial proportion of assets came to be invested overseas, particularly in the United States.  In the Second World War, the American holdings were compulsorily bought by the British Government but as soon as post war regulations allowed, the policy of having a large proportion overseas was resumed.

By 1969 the Company's assets had grown to £54m and that year it was amalgamated with its sister companies: The Second Scottish Mortgage and Trust Company (formed in 1912 as The Scottish Canadian Mortgage Company Ltd.) and The Scottish Capital Investment Company (formed in 1925).

Scottish Mortgage Investment Trust is now one of the largest UK investment trusts. It invests globally, looking for strong businesses with above-average returns.