Bill Gross, the manager of Pacific Investment Management Co.'s $132 billion Total Return Fund, cut holdings of mortgage-backed securities last month and increased investments in government bonds, the company said last week.

Pimco's chief investment officer held 62% of the Total Return Fund's assets in mortgage-backed bonds at Dec. 31, down from 81% a month earlier, according to a posting on the Newport Beach, Calif., company's Web site.

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