(Adds details of fund's holdings, quote, byline)

By Jennifer Ablan

NEW YORK, Nov 12 (Reuters) - Pimco's flagship Total Return fund, whose long-time manager Bill Gross unexpectedly departed on Sept. 26, ended October with a slight decrease in U.S. government-related holdings and a slight increase in mortgage-backed securities.

It was the first look into a full month's holdings under the new three-person management team -- Scott Mather, Mark Kiesel and Mihir Worah -- since Gross' exit.

Investors have yanked more than $50 billion out of the Total Return Fund since Gross left, but it still retains about $171 billion, making it the largest actively managed bond fund.

The Pimco Total Return Fund had exposure of 35 percent in U.S. government-related securities in October, down from 38 percent the previous month and 41 percent in August, according to the Newport Beach, Calif.-based firm's website on Wednesday.

The U.S. government category may include nominal and inflation-protected Treasuries, Treasury futures and options, agencies, FDIC-guaranteed and government-guaranteed corporate securities, and interest rate swaps.

The fund's exposure in Emerging Markets increased significantly to 16 percent in October, up from 10 percent of the portfolio's assets in September, Pimco said.

The Pimco Total Return Fund also increased its exposure in mortgages, its second biggest holdings next to U.S. government-related bonds, to 22 percent in October, up from 20 percent the previous month, Pimco added.

Pimco left its exposure in U.S. credit unchanged at 13 percent in October and slightly increased its holdings in non-U.S. developed debt to 12 percent in October from 11 percent in September.

The Pimco Total Return Fund saw a huge decrease in cash equivalents at 46 percent in October, compared with 53 percent of the portfolio in September.

But that was being counterbalanced by a negative 50 percent exposure in a category described as "net offset related to derivatives." In comparison, it was negative 51 percent in September.

The derivatives category involves offsets associated with investments in futures, swaps and other derivatives. Such offsets may be taken at the notional value of the derivative position, which in certain instances may exceed the actual amount owed on such position, Pimco said.

Rob Arnott, chairman of Research Affiliates and external subadvisor to Pimco's All Asset and Fundamental Index strategies, said he had made Total Return his third-largest personal investment in the week after Gross left.

"It has a defensive character, consonant with my worldview and because I really liked the fact that Total Return would be modestly more concentrated in Pimco's most favored assets, noting that flows in or out of a fund will tend to have this effect," he said. "I made it a top personal holding also as a statement of support for the transition team." (Reporting By Jennifer Ablan; Editing by Chris Reese and Diane Craft)