Deutsche Bank North America plans to empty out its CountryBaskets Index Fund, a previously vaunted series of international indexes.

Shareholders are expected to vote Friday to liquidate the fund.

The nine CountryBaskets series began trading on the New York Stock Exchange in March and had $240 million invested as of Dec. 20, when the fund's board of directors recommended the liquidation.

"We overestimated investor demand," a bank spokeswoman said.

CountryBaskets is an open-ended fund with separate series, or baskets, tied to the stock indexes of nine markets: Australia, France, Germany, Hong Kong, Italy, Japan, South Africa, the United Kingdom, and the United States.

The passively managed, or "top-down," CountryBaskets were doomed when lack of demand was coupled by a change in strategy by the bank's management.

"Deutsche Bank determined what it wants is bottom-up, active management and CountryBaskets did not fit that," its spokeswoman said.

CountryBaskets was advised by Deutsche Morgan Grenfell, the international investment arm of the bank. The fund's directors considered replacing the firm with a top-down investment adviser last year, but opted instead to liquidate.

A competing collection of 17 country index shares managed by Morgan Stanley & Co., dubbed World Equity Benchmark Shares, was launched at the same time as CountryBaskets. The WEBS shares are advised by BZW Barclays Global Fund Advisors and distributed by Funds Distributors Inc.

As the WEBS shares continue to trade on the American Stock Exchange with $300 million of open interest, Morgan Stanley executives say they are not surprised by Deutsche Bank's exit.

"You had two competing products coming out at the same time when the U.S. economy and markets were doing well," said Karen Seitz, vice president for strategic marketing and business development at Morgan Stanley.

"To try and get focused on international was more difficult than anyone anticipated," she added.

The decision to yank CountryBaskets left its distributor, Alps Mutual Funds Services Inc., reeling.

"We were shocked that they pulled out so quickly," said Ned Burke, senior vice president at the Denver-based firm. "Trading volume on the exchange was increasing."

Mr. Burke added that interest in CountryBaskets came from various corners such as investment managers, retail investors, and brokerages- including Raymond James & Associates Inc., Smith Barney Inc., and Prudential Securities.

People familiar with the sales efforts of both products said Deutsche Bank should have given CountryBaskets a longer leash because the method for tapping into international investments-open-ended, exchange-traded shares- was unfamiliar to prospects.

"The fact two different teams were out there helped both products because the structure was new," said a consultant who requested anonymity.

"They had to fight they notion that these were closed-end funds. For one team to do that is a huge task," he added.

Others agreed CountryBaskets needed more time.

"They pulled the plug very early," said Loren T. Moody, an analyst with St. Petersburg, Fla.-based Raymond James.

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