The DEM Index Fund, which is based on an index that tracks minority-owned companies, is facing liquidation after attracting only $212,391 in assets since it was introduced March 23, 1999, according to a proxy filed Feb. 20 with the Securities and Exchange Commission.

The fund was created to track the performance of the DEM Index, an index developed by Chapman Capital Management of Baltimore, the fund's investment advisor. The index is comprised of thirty U.S. companies that are controlled by African-Americans, Asian-Americans, Hispanic-Americans or women. To be included in the index, at least 10 percent of a company's shares must be owned by members of one or more of these groups, and at least one of the company's top three executive officers must represent one of the groups, according to the fund's prospectus.

The fund's assets have not increased to a level that would enable it to achieve economies of scale, according to Chapman Funds. Without subsidies provided by Chapman Capital, expenses for the fund's shares would have been 71.86 and 62.77 percent of net assets for institutional and investor shares respectively, according to the proxy.

After reviewing the fund's size and expenses at a meeting on Jan. 30, the fund's board decided that liquidating the fund to be in the best interests of shareholders, the company said.

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