Barron's (subscription required) reports that the news this week about Auction Rate Securities (ARS) leaves $220 billion worth of the $330 billion market still frozen. Those among the two-thirds of ARS holders who have not gotten any good news must have mixed feelings -- happy that some of their colleagues have the potential for relief, but wondering when they will get their money back.

The ARS market is complicated because the securities were issued in many different forms. Barron's reports that these issuers include "municipalities, closed-end funds, student-loan trusts and collateralized debt obligations [CDOs]." Many of these issuers have announced little, if any relief for those frozen in ARS hell. For example:

• Municipal ARS market has fallen 40% from $175 billion to $105 billion since the beginning of 2008 and only "5% to 8% of muni auctions are proceeding -- at interest rates of 8% to 15%."
• Closed-end funds have reduced the amount of ARS outstanding by 37% from $64 billion to $40 billion. For example, Nuveen's closed-end funds sold $500 million of variable-rate demand-preferred shares (VRDPs) last week to replace the same amount of ARS. (VRDPs' interest rates reset in auctions but have a put option that allows an investor to sell the VRDP to the bank running the auction if it fails). Barron's thinks that if the VRDP market functions, "more than 50% of closed-end-fund ARS could be redeemed" by the end of 2008.

A combination of over-supply and tax-loss selling has sent many closed-end funds plummeting [subscription required] to substantial discounts to the value of their underlying assets. According to the Wall Street Journal, "On average, shares now trade 6.6% below the value of their underlying assets. In contrast, over the past 10 years, shares usually sold for 4% below the funds' net asset value, according to research by Wachovia Securities."

Investor unease about the credit market and a desire to take losses for tax purposes may be a contributing factor.

If you're looking to invest in closed-end funds, you might be able to take advantage of the valuation discounts caused by, at least in part, temporary factors. You can use this screener to search for funds that interest you.

Evaluating closed-end funds isn't all that different from evaluating other funds: Look for a modest expense ratio with an investment focus that interests you. And, when possible, buying them at a discount to their underlying assets is a good way to increase your chances of a good return.