Bargains in closed-end funds continued to pile up in September as they reached discounts to net asset values not seen in almost two years.The median discount on closed-end equity funds tracked by Lipper widened by 134 basis points to 7.04% from a revised 5.70% in August. That was the largest discount since December 2005. "People were fearful with a number of things going on, especially subprime lending and whether there was going to be some kind of contagion going on," says Tom Roseen, a senior analyst at Lipper. "Then we saw a kind of resurgence (in performance), things turned around and it was a strong month for all categories." Unlike open-end funds, closed-end funds are not continuously offered. They issue a fixed number of shares that are bought and sold on an exchange like stocks, frequently trading below the value of their holdings. By the end of the month, just 87 closed-end funds of all stripes were trading at a premium, down from the one-year high of 240 funds trading at a premium on May 31, 2007. Just 28% of all closed-end funds' discounts narrowed or premiums widened September. Despite the widening discounts, the rally in the stock market at month's end boosted returns. The average closed-end equity funds tracked by Lipper returned 3.98% for the month, the best one-month performance since November 2004.