Canadian preferred share prices declined in the first half of May before rallying back in the second half of the month to finish marginally higher than a month earlier. In part, the weakness early in the month may have been caused by investors lightening up their preferred share holdings in anticipation of attractive new issues coming to market. Later in the month, there was some capitulation in the absence of new supply, with accounts slowly beginning to satisfy their investment needs by picking away at existing issues, leading to a recovery in prices. Trading volume was fairly light in the month. The S&P/TSX Preferred Share Index, including dividends, returned 0.52% in May.