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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 24F-2
                        Annual Notice of Securities Sold
                             Pursuant to Rule 24f-2

1.  Name and Address of Issuer:

         VANGUARD PREFERRED STOCK FUND
         THE VANGUARD GROUP, INC.
         c/o Vanguard Financial Center
         P. O. Box 2600
         Valley Forge, Pennsylvania  19482-2600

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2.  Name of each series or class of funds for which this notice is filed:

         VANGUARD PREFERRED STOCK FUND

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3.  Investment Company Act of 1940 File No.:  811-2601

     Securities Act of 1933 File No.:  2-54886

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4.  Last day of fiscal year for which this notice is filed:

         10/31/96

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5.  Check box if this notice is being filed more than 180 days after the close
    of the issuer's fiscal year for purposes of reporting securities sold after
    the close of the fiscal year but before termination of the issuer's 24f-2
    declaration.

         N/A                                                        [    ]

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6. Date of termination of issuer's declaration under rule 24f-2(a)(1), if
   applicable (see Instruction A.6):

         N/A

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7.  Number and amount of securities of the same class of series which had been
    registered under the Securities Act of 1933 other than pursuant to rule
    24f-2 in a prior fiscal year, but which remained unsold at the beginning of
    the fiscal year:

         None


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8. Number and amount of securities registered during the fiscal year other than
   pursuant to rule 24f-2:

         4,509,296  Shares

         $42,793,219.

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9.  Number and aggregate sale price of securities sold during the fiscal year:

         7,706,759  Shares of Beneficial Interest

         $72,071,733.  Aggregate Sales Price
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10. Number and aggregate sale price of securities sold during the fiscal year in
    reliance upon registration pursuant to rule 24f-2:

         7,706,759  Shares of Beneficial Interest

         $72,071,733.  Aggregate Sales Price

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11.  Number and aggregate sale price of securities issued during the fiscal year
     in connection with dividend reinvestment plans, if applicable (see
     instruction B.7):

         N/A

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12.  Calculation of registration fee:

(i)     Aggregate sale price of securities sold during the fiscal year in           $            72,071,733.
        reliance on rule 24f-2 (from Item 10):                                       ----------------------

(ii)    Aggregate price of shares issued in connection with dividend                 + N/A
        reinvestment plans (from Item 11, if applicable):                            ----------------------

(iii)   Aggregate price of shares redeemed or repurchased during the                 -           95,267,717.
        fiscal year (if applicable):                                                 ----------------------

(iv)    Aggregate price of shares redeemed or repurchased and previously             +                   -0-
        applied as a reduction to filing fees pursuant to rule 24e-2 (if             ----------------------
        applicable):

(v)     Net aggregate price of securities sold and issued during the fiscal                 Negative Number
         year in reliance on rule 24f-2 (line (i), plus line                         ----------------------
        (ii), less line (iii), plus line (iv) (if applicable):

(vi)    Multiplier prescribed by Section 6(b) of the Securities Act of 1933          x            1/33 of 1%
        or other applicable law or regulation (see Instruction C.6):                 ----------------------

(vii)   Fee due [line (i) or line (v) multiplied by line (vi)]                       $                   -0-
                                                                                     ======================





 Instruction: Issuers should complete lines (ii), (iii), (iv), and (v) only if
              the form is being filed within 60 days after the close of the
              issuer's fiscal year. See Instruction C.3.

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 13. Check box if fees are being remitted to the Commission's lockbox depository
     as described in section 3a of the Commission's Rules of Informal and Other
     Procedures (17 CFR 202.3a). [ ]

     Date of mailing or wire transfer of filing fees to the Commission's lockbox
     depository:

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                                   SIGNATURES

This report has been signed below by the following persons on behalf of the
issuer and in the capacities and on the dates indicated.

By (Signature and Title)*  /s/
                           -------------------------------------------
                           Raymond J. Klapinsky, Senior Vice President
                           and Secretary

Date:
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                           *Please print the name and title of the signing
                            officer below the signature.
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"EXHIBIT B"

December 30, 1996

VANGUARD PREFERRED STOCK FUND
1300 Morris Drive, P. O. Box 876
Valley Forge, PA  19482

Gentlemen:

I am acting as counsel to VANGUARD PREFERRED STOCK FUND (the "Fund"), in
connection with its registration as an open-end management investment company
under the Investment Company Act of 1940 ("1940 Act"), as amended. It is in my
capacity as counsel to the Fund that I am furnishing you this opinion.

I have examined the Fund's: (1) Declaration of Trust, and amendments thereto;
(2) Minutes of the meetings of Shareholders and Trustees; (3) Notification of
Registration on Form N-8A under the 1940 Act; (4) Registration on Form N-1A
under the Securities Act of 1933 ("1933 Act") and 1940 Act, and all amendments
thereto; and (5) all other relevant documents and records, as well as the
procedures and requirements relative to the issuance and sale of the Fund's
shares.

The Fund is a valid and subsisting Pennsylvania business trust authorized to
issue an unlimited number of shares of beneficial interest without par value per
share. On October 31, 1996, (the end of the Fund's fiscal year), the Fund had
issued and outstanding a total of approximately 29,532,506 shares.

My examination also disclosed the following information:

1. On November 1, 1995, (the beginning of the Fund's fiscal year), the Fund did
not have any securities registered under the 1933 Act other than pursuant to
Rule 24f-2 of the 1940 Act.

2. During the fiscal year ended October 31, 1996, the Fund registered 4,509,296
shares with a value of $42,793,219, under the 1933 Act other than pursuant to
Rule 24f-2.
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3. During the fiscal year ended October 31, 1996, the Fund sold a total of
7,706,759 shares, having an aggregate sales price of $72,071,733, in reliance
upon registration pursuant to Rule 24f-2 of the 1940 Act.

4. During the fiscal year ended October 31, 1996, the Fund redeemed 10,238,629
shares, having a total aggregate redemption price of $95,267,717.

You have instructed me to file, on behalf of the Fund, a Notice pursuant to Rule
24f-2 of the 1940 Act, for the purpose of registering, under the 1933 Act, the
shares set forth above which were sold by the Fund during the fiscal year.

Based upon the foregoing information and my examination, it is my opinion that:

1. The Fund is a valid and subsisting trust of the Commonwealth of Pennsylvania,
authorized to issue an unlimited number of shares of beneficial interest,
without a par value per share;

2. The proposed registration of the 7,706,759 shares of beneficial interest of
the Fund during the fiscal year ended October 31, 1996, pursuant to Rule 24f-2
of the 1940 Act is proper. Such shares, which were issued for a consideration
deemed by the Trustees to be consistent with the Fund's Declaration of Trust,
were lawfully issued, fully paid, and non-assessable;

3. The holders of such shares have all the rights provided with respect to such
holdings by the Declaration of Trust and the laws of the State of Pennsylvania.

I hereby consent to the use of this opinion as an Exhibit to the Rule 24f-2
Notice filed on behalf of the Fund, covering the registration of such shares
under the 1933 Act, and to the applications and registration statements, and
amendments thereto, filed in accordance with the securities laws of the states
in which shares of the Fund are offered. I further consent to reference in the
Prospectus of the Fund to the fact that this opinion concerning the legality of
the issue has been rendered by me.

Very truly yours,

By:      Raymond J. Klapinsky
         Counsel