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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                              ___________________



                                    FORM 8-K

                                 CURRENT REPORT


     PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




Date of Report (Date of earliest event reported):  September 11, 1996


Vanguard Real Estate Fund II, A Sales-Commission-Free Income Properties Fund
- ----------------------------------------------------------------------------
(Exact name of the registrant as specified in its character)



Massachusetts                     0-17656                 23-2482429
- ----------------------------      -----------             -------------
(State of other jurisdiction      (Commission             (IRS Employer
of incorporation)                 File Number)            Identification No.)



Vanguard Financial Center, Malvern, PA                    19355
- ----------------------------------------                  ----------
(Address of principal executive offices)                  (Zip Code)



Registrant's telephone number, including area code (610) 669-1000
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                                     INDEX



Page No.
                                                                      
Cover Page  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  -
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

ITEM
NO.

Item 1.  Change in Control of Registrant  . . . . . . . . . . . . . . . .  2
Item 2.  Acquisition or Disposition of Assets . . . . . . . . . . . . . .  2
Item 3.  Bankruptcy or Receivership . . . . . . . . . . . . . . . . . . .  2
Item 4.  Changes in Registrant's Certifying Accountant  . . . . . . . . .  2
Item 5.  Other Events . . . . . . . . . . . . . . . . . . . . . . . . .  2-3
Item 6.  Resignation of Registrant's Directors  . . . . . . . . . . . . .  3
Item 7.  Financial Statements and Exhibits  . . . . . . . . . . . . . . .  3
Item 8.  Change in Fiscal Year  . . . . . . . . . . . . . . . . . . . . .  3


Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4






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Item 1.  Change in Control of Registrant

         None

Item 2.  Acquisition or Disposition of Assets

         None

Item 3.  Bankruptcy or Receivership

         None

Item 4.  Changes in Registrant's Certifying Accountant

         None

Item 5.  Other Events

         On September 11, 1996, Vanguard Real Estate Fund II (the "Fund")
completed the disposition of its remaining real estate investment, a limited
partnership interest in Plymouth Street, L.P., and determined the timing of the
Fund's final liquidation and dissolution pursuant to its previously reported
plan of liquidation.

         The disposition of the Fund's limited partnership interest in
Plymouth Street, L.P., a partnership that owns a single office property
located in Mountain View, California, culminates a 1992 financing transaction
secured by the Mountain View property. The disposition was structured as an 
assignment of the Fund's remaining limited partnership interest, 
principally representing the right to receive any remaining distributions 
in connection with the financing transaction, to the general partner in 
consideration of an immediate cash payment of $450,000. After legal fees 
and disposition fees due the Fund's adviser, the Fund expects to receive 
net sales proceeds of approximately $210,000, or $.03 per share.

         In the financing transaction, the partnership entered into a Loan
Agreement and Option and Put Agreement with an unrelated party.  Under the loan
agreement, the partnership was scheduled to receive advances, secured by a
non-recourse mortgage on the property, totaling $17.5 million over five years.
Under the terms of the Option and Put Agreement, the Partnership has the right
to require the lender to purchase the property, and the lender has the
exclusive right to purchase the property, during defined periods in 1997 and
1998 for $19 million.  Upon exercise of either the option or the put, the 
Fund would have received 50% of the proceeds in excess of the aggregate 
$17.5 million in scheduled advances.  As of this date, the Fund has received 
net proceeds from all of the scheduled advances due it, except for a 
$75,000 payment due in 1997, which in the aggregate exceed the carrying 
value of the investment by $1,864,000. Such excess has been recorded 
in the Fund's financial statements as deferred revenue.  As a result of 
the assignment of the Fund's partnership interest and the resulting 
completion of the financing transaction, the Fund will recognize a gain 
of approximately $2,074,000, or $.32 per share, of which $1,864,000, or 
$.29 per share, represents realization of the previously recorded 
deferred revenue.

         Since the Mountain View investment represented the final remaining
real estate asset in the Fund's investment portfolio, the Fund has also
determined the timing of its final liquidation and dissolution pursuant to its
previously reported plan of liquidation.  On September 13, 1996, the Board of
Trustees declared a liquidating distribution in the amount of $1.20 per share





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(principally representing the net proceeds from the sale of the Fund's Bayside
investment completed in late August and the Mountain View transaction), payable
on September 30, 1996 to shareholders of record on September 23, 1996.  Since
this liquidating distribution will constitute a distribution of substantially
all of the Fund's remaining assets, the Fund has been advised by the American
Stock Exchange that Monday, September 30, will be the last day of trading of
the Fund's shares on the American Stock Exchange.  The Fund intends to close
its stock transfer books on September 30, though the Fund's transfer agent will
accommodate transfers of Fund shares made through September 30.  On or before
October 31, 1996, the Fund intends to make a final distribution of all of its
residual cash, net of provision for any contingent liabilities, to shareholders
of record.  This final distribution is currently expected to be approximately
$0.10 per share.

Item 6.  Resignation of Registrant's Directors

         None

Item 7.  Financial Statements and Exhibits

         None

Item 8.  Change in Fiscal Year

         None





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                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                  Vanguard Real Estate Fund II,
                                  A Sales-Commission-Free Income Properties Fund
 



DATE:________________                 BY:________________________________
                                          Ralph K. Packard
                                          Vice President & Controller