SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
Annual Report Pursuant To Section 13 or 15 (d) of
The Securities Exchange Act of 1934

For the Fiscal Year Ended Commission File Number
December 31, 1993 0-16785

VANGUARD REAL ESTATE FUND I, A Sales-Commission-Free Income Properties Fund
(Exact Name of Registrant as specified in its charter)

Massachusetts 23-6861048
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

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

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

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Shares of
Beneficial
Interest, no
par value

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days YES X NO .

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. YES X NO .

The aggregate market value of the registrant's outstanding shares of
beneficial interest held by non-affiliates on February 28, 1994 was
$85,404,830 based upon the last sale price of the shares on February 28, 1994.

As of February 28, 1994, 11,019,978 shares of beneficial interest were
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Annual Report to Shareholders for fiscal
year ended December 31, 1993 Part II (Items 6-8)

Portions of the definitive Proxy Statement,
to be filed pursuant to Regulation 14A, to be
issued in connection with the Annual Meeting of
Shareholders to be held on April 22, 1994 Part III (Items 10-13)

INDEX

ITEM NO. PAGE
NO.

Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -
Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

PART I

1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . 9

PART II

5. Market for Registrant's Common Equity and Related
Shareholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . .11
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . .11
8. Financial Statements and Supplementary Data . . . . . . . . . . . . . .11
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . .11

PART III

10. Directors and Executive Officers of the Registrant. . . . . . . . . . .11
11. Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . .11
12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
13. Certain Relationships and Related Transactions. . . . . . . . . . . . .11

PART IV

14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36-58

PART I

Item 1. Business
- ----------------

Vanguard Real Estate Fund I, A Sales-Commission-Free Income Properties
Fund (the "Fund"), was organized on September 10, 1986 as a Massachusetts
business trust and intends to continue to qualify as a real estate investment
trust ("REIT") under the Internal Revenue Code of 1986, as amended (the
"Code"). The Fund has a finite life and intends to commence the liquidation
of its remaining real estate investments over the next five years, market
conditions permitting. In addition, the Fund is precluded from making any
additional real estate investments. The Fund has no employees.

Pursuant to a Services Agreement dated December 23, 1986 (the "Services
Agreement") between the Fund and The Vanguard Group, Inc. (the "Sponsor"), the
Sponsor has been retained to provide administrative services for the Fund,
including the maintenance of financial records, oversight of the performance
of outside service providers and the preparation and distribution of
communications to shareholders, etc., and to supervise its day-to-day business
affairs. Pursuant to an Advisory Agreement dated December 23, 1986 (the
"Advisory Agreement") between the Fund and Aldrich, Eastman & Waltch, Inc.
(the "Adviser"), the Adviser has been retained to advise the Fund in
connection with the evaluation, selection, management and disposition of its
real estate investments. For additional information concerning the Sponsor,
the Adviser, the Services Agreement and the Advisory Agreement, see Item 8,
Financial Statements and Supplementary Data - Notes to Financial Statements,
and Item 13, Certain Relationships and Related Transactions.

The Fund's business consists of holding investments primarily in income-
producing real properties and mortgage loans that offer the potential to
achieve the following investment objectives:

(i) to preserve and protect shareholders' capital;
(ii) to provide shareholders with current income in the form of
quarterly cash distributions and to provide growth of income
over the remaining life of the Fund; and
(iii) to provide long-term growth through appreciation in the value
of the Fund's real estate investments.

In order to achieve these objectives, the Fund has invested, through
direct ownership or shared-appreciation mortgages, in five existing income-
producing properties or portfolios of properties, including one portfolio of
three office buildings, two shopping centers, a portfolio of warehouses and
industrial properties, and one apartment complex. The Adviser believes that
the Fund's investments are diversified by both type of investment and
geographic location.

As of February 28, 1994, the Fund had invested approximately $75 million
in real estate assets, of which $44 million (59%) consisted of real estate
owned directly, $29 million (39%) consisted of mortgage loan investments -
including $17 million (23%) considered to be in-substance foreclosed assets
and $2 million (2%) consisted of marketable securities.

The Fund has elected to be treated as a REIT under the Code. The Fund
intends to invest and operate in a manner that will continue to maintain its
qualification as a REIT.

The Fund's real estate investments are subject to competition from
existing commercial, industrial, and residential properties and will be
subject to competition from properties that are developed in the future. The
REIT provisions of the Code impose certain financial, investment and
operational restrictions that are not applicable to competing entities that
are not REITs.

For additional information regarding the Fund's investments, operations,
and other significant events, see Item 2, Properties, Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations, and
Item 8, Financial Statements and Supplementary Data.

The following table sets forth the names and positions with the Fund of
the executive officers of the Fund:

NAME AGE POSITIONS
------------------ --- ---------------------------------
John C. Bogle 65 Trustee and Chairman of the Board
John J. Brennan 39 President
Ralph K. Packard 49 Vice President and Controller
Richard F. Hyland 57 Treasurer
Raymond J. Klapinsky 55 Secretary

All executive officers of the Fund also serve as executive officers of
Vanguard Real Estate Fund II, A Sales-Commission-Free Income Properties Fund
("VREFII"). All executive officers of the Fund, with the exceptions of Mr.
Packard, who was elected as an officer of the Fund in May 1988, and Mr.
Klapinsky, who was elected as an officer of the Fund in May 1989, have served
since the Fund's inception. Under the Fund's Declaration of Trust, the
officers of the Fund serve at the pleasure of the Trustees. There are no
family relationships between any Trustee or executive officer.

Mr. Bogle is Chairman and Chief Executive Officer of the Fund, The
Vanguard Group, Inc. (the Sponsor of the Fund) and each of the investment
companies in The Vanguard Group. Mr. Bogle has served in such capacities
during each of the past eight years. Mr. Bogle also serves as a Director of
The Mead Corporation and General Accident Insurance Companies.

Mr. Brennan is President of The Vanguard Group, Inc. and has served in
such capacity since May 1989. Mr. Brennan also serves as a Director (Trustee)
of The Vanguard Group, Inc., and each of the investment companies in The
Vanguard Group. Mr. Brennan served as Executive Vice President and Chief
Financial Officer of The Vanguard Group, Inc. from July 1986 to May 1989. Mr.
Brennan served as Senior Vice President and Chief Financial Officer of The
Vanguard Group, Inc. from July 1985 to July 1986, and as Assistant to the
Chairman of the Board of The Vanguard Group, Inc. from July 1982 to July 1985.

Mr. Packard is Senior Vice President and Chief Financial Officer of The
Vanguard Group, Inc. and has served in such capacity since June 1989. Mr.
Packard served as Vice President and Controller of The Vanguard Group, Inc.
from February 1986 to June 1989. Prior to joining The Vanguard Group, Inc.,
Mr. Packard served as Senior Vice President, Controller, and Deputy Director
of Finance for the Society for Savings Bank, Hartford, Connecticut.

Mr. Hyland is, and has served for each of the past eight years as,
Treasurer of The Vanguard Group, Inc. and each of the investment companies in
The Vanguard Group.

Mr. Klapinsky is, and has served for each of the past eight years as,
Senior Vice President and Secretary of The Vanguard Group, Inc. and each of
the investment companies in The Vanguard Group.

Item 2. Properties
- ------------------

As of December 31, 1993, the Fund held the following real estate investments:

EQUITY INVESTMENTS

Nature of
Title Total Acquisition
to/Interest Date Square Cost
Property & Location in Property Description Acquired Footage (000)
- ------------------- ----------- ----------- -------- ------- -----------

Durham, North Carolina Direct Community 11-25-87 116,195 $10,592
Oakcreek Village Ownership Shopping
Center
Kent, Washington
Valley Industrial Park Direct Warehouse 1-29-88 951,000 15,749
Ownership and
distribution

Seattle, Washington
Sea-Tac Industrial Park Direct Warehouse, 1-29-88 186,259 6,567
Ownership distribution,
and light
manufacturing

The Minnesota Portfolio:
- ------------------------
Arden Hills, Minnesota
Everest II Direct Office and 2-25-88 73,150 7,438
Ownership research &
development

Roseville, Minnesota
Fairview Industrial Direct Office and 2-25-88 29,412 1,200
Building Ownership warehouse

Shoreview, Minnesota
Shoreview Professional Direct Office 2-25-88 10,627 1,236
Building Ownership -------

Total Equity Investments $42,782
=======

MORTGAGE INVESTMENTS
Funds
Nature of Total Advanced
Title to/ Square Mortgage and Mortgage
Interest Date Footage/ Receivable Debt Repaid Mortgage Debt
Property and Location Description In Acquired Units (000) (000) (000)
- --------------------- ----------- ----------- -------- -------- ---------- ------------ -------------

Torrance, California Community Shared- 9-16-87 91,609 $10,646 $ 7,750 $2,477
Plaza del Amo Shopping Appreciation
Center Wraparound
Mortgage

Silver Spring, Apartment Participation 12-8-88 256 (1)17,992 18,000 0
Maryland complex Shared- ------- ------ ------
Sheffield Forest Appreciation
Apartments Mortgage

Total Mortgage $28,638 $25,750 $2,477
Investments

(1) Prior to write-down of $800,000 required to reduce the carrying value of the Sheffield investment to its estimated
fair value less selling costs.

Set forth below is a summary of the general competitive conditions for those
properties whose book value is ten percent or more of the Fund's total assets
as of December 31, 1993, or whose gross revenues are ten percent or more of
the aggregate gross revenues of the Fund for the year ended December 31, 1993.

Plaza del Amo
- -------------

There are approximately 85,000 households (average household income of $70,000)
and 210,000 people within a three-mile radius of the shopping center. Southern
California's economy and, in particular, the South Bay market, have been
seriously undermined by the recent recession prompted, in part, by difficulties
in the defense and aerospace industries. As a result, the retail property
market has suffered for several years from weak demand growth. Current market
vacancy has remained relatively unchanged at approximately 10-12% and estimated
effective rent at comparable properties is $15-$18 per square foot for shop
space and $5.25-$8.10 for anchor space.

Oakcreek Village
- ----------------

There are approximately 14,500 households (average household income of $57,000)
and 32,000 people within a three-mile radius of the center. Employment in the
Raleigh-Durham metropolitan area grew 2.6% over the 12 month period ended
December 1993. Estimated market rents for comparable properties are
approximately $10-$12 per square foot. Tightening market conditions, however,
have resulted in several significant proposed projects in Oakcreek Village's
trade area. If built, these proposed competitive projects may reduce rent
growth and increase the vacancy rate in the area.

Seattle Industrial Park
- -----------------------

Boeing Company is the region's driving economic force (and the Seattle
Industrial Park's lead tenant). The combination of weak worldwide demand and
the severe oversupply of commercial aircraft has resulted in a significant
contraction at Boeing. Over the past three years the Seattle economy has had to
cope with a transition from a high-growth economy to a little or no-growth
environment. Currently, the market is weak with vacancy rates averaging
approximately 7%. The estimated triple net market rent for comparable
properties is $2.75 per square foot for Valley Industrials and $4-$5 per square
foot for Sea-Tac.

Sheffield Forest Apartments
- ---------------------------

Washington DC's superior growth over the past decade has slowed appreciably to a
rate more in line with the national average. With little near-term stimulus
from the region's traditional growth sectors, government and construction, total
employment growth is expected to be moderate over the next several years.
Estimated market rents for comparable properties stand at $0.70 to $1.10 per
square foot and the estimated vacancy rate for comparable properties is 5-6%.

Minnesota Portfolio
- -------------------

The Twin Cities economy is characterized by a broad economic base. As a result,
employment growth has remained relatively stable over the past decade, and the
region has avoided significant job losses during the latest recession.
Currently, employment is increasing at an annual rate of 2.1%. Vacancy rates
and net market rents for comparable properties are as follows: Shoreview -
rent of $7.50 to $9.00 per square foot and vacancy rate of 11%; Arden Hills -
rent of $6.00 to $12.50 per square foot and vacancy rate of 5%; and Fairview -
rent of $3.25 to $5.00 per square foot and vacancy rate of 13%.

Set forth below is certain operating data for those properties held by the Fund
whose book value is ten percent or more of the Fund's total assets as of
December 31, 1993 or whose gross revenues are ten percent or more of the
aggregate gross revenues of the Fund for the year ended December 31, 1993.

Occupancy Rates:
- ----------------

Plaza Del Oakcreek Seattle Ind. Minnesota Sheffield
Amo Village Park Portfolio Forest Apt.
--- ------- ---- --------- -----------

1993 98% 96% 99% 99% 93%
1992 94% 95% 99% 99% 93%
1991 92% 94% 98% 99% 93%
1990 100% 97% 98% 75% 96%
1989 98% 91% 99% 97% 95%

Avg. Effective
Rental/Sq.Ft/Yr.:
- -----------------

Plaza Del Oakcreek Seattle Ind. Minnesota Sheffield
Amo Village Park Portfolio Forest Apt.*
--- ------- ---- --------- -----------

1993 $13.23 $9.07 $3.00 $8.06 $8,796
1992 $13.06 $9.11 $2.47 $7.95 $8,976
1991 $13.72 $9.47 $1.95 $8.71 $9,240
1990 $13.11 $8.82 $1.96 $7.40 $9,180
1989 $13.15 $9.61 $1.92 $7.74 $8,952

* Annual rent/unit.

Real Estate Tax/Fiscal Year:
- ----------------------------
Effective Rate
Per $1000
of Assessed
Value $11.63 $15.34 $14.30 $61.14 $32.92

Annual
Taxes $85,723 $96,141 $239,927 $308,888 $220,639

Tenants Occupying 10% or more of rentable square footage:
- ---------------------------------------------------------

Rental
Property Major Tenants Sq.Ft. Principal Bus. Sq.Ft./Yr. Expiration Date Renewal Options
- -------- ------------- ------ -------------- ---------- --------------- ---------------

Plaza del Albertsons 39,852 Supermarket $6.36 10/29/06 None
Amo Oshman's 9,930 Sporting Goods $9.03 9/23/01 None

Oakcreek T.J. Maxx 31,303 Clothing Retail$7.62 5/31/03 None
Village Durham S.G. 16,034 Sporting Goods $5.00 8/30/97 None

Seattle Boeing Co 502,500 Aerospace $2.82 11/30/97 None
Ind.Park Holman Dist. 448,500 Aerospace $2.52 1/31/97 None

Minnesota Deluxe Ck. Pt. 73,150 Check Print. $9.00 5/31/99 None
Portfolio The Tile Shop 23,122 Tile Retailers $6.43 9/30/98 None

Sheffield N/A N/A N/A N/A N/A N/A
Forest

Lease Expirations during the next ten years:
- --------------------------------------------

By Square Foot

Total Sq.Ft.
Property Expiring 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 After
- -------- ----------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- -----

Plaza del
Amo 89,400 4,320 5,411 3,716 10,913 2,554 0 0 22,634 0 0 39,852

Oakcreek
Village 111,865 8,000 1,600 23,863 24,834 11,760 0 0 0 0 31,303 10,505

Seattle
Ind. Park 1,130,227 34,263 40,448 40,936 1,007,992 6,588 0 0 0 0 0 0

Minnesota
Portfolio 112,289 0 4,069 4,854 7,094 23,122 73,150 0 0 0 0 0

By Annual Rental

Total
Property Expirations 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 After
- -------- ----------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- -----

Plaza del Amo
# of leases 22 2 4 4 6 1 0 0 4 0 0 1
annual $ 1,186,924 98,011 129,144 90,690 243,617 55,166 0 0 316,792 0 0 253,504
annual % 100.0 8.3 10.9 7.6 20.5 4.7 0 0 26.7 0 0 21.3

Oakcreek Vlg.
# of leases 21 3 1 7 3 4 0 0 0 0 1 2
annual $ 1,090,452 89,760 19,752 262,236 182,268 124,464 0 0 0 0 238,529 173,443
annual % 100.0 8.2 1.8 24.1 16.7 11.4 0 0 0 0 21.9 15.9

Seattle Ind.
# of leases 35 12 9 9 4 1 0 0 0 0 0 0
annual $ 3,388,476 197,220 237,036 154,536 2,764,836 34,848 0 0 0 0 0 0
annual % 100.0 5.8 7.0 4.6 81.6 1.0 0 0 0 0 0 0

Minnesota
Portfolio
# of leases 10 0 3 5 0 1 1 0 0 0 0 0
annual $ 931,451 0 43,132 81,289 0 148,680 658,350 0 0 0 0 0
annual % 100.0 0 4.6 8.7 0 16.0 70.7 0 0 0 0 0

Leases at Sheffield Forest are generally one year or less, and no tenant exceeds 10%
of the units rented.

A mortgage loan payable, secured by the Plaza del Amo property, is
outstanding at December 31, 1993. Information concerning its principal,
interest rate, amortization and maturity provisions is included in Note H
to the Fund's financial statements, incorporated by reference in Item 8,
Financial Statements and Supplementary Data, and in Schedule XII to Item
14.

Information concerning the interest rates, shared-appreciation features,
and other terms of the Fund's mortgage investments is included in Note F to
the Fund's Financial Statements, included in Item 8, Financial Statements
and Supplementary Data, and in Schedule XII to Item 14.

Excluding the Fund's Sheffield investment, the Fund believes that its direct
ownership properties, and the properties underlying its mortgage investments,
are well maintained, in good repair, suitable for their intended uses and are
adequately covered by insurance. For additional information regarding the
Fund's real estate investments see Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations, Item 8,
Financial Statements and Supplementary Data, and Schedules XI and XII to
Item 14.

With respect to the Sheffield investment, cash flow from the property
has been insufficient to cover debt service obligations owing to the Fund.
As a result, the partnership which owns the property deferred certain
maintenance on the property and subsequently defaulted on the mortgage loan
in January 1994. The Fund is currently negotiating with the partnership,
whose sole asset is the Sheffield property, to obtain title to the property
via a transfer of all of its partnership interests to the Fund in full
satisfaction of the mortgage loan outstanding. Upon gaining ownership of
the property, which the Fund believes to be imminent, the Fund intends to
remedy the deferred maintenance on the property. The cost of such
renovations, expected to be $150,000 - $250,000, will be financed from the
Fund's current operating cash flow. The Fund believes that the Sheffield
property is suitable for its intended use and is adequately covered by
insurance.

Except for Sheffield as discussed above, the Fund has no other
significant renovation, improvement or development plans for its other
properties.

Information concerning the Federal tax basis and depreciation method and
lives of the Fund's properties and components thereof and on which
deprecation is taken is included in Notes A and E to the Fund's Financial
Statements, included in Item 8, Financial Statements and Supplementary
Data, and in Schedule XI to Item 14. All real estate owned is depreciated
over 40 years for both financial and tax reporting purposes on a
straight-line basis except for leasehold improvements which are depreciated
over the term of the respective lease for financial reporting purposes.

Item 3. Legal Proceedings
- -------------------------

None

Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------

None

PART II

Item 5. Market for Registrant's Common Equity and Related Shareholder
Matters
- ---------------------------------------------------------------------

The Fund's shares of beneficial interest ("Shares") are traded on the
American Stock Exchange (AMEX) under the symbol "VRO". The Shares have
been traded on the AMEX since August 20, 1991. From July 24, 1989 to
August 19, 1991, the Fund's shares were traded on the over the counter
market and were quoted by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"). Prior to July 24, 1989, there was
no trading market for the Shares. As of February 28, 1994, there were
approximately 15,554 holders of record of the Fund's Shares.

Set forth below is certain information regarding the Fund's Shares for
each of the eight fiscal quarters in the period ended December 31, 1993:

Year Ended December 31,
-------------------------------------------
1993 1992
Share Prices Share Prices
------------------ ------------------
High Low High Low
-------- -------- -------- --------
For the Quarter Ended:
March 31 $8-1/4 $6-5/8 $7-5/8 $6-5/8
June 30 8 7-1/4 7-3/4 6-5/8
September 30 8-1/4 7-3/8 8 6-5/8
December 31 8-3/4 7-3/8 7-1/4 6-1/4

The tables below indicate the amount of cash dividends per share
declared during the years ended December 31, 1993 and 1992.

Record Distribution
Date Per Share
----------------- --------------
03-31-93 $ .15
06-30-93 .15
09-30-93 .15
12-22-93 1.24
----
Total Distributions - 1993 $1.69

Record Distribution
Date Per Share
----------------- --------------
04-01-92 $ .15
06-30-92 .15
09-30-92 .15
12-22-92 .24
----
Total Distributions - 1992 $ .69

Status of Distributions 1993 1992
----------------------- ---- ----

Ordinary Income $ - $ .57
Return of Capital 1.69 .12
---- ----
Total $1.69 $ .69

Except during its offering period, the Fund has historically paid
dividends on a quarterly basis, and there are currently no contractual
restrictions on the Fund's present or future ability to pay such dividends.

Item 6. Selected Financial Data
- -------------------------------

The information required by this Item is included on page 18 of the
Fund's 1993 Annual Report to Shareholders and is incorporated herein by
reference thereto.

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
- -----------------------------------------------------------------------

The information required by this Item is included on pages 20 through
23 of the Fund's 1993 Annual Report to Shareholders and is incorporated
herein by reference thereto.

Item 8. Financial Statements and Supplementary Data
- ---------------------------------------------------

The Fund's financial statements at December 31, 1993 and 1992, and for
each of the three years in the period ended December 31, 1993 are included
on pages 6-17 of the Fund's 1993 Annual Report to Shareholders and are
incorporated herein by reference thereto.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
- -----------------------------------------------------------------------

None

PART III

Item 10. Directors and Executive Officers of the Registrant
- -----------------------------------------------------------

The information required by this Item with respect to Trustees is
included in the Fund's definitive proxy statement filed with the
Securities and Exchange Commission on March 15, 1994 for its
Annual Meeting of Shareholders to be held on April 22, 1994, which
is incorporated herein by reference thereto. (Information with respect to
executive officers of the Fund is included in Item 1.)

Item 11. Executive Compensation
- -------------------------------

The information required by this Item is included in the Fund's
definitive Proxy Statement filed with the Securities and Exchange
Commission on March 15, 1994 for its Annual Meeting of Shareholders to be held
on April 22, 1994, which is incorporated herein by reference thereto.

Item 12. Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------

Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- -------------------------------------------------------------------------

(a) 1. Financial Statements:
---------------------

The following financial statements as of, and for the years
ended, December 31, 1993, 1992 and 1991 are incorporated in Item 8
herein by reference from the following pages of the Fund's 1993 Annual
Report to Shareholders, which is filed as an Exhibit hereto.

ANNUAL REPORT
PAGE NO.

Balance Sheets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Statements of Operations. . . . . . . . . . . . . . . . . . . . . . . . . 7
Statements of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . 8-9
Statements of Changes in Shareholders' Equity . . . . . . . . . . . . . .10
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 11-17
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . .17

The following financial statements of Lincoln Park Place II, a
Maryland Limited Partnership, as of and for the year ended October 31,
1993 are filed as part of this Report on Form 10-K. Such partnership
owns and operates the property underlying the Fund's Sheffield
investment.
FORM 10-K
PAGE NO.
Independent Auditors' Report. . . . . . . . . . . . . . . . . . . . . . .25
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . .27
Statement of Changes in Partners' Deficit . . . . . . . . . . . . . . . .28
Statement of Cash Flows 29
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 30-32

2. Financial Statement Schedules:
------------------------------

The financial statement schedules included in Part IV of this
report should be read in conjunction with the Fund's financial
statements incorporated by reference in Item 8 of this report.
FORM 10-K
SCHEDULE PAGE NO.

I Marketable Securities - Other Investments . . . . . . . . . . .18
X Supplementary Income Statement Information. . . . . . . . . . .19
XI Real Estate and Accumulated Depreciation. . . . . . . . . . 20-21
XII Mortgage Loans on Real Estate . . . . . . . . . . . . . . . 22-23
Report of Independent Accountants . . . . . . . . . . . . . . .33

All other schedules have been omitted since the required
information is presented in the financial statements, the related
notes, or is not applicable.

3. Exhibits:
---------

Exhibit No. Description
----------- -----------

3.1 Amended and Restated Declaration of Trust, dated
December 9, 1986, filed as exhibit 3 to the Fund's
Registration Statement on Form S-11, SEC Registration
#33-8649, and incorporated herein by reference.

3.2 Amendment #1 to Amended and Restated Declaration of
Trust, dated January 10, 1987, filed as exhibit 3(b) to
the Fund's Registration Statement on Form S-11, SEC
Registration #33-15040, and incorporated herein by
reference.

3.3 Amendment #2 to Amended and Restated Declaration of
Trust, dated May 31, 1988, filed as exhibit 3 to the
Fund's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1988, and incorporated herein by
reference.

3.4 By-laws, filed as exhibit 3 to the Fund's Registration
Statement on Form S-11, SEC Registration #33-8649, and
incorporated herein by reference.

10.1 Advisory Agreement between the Fund and Aldrich,
Eastman & Waltch, Inc. dated December 23, 1986, filed
as exhibit 10.1 to the Fund's Annual Report on Form 10-
K for the fiscal year ended December 31, 1987, and
incorporated herein by reference.

10.2 Services Agreement between the Fund and The Vanguard
Group, Inc. dated December 23, 1986, filed as exhibit
10.2 to the Fund's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987, and incorporated
herein by reference.

10.3(a) Loan Agreement by and between Plaza Del Amo and
Lawrence W. Doyle, J. Grant Monahon and Richard F.
Burns, Trustees of AEW #82 Trust, established by
Declaration of Trust dated August 14, 1987, dated
September 16, 1987, filed as exhibit 10.3(a) to
the Fund's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987, and
incorporated herein by reference.

10.3(b) Declaration of Trust, AEW #82 Trust and Schedule
of Beneficial Interest dated August 14, 1987,
filed as exhibit 10.3(b) to the Fund's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1987, and incorporated herein by
reference.

10.3(c) All-Inclusive Promissory Note from Plaza Del Amo
in favor of Lawrence W. Doyle, J. Grant Monahon
and Richard F. Burns, Trustees of AEW #82,
established by Declaration of Trust dated August
14, 1987, dated September 16, 1987, filed as
exhibit 10.3(c) to the Fund's Annual Report on
Form 10-K for the fiscal year ended December 31,
1987 and incorporated herein by reference.

10.4(a) Purchase and Sale Agreement of Oakcreek Village
Shopping Center, between Pacific Guaranty Retail
Development Corporation and Michael O. Craig,
Richard F. Burns and J. Grant Monahon as Trustees
of AEW #96 Trust, under Declaration of Trust dated
November 6, 1987, dated October 31, 1987, filed as
exhibit 10.4(a) to the Fund's Annual Report on
Form 10-K for the fiscal year ended December 31,
1987, and incorporated herein by reference.

10.4(b) Declaration of Trust, AEW #96 Trust and Schedule
of Beneficial Interest, dated November 6, 1987,
filed as exhibit 10.4(b) to the Fund's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1987, and incorporated herein by
reference.

10.4(c) First Amendment to Purchase and Sale Agreement of
Oakcreek Village Shopping Center between Pacific
Guaranty Retail Development Corporation and
Michael O. Craig, Richard F. Burns and J. Grant
Monahon as Trustees of AEW #96 Trust, under
Declaration of Trust dated November 6, 1987, dated
November 24, 1987, filed as exhibit 10.4(c) to the
Fund's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987, and incorporated
herein by reference.

10.5(a) Purchase and Sale Agreement of Valley Industrial
Park and Sea-Tac Industrial Park between
Prudential Insurance Company of America and Joseph
F. Azrack, Richard F. Burns and J. Grant Monahon
as Trustees of AEW #105 Trust, under Declaration
of Trust dated December 23, 1987, dated January 8,
1988, filed as exhibit 10.5(a) to the Fund's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1987, and incorporated herein
by reference.

10.5(b) Declaration of Trust, AEW #105 Trust and Schedule
of Beneficial Interest, dated December 23, 1987,
filed as exhibit 10.5(b) to the Fund's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1987, and incorporated herein by
reference.

10.6(a) Purchase and Sale Agreement of Vita-Fresh Vitamin
Facility, dated January 10, 1988, between Vita-
Fresh Vitamin Company, Inc. and Lawrence W. Doyle,
Richard F. Burns and J. Grant Monahon as Trustees
of AEW #113 Trust, under Declaration of Trust
dated January 10, 1988, filed as exhibit 10.6(a)
to the Fund's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987, and
incorporated herein by reference.

10.6(b) Declaration of Trust, AEW #113 Trust and Schedule
of Beneficial Interest, dated January 19, 1988,
filed as exhibit 10.6(b) to the Fund's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1987, and incorporated herein by
reference.

10.7(a) Purchase and Sale Agreement of Everest I, Everest
II, Fairview Industrial Building and Shoreview
Professional Building between Everest Development
ltd. and Michael O. Craig, Richard F. Burns and J.
Grant Monahon as Trustees of AEW #106 Trust, under
Declaration of Trust dated December 17, 1987,
dated February 8, 1988, filed as exhibit 10.7(a)
to the Fund's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987, and
incorporated herein by reference.

10.7(b) Declaration of Trust, AEW #106 Trust and Schedule
of Beneficial Interest, dated December 17, 1987,
filed as exhibit 10.7(b) to the Fund's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1987, and incorporated herein by
reference.

10.8 All-Inclusive Promissory Note (Wraparound note) dated
May 11, 1988, Escrow Agreement dated May 27, 1988 and
Option Agreement dated May 11, 1988, all relating to
the Fund's mortgage investment in the Carmel Executive
Park, filed as exhibit 10 to the Fund's Quarterly
Report on Form 10-Q Report for the quarter ended June
30, 1988, and incorporated herein by reference.

10.9(a) Purchase and Sale Agreement of Citadel II office
building, between Crow Vista #1 and Aldrich, Eastman &
Waltch, Inc., a Massachusetts Corporation acting as
agent for the Fund, filed as exhibit 10(a) to the
Fund's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1988, and incorporated herein by
reference.

10.9(b) Citadel II Escrow Agreement, filed as exhibit 10(b) to
the Fund's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1988, and incorporated
herein by reference.

10.10(a) Loan Agreement for Sheffield Forest Apartments by and
between Lincoln Park Place II Limited Partnership and
J. Grant Monahon, Richard F. Burns and Marvin M.
Franklin, Trustees of AEW #145 Trust, established by
Declaration of Trust dated October 14, 1988, dated
December 7, 1988, filed as exhibit 10.10(a) to the
Fund's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, and incorporated herein by
reference.

10.10(b) Second Amended and Restated Promissory Note for
Sheffield Forest Apartments from Lincoln Park Place II
Limited Partnership in favor of J. Grant Monahon,
Richard F. Burns and Marvin M. Franklin, Trustees of
AEW #145 Trust, established by Declaration of Trust
dated October 14, 1988, dated December 7, 1988, filed
as exhibit 10.10(b) to the Fund's Annual Report on Form
10-K for the fiscal year ended December 31, 1988 and
incorporated herein by reference.

10.10(c) Amended and Restated Deed of Trust for Sheffield Forest
Apartments by and between Lincoln Park Place II Limited
Partnership and J. Grant Monahon, Richard F. Burns and
Marvin M. Franklin, Trustees of AEW #145 Trust,
established by Declaration of Trust dated October 14,
1988, dated December 7, 1988, filed as exhibit 10.10(c)
to the Fund's Annual Report on Form 10-K for the fiscal
year ended December 31, 1988, and incorporated herein
by reference.

10.10(d) Declaration of Trust, AEW #145 Trust and Schedule of
Beneficial Interest dated October 14, 1988, filed as
exhibit 10.10(d) to the Fund's Annual Report on Form
10-K for the fiscal year ended December 31, 1988, and
incorporated herein by reference.

10.11(a) Promissory note of Citadel II by and between the
Variable Annuity Life Insurance Company and J. Grant
Monahon, Richard F. Burns, and Lee H. Sandwen, Trustees
of AEW #131 Trust, established by Declaration of Trust
dated June 7, 1988, dated October 9, 1990, filed as
exhibit 10.1(a) to the Fund's Quarterly Report on Form
10-Q for the quarter ended September 30, 1990, and
incorporated herein by reference.

10.11(b) Mortgage and Security Agreement of Citadel II by and
between the Variable Annuity Life Insurance Company and
J. Grant Monahon, Richard F. Burns, and Lee H. Sandwen,
Trustees of AEW #131 Trust, established by Declaration
of Trust dated June 7, 1988, dated October 9, 1990,
filed as exhibit 10.1(b) to the Fund's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1990,
and incorporated herein by reference.

10.11(c) Assignment of Lessor's Interest in Leases of Citadel II
by and between the Variable Annuity Life Insurance
Company and J. Grant Monahon, Richard F. Burns, and Lee
H. Sandwen, Trustees of AEW #131 Trust, established by
Declaration of Trust dated June 7, 1988, dated October
9, 1990, filed as exhibit 10.1(c) to the Fund's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990, and incorporated herein by
reference.

10.12 Standard Offer, Agreement and Escrow Instructions
for Purchase of Real Estate by and between the
Fujita Corporation USA, a California Corporation,
and Richard F. Burns, J. Grant Monahon, Lawrence
W. Doyle, Trustees of AEW #113 Trust, established
by Declaration of Trust dated January 19, 1988,
filed as exhibit 10.12 to the Fund's Annual Report
on Form 10-K for the fiscal year ended December
31, 1990 and incorporated herein by reference.

10.13 Purchase and Sale Agreement of the Everest I
("Zycad") Building by and between Richard F Burns,
J. Grant Monahon, and Bruce H. Freedman as
Trustees of AEW #106, under Declaration of Trust
dated December 17, 1987 and JLS and L.P., dated
April 23, 1991, filed as exhibit 10.13 to the
Fund's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1991 and incorporated
herein by reference.

10.14 Settlement Agreement and Mutual Release from
mortgage by and among J. Grant Monahon, Richard F
Burns and Lee. H. Sandwen, Trustees of AEW #155
Trust under Declaration of Trust dated January 11,
1989, Mark C. Dickinson, Dickinson Development
Corp. and Citadel III Partners, Ltd., a Florida
limited partnership, dated December 30, 1991,
filed as exhibit 10.14 to the Fund's Annual Report
on Form 10-K for the fiscal year ended December
31, 1991 and incorporated herein by reference.

10.15 First Amendment to Second Amended and Restated
Promissory Note by and between Lincoln Park Place
II Limited Partnership, a Maryland limited
partnership and J. Grant Monahon, Richard F. Burns
and Devin McCall, Trustees of AEW #145 Trust under
Declaration of Trust dated October 14, 1988 dated
April 30, 1992, filed as exhibit 10.15 to the
Fund's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1992 and incorporated
herein by reference.

10.16 Amendment No.1 to Loan Agreement by and between
Lincoln Park Place II Limited Partnership, a
Maryland limited partnership and J. Grant Monahon,
Richard F. Burns and Kevin McCall, Trustees of AEW
#145 Trust under Declaration of Trust dated
October 14, 1988, dated April 30. 1992, filed as
exhibit 10.16 to the Fund's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1992 and
incorporated herein by reference.

10.17 Amendment No.1 to All-Inclusive Promissory Note by
and between Piazzagalli Development Company, a
Vermont General Partnership and J. Grant Monahon,
Richard F. Burns and Lee H. Andwen, Trustees of
AEW #127 Trust, under Declaration of Trust dated
May 3, 1988, dated December 23, 1991 for purposes
of reference, filed as exhibit 10.17 to the Fund's
Quarterly Report on Form 10-Q for the quarter
ended March 31, 1992 and incorporated herein by
reference.

10.18 Amendment No.1 to Loan Agreement by and between
Piazzagalli Development Company, a Vermont General
Partnerhip and J. Grant Monahon, Richard F. Burns
and Lee H. Sandwen, Trustees of AEW #127 Trust,
under Declaration of Trust dated May 3, 1988,
dated December 23, 199 for purposes of reference,
filed as exhibit 10.18 to the Fund's Quarterly
Report on Form 10-Q for the quarter ended March
31, 1992 and incorporated herein by reference.

13 1993 Annual Report to Shareholders. (With the
exception of the information and data incorporated by
reference in Items 6, 7, and 8 of this Annual Report on
Form 10-K, no other information or data appearing in
the 1993 Annual Report to Shareholders is to be deemed
filed as part of this report.)

(b) Reports on Form 8-K

The Fund has filed no reports on Form 8-K during the fourth
quarter ended December 31, 1993.

SCHEDULE I

VANGUARD REAL ESTATE FUND I,
A SALES-COMMISSION-FREE INCOME PROPERTIES FUND
MARKETABLE SECURITIES - OTHER INVESTMENTS
December 31, 1993

Number of Shares or Units -- Cost and
Name of Issuer and Principal Amount of Market Value
Title of Issue Bonds and Notes (000)
- ------------------ ------------------------- ------------

Vanguard Money Market Reserves:
Prime Portfolio $2,482,738 $2,483
------

TOTAL $2,483
======

Temporary Cash Investments:
Certificates of Deposit

Commerz Bank $2,000,007 $2,000
3.35% 1/4/94

Canadian Imperial Bank 2,000,000 2,000
of Commerce
3.25% 1/5/94

Westdeutsch Landes Bank 2,000,000 2,000
3.18% 1/6/94 ------

TOTAL $6,000
======

SCHEDULE X

VANGUARD REAL ESTATE FUND I
A SALES-COMMISSION-FREE INCOME PROPERTIES FUND
SUPPLEMENTARY INCOME STATEMENT INFORMATION

Year Ended December 31,
-------------------------------------------------

1993 1992 1991
(000) (000) (000)
----- ----- -----
1. Maintenance and repairs $ 275 $ 374 $ 448

2. Depreciation and
amortization 1,503 1,610 1,519

3. Real estate taxes 823 887 897

Schedule XI

VANGUARD REAL ESTATE FUND I,
A SALES-COMMISSION-FREE INCOME PROPERTIES FUND
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1993
(000)

Property Description
--------------------
Seattle
Oakcreek Industrial Minnesota
Village, Parks, Two Portfolio,
Shopping Industrial Three Office
Center, Parks, Buildings,
Durham, NC Seattle, WA Roseville, MN TOTALS
------------ ------------ ------------- -------

Encumbrances None None None

Initial Cost to Fund

Land $ 3,100 $ 8,250 $ 1,725 $13,075

Building and
Improvements $ 7,492 $14,066 $10,043 $31,601

Total $10,592 $22,316 $11,768(d) $44,676

Cost capitalized
subsequent
to acquisition

Improvements $ 606 $ 778 $ 341 $ 1,725

Gross amount at which
carried at close of
period (a)

Land $ 3,100 $ 8,250 $ 1,440 $12,790

Building and
Improvements $ 8,098 $14,844 $ 8,490 $31,432

Total (b) $11,198 $23,094 $ 9,930 $44,222

Accumulated
Depreciation (c) $ 1,304 $ 2,232 $ 1,253 $ 4,789

Date of 1967 and 1978 and
Construction 1986 1979 1986

Date
Acquired 11/87 1/88 2/88

Depreciable
Life 40 years 40 years 40 years

20
PAGE

SCHEDULE XI (Continued)

(a) The aggregate cost of real estate for federal income tax purposes at December 31, 1993 was $44,222,000.

(b) The activity in real estate is summarized as follows:

Year ended December 31,
-----------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987
(000) (000) (000) (000) (000) (000) (000)
------ ------ ------ ------ ------ ------ ------

Balance at beginning of year $63,622 $63,192 $71,561 $71,304 $71,422 $10,574 $ 0
Additions during the year:
Property purchases 0 0 0 0 0 61,108 10,574
Property improvements 360 430 613 257 160 60 0
Deletions during the year:
Sales of properties (19,704) 0 (8,962) 0 0 0 0
Citadel II contingent purchase price refund* 0 0 (20) 0 (278) (320) 0
Write-off of tenant improvements (56) 0 0 0 0 0 0
------- ------- -------- ------- ------- ------- -------
Balance at end of year $44,222 $63,622 $63,192 $71,561 $71,304 $71,422 $10,574

* The Fund purchased the Citadel II office building ("Citadel II") for a contract price of $19,500,000.
Included in the contract price was a $1,000,000 contingent purchase price payment placed in escrow for the
Fund, of which an aggregate of $618,000 was returned to the Fund by the seller at the expiration of the
escrow period pursuant to the terms of the purchase and sale agreement.

Year ended December 31,
----------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987
(000) (000) (000) (000) (000) (000) (000)
----- ----- ----- ----- ----- ----- -----

Balance at beginning of year $5,862 $4,557 $3,792 $2,413 $1,087 $ 23 $ 0
Add:
Depreciation for the year 1,217 1,305 1,231 1,379 1,326 1,064 23
Deduct:
Accumulated depreciation of real estate sold (2,234) 0 (466) 0 0 0 0
Write-off of tenant improvements (56) 0 0 0 0 0 $ 23
------ ------ ------ ------ ------ ------ ------
Balance at end of year $4,789 $5,862 $4,557 $3,792 $2,413 $1,087
====== ====== ====== ====== ====== ====== ======

(d) Zycad Building sold in 1991 with a land and building cost of $1,894,000.

Schedule XII

VANGUARD REAL ESTATE FUND I,
A SALES-COMMISSION-FREE INCOME PROPERTIES FUND
MORTGAGE LOANS ON REAL ESTATE (e)
DECEMBER 31, 1993

Wraparound Mortgages Senior Mortgage
-------------------- ---------------

Plaza del Amo Sheffield Forest
Shopping Center, Apartments,
Torrance, CA (a) Silver Spring, MD (b)
-------------------- ---------------------
Effective
Rate 10.3% 9.3%

Pay
Rate 9.7%-10.8% 8.5%-9%

Maturity
Date 1997 1998

Call
Date 1994 1995

Periodic Interest only, Interest only,
Payment principal due principal due
Terms upon maturity upon maturity
or call date. or call date.

Prior
Liens (a) None

Face
Amount of Totals
Mortgages -------
(000) $10,646 $17,992 $28,638

Carrying
Amount of
Mortgages
(000) (c)(d) $10,646 $17,192 $27,838

Principal Amount
of Loans Subject to
Delinquent Principal
or Interest None None

(a) The Fund advanced $7,750,000 to enter into a shared-appreciation,
wraparound, mortgage loan secured by the Plaza del Amo Shopping Center
("Plaza"). In addition, Plaza secures two existing senior mortgage
loans, which at the time of investment had an aggregate outstanding
balance of $2,896,000. The funds advanced plus these two existing
senior mortgages resulted in a total wraparound loan of $10,646,000.
Upon repayment of the loan, the Fund is entitled to a share of Plaza's
appreciation, if any, equal to 50% of Plaza's fair market value in
excess of the original balance of the wraparound loan.

Schedule XII (Continued)

(b) Sheffield Forest is a participating, shared-appreciation, senior mortgage loan secured by the Sheffield
Forest Apartments("Sheffield"). Upon repayment of the loan, the Fund is entitled to a share of Sheffield's
appreciation, if any, equal to the greater of (i) an amount sufficient to generate an 11.5% internal rate
of return (as defined in the loan documents) on the loan or (ii) 50% of Sheffield's fair market value in
excess of the mortgage loan.

1993 1992 1991 1990 1989 1988 1987
(000) (000) (000) (000) (000) (000) (000)
----- ----- ----- ----- ----- ----- -----

(c) Balance at beginning of year $42,032 $45,046 $45,046 $45,046 $45,046 $10,646 $ 0
Additions during the year:
New mortgage loans 90 76 0 0 0 34,400 10,646

Deductions during the year:
Pay-off of Carmel loan(f) (14,284) 0 0 0 0 0 0
Collections of principal 0 (90) 0 0 0 0 0
Write-down of in-substance
foreclosed assets (g) 0 (3,000) 0 0 0 0 0
------- ------- ------- ------- ------- ------- -------
Balance at end of year $27,838 $42,032 $45,046 $45,046 $45,046 $45,046 $10,646
======= ======= ======= ======= ======= ======= =======

(d) The aggregate cost of the Fund's mortgage loan investments for federal income tax purposes at December 31, 1993
was $28,638,000.
(e) Includes loans considered to be in-substance foreclosed assets for financial reporting purposes.
(f) On July 30, 1993, the Fund accepted a discounted payoff of $13,500,000 on its mortgage loan secured by Carmel.
For further information, see Note F to the Fund's Financial Statements, included in Item 8, Financial Statements
and Supplementary Data.
(g) Consists of: Carmel - $2,200 ; Sheffield - $800.

Deloitte &
Touche
- ----------

- -------------------------------------------------------------------------

LINCOLN PARK PLACE II,
A MARYLAND LIMITED PARTNERSHIP
------------------------------

Financial Statements for the
Year Eanded October 31, 1993, and
Independent Auditors' Report

- -------------------------------------------------------------------------

INDEPENDENT AUDITORS' REPORT

General Partners of Lincoln Park Place II,
A Maryland Limited Partnership

We have audited the accompanying balance sheet of Lincoln Park Place II, A
Maryland Limited Partnership (the Partnership) as of October 31, 1993, and
the related statements of operations, changes in partners' deficit and cash
flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of October 31, 1993,
and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 5 to
the financial statements, conditions exist which raise substantial doubt
about the ability of the Partnership to continue as a going concern.
Management's plans in regard to these matters are also described in Note 5.
The financial statements do not include any adjustment that might result
from the outcome of this uncertainty.

Deloitte & Touche
Dallas, Texas 75201-6778
November 20, 1993

LINCOLN PARK PLACE II, A MARYLAND LIMITED PARTNERSHIP

BALANCE SHEET
OCTOBER 31, 1993

ASSETS

INVESTMENT IN REAL ESTATE, AT COST:
Land $ 2,600,376
Buildings and improvements 10,796,809
Less accumulated depreciation (2,782,304)
-------------

10,614,881

DUE FROM AFFILIATE 1,788,684

DEFERRED FINANCING COSTS, NET OF ACCUMULATED
AMORTIZATION OF $97,299 142,345

CASH 97,439

ESCROW DEPOSITS 26,436

OTHER ASSETS 167,035
-----------

TOTAL $ 12,836,820
=============

LIABILITIES AND PARTNERS' DEFICIT

MORTGAGE PAYABLE $ 18,620,029

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 303,079

TENANT SECURITY DEPOSITS 75,629

Total liabilities 18,998,737

PARTNERS' DEFICIT (6,161,917)
-------------

TOTAL $ 12,836,820
=============

See notes to financial statements.

LINCOLN PARK PLACE II, A MARYLAND LIMITED PARTNERSHIP
- -----------------------------------------------------

STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1993
- ---------------------------------------------------------------------------

REVENUES:
Rental $ 1,982,340
Other 33,795
---------

2,016,135

EXPENSES:
Interest 1,668,949
Depreciation and amortization 447,027
Operating 589,773
Real estate taxes 225,065
---------
2,930,814
---------

NET LOSS $ (914,679)
=========

See notes to financial statements.

LINCOLN PARK PLACE II, A MARYLAND LIMITED PARTNERSHIP

STATEMENT OF CHANGES IN PARTNERS' DEFICIT
YEAR ENDED OCTOBER 31, 1993

Managing
General Partner,Limited Partner,
Lincoln PropertyAmerican Financial
Company No. 1288 Realty, Inc. Total

PARTNERS' DEFICIT,
NOVEMBER 1, 1992 $(5,247,738) $500 $(5,247,238)

Net loss (914,679) (914,679)
----------- ----- -----------

PARTNERS' DEFICIT,
OCTOBER 31, 1993 $(6,162,417) $500 $(6,161,917)
=========== ==== ===========

See notes to financial statements.

LINCOLN PARK PLACE II, A MARYLAND LIMITED PARTNERSHIP

STATEMENT OF CASH FLOWS
YEAR ENDED OCTOBER 31, 1993

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(914,679)
Depreciation and amortization 447,027
Changes in assets and liabilities:
Decrease in deposits 1,898
Decrease in other assets 7,721
Increase in accounts payable 117,064
Increase in tenant security deposits 11,938
--------

Net cash used in operating activities (329,031)

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to buildings and improvements (24,129)

CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in due from affiliate 227,614
Increase in mortgage payable 141,450
Decrease in deferred financing costs 384
---------

Net cash provided by financing activities 369,448
---------

NET INCREASE IN CASH 16,288

CASH, BEGINNING OF YEAR 81,151
---------

CASH, END OF YEAR $ 97,439
=========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $1,530,388
==========

See notes to financial statements.

LINCOLN PARK PLACE II, A MARYLAND LIMITED PARTNERSHIP
- -----------------------------------------------------

NOTES TO FINANCIAL STATEMENTS
YEAR ENDED OCTOBER 31, 1993
- ---------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization - Lincoln Park Place II, A Maryland Limited Partnership (the
Partnership) was formed December 1, 1985, for the purpose of owning,
developing and operating a 256-unit garden apartment project in Montgomery
County, Maryland. Lincoln Property Company No. 1288, A Maryland Limited
Partnership is the managing general partner, and American Financial Realty,
Inc. (AFR) is the limited partner. The project was started in November
1986 and completed in December 1987 and had an occupancy rate of 97% at
October 31, 1993.

Basis of Accounting - The accounts of the Partnership are maintained on the
basis of accounting used for federal income tax reporting purposes.
Memorandum entries have been made to present the accompanying financial
statements in accordance with generally accepted accounting principles.

Depreciation and Amortization - Buildings and improvements are stated at
cost and are depreciated or amortized using the straight-line method over
useful lives ranging from 5 to 30 years.

Deferred Financing Costs - Financing costs incurred in connection with
obtaining and closing the mortgage payable have been capitalized and are
being amortized over the term of the note.

Other Assets - Other assets consist primarily of prepaid real estate taxes
and insurance and deferred expenses.

Federal Income Taxes - The financial statements include only those assets,
liabilities and results of operations which relate to the business of the
Partnership. The financial statements do not include any assets,
liabilities, revenues or expenses attributable to the partners' individual
activities. No federal or state income taxes are payable by the
Partnership, and none have been provided in the accompanying financial
statements. The partners are to include their respective share of
partnership profits or losses in their individual tax returns.

Net income or loss determined under generally accepted accounting
principles is allocated among the partners based upon provisions in the
partnership agreement even though actual partnership allocations are made
on an income tax basis. Consequently, the amounts so allocated will not
agree to the allocations on the income tax returns.

2. TRANSACTIONS WITH AFFILIATES

Certain of the Partnership's expenses and other disbursements are paid from
a central operating account of a general partnership affiliated with the
managing general partner in the normal course of business. The Partnership
reimburses the affiliate on a regular basis for disbursements made on its
behalf. All disbursements are identified by partnership, and the
disbursements and reimbursements are accounted for by the Partnership as
due to or from the affiliate.

The Partnership has entered into an agreement with Lincoln Property Company
N.C., Inc., an affiliate of the managing general partner, which provides
for management of the property. For its services, Lincoln Property Company
N.C., Inc. is entitled to receive a fee of 5% of monthly rents, as defined,
amounting to $101,804 for the fiscal year.

3. MORTGAGE PAYABLE

The permanent financing was obtained from Aldrich, Eastman & Waltch #145
Trust in the amount of $18,000,000, evidenced by the second amended and
restated promissory note. The note accrues interest at the base rate of
9.0% and requires monthly payments in arrears at the current pay rate of
8.5%. The pay rate increases 0.5% on December 7, 1993, and remains at the
rate of 9.0% thereafter. Accrued but unpaid interest is added to the
outstanding principal balance monthly and bears interest at the base rate
of 9.0%. Participation interest based on adjusted gross revenue, as
defined, may become due and payable quarterly (no participation interest
was paid during the fiscal year ended October 31, 1993). Upon the
occurrence of certain events, appreciation interest, as defined, becomes
due. The note matures December 7, 1998, at which time all principal and
deferred interest become due. The note may be prepaid after December 7,
1995, and the lender has the right to call the note, making it fully due
and payable any time following December 7, 1994, provided six months'
notice of such intention is given. The land, building and improvements
serve as collateral for the note which is nonrecourse to the partners of
the Partnership. However, certain partners of the managing general partner
have guaranteed the payment of this indebtedness under certain conditions
in an amount not to exceed $2,000,000. The note payable has an outstanding
balance of $18,000,000 and deferred interest of $620,029 at October 31,
1993.

4. PARTNERS' DEFICIT

Capital Contributions - In accordance with the partnership agreement, no
additional contributions are required from partners to provide funds for
the Partnership.

Allocation of Profits and Losses - The net profits, net gains and net
losses from operations of the Partnership and capital transactions shall be
allocated 100% to the managing general partner, and the limited partner
shall have no interest in such net profits, gains or losses.

5. CASH DEFICITS

During the year ended October 31, 1993, the Partnership incurred cash
deficits from operations. Management anticipates that the Partnership will
continue to incur cash deficits from operations. There can be no assurance
that the Partnership will be able to obtain loans to fund such deficits.
Management intends to continue operating the Partnership in its present
form while investigating options to improve operations of the Partnership.
However, there is no assurance management will be successful in its
efforts. This uncertainty raises substantial doubt about the Partnership's
ability to continue as a going concern.

* * * * * *

REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES

To the Board of Trustees of
Vanguard Real Estate Fund I,
A Sales-Commission-Free Income
Properties Fund

Our audits of the financial statements referred to in our report dated
January 27, 1994 appearing on page 17 of the 1993 Annual Report to
Shareholders of Vanguard Real Estate Fund I, A Sales-Commission-Free Income
Properties Fund, (which report and financial statements are incorporated
by reference in this Annual Report on Form 10-K) also included audits of
the Financial Statement Schedules listed in Item 14(a) of this Form 10-K.
In our opinion, these Financial Statement Schedules present fairly, in all
material respects, the information set forth therein when read in conjunction
with the related financial statements.

PRICE WATERHOUSE
Philadelphia, Pennsylvania
January 27, 1994

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 I,
A Sales-Commission-Free Income Properties Fund

3/30/94 /s/ John J. Brennan
_________________ _________________________________
DATE John J. Brennan
President

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities on the dates indicated.

3/30/94 /s/ J. Mahlon Buck, Jr.
_________________ _________________________________
DATE J. Mahlon Buck, Jr.
Trustee

3/30/94 /s/ William S. Cashel, Jr.
_________________ _________________________________
DATE William S. Cashel, Jr.
Trustee

3/30/94 /s/ David C. Melnicoff
_________________ _________________________________
DATE David C. Melnicoff
Trustee

3/30/94 /s/ J. Lawrence Wilson
_________________ _________________________________
DATE J. Lawrence Wilson
Trustee

3/30/94 /s/ Ralph K. Packard
_________________ _________________________________
DATE Ralph K. Packard
Vice President & Controller

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION PAGE NO.

13 1993 Annual Report to Shareholders . . . . . . . . . . . .36