VUSXX Vanguard Admiral Fund Treasury Money Market Fund (MM)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF

REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number : 811-7043

Name of Registrant: Vanguard Admiral Funds

Address of Registrant:
P.O. Box 2600
Valley Forge, PA 19482

Name and address of agent for service:
Heidi Stam, Esquire
P.O. Box 876
Valley Forge, PA 19482

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

Date of fiscal year end: August 31

Date of reporting period: September 1, 2009 – February 28, 2010

Item 1: Reports to Shareholders

> Returns for the three Vanguard Money Market Funds fell to historical lows, but were ahead of the average returns of peer-group funds.

> The funds’ returns ranged from 0.02% for the Admiral Treasury Money Market Fund to 0.12% for the Prime Money Market Fund’s Institutional Shares.

> New regulations for money market mutual funds won’t alter the Vanguard funds’ conservative, high-quality investment approach.

Please note: The opinions expressed in this report are just that—informed opinions. They should not be considered promises or advice.
Also, please keep in mind that the information and opinions cover the period through the date on the front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus.
See the Glossary for definitions of investment terms used in this report.

Cover photograph: Veronica Coia.

Your Fund’s Total Returns

iMoneyNet Money Fund Report’s 100% Treasury Funds Average: Derived from data provided by iMoneyNet, Inc.
Institutional Shares are available for a minimum investment of $5 million. The minimum investment for the Admiral Treasury Money Market Fund is $50,000.

1 The 7-day SEC yield of a money market fund more closely reflects the current earnings of the fund than its total return.

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Chairman’s Letter

Dear Shareholder,

Each of the three Vanguard money market mutual funds reported positive returns, but just barely, for the six months ended February 28, 2010. Like the interest rates available on most short-term savings vehicles, the yields of money market funds have been collateral damage in the Federal Reserve Board’s dramatic campaign to resuscitate the financial system and bolster the economy.

Since December 2008, the Fed has kept its target for short-term interest rates between 0% and 0.25%. The yields of the short-term securities in which money market funds invest have, predictably, hovered in the same range.

During the past six months, the Vanguard money market funds’ returns fell to historical lows, ranging from 0.02% for the Admiral Treasury Money Market Fund to 0.12% for the Institutional Shares of the Prime Money Market Fund. The Vanguard funds’ returns were above the average returns of their respective peer-group funds.

As the fiscal period drew to a close, the Securities and Exchange Commission (SEC) issued new regulations aimed at improving the resiliency of money market funds. The rules, for example, call for more stringent liquidity requirements, new limits

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on lower-quality securities, shorter average maturities, periodic stress tests, and monthly Web postings of portfolio holdings.

The new SEC rules were developed as a result of the financial crisis, which raised concerns about the stability of money market funds. As you may recall, the U.S. Treasury guaranteed certain money market mutual fund assets during the worst of this period. The Treasury lifted the guarantee one year later, on September 18, 2009.

The SEC’s rule changes are effective in May. In our view, the SEC did a good job of striking a balance between investor protection and the efficient management of money market funds.

Please note that the Federal Money Market Fund and the Admiral Treasury Money Market Fund remained closed to new investors.

Fed began unwinding its rescue programs
Although the Fed expects to keep its target for short-term interest rates close to zero percent for “an extended period,” toward the end of the fiscal period it began to wind down credit programs established during the financial crisis. The Fed’s most dramatic (though largely symbolic) act was to raise the interest rate at its discount window, a lending facility designed to help commercial banks and other depository institutions meet emergency short-term funding needs.

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While the yields of the shortest-term securities remained near 0% during the past six months, the yields of U.S. Treasury bonds rose modestly. The broad taxable bond market returned 3.19%, with notable strength in corporate bonds. The broad municipal bond market returned 4.13%.

Stock markets caught their breath at the end of a solid six months
For the six months, the broad U.S. stock market returned about 10%. The rally seemed to downshift toward the end of the period, as the investor relief that powered markets higher a year ago gave way to a sober-minded assessment of the prospects for corporate earnings growth.

Smaller-capitalization stocks did a little better than larger-capitalization stocks, and growth-oriented securities bested their value-oriented counterparts, but the uniformity of returns from different market segments was more striking than the differences.

International stocks produced more modest returns. In Europe, the precarious financial health of Greece and smaller economies such as Portugal and Ireland weighed on the markets. In Asia, the Japanese stock market’s weakness held back results for Asia Pacific indexes. Emerging market stocks continued to outpace those from developed markets.

The fund expense ratios shown are from the prospectuses dated December 23, 2009, as revised April 9, 2010, and represent estimated costs for the fiscal year based on the funds’ net assets as of the prospectus date. For the six months ended February 28, 2010, the annualized expense ratios were: for the Prime Money Market Fund, 0.23% for Investor Shares and 0.09% for Institutional Shares; for the Federal Money Market Fund, 0.23%; and for the Admiral Treasury Money Market Fund, 0.14%. Peer-group expense ratios are derived from data provided by Lipper Inc. and capture information through year-end 2009.

Peer groups: for the Prime Money Market Fund, Money Market Funds; for the Federal Money Market Fund, Government Money Market Funds; for the Admiral Treasury Money Market Fund, U.S. Treasury Money Market Funds.

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Funds have a role despite their meager yields
Vanguard’s money market funds served their purpose not only during the six months ended February 28 but also during the preceding year. Amid fears of a financial-industry implosion and the anxiety created by the volatile stock market in 2008 and 2009, the funds remained safe havens for investors who sought to preserve principal in highly liquid accounts.

Because of the historically low interest rates, however, our money market funds were unable to deliver income yields anywhere near their historical averages. (For example, the average annualized return since inception for the Admiral Treasury Money Market Fund, the lowest among the three Vanguard Funds, is 3.59%.) The Fed’s policy actions reduced the returns of our funds to near zero—and, with the exception of some institutional funds, they actually reduced the average return of competing government and Treasury money market funds to zero.

The Vanguard money market funds offered higher, if exceptionally modest, returns primarily because of our low-cost structure.

Among Vanguard’s funds, the Admiral Treasury Money Market Fund returned the least for the fiscal period. This is understandable because the fund invests predominantly in Treasury securities—which represented 100% of its assets as of February 28—and these are the most sensitive to changes in Fed policy. The Federal Money Market Fund and both share classes of the Prime Money Market Fund reported somewhat higher returns because of those funds’ wider investment mandates.

The Federal Money Market Fund’s investments include securities of both government agencies and the U.S. Treasury. The Prime Money Market Fund can venture even further afield into a variety of high-quality short-term securities issued by corporations. The highest return—on a relative basis, of course—was produced by the Institutional Shares of the Prime Money Market Fund, which also have the lowest expense ratio.

A balanced portfolio makes troubled times more bearable
The financial crisis spawned a massive inflow of funds into money market funds in 2008 as investors flocked to what were perceived to be safe investments, and a massive outflow from money market funds in 2009 as investors sought the higher yields offered by bond funds. (Vanguard money market fund shareholders were comparatively steadfast.)

Such skittishness risks undermining a sensible long-term investment program. A better approach—one that has withstood the test of time—is to develop a long-term portfolio that is balanced and diversified among stocks, bonds, and money market funds, which can help your long-term

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portfolio weather the uncomfortable (and admittedly sometimes awful) short-term ups and downs.

On another matter, I would like to inform you that as of January 1, 2010, we completed a leadership transition that began in March 2008. I succeeded Jack Brennan as chairman of Vanguard and each of the funds. Jack has agreed to serve as chairman emeritus and senior advisor. Under Jack’s leadership, Vanguard has grown to become a preeminent firm in the mutual fund industry. Jack’s energy, his relentless pursuit of perfection, and his unwavering focus on always doing the right thing for our clients are evident in every facet of Vanguard policy today.

F. William McNabb III
Chairman and Chief Executive Officer
March 11, 2010

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Advisor’s Report

For the six months ended February 28, 2010, the three Vanguard Money Market Funds produced near-zero returns because of actions taken by the Federal Reserve Board to keep its target federal funds rate between 0% and 0.25%. As the fiscal period drew to a close, the Fed yet again said that it planned to maintain rates at a low level “for an extended period.” In this challenging environment, the funds’ returns were above the average returns of competing funds, ranging from 0.02% for the Admiral Treasury Money Market Fund to 0.12% for the Institutional Shares of the Prime Money Market Fund.

The regulatory environment
Investor anxiety about the safety of money market funds continued to dissipate during the six months, as evidenced by the U.S. Treasury’s decision to let its program that insured investors’ holdings in certain money market funds expire in September 2009.

Changes have also been made in the way money market funds operate, with the aim of enhancing the safety and liquidity of these portfolios. The Investment Company Institute, the fund industry trade group, issued recommendations in March 2009, and in February 2010, the Securities and Exchange Commission (SEC) announced new rules that go into effect in May.

On balance, the amended SEC rules increase the credit quality of portfolios by limiting holdings of lower-rated credits, shorten maturities to decrease interest rate risk, increase liquidity to meet both expected and unexpected redemptions, and increase transparency so that investors can better understand risks.

The rules mandate reductions in money market funds’ weighted average maturities, from 90 days to 60 days. The SEC also introduced a new weighted average life calculation aimed at limiting funds’ use of floating-rate securities. The new portfolio liquidity requirements, combined with the weighted maturity and life limitations, will require us to shorten the maturities of the Vanguard funds’ holdings.

The investment environment
The money market yield curve remained steep during the fiscal period, allowing us to achieve higher returns despite the near- zero yield environment. We have taken advantage of longer-dated opportunities, including agency discount notes. These notes contribute to the enhanced liquidity requirements mandated by the SEC for money funds.

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Financial conditions continue to improve, allowing the Fed to gradually unwind some of the policies it set in motion to help stabilize the financial markets. At the same time, our team of credit analysts has begun to lift some of the restrictions previously placed on issuers, and this will widen the diversification opportunities available to the funds.

On Christmas Eve, the Treasury removed the caps on financial assistance to Fannie Mae and Freddie Mac. Under the new agreement, the U.S. Treasury will cover any net losses incurred by Fannie and Freddie over the next three years, solidifying the relationship between the government and these mortgage giants.

Yields on Treasury bills frequently hovered in the low single digits in basis points (which represent one-hundredth of a percentage point) during the period. They recently drifted back into double-digit territory when the Treasury began issuing bills designed to help the Fed manage its open-market operations.

David R. Glocke, Principal
Vanguard Fixed Income Group
March 16, 2010

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Prime Money Market Fund

Fund Profile
As of February 28, 2010

The agency and mortgage-backed securities sectors may include issues from government-sponsored enterprises; such issues are not backed by the full faith and credit of the U.S. government.

Distribution by Credit Quality (% of portfolio)

1 The expense ratios shown are from the prospectuses dated December 23, 2009, as revised April 9, 2010, and represent estimated costs for the fiscal year based on the fund’s net assets as of the prospectus date. For the six months ended February 28, 2010, the annualized expense ratios were 0.23% for Investor Shares and 0.09% for Institutional Shares.

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Prime Money Market Fund

Performance Summary

Investment returns will fluctuate. All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the fund. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at www.vanguard.com/performance.) The returns shown do not reflect taxes that a shareholder would pay on fund distributions. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the fund. The fund’s 7-day SEC yield reflects its current earnings more closely than do the average annual returns.

Average Annual Total Returns: Periods Ended December 31, 2009
This table presents average annual total returns through the latest calendar quarter—rather than through the end of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

Vanguard fund total returns do not include any transaction or account fees that applied in the periods shown. Fund prospectuses provide information about current fees.
See Financial Highlights for dividend information.

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Prime Money Market Fund

Financial Statements (unaudited)

Statement of Net Assets

As of February 28, 2010

The fund reports a complete list of its holdings in regulatory filings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information). In addition, the fund publishes its holdings on a monthly basis at www.vanguard.com.

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• See Note A in Notes to Financial Statements.
1 Represents annualized yield at date of purchase for discount securities, and coupon for coupon-bearing securities.
2 The issuer operates under a congressional charter; its securities are not backed by the full faith and credit of the U.S. government.
3 Adjustable-rate security.
4 Security exempt from registration under Section 4(2) of the Securities Act of 1933. Such securities may be sold in transactions exempt from registration only to dealers in that program or other “accredited investors.” At February 28, 2010, the aggregate value of these securities was $7,851,695,000, representing 7.1% of net assets.
5 Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the
7-day yield.
GO—General Obligation Bond.
VRDO—Variable Rate Demand Obligation.
See accompanying Notes, which are an integral part of the Financial Statements.

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See accompanying Notes, which are an integral part of the Financial Statements.

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See accompanying Notes, which are an integral part of the Financial Statements.

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1 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.
2 Annualized.
3 Includes 0.03% of fees to participate in the Treasury Temporary Guarantee Program for Money Market Funds. See Note E in Notes to Financial Statements.

See accompanying Notes, which are an integral part of the Financial Statements.

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1 Annualized.
2 Includes 0.03% of fees to participate in the Treasury Temporary Guarantee Program for Money Market Funds. See Note E in Notes to Financial Statements.

See accompanying Notes, which are an integral part of the Financial Statements.

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Prime Money Market Fund

Notes to Financial Statements

Vanguard Prime Money Market Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund invests in short-term debt instruments of companies primarily operating in specific industries, particularly financial services; the issuers’ abilities to meet their obligations may be affected by economic developments in such industries. The fund offers two classes of shares, Investor Shares and Institutional Shares. Investor Shares are available to any investor who meets the fund’s minimum purchase requirements. Institutional Shares are designed for investors who meet certain administrative and service criteria and invest a minimum of $5 million.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued at amortized cost, which approximates market value. Investments in Vanguard Municipal Cash Management Fund are valued at that fund’s net asset value.

2. Repurchase Agreements: The fund may invest in repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings.

3. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2006–2009), and for the period ended February 28, 2010, and has concluded that no provision for federal income tax is required in the fund’s financial statements.

4. Distributions: Distributions from net investment income are declared daily and paid on the first business day of the following month.

5. Other: Interest income includes income distributions received from Vanguard Municipal Cash Management Fund and is accrued daily. Premiums and discounts on debt securities purchased are amortized and accreted, respectively, to interest income over the lives of the respective securities. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses) and shareholder reporting. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. Vanguard and the fund’s board have agreed to temporarily limit certain net operating expenses in excess of the fund’s daily yield so as to maintain a zero or positive yield for the fund. Vanguard and the fund’s board may terminate the temporary expense limitation at any time. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At February 28, 2010, the fund had contributed capital of $22,021,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 8.81% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

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Prime Money Market Fund

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1 — Quoted prices in active markets for identical securities.
Level 2 — Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3 — Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).

The fund’s investment in Vanguard Municipal Cash Management Fund is valued based on Level 1 inputs. All of the fund’s other investments were valued using amortized cost, in accordance with rules under the Investment Company Act of 1940. Amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, securities valued at amortized cost are considered to be valued using Level 2 inputs.

E. On October 7, 2008, the board of trustees approved the fund’s participation in a temporary program introduced by the U.S. Treasury to guarantee the account values of shareholders in a money market fund in the event the fund’s net asset value fell below $0.995 and the fund’s trustees decided to liquidate the fund. The program covered the lesser of a shareholder’s account value on September 19, 2008, or on the date of liquidation. To participate, the fund was required to pay a fee of 0.01% of its net assets as of September 19, 2008, for coverage through December 18, 2008. In December 2008, the U.S. Treasury extended the program through April 30, 2009, and the fund’s trustees approved the fund’s continuing participation in the program at a cost of an additional 0.015% of its net assets as of September 19, 2008. In March 2009, the U.S. Treasury extended the program through September 18, 2009, and the fund’s trustees approved the fund’s continuing participation in the program at a cost of an additional 0.015% of its net assets as of September 19, 2008.

F. In preparing the financial statements as of February 28, 2010, management considered the impact of subsequent events for potential recognition or disclosure in these financial statements.

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Federal Money Market Fund

Fund Profile
As of February 28, 2010

1 The expense ratio shown is from the prospectus dated December 23, 2009, as revised April 9, 2010, and represents estimated costs for the fiscal year based on the fund’s net assets as of the prospectus date. For the six months ended February 28, 2010, the annualized expense ratio was 0.23%.

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Federal Money Market Fund

Performance Summary

Investment returns will fluctuate. All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the fund. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at www.vanguard.com/performance.) The returns shown do not reflect taxes that a shareholder would pay on fund distributions. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the fund. The fund’s 7-day SEC yield reflects its current earnings more closely than do the average annual returns.

Average Annual Total Returns: Periods Ended December 31, 2009
This table presents average annual total returns through the latest calendar quarter—rather than through the end of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

Vanguard fund total returns do not include any transaction or account fees that applied in the periods shown. Fund prospectuses provide information about current fees.
See Financial Highlights for dividend information.

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Federal Money Market Fund

Financial Statements (unaudited)

Statement of Net Assets
As of February 28, 2010

The fund reports a complete list of its holdings in regulatory filings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information). In addition, the fund publishes its holdings on a monthly basis at www.vanguard.com.