An annual report is issued by a company to its ______.

Shareholders

The correct answer is Option (1) → Shareholders

An annual report is a comprehensive document prepared by a company at the end of each financial year.
It provides details about:

• The company’s financial performance,

• Auditor’s report,

• Director’s report, and

• Future outlook of the business.

This report is primarily addressed to the shareholders, since they are the owners of the company, and it keeps them informed about how their invested funds are being used and how the company is performing.