Annual reports (ARs) are an excellent source of information and are usually a big factor for any fundamental investor, while taking a call on a company.
ARs primarily contain 2 types of information; qualitative and quantitative. Reading multiple ARs, going into the nitty-gritties of things (both qualitative and quantitative) takes time and effort. Also, it is a matter of being interested to do the same in the first place!
This is where an annotated AR comes into play.
An annotated AR is the usual soft copy of the AR, but which has been marked and commented upon by me. (I do this in Evernote, for those who are interested). Here, both the numbers as well as narratives are marked and commented upon. The best part is, at the beginning of the PDF file, all my markings as well as comments are presented as a summary first. Then the actual AR follows, which again has these markings and comments at the relevant places anyway.
An annotated AR cuts your AR reading time massively, as well as gives some new and unique perspectives. As an example, check out this Annotated AR of Dollar Industries for FY19.
An annotated AR can also be a good idea generator. As an example, check out this Annotated AR of Shree Digvijay Cement for FY19, particularly my comments at the end.
An annotated AR can also provide information which may not be positive and which will prevent you from making losses due to some problems with the company. As an example, check out this Annotated AR of TNPP for FY17.
I hope this gives you a better understanding of what an Annotated AR is, and how it can add value to you.