"Annual" is an adjective. "Yearly" can be an adjective or an adverb. Both pertain to a year.
Examples:
Our annual picnic will be on Saturday. (adjective)
I attend the picnic annually. (adverb)
Our yearly picnic will be on Saturday. (adjective)
The picnic happens yearly. (adverb)
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They mean the same thing but annual can be a little more professional.
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