butterfliesandbee I have not read all the replies and I am not going to tell you whether you are being unreasonable or not. I am just going to say....
My own dd is very, very dyslexic and is working two to three years below her school year. For me this is both a fact and a non-fact in the sense that she is struggling, happy to admit that to anyone (not in DD's hearing) but also she is doing well, because to be able to do well enough in her class when she has to do about three times as much work as everyone else, and she struggles to concentrate, is amazing.
For your own dd I hope you have some ideas as to why she is behind, (sorry I have not had time to read all comments but have read some, so I bet I have missed a vital bit!) and once the reason for struggles or being behind is known then everyone can work out what to do, how best to do it, and what may or may not work.
My only other comment is that with a school age child I would say her report is her report and whether it is shared with granny or granddad etc should be her decision in my humble opinion. My dd is 10 and I would not just give her report to an extended family member to read. My son is in reception and I think I would also ask him before sharing a whole report.
I might say a few choice bits about things that are going well but I would be careful how much to share.
It sounds like you think the truth is best but as I say there are facts and non-facts, and the truth can be quite elastic! Doing well and struggling, can be the same thing for some children!
Good luck, the fact you are on here talking about all this is a sign it's really on your mind, I do hope you will find the way forward for you and your dd. All the best.