The correct answer is option 1, bacterium. Genetically engineered cotton plants with pest resistance have been created by inserting a specific gene from a bacterium into their genetic material. This gene is known as the Bacillus thuringiensis (Bt) gene. Bt is a type of bacterium that produces proteins toxic to certain pests, specifically the larvae of insects such as bollworms and budworms.

By inserting the Bt gene into the cotton plants, scientists have made them capable of producing these toxic proteins themselves. When these cotton plants are attacked by the targeted pests, the toxic proteins are released and kill the insects. This eliminates or significantly reduces the need for using chemical pesticides, making these genetically engineered cotton plants more environmentally friendly and potentially more sustainable in pest management.

It is important to note that although the other options (fungus, insect, protozoan) can also be sources of genetic material, in the case of genetically engineered pest-resistant cotton plants, the gene used comes from a bacterium (Bt) for its pest-killing properties.