AT&T INC. - Annual Report 2019 | FinancialReports.eu

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

☐ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number:1-8610

A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

BELLSOUTH SAVINGS AND SECURITY PLAN

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

AT&T INC.

208 S. Akard, Dallas, Texas 75202

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BellSouth Savings and Security Plan

Financial Statements, Supplemental Schedule and Exhibit

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Reports of Independent Registered Public Accounting Firm	1
Financial Statements:
Statements of Net Assets Available for Benefits as of December
31, 2018 and 2017	2
Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31,
2018	3
Notes to Financial Statements	4
Supplemental Schedule:
Schedule H, Line 4(i) Schedule of Assets (Held at End of Year) as of December 31,
2018	16

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Plan Administrator and Plan Participants

Bellsouth Savings and Security Plan

Dallas, Texas

Opinion on the Financial Statements

We have audited the accompanying statements of net assets available for benefits of BellSouth Savings and Security Plan (Plan) as of December 31, 2018 and 2017, the related statement of changes in net assets available for benefits for the year ended December 31, 2018, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of BellSouth Savings and Security Plan as of December 31, 2018 and 2017, and the changes in net assets available for benefits for the year ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America.

Basis of Opinion

These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plans internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Report on Supplemental Information

The supplemental information in the accompanying schedule of assets (held at end of year) as of December 31, 2018, has been subjected to audit procedures performed in conjunction with the audit of the Plans financial statements. The supplemental schedule is the responsibility of the Plans management. Our audit procedures included determining whether the supplemental schedule reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the supplemental schedule, we evaluated whether the supplemental schedule, including its form and content, is presented in conformity with the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 . In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

/s/ BKD, LLP

We have served as the Plans auditor since 2018

San Antonio, Texas

June 28, 2019

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BELLSOUTH SAVINGS AND SECURITY PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

(Dollars in Thousands)

	December 31, — 2018	2017
ASSETS
Investment in AT&T Savings Group Investment Trust	$ 552,489	$ 572,237
Investments, at fair value	1,575,169	1,853,150
Total Investments (See Note 4)	2,127,658	2,425,387
Notes receivable from participants	59,874	60,770
Participant contributions receivable	2,170	2,204
Employer contributions receivable	631	803
Interest receivable	396	334
Total Receivables	63,071	64,111
Total Assets	2,190,729	2,489,498
LIABILITIES
Administrative expenses payable	825	811
Due to broker for securities purchased	20,308	44,508
Total Liabilities	21,133	45,319
Net Assets Available for Benefits	$ 2,169,596	$ 2,444,179
See Notes to Financial Statements.

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BELLSOUTH SAVINGS AND SECURITY PLAN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

FOR THE YEAR ENDED DECEMBER 31, 2018

(Dollars in Thousands)

Net Assets Available for Benefits, December 31, 2017	$
Changes in Net Assets:
Contributions:
Participant contributions	64,575
Employer contributions	20,441
Rollover contributions	9,089
	94,105
Investment Income (Loss):
Net income from investment in AT&T Savings Group Investment Trust	11,608
Interest	2,353
Dividends	70,473
Net (depreciation) in fair value of investments	(240,707	)
	(156,273	)
Interest income on notes receivable from participants	2,765
Distributions	(213,789	)
Administrative expenses	(1,408	)
Net decrease before transfers	(274,600	)
Transfers from affiliated qualified savings plan (Note 1)	17
Net Assets Available for Benefits, December 31, 2018	$ 2,169,596
See Notes to Financial Statements.

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BellSouth Savings and Security Plan

Notes to Financial Statements

(Dollars in Thousands)

NOTE 1. PLAN DESCRIPTION

The BellSouth Savings and Security Plan (Plan) is a defined contribution plan originally established by BellSouth Corporation (BellSouth) to provide a convenient way for eligible nonmanagement employees of participating BellSouth companies to save on a regular and long-term basis. In December 2006, BellSouth was acquired by AT&T Inc. (AT&T or the Company). The following description of the Plan provides only general information. The Plan has detailed provisions covering participant eligibility, participant allotments from pay, participant withdrawals, participant loans, employer contributions and related vesting of contributions and Plan expenses. The Plan text and prospectus include complete descriptions of these and other Plan provisions. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).

During 2018, $17 of participant balances and assets were transferred into the Plan from the AT&T Savings and Security Plan.

The Plan participates in the AT&T Savings Group Investment Trust (Group Trust) with respect to the AT&T Stable Value Fund and International Stock Fund. The Bank of New York Mellon Corporation (BNY Mellon) serves as trustee for both the Group Trust and the trust holding the Plans assets, known as the BellSouth Savings and Security Plan Trust. Fidelity Investments Institutional Operations Company, Inc. (Fidelity) serves as recordkeeper for the Plan. During 2018, participants could invest their contributions in one or more of fourteen funds in 1% increments:

| AT&T Shares Fund | T. Rowe Price Mid-Cap Growth
Fund |
| --- | --- |
| Bond Fund | Indexed Stock Fund |
| Fidelity Growth and Income Portfolio ** | Russell 1000 Growth Index |
| Balanced Fund | LifePath Funds (based on retirement date) |
| AT&T Stable Value Fund * DFA U.S. Small Cap Value Portfolio DFA U.S. Large Cap Value Portfolio II | Small and Mid-Sized U.S. Stock Index
Fund ** International Stock Index Fund AT&T International Stock Fund * |

Investment fund option of the Group Trust

** Effective as of market close on June 29, 2018, the Fidelity Growth and Income Portfolio investment option ceased to exist as an investment option and the Small and Mid-Sized U.S. Stock Index Fund was introduced.

Participants contribute to the Plan through payroll allotments. Participants may also contribute amounts representing distributions from other qualified defined benefit and defined contribution plans (rollovers). The Company contributes to the Plan by matching the participants contributions based on the provisions of the Plan. All contributions are participant directed.

Dividends on shares in the AT&T Shares Fund can either be reinvested in the AT&T Shares Fund on a quarterly basis, or paid into a short-term interest bearing fund for distribution before the end of the year. Interest earned on dividends held in the short-term interest-bearing fund are used to purchase additional units of the AT&T Shares Fund in the participants account. During 2018, Plan participants elected to receive $1,366 in dividend distributions. This amount is included in distributions on the Plans Statement of Changes in Net Assets Available for Benefits.

Each participant is entitled to exercise voting rights attributable to the AT&T shares allocated to their account and is notified by the Company prior to the time that such rights may be exercised. Subject to the fiduciary provisions of ERISA, the trustee will not vote any allocated shares for which instructions have not been given by a participant. The trustee votes any unallocated shares in the same proportion as it votes those shares that were allocated to the extent the proportionate vote is consistent with the trustees fiduciary obligations under ERISA. Participants have the same voting rights in the event of a tender or exchange offer.

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BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

Although it has not expressed any intent to do so, AT&T has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA and collectively bargained agreements. In the event that the Plan is terminated, subject to the conditions set forth by ERISA, the account balances of all participants shall be 100% vested.

Administrative Expenses Each participant in the Plan may be charged for investment manager fees and administrative expenses, including, trustee and other expenses considered reasonable by the Plan administrator. Investment manager fees are charged through the applicable investment option. Administrative fees are divided on a pro rata basis among investment options of the participant. An additional fee is charged to individual participants for various services provided by the Plans recordkeeper and other service providers. Certain expenses are paid by the Plan, Group Trust, or Company.

NOTE 2. ACCOUNTING POLICIES

The accompanying financial statements were prepared in conformity with U.S. generally accepted accounting principles (GAAP), which require management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Distributions are recorded when paid.

Investment Valuation and Income Recognition Investments are stated at fair value except those investments that are fully benefit responsive which are stated at contract value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 3 for discussion of fair value measurements. Investments in securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. If no sale was reported on that date, they are valued at the last reported bid price. Shares of registered investment companies (i.e. mutual funds) are valued based on quoted market prices, which represent the net asset value of shares held at year-end. Over-the-counter securities (OTC) and government obligations are valued at the bid price or the average of the bid and asked price on the last business day of the year from published sources where available and, if not available, from other sources considered reliable. Depending on the types and contractual terms of OTC derivatives, fair value is measured using valuation techniques such as Black-Scholes option price models, simulation models, or a combination of various models.

Common/collective trust funds and 103-12 investment entities (i.e. an investment entity that holds the assets of two or more plans which are not members of a related group or employee benefit plan) are valued at quoted redemption values that represent the net asset values (NAV) of units held at year-end. Publicly traded partnerships are valued using trades on a national securities exchange based on the last reported sales price on the last business day of the year.

Investment contracts held by a defined contribution plan are required to be reported at contract value. Contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The Group Trust invests in fully benefit-responsive guaranteed investment contracts (GICs) and synthetic investment contracts (Synthetic GICs). The underlying investments of the Synthetic GICs are owned by the Group Trust and are comprised of corporate bonds and notes, registered investment companies and government securities and are also valued as described above. The contract value of the fully benefit-responsive investment contracts represents contributions plus earnings, less participant withdrawals and administrative expenses.

Purchases and sales of securities are reflected as of the trade date. Dividend income is recognized on the ex-dividend date. Interest earned on investments is recognized on the accrual basis. Net depreciation includes the Plans gains and losses on investments bought and sold as well as held during the year. Transfers in and out of Level 1 (quoted market prices), Level 2 (other significant observable inputs) and Level 3 (significant unobservable inputs) are recognized on the period ending date.

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BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

Notes Receivable from Participants Notes receivable from participants represent participant loans that are recorded at their unpaid principal balance plus any accrued, but unpaid interest. Interest income on notes receivable from participants is recorded when it is earned. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2018 or 2017. If a participant ceases to make loan repayments and the plan administrator deems the participant loan to be a distribution, the participant loan balance is reduced and a distribution is recorded.

Recent Accounting Standards

In February 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2017-06 Employee Benefit Plan Master Trust Reporting (ASU 2017-06). ASU 2017-06 requires plans to report interests in a master trust and changes in the value of that interest as separate line items on the plans financial statements. The plans must also disclose the master trusts investments by general type as well as other assets and liabilities and disclose the dollar amount of the plans interest in each category disclosed. The new standard is effective for fiscal years beginning after December 15, 2018 with retrospective application. Early adoption is permitted. The Plan is not early adopting this standard. Management is currently evaluating this updated guidance.

In July 2018, the FASB issued Accounting Standards Update No. 2018-09 Codification Improvements (ASU-2018-09). ASU 2018-09 requires a plan to evaluate its investments to determine whether a readily determinable fair value exists or if investments qualify for the net asset value per share practical expedient and can be excluded from the fair value hierarchy disclosure. The new standard is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Plan is not early adopting this standard. Management is currently evaluating this updated guidance.

NOTE 3. FAIR VALUE MEASUREMENTS

Accounting Standards Codification 820, Fair Value Measurement , establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access.

Level 2 Inputs to the valuation methodology include:

Quoted prices for similar assets and liabilities in active markets;

Quoted prices for identical or similar assets or liabilities in inactive markets;

Inputs other than quoted market prices that are observable for the asset or liability;

Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The assets or liabilitys fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The valuation methodologies described in Note 2 may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while Plan management believes its valuation methods are

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BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. There have been no changes in the methodologies used at December 31, 2018 and 2017.

See Note 4 for fair value hierarchy for the Group Trusts and Plans investments.

NOTE 4. INVESTMENTS

The Plan held investments in its own trust and in the Group Trust (through participation in the AT&T Stable Value Fund and AT&T International Stock Fund) as of December 31, 2018 and 2017.

The following table sets forth by level, within the fair value hierarchy, the Plans assets, other than the Plans investment in the Group Trust, at fair value as of December 31, 2018:

	Plan Assets at Fair Value as of December 31, 2018 — Level 1	Level 2	Level 3	Total
Interest-bearing investments	$ 894	$ 16,101	$	$ 16,995
AT&T common stock	306,853			306,853
Mutual funds or exchange-traded funds	524,126			524,126
Corporate debt		26,914		26,914
Mortgage-backed securities		38,541		38,541
Government debt		8,765		8,765
Futures	62			62
Total assets in fair value hierarchy	$ 831,935	$ 90,321	$	$ 922,256
Common/collective trusts measured at net asset value:
U.S. index stock fund 1				327,383
International index stock fund 2				45,420
Blended equity & debt 3				256,755
Bond index fund 4				23,355
Total assets at fair value				$ 1,575,169

1 This category includes common/collective trust funds with an objective of providing investment results that approximate the overall performance of the common stocks included in the Standard and Poors Composite Stock Price Index of 500 stocks (the S&P 500®) and the Russell 1000 Index. There are currently no redemption restrictions on these investments.

2 This category includes a common/collective trust fund with an objective of providing investment results that approximate the overall performance of the common stocks included in the All Country World Index ex U.S. Index. Except for a short-term trading fee applicable to certain participant transactions, there are currently no redemption restrictions on this investment.

3 This category includes common/collective trust funds also known as LifePath Portfolios which are well diversified portfolios that adjust the mix of the various underlying investments over time. The change in allocation of investments is designed to move from a more aggressive investment strategy to a more conservative strategy as the participants come closer to retirement. The year associated with the fund identification denotes the projected year of retirement of the participant selecting the fund. There are currently no redemption restrictions on these investments.

4 This category includes a common/collective trust fund with an objective to approximate the overall performance of the Barclays Capital Aggregate Bond Index. There are currently no redemption restrictions on these investments.

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BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

The following table sets forth by level, within the fair value hierarchy, the Plans assets, other than the Plans investment in the Group Trust, at fair value as of December 31, 2017:

	Plan Assets at Fair Value as of December 31, 2017 — Level 1	Level 2	Level 3	Total
Interest-bearing investments	$ 597	$ 39,313	$	$ 39,910
AT&T common stock	429,897			429,897
Mutual funds or exchange-traded funds	683,291			683,291
Corporate debt		23,832		23,832
Mortgage-backed securities		40,971		40,971
Government debt		13,100		13,100
Futures	37			37
Total assets in fair value hierarchy	$ 1,113,822	$ 117,216	$	$ 1,231,038
Common/collective trusts measured at net asset value:
U.S. index stock fund 1				339,662
International index stock fund 2				43,237
Blended equity & debt 3				214,984
Bond index fund 4				24,229
Total assets at fair value				$ 1,853,150

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BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

AT&T Savings Group Investment Trust Investments

AT&T established the Group Trust to manage assets of pooled investment options among various AT&T sponsored employee benefit trusts. Each participating trusts interest in the investment fund options (i.e., separate accounts) of the Group Trust is based on account balances of the participants and their elected investment fund options. The Group Trust assets are allocated among the participating plans by assigning to each trust those transactions (primarily contributions, distributions, and expenses) that can be specifically identified and by allocating investment income and administrative expenses to the individual plans on a daily basis based on each participants account balance within each investment fund option.

The participating entities and ownership percentages of the Group Trust are listed below:

2018	2017
AT&T Master Trust	95.4 %	95.3 %
BellSouth Savings and Security Plan	4.6 %	4.7 %
Total	100.0 %	100.0 %

The Plans percentage interest in each of the investment fund options within the Group Trust is disclosed below as of December 31, 2018.

Interest bearing cash	AT&T Total Return Bond Fund — $ 8,064	$	500	$	3	AT&T Stable Value Fund — $	$	8,567
Foreign cash	3,892				16			3,908
Mortgage-backed securities	267,127							267,127
Corporate debt	712,633							712,633
Government securities	315,654							315,654
Common/collective trust funds	756,427		2,161,448		157,522			3,075,397
103-12 investment entities					236,952			236,952
Equities - common stock			324,930		193,898			518,828
Equities - preferred stock					4,528			4,528
Futures	(245	)						(245	)
Registered investment companies	291,899		6,090		3,536	185,716		487,241
Group Trust investments at fair value	2,355,451		2,492,968		596,455	185,716		5,630,590
Unsettled trades and other	(395,768	)	(263	)	801	(771	)	(396,001	)
Fully benefit-responsive investments contracts valued at contract value						6,829,151		6,829,151
Group Trust net assets	$ 1,959,683	$	2,492,705	$	597,256	$ 7,014,096	$	12,063,740
Plans percentage Ownership interest of investments		%		%	1.4 %	7.8	%	4.6	%

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BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

The Plans percentage interest in each of the investment fund options within the Group Trust is disclosed below as of December 31, 2017.

Interest bearing cash	AT&T Total Return Bond Fund — $ 8,635	$		AT&T International Stock Fund — $	AT&T Stable Value Fund — $	$	8,635
Foreign cash	2,513			49			2,562
Mortgage-backed securities	197,984						197,984
Corporate debt	435,034						435,034
Government securities	334,453						334,453
Common/collective trust funds	660,574		2,465,860	262,744			3,389,178
103-12 investment entities				259,704			259,704
Equities - common stock			363,871	215,321			579,192
Equities - preferred stock				981			981
Futures	622						622
Registered investment companies	468,488		73,167	4,304	63,048		609,007
Group Trust investments at fair value	2,108,303		2,902,898	743,103	63,048		5,817,352
Unsettled trades and other	(238,620	)	100	625	(785	)	(238,680	)
Fully benefit-responsive investments contracts valued at contract value					6,582,615		6,582,615
Group Trust net assets	$ 1,869,683	$	2,902,998	$ 743,728	$ 6,644,878	$	12,161,287
Plans percentage Ownership interest of investments		%	%	1.3 %	8.5	%	4.7	%

Net Depreciation in Fair Value of Group Trust Investments and

Total Investment Income (Loss) for the year ended December 31, 2018

Net depreciation in fair value of Group Trust Investments	Group Trust — $ (279,287	)
Investment income:
Interest	$ 207,574
Dividends	23,104
Less: Investment management expenses	(9,070	)
Net investment loss of Group Trust Investments	$ (57,679	)

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BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

The following tables sets forth by level, within the fair value hierarchy, the Group Trusts assets at fair value as

of December 31, 2018 and 2017:

	Group Trust Assets and Liabilities at Fair Value December 31, 2018 — Level 1	Level 2		Level 3	Total
Corporate debt	$	$	712,633	$	$ 712,633
Mortgage-backed securities			267,127		267,127
Interest-bearing investments			8,567		8,567
Foreign cash	3,908				3,908
Common stock	518,828				518,828
Preferred stock	4,528				4,528
Futures	(245	)			(245	)
Registered investment companies	487,241				487,241
Government debt			315,654		315,654
Total assets in fair value hierarchy	$ 1,014,260	$	1,303,981	$	$ 2,318,241
Investments measured at net asset value
U.S. common/collective trusts 1					2,868,746
International common/collective
trusts 2					157,522
103-12 investments 3					236,952
Non-publicly traded registered investments companies 4					49,129
Total assets at fair value					$ 5,630,590

1 The objective of the common/collective trust funds held in the AT&T U.S. Stock Fund is to deliver diversified exposure to the large-capitalization U.S. equity market as represented by the Russell 3000 Index. The objective of the common/collective trust funds held in the AT&T Total Return Bond Fund is to deliver diversified exposure to the fixed income market as represented by the Bloomberg Barclays Aggregate Index. There are currently no redemption restrictions on these investments.

2 The objective of the common/collective trust funds held in the AT&T International Stock Fund is to provide diversified exposure to international markets as represented by the All Country World Index ex U.S., MSCI Emerging Markets Net Dividend Index, MSCI Australia Index and MSCI Canada Index. There are currently no redemption restrictions on these investments.

3 The objective of these equity commingled funds is to provide diversified exposure to international markets as represented by the All Country World Index ex U.S. that invest in both developed and emerging countries. These funds have redemption restrictions limited to daily and monthly settlement.

4 These are non-publicly traded registered investment companies, consisting of a short-term floating rate portfolio plus publicly-traded high-yield and asset-backed fixed income securities. The fair value of the investments in this group have been estimated using the net asset values reported by the fund manager. These funds are utilized on a discretionary basis as part of a broad fixed income mandate. These are open-ended funds, with no final termination dates. There are currently no redemption restrictions on this investment.

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BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

	Group Trust Assets and Liabilities at Fair Value December 31, 2017 — Level 1	Level 2	Level 3	Total
Corporate debt	$	$ 435,034	$	$ 435,034
Mortgage-backed securities		197,984		197,984
Interest-bearing investments		8,635		8,635
Foreign cash	2,513	49		2,562
Common stock	579,192			579,192
Preferred stock	981			981
Futures	622			622
Registered investment companies	526,784			526,784
Government debt		334,453		334,453
Total assets in fair value hierarchy	$ 1,110,092	$ 976,155	$	$ 2,086,247
Investments measured at net asset value
U.S. common/collective trusts 1				3,126,434
International common/collective
trusts 2				262,744
103-12 investments 3				259,704
Non-publicly traded registered investments companies 4				82,223
Total assets at fair value				$ 5,817,352

2 The objective of the common/collective trust funds held in the AT&T International Stock Fund is to provide diversified exposure to international markets as represented by the All Country World Index ex U.S. and MSCI Emerging Markets Net Dividend Index. The three common/collective trust funds have redemption restrictions limited to daily, weekly or monthly. One fund is invested broadly in developed and emerging market countries, while the other two funds are invested primarily in emerging market countries.

3 These are equity commingled funds that invest primarily in developed countries. These funds have redemption restrictions limited to monthly settlement.

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BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

Derivative Financial Instruments

In the normal course of operations, Group Trust assets and liabilities held in the AT&T Stable Value Fund (Stable Value Fund) may include derivative financial instruments (futures and foreign currency forward contracts). These instruments involve, in varying degrees, elements of credit and market volatility risks in excess of more traditional investment holdings such as equity and debt instruments. The intent is to use derivative financial instruments as an economic hedge to manage market volatility and foreign currency exchange rate risk associated with the Stable Value Funds investment assets. The gains (losses) are located on the Statement of Changes in Net Assets Available for Benefits as Net Income from Investment in AT&T Savings Group Investment Trust to the extent of the Plans ownership in the Group Trust. The Group Trusts fiduciaries do not anticipate any material adverse effect on the Group Trusts financial position resulting from its involvement in these instruments.

In addition to the derivative financial instruments held by the Group Trust, the Plan also holds derivative financial instruments as Plan investments in its own trust. The income is located on the Statements of Changes in Net Assets Available for Benefits a component of net appreciation in fair value of investments.

At December 31, 2018 and 2017, the fair value of derivative financial instruments held by the Group Trust and the Plan was not material.

Futures Contracts

The primary risk managed by the Group Trust using futures contracts is the price risk associated with investments. On behalf of the Group Trust, investment managers enter into various futures contracts to economically hedge investments. These contracts, which are considered derivatives under Accounting Standards Codification Topic 815, Derivatives and Hedging are agreements between two parties to buy or sell a security or financial interest at a set price on a future date and are standardized and exchange-traded. Upon entering into such a contract on behalf of the Group Trust, the investment manager is required to pledge to the broker an amount of cash or securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Pursuant to the contract, the investment manager agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded on a daily basis by the trustee as a realized gain or loss equal to the difference in the value of the contract between daily closing prices. Upon entering into such contracts, the Group Trust bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Group Trust may not achieve the anticipated benefits of the futures contracts and may realize a loss. With futures, there is minimal counterparty credit risk to the Group Trust since futures are exchange traded and the exchanges clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. The investments in the Group Trust are subject to equity price risk and interest rate risk, in the normal course of pursuing its investment objectives. The U.S. interest rate futures held in the portfolio as of December 31, 2018 and 2017 were used primarily to hedge and manage the duration risk of the portfolio.

The futures held in the Plan as of December 31, 2018 and 2017, were used primarily to maintain the target allocations of the portfolio.

Foreign Currency Contracts

The primary risks managed by the Group Trust using foreign currency forward contracts is the foreign currency exchange rate risk associated with the Group Trusts investments denominated in foreign currencies. On behalf of the Group Trust, investment managers enter into forward foreign currency contracts, which are agreements to exchange foreign currencies at a specified future date at a specified rate, the terms of which are not standardized on an exchange. These contracts are intended to minimize the effect of currency fluctuations on the performance of investments denominated in foreign currencies. Although in some cases, forward foreign currency contracts are used to express a view on the direction of a particular currency, risk arises both from the possible inability of the counterparties to meet the terms of the contracts (credit risk) and from movement in foreign currency exchange rates (market risk). Foreign currency forward contracts are entered into with major banks to minimize credit risk, and accordingly, no credit reserve has been established against these amounts. The contracts are recorded at fair value on the date the contract is entered into, which is typically zero.

Fully Benefit-Responsive Investment Contracts

The Stable Value Fund consists of fully benefit-responsive investment contracts with various financial institutions and insurance companies which can be accounted for by the Plans at contract value. Generally contract value represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses.

Table of Contents

BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

The investments held by the Stable Value Fund as of December 31, 2018 include Synthetic GICs which are fully benefit-responsive investment contracts. Synthetic GICs are constructed by combining a stable value insurance wrapper contract and a fixed income portfolio. The assets supporting the Synthetic GICs are owned by the Group Trust and generally consist of high quality fixed income securities.

Traditional Guaranteed Investment Contracts (Traditional GICs also known as General Account GICs) are issued by insurance companies and typically pay a guaranteed fixed or floating rate of interest over the life of the contract with a repayment of principal at maturity. A Synthetic GIC is similar to a Traditional GIC but has unbundled the insurance and investment components of the Traditional GIC.

Wrapper contracts are typically issued by a bank or insurance company, and seek to provide preservation of principal by permitting daily liquidity at contract value for participant directed transactions, in accordance with the provisions of the Plans. Wrapper contracts amortize the realized and unrealized gains and losses on the underlying fixed income investments through adjustments to the future interest crediting rate of the contract. Wrapper contracts typically contain contractual provisions that prevent the interest crediting rate from falling below zero.

In certain circumstances, the amount withdrawn from the wrapper contract could be payable at fair value rather than at contract value. These events include termination of the Plans, a material adverse change to the provisions of the Plans, if AT&T elects to withdraw from a wrapper contract in order to switch to a different investment provider or, in the event of a spin-off or sale of a division, if the terms of the successor plan do not meet the contract issuers underwriting criteria for issuance of a clone wrapper contract. Events that would permit a wrapper contract issuer to terminate a wrapper contract upon short notice include the Plans loss of qualified status, un-cured material breaches of responsibilities or material and adverse changes to the provisions of the Plans. The Company does not believe any of the events are probable of occurring in the foreseeable future.

Investment Risk

Investments held by the Group Trust and the Plan are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investments, it is at least reasonably possible that changes in the values of investments could occur in the near term and that such changes could materially affect participants account balances and the amounts reported in the statements of net assets available for benefits. Participants accounts that are invested in the Company stock fund option are exposed to market risk in the event of a significant decline in the value of AT&T stock.

Additionally, the Group Trust invests in securities with contractual cash flows, such as asset backed securities, collateralized mortgage obligations and commercial mortgage-backed securities. The value, liquidity and related income of these securities are sensitive to changes in economic conditions, including real estate value, delinquencies or defaults, or both, and may be adversely affected by shifts in the markets perception of the issuers and changes in interest rates

NOTE 5. PARTIES-IN-INTEREST TRANSACTIONS

The Plan may, at the discretion of the Plans participants or via the Company match, invest in the Companys common stock. The Plan held 10,751,695 and 11,057,020 shares of the Companys common stock as of December 31, 2018 and 2017, respectively. Dividends earned by the Plan on the Companys common stock were $20,523 for the year ended December 31, 2018.

Plan assets are invested in AT&T stock either directly or through the Group Trust. Because the Company is the plan sponsor, transactions involving the Companys stock qualify as party-in-interest transactions. In addition, certain investments held by the Plan and Group Trust are managed by BNY Mellon and Fidelity as trustee and record keeper, respectively, as defined by various agreements. Therefore, these transactions and fees paid to these entities qualify as parties-in-interest transactions. All of these transactions are exempt from the prohibited transactions rules.

Table of Contents

BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

NOTE 6. TAX STATUS

The Plan has received a determination letter from the Internal Revenue Service (IRS) dated June 4, 2015, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the IRS, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The plan administrator has indicated that it will take the necessary steps, if any, to bring the Plans operations into compliance with the Code.

Accounting principles generally accepted in the United States require Plan management to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2018, there were no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

NOTE 7. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500

The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500 as of December 31:

Net Assets Available for Benefits per the financial statements	2018 — $ 2,169,596	$	2,444,179
Distributions payable to participants	(368	)	(524	)
Net Assets Available for Benefits per the Form 5500	$ 2,169,228	$	2,443,655

Distributions payable to participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, but not yet paid as of that date. The following is a reconciliation of distributions to participants per the financial statements to the Form 5500 for the year ended December 31, 2018:

Distributions to participants per the financial statements	$
Distributions payable to participants at December 31, 2017	(524	)
Distributions payable to participants at December 31, 2018	368
Distributions to participants per the Form 5500	$ 213,633

Table of Contents

BELLSOUTH SAVINGS AND SECURITY PLAN

EIN 58-1533433, PLAN NO. 004

SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2018

(Dollars in Thousands)

Identity of Issue	Description of Investment
Indexed Stock Fund
NORTHERN TRUST S&P 500 INDEX STOCK FUND	COMMON/COLLECTIVE TRUST FUND: 16,271 UNITS	$142,422
BLACKROCK RUSSELL 1000 INDEX FUND	COMMON/COLLECTIVE TRUST FUND: 5,888,991 UNITS	144,289
EXTENDED EQUITY MARKET FUND F	COMMON/COLLECTIVE TRUST FUND: 59,348 UNITS	3,515
Total Indexed Stock Fund		290,226
Balanced Fund
* DREYFUS GOVERNMENT CASH MANAGEMENT FUND	REGISTERED INVESTMENT COMPANY: 2,716,274 UNITS	2,716
US TREASURY BILL	0.000% 01/31/2019 DD 02/01/18	297
US TREASURY BILL	0.000% 02/28/2019 DD 03/01//18	299
US TREASURY BILL	0.000% 04/25/2019 DD 04/26/18	298
NORTHERN TRUST QM AGGREGATE BOND INDEX FUND	COMMON/COLLECTIVE TRUST FUND: 43,470 UNITS	23,355
NORTHERN TRUST S&P 500 INDEX STOCK FUND	COMMON/COLLECTIVE TRUST FUND: 4,245 UNITS	37,156
FUTURES CONTRACT	US 10YR TREAS NTS FUTURE (CBT) EXP MAR 19	39
FUTURES CONTRACT	S&P 500 EMINI INDEX FUT (CME) EXP MAR 19	23
*BNY MELLON CASH RESERVES	0.100% 12/31/20149 DD 06/26/97	2,188
Total Balanced Fund		66,371
Registered Investment Companies
T ROWE PRICE MID-CAP GROWTH FUND	REGISTERED INVESTMENT COMPANY: 5,441,822 UNITS	262,786
DFA U.S. SMALL CAP VALUE PORTFOLIO	REGISTERED INVESTMENT COMPANY: 3,908,671 UNITS	117,260
DFA U.S. LARGE CAP VALUE PORTFOLIO II	REGISTERED INVESTMENT COMPANY: 9,206,092 UNITS	136,719
Total Registered Investment Companies		516,765
LifePath Funds
LIFEPATH 2050 FUND	COMMON/COLLECTIVE TRUST FUND: 536,473 UNITS	8,422
LIFEPATH 2040 FUND	COMMON/COLLECTIVE TRUST FUND: 2,604,029 UNITS	53,924
LIFEPATH 2030 FUND	COMMON/COLLECTIVE TRUST FUND: 4,744,694 UNITS	95,549

Table of Contents

BELLSOUTH SAVINGS AND SECURITY PLAN

EIN 58-1533433, PLAN NO. 004

SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2018

(Dollars in Thousands)

Identity of Issue	Description of Investment
LIFEPATH 2020 FUND	COMMON/COLLECTIVE TRUST FUND: 3,633,110 UNITS	69,928
LIFEPATH RETIREMENT FUND	COMMON/COLLECTIVE TRUST FUND: 1533,073 UNITS	28,932
Total LifePath Age-Based Retirement Funds		256,755
AT&T Shares Fund
* AT&T COMMON STOCK	10,751,695 SHARES	306,853
* DREYFUS GOVERNMENT CASH MANAGEMENT FUND	REGISTERED INVESTMENT COMPANY:3,360,153 UNITS	3,360
Total AT&T Shares Fund		310,213
Bond Fund
SLH PROXY LONG EXPOSURE	SLHOPNTA4	13
CITIGROUP GLOBAL REV REPO	2.950% 01/02/2019 DD 12/31/18	13,900
* DREYFUS GOVT CAS MGMT INST 289	VAR RT 12/31/2075 DD 06/03/97	339
ABBVIE INC	4.500% 05/14/2035 DD 05/14/15	185
ABBVIE INC	4.700% 05/14/2045 DD 05/14/15	91
ALLY AUTO RECEIVABLES TRU 4 A2	1.590% 04/15/2020 DD 08/23/17	94
AMERICAN INTERNATIONAL GROUP I	4.875% 06/01/2022 DD 05/24/12	726
AMERICAN MUNI PWR-OHIO INC OH	6.449% 02/15/2044 DD 12/09/09	1,284
AMERICAN WATER CAPITAL CORP	3.400% 03/01/2025 DD 08/14/14	296
AMGEN INC	3.125% 05/01/2025 DD 05/01/15	861
ARROW ELECTRONICS INC	3.250% 09/08/2024 DD 09/08/17	279
ASSET BACKED SECURITIES HE4 M1	VAR RT 08/15/2033 DD 08/06/03	93
AVIATION CAPITAL GROUP LL 144A	4.125% 08/01/2025 DD 08/01/18	97
AVIATION CAPITAL GROUP LL 144A	VAR RT 06/01/2021 DD 12/03/18	100
BANC OF AMERICA FUNDING 2 D A1	VAR RT 05/25/2035 DD 06/01/05	31
BANK OF AMERICA CORP	VAR RT 03/05/2024 DD 03/05/18	97
BANK OF AMERICA CORP	VAR RT 03/05/2024 DD 03/05/18	593
BANK OF AMERICA CORP	VAR RT 07/23/2024 DD 07/23/18	299
BEAR STEARNS ARM TRUST 11 1A2	VAR RT 02/25/2033 DD 12/01/02	2
BEAR STEARNS ARM TRUST 12 13A1	VAR RT 02/25/2036 DD 12/01/05	16
BMW US CAPITAL LLC 144A	VAR RT 08/13/2021 DD 08/14/18	297
BOSTON SCIENTIFIC CORP	3.850% 05/15/2025 DD 05/12/15	295
BROADCOM CORP / BROADCOM CAYMA	3.000% 01/15/2022 DD 01/15/18	96
BROADCOM CORP / BROADCOM CAYMA	3.625% 01/15/2024 DD 01/15/18	284
CD 2018-CD7 MORTGAGE T CD7 ASB	4.213% 08/15/2051 DD 08/01/18	314
CHARTER COMMUNICATIONS OPERATI	VAR RT 02/01/2024 DD 07/03/18	197
CHASE ISSUANCE TRUST A1 A	VAR RT 01/15/2022 DD 02/06/17	200
CHICAGO IL TRANSIT AUTH SALES	6.899% 12/01/2040 DD 08/06/08	128

Table of Contents

BELLSOUTH SAVINGS AND SECURITY PLAN

EIN 58-1533433, PLAN NO. 004

SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2018

(Dollars in Thousands)

Identity of Issue	Description of Investment
CITIBANK NA	VAR RT 07/23/2021 DD 07/23/18	396
CITIGROUP COMMERCIAL GC35 AAB	3.608% 11/10/2048 DD 12/01/15	913
CITIGROUP INC	VAR RT 04/23/2029 DD 04/23/18	389
COMMIT TO PUR FHLMC GOLD SFM	4.000% 01/01/2049 DD 01/01/19	2,447
COMMIT TO PUR FNMA SF MTG	3.000% 02/01/2049 DD 02/01/19	3,117
COMMIT TO PUR FNMA SF MTG	3.500% 01/01/2049 DD 01/01/19	4,199
COMMIT TO PUR FNMA SF MTG	4.000% 01/01/2049 DD 01/01/19	10,194
COMMIT TO PUR FNMA SF MTG	4.000% 02/01/2049 DD 02/01/19	611
CONAGRA BRANDS INC	VAR RT 10/22/2020 DD 10/22/18	100
CONSOLIDATED EDISON CO OF NEW	VAR RT 06/25/2021 DD 06/26/18	99
CONSTELLATION BRANDS INC	2.650% 11/07/2022 DD 11/07/17	96
CONTINENTAL AIRLINES 2012-1 CL	4.150% 10/11/2025 DD 03/22/12	145
CVS HEALTH CORP	4.300% 03/25/2028 DD 03/09/18	98
CVS HEALTH CORP	5.050% 03/25/2048 DD 03/09/18	146
DELL INTERNATIONAL LLC / 144A	6.020% 06/15/2026 DD 06/01/16	301
DIGITAL REALTY TRUST LP	4.450% 07/15/2028 DD 06/21/18	199
DISCOVER CARD EXECUTION A1 A1	VAR RT 07/15/2021 DD 01/27/14	500
DUKE ENERGY CAROLINAS LLC	3.750% 06/01/2045 DD 03/12/15	829
ENTERGY ARKANSAS LLC	3.500% 04/01/2026 DD 01/08/16	298
FHLMC MULTICLASS MTG 3626 ME	5.000% 01/15/2040 DD 01/01/10	21
FHLMC MULTICLASS MTG K156 A1	3.700% 05/25/2030 DD 08/01/18	206
FLORIDA POWER & LIGHT CO	4.125% 02/01/2042 DD 12/13/11	504
FNMA POOL #0915042	5.500% 04/01/2022 DD 04/01/07	1
FNMA POOL #0AB2130	3.500% 01/01/2026 DD 12/01/10	13
FNMA POOL #0AE0676	3.500% 01/01/2026 DD 12/01/10	20
FNMA POOL #0AE7060	3.500% 12/01/2025 DD 11/01/10	13
FNMA POOL #0AL2617	6.000% 10/01/2040 DD 11/01/12	166
FNMA POOL #0AM0359	2.310% 08/01/2022 DD 08/01/12	99
FNMA POOL #0AS1338	5.000% 12/01/2043 DD 11/01/13	429
FNMA POOL #0AS2741	5.000% 06/01/2044 DD 05/01/14	335
FNMA POOL #0AV5751	3.500% 04/01/2029 DD 04/01/14	11
FNMA POOL #0AX5306	3.500% 01/01/2027 DD 11/01/14	1,197
FNMA POOL #0AZ4023	3.500% 06/01/2030 DD 06/01/15	21
FNMA POOL #0BM2007	4.000% 09/01/2048 DD 08/01/18	300
FNMA POOL #0MA2161	3.500% 01/01/2030 DD 12/01/14	23
FNMA POOL #0MA3443	4.000% 07/01/2048 DD 07/01/18	4,015
FNMA GTD REMIC P/T 03-25 KP	5.000% 04/25/2033 DD 03/01/03	89
FNMA GTD REMIC P/T 03-W1 1A1	VAR RT 12/25/2042 DD 01/01/03	28
FNT MORTGAGE-BACKED PASS 3 1A1	6.750% 08/21/2031 DD 07/01/01	0
FORD MOTOR CREDIT CO LLC	3.664% 09/08/2024 DD 09/08/14	179
FORD MOTOR CREDIT CO LLC	3.157% 08/04/2020 DD 08/04/15	196
FORD MOTOR CREDIT CO LLC	2.343% 11/02/2020 DD 11/02/17	192
GENERAL ELECTRIC CO	4.125% 10/09/2042 DD 10/09/12	391

Table of Contents

BELLSOUTH SAVINGS AND SECURITY PLAN

EIN 58-1533433, PLAN NO. 004

SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2018

(Dollars in Thousands)

Identity of Issue	Description of Investment
GENERAL MOTORS FINANCIAL CO IN	3.150% 06/30/2022 DD 06/30/17	382
GM FINANCIAL AUTOMOBILE 2 A2B	VAR RT 01/21/2020 DD 06/14/17	120
GNMA POOL #0705997	5.000% 01/15/2039 DD 01/01/09	67
GNMA POOL #0782523	5.000% 11/15/2035 DD 12/01/08	61
GNMA POOL #0AE7708	4.000% 08/15/2043 DD 08/01/13	16
GNMA POOL #0AL0766	3.500% 01/15/2045 DD 01/01/15	289
GNMA POOL #0AL5269	3.500% 02/15/2045 DD 02/01/15	570
GNMA POOL #0AN4392	4.000% 06/15/2045 DD 06/01/15	865
GNMA GTD REMIC P/T 12-H08 FC	VAR RT 04/20/2062 DD 04/20/12	208
GNMA GTD REMIC P/T 15-H08 FB	VAR RT 03/20/2065 DD 03/20/15	545
GNMA GTD REMIC P/T 16-H11 F	VAR RT 05/20/2066 DD 05/20/16	268
GNMA GTD REMIC P/T 16-H23 FD	VAR RT 10/20/2066 DD 10/20/16	97
GNMA GTD REMIC P/T 17-H14 FE	VAR RT 06/20/2067 DD 06/20/17	578
GOLDMAN SACHS GROUP INC/THE	3.850% 07/08/2024 DD 07/08/14	782
GS MORTGAGE SECURITIE GC26 AAB	3.365% 11/10/2047 DD 12/01/14	906
GSR MORTGAGE LOAN TRUS AR6 1A1	VAR RT 09/25/2035 DD 09/01/05	73
HARLEY-DAVIDSON FINANCIAL 144A	VAR RT 03/02/2021 DD 11/28/18	100
HCA INC	6.500% 02/15/2020 DD 08/01/11	103
HOST HOTELS & RESORTS LP	4.000% 06/15/2025 DD 05/15/15	583
INTERNATIONAL FINANCE CORP	2.125% 04/07/2026 DD 04/07/16	671
INTERNATIONAL LEASE FINANCE CO	8.625% 01/15/2022 DD 12/22/11	111
JOHN DEERE CAPITAL CORP	VAR RT 09/10/2021 DD 09/10/18	297
JPMBB COMMERCIAL MORTG C31 ASB	3.540% 08/15/2048 DD 08/01/15	906
JPMBB COMMERCIAL MORTG C32 ASB	3.358% 11/15/2048 DD 10/01/15	900
JPMBB COMMERCIAL MORTG C33 ASB	3.562% 12/15/2048 DD 11/01/15	504
JPMDB COMMERCIAL MORTGA C2 ASB	2.954% 06/15/2049 DD 05/01/16	392
JPMORGAN CHASE & CO	VAR RT 03/09/2021 DD 03/09/17	100
JPMORGAN CHASE & CO	VAR RT 07/23/2024 DD 07/23/18	586
KRAFT HEINZ FOODS CO	3.950% 07/15/2025 DD 07/15/16	387
MERRILL LYNCH MORTGAGE IN E A1	VAR RT 11/25/2029 DD 09/23/04	45
MICROSOFT CORP	4.000% 02/12/2055 DD 02/12/15	786
MIDAMERICAN ENERGY CO	4.400% 10/15/2044 DD 04/03/14	412
MORGAN STANLEY	3.875% 04/29/2024 DD 04/28/14	100
MORGAN STANLEY	3.700% 10/23/2024 DD 10/23/14	983
MORGAN STANLEY CAPITAL H3 ASB	4.120% 07/15/2051 DD 07/01/18	209
MORGAN STANLEY MORTGA 11AR 1A1	VAR RT 01/25/2035 DD 12/29/04	27
NAVIENT STUDENT LOA EA A1 144A	3.430% 12/15/2059 DD 11/15/18	301
NELNET STUDENT LOAN TRUST 3 A4	VAR RT 11/25/2024 DD 04/24/08	275
NEW YORK CITY NY TRANSITIONAL	5.750% 02/01/2035 DD 03/03/10	543
NEW YORK CITY NY TRANSITIONAL	5.767% 08/01/2036 DD 10/22/09	836
NEW YORK ST DORM AUTH ST PERSO	5.289% 03/15/2033 DD 10/14/10	457
NISSAN AUTO LEASE TRUST A A2B	VAR RT 09/16/2019 DD 06/28/17	140
PENNSYLVANIA HIGHER EDUCA 2 A3	VAR RT 10/25/2036 DD 11/17/06	224

Table of Contents

BELLSOUTH SAVINGS AND SECURITY PLAN

EIN 58-1533433, PLAN NO. 004

SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2018

(Dollars in Thousands)

Identity of Issue	Description of Investment
PHILIP MORRIS INTERNATIONAL IN	3.250% 11/10/2024 DD 11/10/14	878
PLAINS ALL AMERICAN PIPELINE L	4.650% 10/15/2025 DD 08/24/15	393
PNC BANK NA	1.950% 03/04/2019 DD 03/04/16	998
PRIME MORTGAGE TRUST 2 CL1 1A2	VAR RT 02/25/2034 DD 01/25/04	8
PRINCETON UNIVERSITY	5.700% 03/01/2039 DD 01/21/09	382
PUBLIC PWR GENERATION AGY NE R	7.242% 01/01/2041 DD 07/16/09	131
REYNOLDS AMERICAN INC	4.000% 06/12/2022 DD 06/12/15	198
SABINE PASS LIQUEFACTION LLC	VAR RT 02/01/2021 DD 02/01/14	103
SANTANDER HOLDINGS USA INC	3.400% 01/18/2023 DD 12/18/17	384
SBA GTD PARTN CTFS 2003-20C 1	4.500% 03/01/2023 DD 03/12/03	489
SBA GTD PARTN CTFS 2005-20B 1	4.625% 02/01/2025 DD 02/16/05	305
SBA GTD PARTN CTFS 2008-20D 1	5.370% 04/01/2028 DD 04/16/08	281
SBA GTD PARTN CTFS 2008-20E 1	5.490% 05/01/2028 DD 05/14/08	270
SBA GTD PARTN CTFS 2008-20F 1	5.680% 06/01/2028 DD 06/11/08	119
SBA GTD PARTN CTFS 2009-20A 1	5.720% 01/01/2029 DD 01/14/09	38
SIGMA ERISA LIQUIDATING POOL	VAR RT 12/31/2049 DD 05/01/01	0
SLM STUDENT LOAN TRUST 2 9 A7A	VAR RT 01/25/2041 DD 01/25/18	397
SLM STUDENT LOAN TRUST 20 4 A3	VAR RT 01/25/2027 DD 05/19/05	197
SLM STUDENT LOAN TRUST 200 9 A	VAR RT 04/25/2023 DD 08/28/08	182
SMB PRIVATE EDUCATIO C A1 144A	VAR RT 09/15/2025 DD 09/19/18	166
SOFI CONSUMER LOAN P 3 A1 144A	3.200% 08/25/2027 DD 08/07/18	225
SOUTH DAKOTA ST EDUCTNL ENHANC	3.539% 06/01/2022 DD 03/14/13	2,007
SOUTHERN CALIFORNIA GAS CO	4.450% 03/15/2044 DD 03/13/14	201
STRUCTURED ADJUSTABLE R 12 7A1	VAR RT 09/25/2034 DD 08/01/04	150
STRUCTURED ASSET INVESTME 8 M1	VAR RT 09/25/2034 DD 08/25/04	101
STRUCTURED ASSET MORTG AR4 2A1	VAR RT 12/19/2034 DD 07/30/04	36
THORNBURG MORTGAGE SECUR 1 I1A	VAR RT 03/25/2044 DD 03/31/04	347
U S TREASURY BOND	2.875% 11/15/2046 DD 11/15/16	97
U S TREASURY BOND	2.750% 08/15/2047 DD 08/15/17	1,184
U S TREASURY BOND	3.000% 02/15/2048 DD 02/15/18	353
U S TREASURY BOND	3.125% 05/15/2048 DD 05/15/18	153
U S TREASURY BOND	3.000% 08/15/2048 DD 08/15/18	259
U S TREASURY NOTE	2.625% 12/31/2025 DD 12/31/18	301
UBS COMMERCIAL MORTGAG C11 ASB	4.119% 06/15/2051 DD 07/01/18	209
UBS COMMERCIAL MORTGAG C13 ASB	4.241% 10/15/2051 DD 10/01/18	211
UNIV OF CALIFORNIA CA REVENUES	6.270% 05/15/2031 DD 08/27/09	304
US TREAS-CPI INFLAT	1.375% 02/15/2044 DD 02/15/14	224
US TREAS-CPI INFLAT	1.000% 02/15/2046 DD 02/15/16	506
VERIZON COMMUNICATIONS INC	4.150% 03/15/2024 DD 03/17/14	1,021
VISA INC	3.150% 12/14/2025 DD 12/14/15	393
WALGREEN CO	3.100% 09/15/2022 DD 09/13/12	293
WELLS FARGO & CO	3.000% 02/19/2025 DD 02/19/15	283
WELLS FARGO & CO	2.625% 07/22/2022 DD 07/24/17	289

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BELLSOUTH SAVINGS AND SECURITY PLAN

EIN 58-1533433, PLAN NO. 004

SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2018

(Dollars in Thousands)

Identity of Issue	Description of Investment
WELLS FARGO BANK NA	VAR RT 03/25/2020 DD 09/25/18	249
WELLS FARGO COMMERCIA NXS4 ASB	3.522% 12/15/2048 DD 12/01/15	912
WELLS FARGO COMMERCIAL C45 ASB	4.147% 06/15/2051 DD 07/01/18	313
WELLTOWER INC	4.250% 04/15/2028 DD 04/10/18	396
Total Bond Fund		88,474
International Stock
INTL STOCK INDEX	BGI MSCI ACWI EX-US INDEX SUPERFUND	45,420
Interest Bearing Cash
* DREYFUS GOVERNMENT CASH MANAGEMENT FUND		945
* Notes Receivable from Participants	4.25% - 10.50%	59,874
Total		$1,635,043
* Party-in-Interest

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustee (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed by the undersigned thereunto duly authorized.

BellSouth Savings and Security Plan
By: AT&T Services, Inc., Plan
Administrator for the Foregoing Plan
By	/s/ Debra L. Dial
	Debra L. Dial
	Senior Vice President and Controller

Date: June 28, 2019

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EXHIBIT INDEX

Exhibit identified below, Exhibits 23 is filed herein as exhibit hereto.

Exhibit Number
23	Consent of Independent Registered Public Accounting Firm

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