Edgar Filing: AT&T INC.

	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
(Mark One)
	FORM 11-K

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

	For the fiscal year ended December 31, 2016

	OR

☐	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

Financial Statements, Supplemental Schedule and Exhibit

Table of Contents
	Page


Report of Independent Registered Public Accounting Firm	1

Financial Statements:

Statements of Net Assets Available for Benefits as of December 31, 2016 and 2015	2
Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2016	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, 2016	18

Exhibit:

23 – Consent of Independent Registered Public Accounting Firm	25

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Plan Administrator of the

BellSouth Savings and Security Plan

We have audited the accompanying statements of net assets available for benefits of the BellSouth Savings and Security Plan as of December 31, 2016 and 2015, and the related statement of changes in net assets available for benefits for the year ended December 31, 2016. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the BellSouth Savings and Security Plan at December 31, 2016 and 2015, and the changes in its net assets available for benefits for the year ended December 31, 2016, in conformity with U.S. generally accepted accounting principles.

The accompanying supplemental schedule of assets held (at end of year) as of December 31, 2016, has been subjected to audit procedures performed in conjunction with the audit of the BellSouth Savings and Security Plan's financial statements. The information in the supplemental schedule is the responsibility of the Plan's management. Our audit procedures included determining whether the information 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 information, we evaluated whether such information, including its form and content, is presented in conformity with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.

Dallas, Texas /s/ Ernst & Young LLP

June 22, 2017

BELLSOUTH SAVINGS AND SECURITY PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(Dollars in Thousands)

	December 31,
	2016		2015
ASSETS
Investment in AT&T Savings Group Investment Trust	$	624,163	$	621,259
Investments, at fair value		1,783,206		1,618,132
Total Investments (See Note 4)		2,407,369		2,239,391

Notes receivable from participants		64,369		65,809
Participant contributions receivable		2,177		2,164
Employer contributions receivable		701		666
Interest receivable		370		420
Total Receivables		67,617		69,059

Total Assets		2,474,986		2,308,450

LIABILITIES
Administrative expenses payable		773		809
Due to broker for securities purchased		27,023		14,160

Total Liabilities		27,796		14,969

Net Assets Available for Benefits	$	2,447,190	$	2,293,481

See Notes to Financial Statements.

BELLSOUTH SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2016
(Dollars in Thousands)


Net Assets Available for Benefits, December 31, 2015	$	2,293,481

Additions to Net Assets:
Contributions:
Participant contributions		65,020
Employer contributions		21,173
Rollover contributions		11,798
		97,991
Investment Income:
Net income from investment in AT&T Savings Group Investment Trust		14,105
Interest		1,951
Dividends		45,997
Net appreciation in fair value of investments		200,383
		262,436

Interest income on notes receivable from participants		2,734

Total Additions		363,161

Deductions from Net Assets:
Distributions		207,620
Administrative expenses		1,309

Total Deductions		208,929

Net increase		154,232

Transfers to affiliated plan		(523	)

Net Assets Available for Benefits, December 31, 2016	$	2,447,190

See Notes to Financial Statements.

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).

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 Plan's assets, known as the Bell South Savings and Security Plan Trust. Fidelity Investments Institutional Operations Company, Inc. (Fidelity) serves as recordkeeper for the Plan. During 2016, participants could invest their contributions in one or more of 12 funds in 1% increments:

· AT&T Shares Fund	· DFA U.S. Small Cap Value Portfolio
· Bond Fund	· DFA U.S. Large Cap Value Portfolio II
· Vanguard Growth Index Fund	· T. Rowe Price Mid-Cap Growth Fund
· Fidelity Growth and Income Portfolio	· Indexed Stock Fund
· Balanced Fund	· LifePath Funds (based on retirement date)
· Interest Income Fund (known as the AT&T Stable Value Fund & International Stock Fund) *

* Investment fund option of the Group Trust

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 participant's account. During 2016, Plan participants elected to receive $1,482 in dividend distributions. This amount is included in distributions on the Plan's 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 trustee's fiduciary obligations under ERISA. Participants have the same voting rights in the event of a tender or exchange offer.

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 Plan's recordkeeper and other service providers. Certain expenses are paid by the Plan, Group Trust, or Company.

Notes to Financial Statements (Continued)

(Dollars in Thousands)

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 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.

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, 2016 or 2015. 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 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 plan's financial statements. The plans must also disclose the master trust's investments by general type as well as other assets and liabilities and disclose the dollar amount of the plan's 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. Management is currently evaluating this updated guidance.

Notes to Financial Statements (Continued)

(Dollars in Thousands)

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 asset's or liability's 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 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, 2016 and 2015.

See Note 4 for fair value hierarchy for the Group Trust's and Plan's investments.

NOTE 4. INVESTMENTS

The Plan held investments in its own trust and in the Group Trust (through participation in the Interest Income Fund, also known as the AT&T Stable Value Fund and International Stock Fund) as of December 31, 2016 and for the year ended December 31, 2016, and in the Group Trust (through participation in the Interest Income Fund, also known as the AT&T Stable Value Fund) as of December 31, 2015.

Notes to Financial Statements (Continued)

(Dollars in Thousands)

The following table sets forth by level, within the fair value hierarchy, the Plan's assets at fair value as of December 31, 2016:

	Plan Assets at Fair Value as of December 31, 2016
	Level 1			Level 2		Level 3		Total
Interest-bearing investments	$	-		$	20,083	$	-	$	20,083
AT&T common stock		514,356			-		-		514,356
Mutual funds or exchange-traded funds		754,319			-		-		754,319
U.S. government securities		1,068			50,366		-		51,434
Corporate debt instruments		-			29,233		-		29,233
Municipal debt instruments		-			6,854		-		6,854
Futures		(12	)		-		-		(12	)
Total assets in fair value hierarchy	$	1,269,731		$	106,536	$	-	$	1,376,267
Common/collective trusts measured at net asset value:
U.S. index stock fund¹									165,728
International index stock fund²									19,052
Blended equity & debt³									198,290
Bond index fund⁴									23,869
Total assets at fair value								$	1,783,206

The following table sets forth by level, within the fair value hierarchy, the Plan's assets at fair value as of December 31, 2015:

	Plan Assets at Fair Value as of December 31, 2015
	Level 1			Level 2		Level 3		Total
AT&T common stock	$	430,786		$	-	$	-	$	430,786
Mutual funds or exchange-traded funds		811,905			-		-		811,905
U.S. government securities		3,405			64,270		-		67,675
Corporate debt instruments		-			22,119		-		22,119
Municipal debt instruments		-			9,020		-		9,020
Futures		(8	)		-		-		(8	)
Total assets in fair value hierarchy	$	1,246,088		$	95,409	$	-	$	1,341,497
Common/collective trusts measured at net asset value:
U.S. index stock fund¹									151,386
Blended equity & debt³									103,601
Bond index fund⁴									21,648
Total assets at fair value								$	1,618,132

¹This 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 Standard and Poor's Composite Stock Price Index of 500 stocks (the "S&P 500®"). There are currently no redemption restrictions on this investment.

²This 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.

³This 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.

⁴This 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.

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 trust's 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 participant's account balance within each investment fund option.

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

	December 31,
	2016			2015
AT&T Master Trust		94.5	%		94.3	%
BellSouth Savings and Security Plan		5.5	%		5.7	%
Total		100.0	%		100.0	%

The Plan's percentage interest in each of the investment fund options within the Group Trust is disclosed below as of December 31, 2016.

	AT&T Total Return Bond Fund			AT&T U.S. Stock Fund			AT&T International Stock Fund			AT&T Stable Value Fund			Group Trust
Interest bearing cash	$	15,420		$	-		$	-		$	-		$	15,420
Corporate debt		137,313			-			-			-			137,313
Government securities		254,983			-			-			-			254,983
Common/collective trust funds		349,296			2,182,833			150,217			-			2,682,346
103-12 investment entities		-			-			184,463			-			184,463
Equities - common stock		-			340,452			141,536			-			481,988
Equities - preferred stock		-			-			802			-			802
Futures		8			-			-			-			8
Registered investment companies		983,183			63,805			2,995			183,525			1,233,508
Group Trust investments at fair value		1,740,203			2,587,090			480,013			183,525			4,990,831
Unsettled trades and other		(122,816	)		(359	)		226			(273,085	)		(396,034	)
Fully benefit-responsive investments contracts valued at contract value		-			-			-			6,755,551			6,755,551
Group Trust net assets	$	1,617,387		$	2,586,731		$	480,239		$	6,665,991		$	11,350,348
Plan's percentage ownership interest of investments	-		%		-	%		0.4	%		9.4	%		5.5	%

Notes to Financial Statements (Continued)

(Dollars in Thousands)

The Plan's percentage interest in each of the investment fund options within the Group Trust is disclosed below as of December 31, 2015.

	AT&T Total Return Bond Fund			AT&T U.S. Stock Fund			AT&T International Stock Fund			AT&T Stable Value Fund			Group Trust
Interest bearing cash	$	-		$	-		$	76		$	-		$	76
Corporate debt		-			3,168			-			-			3,168
Common/collective trust funds		223,554			1,270,030			154,807			-			1,648,391
103-12 investment entities		-			-			174,297			-			174,297
Equities - common stock		-			1,226,111			150,140			-			1,376,251
Equities - preferred stock		-			-			433			-			433
Publicly traded partnerships		-			8,176			-			-			8,176
Registered investment companies		1,220,725			31,929			4,194			171,302			1,428,150
Group Trust investments at fair value		1,444,279			2,539,414			483,947			171,302			4,638,942
Unsettled trades and other		3,373			(1,746	)		(89	)		(165,522	)		(163,984	)
Fully benefit-responsive investments contracts valued at contract value		-			-			-			6,432,747			6,432,747
Group Trust net assets	$	1,447,652		$	2,537,668		$	483,858		$	6,438,527		$	10,907,705
Plan's percentage ownership interest of investments		-	%		-	%		-	%		9.6	%		5.7	%

Net Appreciation in Fair Value of Group Trust Investments and

Total Investment Income for the year ended December 31, 2016

	Group Trust
Total net appreciation in fair value of Group Trust Investments	$	280,062
Investment income:
Interest	$	161,039
Dividends		61,149
Total investment income of Group Trust Investments	$	222,188

Notes to Financial Statements (Continued)

(Dollars in Thousands)

The following table sets forth by level, within the fair value hierarchy, the Group Trust's assets at fair value as of December 31, 2016:

	Group Trust Assets and Liabilities at Fair Value
	December 31, 2016
	Level 1		Level 2		Level 3		Total
Corporate debt	$	-	$	137,313	$	-	$	137,313
Interest-bearing investments		-		15,420		-		15,420
Common stock		481,988		-		-		481,988
Preferred stock		802		-		-		802
Futures		8		-		-		8
Registered investment companies		1,132,971		-		-		1,132,971
Government debt		-		254,983		-		254,983
Total assets in fair value hierarchy	$	1,615,769	$	407,716	$	-	$	2,023,485
Investments measured at net asset value
U.S. common/collective trusts¹								2,333,051
International common/collective trusts²								349,295
103-12 investments³								184,463
Non-publically traded registered investments companies⁴								100,537
Total assets and liabilities at fair value							$	4,990,831

Notes to Financial Statements (Continued)

(Dollars in Thousands)

The following table sets forth by level, within the fair value hierarchy, the Group Trust's assets at fair value as

of December 31, 2015:

	Group Trust Assets and Liabilities at Fair Value
	December 31, 2015
	Level 1		Level 2		Level 3		Total
Corporate debt	$	-	$	3,168	$	-	$	3,168
Interest bearing cash		76		-		-		76
Equities - common stock		1,376,251		-		-		1,376,251
Publicly traded partnerships		8,176		-		-		8,176
Equities - preferred stock		433		-		-		433
Registered investment companies		1,428,150		-		-		1,428,150
Total assets and liabilities in fair value hiearchy	$	2,813,086	$	3,168	$	-	$	2,816,254
Investments measured at net asset value
U.S. common/collective trusts¹								1,424,837
International common/collective trusts²								223,554
103-12 investments³								174,297
Total assets and liabilities at fair value							$	4,638,942

¹The 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. This common/collective trust fund has redemption restrictions limited to daily and monthly settlement.

²The 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.

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

⁴These are non-publically traded registered investment companies, consisting of a short-term floating rate portfolio plus publically-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.

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 contract or notional amounts disclosed provide a measure of the Group Trust's involvement in such instruments but are not indicative of potential loss. 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 Fund's investment assets. The Group Trust's fiduciaries do not anticipate any material adverse effect on the Group Trust's financial position resulting from its involvement in these instruments.

The following table presents the effect of gains (losses) with respect to these derivative instruments, by type of derivative. 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 Plan's ownership in the Group Trust.

	Year Ended
	December 31, 2016
Futures contracts	$	93
Forward foreign currency exchange rate contracts	$	8,011

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 following table presents the effect on income with respect to these derivative instruments, by type of derivative. 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.

	Year Ended
	December 31, 2016
Futures contracts	$	(5	)

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 exchange's 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, 2016 and 2015 were used primarily to hedge and manage the duration risk of the portfolio.

The fair value of the open futures contracts is separately disclosed in the detail of the Group Trust investments presented below and are included in the Statement of Net Assets Available for Benefits to the extent of the Plan's ownership in the Group Trust.

Notes to Financial Statements (Continued)

(Dollars in Thousands)

At December 31, 2016, open futures contracts held in the Group Trust were as follows:

Type of Contract	Number of Contracts Buy/(Sell)			Expiration		Notional Value			Fair Value
U.S. 10-Year Treasury Note Future		(50	)		3/2017	$	(6,703	)	$	46
U.S. 10-Year Treasury Note Future		(13	)		3/2017		(1,743	)		12
U.S. 10-Year Treasury Note Future		10			3/2017		1,280			(37	)
U.S. Treasury Bond Future		(115	)		3/2017		(17,325	)		(164	)
U.S. Treasury Bond Future		13			3/2017		1,959			(10	)
U.S. Treasury Bond Future		(54	)		3/2017		(8,135	)		9
U.S. Treasury Bond Future		(732	)		3/2017		(110,280	)		740
U.S. Treasury Bond Future		7			3/2017		1,066			(12	)
U.S. 10-Year Treasury Note Future		(44	)		3/2017		(5,468	)		33
U.S. 10-Year Treasury Note Future		(146	)		3/2017		(18,145	)		61
U.S. 10-Year Treasury Note Future		541			3/2017		67,236			(481	)
U.S. 10-Year Treasury Note Future		(356	)		3/2017		(44,244	)		143
U.S. 10-Year Treasury Note Future		29			3/2017		3,604			(20	)
U.S. 5-Year Treasury Note Future		454			3/2017		53,419			(104	)
U.S. 5-Year Treasury Note Future		380			3/2017		44,712			(22	)
U.S. 5-Year Treasury Note Future		97			3/2017		11,413			(40	)
U.S. 5-Year Treasury Note Future		(17	)		3/2017		(2,000	)		3
U.S. 2-Year Treasury Note Future		242			3/2017		52,438			16
U.S. 2-Year Treasury Note Future		(31	)		3/2017		(6,717	)		1
U.S. 2-Year Treasury Note Future		41			3/2017		8,884			(4	)
U.S. 2-Year Treasury Note Future		1,230			3/2017		266,526			(175	)
U.S. 2-Year Treasury Note Future		(334	)		3/2017		(72,431	)		58
U.S. Ultra Bond		(94	)		3/2017		(15,064	)		71
U.S. Ultra Bond		135			3/2017		21,634			(201	)
U.S. Ultra Bond		(38	)		3/2017		(6,090	)		(37	)
U.S. Ultra Bond		60			3/2017		9,615			165
U.S. Ultra Bond		(32	)		3/2017		(5,128	)		42
Total						$	224,313		$	93

Notes to Financial Statements (Continued)

(Dollars in Thousands)

At December 31, 2015, open futures contracts held in the Group Trust were as follows:

Type of Contract	Number of Contracts Buy/(Sell)			Expiration		Notional Value			Fair Value
U.S. Treasury Bond Future		(403	)		3/2016	$	(61,961	)	$	(173	)
U.S. Treasury Bond Future		(79	)		3/2016		(12,146	)		141
U.S. Treasury Bond Future		(44	)		3/2016		(6,765	)		(10	)
U.S. Treasury Bond Future		(63	)		3/2016		(9,686	)		13
U.S. 10-Year Treasury Note Future		44			3/2016		5,540			(19	)
U.S. 10-Year Treasury Note Future		(279	)		3/2016		(35,128	)		97
U.S. 10-Year Treasury Note Future		183			3/2016		23,041			(74	)
90 Day Eurodollar Future		(4	)		3/2016		(993	)		-
90 Day Eurodollar Future		119			3/2016		29,531			(37	)
90 Day Eurodollar Future		(119	)		9/2016		(29,433	)		40
U.S. 5-Year Treasury Note Future		455			3/2016		53,836			(123	)
U.S. 5-Year Treasury Note Future		9			3/2016		1,065			2
U.S. 5-Year Treasury Note Future		651			3/2016		77,027			(153	)
U.S. 2-Year Treasury Note Future		197			3/2016		42,795			(57	)
U.S. 2-Year Treasury Note Future		(687	)		3/2016		(149,240	)		226
U.S. 2-Year Treasury Note Future		522			3/2016		113,396			(184	)
U.S. Ultra Bond Future		(36	)		3/2016		(5,713	)		4
U.S. Ultra Bond Future		(148	)		3/2016		(23,486	)		(130	)
U.S. Ultra Bond Future		(28	)		3/2016		(4,443	)		(27	)
Total						$	7,237		$	(464	)

The fair value of the open futures contracts is presented below and is included in investments on the Plan's Statement of Net Assets Available for Benefits.

At December 31, 2016, open futures contracts held by the Plan were as follows:

Type of Contract	Number of Contracts Buy/(Sell)		Expiration		Notional Value		Fair Value
S&P e-mini 500 Index Futures U.S.		28		3/2017	$	3,131	$	(15	)
U.S. Treasury Bond Future		28		3/2017		3,480		3
Total					$	6,611	$	(12	)

At December 31, 2015, open futures contracts held by the Plan were as follows:

Type of Contract	Number of Contracts Buy/(Sell)			Expiration		Notional Value			Fair Value
S&P e-mini 500 Index Futures U.S.		(6	)		3/2016	$	(611	)	$	4
U.S. Treasury Bond Future		54			3/2016		6,799			(12	)
Total						$	6,188		$	(8	)

The futures held in the Plan as of December 31, 2016 and 2015, were used primarily to maintain the target allocations of the portfolio.

Notes to Financial Statements (Continued)

(Dollars in Thousands)

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 Trust's 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. The fair value of the foreign currency contracts are disclosed in unsettled trades and other of the Group Trust, which is then allocated to the Plan and is included in Statement of Net Assets Available for Benefits to the extent of the Plan's ownership in the Group Trust.

As of December 31, 2016 and 2015, the contracts held by the Group Trust were:

	Notional Value				Fair Value
	2016		2015		2016		2015
Derivative assets	$	55	$	195	$	-	$	-
Derivative liabilities	$	61	$	201	$	-	$	-

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.

The investments held by the Stable Value Fund as of December 31, 2016 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.

Notes to Financial Statements (Continued)

(Dollars in Thousands)

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 market's perception of the issuers and changes in interest rates

NOTE 5. PARTIES IN INTEREST TRANSACTIONS

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 Company's 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.

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 Plan's 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, 2016, 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.

Notes to Financial Statements (Continued)

(Dollars in Thousands)

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:

	2016			2015
Net Assets Available for Benefits per the financial statements	$	2,447,190		$	2,293,481
Distributions payable to participants		(1,416	)		(279	)
Net Assets Available for Benefits per the Form 5500	$	2,445,774		$	2,293,202

The following is a reconciliation of distributions to participants per the financial statements to the Form 5500 for the year ended December 31, 2016:

Distributions to participants per the financial statements	$	207,620
Distributions payable to participants at December 31, 2015		(279	)
Distributions payable to participants at December 31, 2016		1,416
Distributions to participants per the Form 5500	$	208,757

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.

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, 2016
(Dollars in Thousands)

	Identity of Issue	Description of Investment	Current Value

Indexed Stock Fund
		NORTHERN TRUST S&P 500 INDEX STOCK FUND	COMMON/COLLECTIVE TRUST FUND: 17,193 UNITS	$	129,228

Balanced Fund
	*	DREYFUS GOVERNMENT CASH MANAGEMENT FUND	REGISTERED INVESTMENT COMPANY: 5,382,673 UNITS		5,383
		US TREASURY BILL	0.000% 01/26/2017 DD 07/28/16		250
		US TREASURY BILL	0.000% 02/26/2017 DD 08/18/16		409
		US TREASURY BILL	0.000% 03/23/2016 DD 09/22/16		150
		US TREASURY BILL	0.000% 04/20/2017 DD 10/20/16		259
		NORTHERN TRUST QM AGGREGATE BOND INDEX FUND	COMMON/COLLECTIVE TRUST FUND: 46,030 UNITS		23,869
		NORTHERN TRUST S&P 500 INDEX STOCK FUND	COMMON/COLLECTIVE TRUST FUND: 4,856 UNITS		36,500
		FUTURES CONTRACT	US 10YR TREAS NTS FUTURE (CBT) EXP MAR 17		3
		FUTURES CONTRACT	S&P 500 EMINI INDEX FUT (CME) EXP MAR 17		(15	)
		Total Balanced Fund			66,808

Registered Investment Companies
		T ROWE PRICE MID-CAP GROWTH FUND	REGISTERED INVESTMENT COMPANY: 5,256,798 UNITS		241,497
		DFA U.S. SMALL CAP VALUE PORTFOLIO	REGISTERED INVESTMENT COMPANY: 4,209,710 UNITS		157,401
		DFA U.S. LARGE CAP VALUE PORTFOLIO II	REGISTERED INVESTMENT COMPANY: 8,573,701 UNITS		148,668
		VANGUARD GROWTH INDEX FUND	REGISTERED INVESTMENT COMPANY: 2,113,130 UNITS		121,103
		FIDELITY GROWTH AND INCOME PORTFOLIO	REGISTERED INVESTMENT COMPANY: 2,181,432 UNITS		71,747
		Total Registered Investment Companies			740,416

LifePath Funds
		LIFEPATH 2050 FUND	COMMON/COLLECTIVE TRUST FUND: 401,001 UNITS		5,662
		LIFEPATH 2040 FUND	COMMON/COLLECTIVE TRUST FUND: 2,152,164 UNITS		40,189
		LIFEPATH 2030 FUND	COMMON/COLLECTIVE TRUST FUND: 3,569,804 UNITS		65,721
		LIFEPATH 2020 FUND	COMMON/COLLECTIVE TRUST FUND: 3,320,499 UNITS		59,403
		LIFEPATH RETIREMENT FUND	COMMON/COLLECTIVE TRUST FUND: 1,541,431 UNITS		27,315
		Total LifePath Age-Based Retirement Funds			198,290

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, 2016
(Dollars in Thousands)

	Identity of Issue	Description of Investment	Current Value


AT&T Shares Fund
	*	AT&T COMMON STOCK	12,093,958 SHARES	514,356
	*	DREYFUS GOVERNMENT CASH MANAGEMENT FUND	REGISTERED INVESTMENT COMPANY: 5,898,999.51 UNITS	5,899
		Total AT&T Shares Fund		520,255

Bond Fund
		SLH PROXY LONG EXPOSURE	SLHOPNTA4	13
		J P MORGAN CHASE REV REPO	0.540% 01/04/2017 DD 01/03/17	19,800
	*	DREYFUS GOVERNMENT CASH MANAGEMENT FUND	VAR RT 12/31/2075 DD 06/03/97	824
		SIGMA ERISA LIQUIDATING POOL	VAR RT 12/31/2049 DD 05/01/01	-
		TBA CASH COLL FOB	VAR RT 01/01/2049 DD 07/01/08	270
		ABBVIE INC	4.500% 05/14/2035 DD 05/14/15	195
		ABBVIE INC	4.700% 05/14/2035 DD 05/14/15	98
		COMMIT TO PUR FNMA SF MTG	3.000% 02/01/20467DD 01/01/17	8,927
		COMMIT TO PUR FNMA SF MTG	3.500% 01/01/2032 DD 01/01/17	5,209
		COMMIT TO PUR FNMA SF MTG	3.500% 02/01/2047 DD 02/01/17	4,094
		COMMIT TO PUR FNMA SF MTG	4.000% 01/01/2047 DD 01/01/17	7,359
		COMMIT TO PUR FNMA SF MTG	4.000% 02/01/2047 DD 02/01/17	1,050
		AMERICAN HONDA FINANCE CORP	1.600% 07/13/2018 DD 07/14/15	501
		AMERICAN INTERNATIONAL GROUP I	4.875 06/01/2022 DD 05/24/12	983
		AMERICAN MUN PWR-OHIO INC	6.449% 02/15/2044 DD 12/09/09	1,236
		AMERICAN WATER CAPITAL CORP	3.400% 03/01/2025 DD 08/14/14	306
		AMGEN INC	3.125% 05/01/2025 DD 05/01/15	876
		APPLE INC	3.200% 05/13/2025 DD 05/13/15	402
		ASSET BACKED SECURITIES HE4 M1	VAR RT 08/15/2033 DD 08/06/03	114
		BANK OF AMERICA NA	VAR RT 06/05/2017 DD 06/05/15	1,402
		BANK OF AMERICA FUNDING 2 D A1	VAR RT 05/25/2035 DD 06/01/05	58
		BEAR STEARNS ARM TRUST 11 1A2	VAR RT 02/25/2033 DD 12/01/02	6
		BEAR STEARNS ARM TRUST 12 13A1	VAR RT 02/25/2036 DD 12/01/05	25
		CHEVRON CORP	2.419% 11/17/2020 DD 11/17/15	504
		CHICAGO IL TRANSIT AUTH SALES	6.899% 12/01/2040 DD 08/06/08	125
		CITIGROUP INC	2.650% 10/26/2020 DD 10/26/15	400
		CITIGROUP COMMERCIAL GC35 AAB	3.608% 11/10/2048 DD12/01/15	934
		FNT MORTGAGE-BACKED PASS 3 1A1	6.750% 08/21/2031 DD 07/01/01	1
		DUKE ENERGY CAROLINAS LLC	3.750% 06/01/2045 DD 03/12/15	857
		EXXON MOBIL CORP	2.726% 03/01/2023 DD 03/03/16	502
		FEDERAL NATL MTG ASSN	0.875% 05/21/2018 DD 04/15/13	100

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, 2016
(Dollars in Thousands)

	Identity of Issue	Description of Investment	Current Value

FEDERAL NATL MTG ASSN	1.875% 09/18/2018 DD 08/23/13	101
FNMA GRD REMIC P/T 15-M8 FA	VAR RT 11/25/2018 DD 05/01/15	580
FEDERAL HOME LN MTG CORP	0.875% 03/07/2018 DD 01/17/13	300
FNMA POOL #0255272	4.000% 06/01/2019 DD 05/01/04	41
FNMA POOL #0357414	4.000% 07/01/2018 DD 07/01/03	23
FNMA POOL #0AL2617	6.000% 10/01/2040 DD 11/01/12	286
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	764
FNMA POOL #0AS2741	5.000% 06/01/2044 DD 05/01/14	610
FNMA POOL #0AV1676	4.000% 01/01/2026 DD 10/01/13	139
FNMA POOL #0AV5751	3.500% 04/01/2029 DD 04/01/14	18
FNMA POOL #0AZ4023	3.500% 06/01/2030 DD 06/01/15	30
FNMA POOL #0AX5306	3.500% 01/01/2027 DD 11/01/14	2,028
FNMA GTD REMIC P/T 03-W1 1A1	VAR RT 12/25/2042 DD 01/01/03	39
FNMA GTD REMIC P/T 03-25 KP	5.000% 04/25/2033 DD 03/01/03	133
FHLMC MULTICLASS MTG 3626 ME	5.000% 01/15/2040 DD 01/01/10	21
FNMA POOL #0755735	3.500% 05/01/2019 DD 05/01/04	8
FNMA POOL #0915042	5.500% 04/01/2022 DD 04/01/07	2
FNMA POOL #0AB1365	3.500% 08/01/2025 DD 07/01/10	11
FNMA POOL #0AB2130	3.500% 01/01/2026 DD 12/01/10	23
FNMA POOL #0MA2161	3.500% 01/01/2030 DD 12/01/14	32
FNMA POOL #0AD5797	3.500% 06/01/2025 DD 06/01/10	12
FNMA POOL #0AE0676	3.500% 01/01/2026 DD 12/01/10	35
FNMA POOL #0AE3895	3.500% 11/01/2025 DD 10/01/10	11
FNMA POOL #0AE5487	3.500% 10/01/2025 DD 10/01/10	4
FNMA POOL #0AE7060	3.500% 12/01/2025 DD 11/01/10	21
FLORIDA POWER & LIGHT CO	4.125% 02/01/2042 DD 12/13/11	513
GNMA POOL #0AE7708	4.000% 08/15/2043 DD 08/01/13	33
GNMA POOL #0AL0766	3.500% 01/15/2045 DD 01/01/15	437
GNMA POOL #0AL5269	3.500% 02/15/2045 DD 02/01/15	957
GNMA POOL #0AN4392	4.000% 06/15/2045 DD 06/01/15	1,773
GSR MORTGAGE LOAN TRUST AR6 1A1	VAR RT 09/25/2035 DD 09/01/05	151
GNMA POOL #0782523	5.000% 11/15/2035 DD 12/01/08	91
GS MORTGAGE SECURITIE GC26 AAB	3.365% 11/10/2047 DD 12/01/14	929
GNMA POOL #0705997	5.000% 01/15/2039 DD 01/01/09	129
GENERAL ELECTRIC CO	4.125% 10/09/2042 DD 10/09/12	504
GOLDMAN SACHS GROUP INC/THE	3.850% 07/08/2024 DD 07/08/14	817
GOLDMAN SACHS GROUP INC/THE	VAR RT 04/23/2020 DD 01/23/15	404
GNMA GTD REMIC P/T 16-H23 FD	VAR RT 10/20/2066 DD 10/20/16	290
HOST HOTELS & RESORTS LP	4.000% 06/15/2025 DD 05/15/15	591
INTERNATIONAL FINANCE CORP	2.125% 04/07/2026 DD 04/07/16	671
JPMBB COMMERCIAL MORTG C32 ASB	3.358% 11/15/2048 DD 10/01/15	922
JPMDB COMMERCIAL MORTGA C2 ASB	2.954 06/15/2049 DD 05/01/16	399

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, 2016
(Dollars in Thousands)

	Identity of Issue	Description of Investment	Current Value

JP MORGAN CHASE & CO	2.250% 01/23/2020 DD 01/23/15	399
JP MORGAN CHASE & CO	2.550% 10/29/2020 DD 10/29/15	799
JP MORGAN CHASE & CO	2.550% 03/01/2021 DD 03/01/16	100
JP MORGAN CHASE COMMER LDP9 A3	5.336% 05/15/2047 DD 12/01/06	-
JP MORGAN CHASE COMMER LDPX A3	5.420% 01/15/2049 DD 03/01/07	122
JPMBB COMMERCIAL MORTG C31 ASB	3.540% 08/15/2048 DD 08/01/15	931
JPMBB COMMERCIAL MORTG C33 ASB	3.562% 12/15/2048 DD 11/01/15	518
LOS ANGELES CALIF UNI SCH DIST	5.750% 07/01/2034 DD 10/15/09	494
MERRILL LYNCH MORTGAGE IN E A1	VAR RT 11/25/2029 DD 09/23/04	69
MICROSOFT CORP	4.000% 02/12/2055 DD 02/12/15	757
MIDAMERICAN ENERGY CO	4.400% 10/15/2044 DD 04/03/14	425
MORGAN STANLEY ABS CAP HE6 A2C	VAR RT 11/25/2035 DD 11/29/05	20
MORGAN STANLEY CAPITAL 11AR 1A1	VAR RT 01/25/2035 DD 12/29/04	43
NEW YORK CITY NY TRANSITIONAL	5.750% 02/01/2035 DD 03/03/10	537
NEW YORK CITY NY TRANSITIONAL	5.767% 08/01/2036 DD 10/22/09	862
NEW YORK ST DORM AUTH ST PERSO	5.289% 03/15/2033 DD 10/14/10	467
OCCIDENTAL PETROLEUM CORP	2.700% 02/15/2023 DD 06/22/12	495
PNC BANK NA	1.950% 03/04/2019 DD 03/04/16	1,001
PACIFIC GAS & ELECTRIC CO	3.400% 08/15/2024 DD 08/18/14	920
PHILIP MORRIS INTERNATIONAL IN	3.250% 11/10/2024 DD 11/10/14	906
PRIME MORTGAGE TRUST 2 CL1 1A2	VAR RT 02/25/2034 DD 01/25/04	13
PROLOGIS LP	4.250% 08/15/2023 DD 08/15/13	531
PUBLIC PWR GENERATION AGY NE R	7.242% 01/01/2041 DD 07/16/09	121
SLM STUDENT LOAN TRUST 200 9 A	VAR RT 04/25/2023 DD 08/28/08	253
SBA GTD PARTN CTFS 2003-20C 1	4.500% 03/01/2023 DD 03/12/03	950
SBA GTD PARTN CTFS 2005-20B 1	4.625% 02/01/2025 DD 02/16/05	549
SBA GTD PARTN CTFS 2008-20D 1	5.370% 04/01/2028 DD 04/16/08	499
SBA GTD PARTN CTFS 2008-20E 1	5.490% 05/01/2028 DD 05/14/08	528
SBA GTD PARTN CTFS 2008-20F 1	5.680% 06/01/2028 DD 06/11/08	218
SBA GTD PARTN CTFS 2009-20A 1	5.720% 01/01/2029 DD 01/14/09	67
SBA GTD PARTN CTFS 2008-10A 1	5.471% 03/10/2018 DD 03/26/08	63
SOUTH DAKOTA ST EDUCTNL ENHANC	3.539% 06/01/2022 DD 03/14/13	2,030
SOUTHERN CALIFORNIA GAS CO	4.450% 03/15/2044 DD 03/13/14	212
STRUCTURED ADJUSTABLE R 12 7A1	VAR RT 09/25/2034 DD 08/01/04	324
STRUCTURED ASSET INCESTME 8 M1	VAR RT 09/25/2034 DD 08/25/04	237
STRUCTURED ASSET SEC M 21A 1A1	VAR RT 01/25/2032 DD 12/01/01	2
STRUCTURED ASSET SEC COR 1A 4A	VAR RT 02/25/2032 DD 01/01/02	3
STRUCTURED ASSET MORTG AR4 2A1	VAR RT 12/19/2034 DD 07/30/04	56
THORNBURG MORTGAGE SECUR 1 I1A	VAR RT 03/25/2044 DD 03/31/04	728
PRINCETON UNIVERSITY	5.700% 03/01/2039 DD 01/21/09	394
US TREAS-CPI INFLAT	2.375% 01/15/2025 DD 07/15/04	147
US TREAS-CPI INFLAT	2.375% 01/15/2027 DD 01/15/07	562
US TREAS-CPI INFLAT	1.750% 01/15/2028 DD 01/15/08	773

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, 2016
(Dollars in Thousands)

	Identity of Issue	Description of Investment	Current Value

		US TREAS-CPI INFLAT	2.500% 01/15/2029 DD 01/15/09		1,630
		US TREAS-CPI INFLAT	1.375% 02/15/2044 DD 02/15/14		226
		US TREASURY BOND	2.500% 02/15/2046 DD 02/15/16		89
		US TREAS-CPI INFLAT	1.000% 02/15/2046 DD 02/15/16		1,639
		US TREAS-CPI INFLAT	0.250% 01/15/2025 DD 01/15/15		2,238
		US TREASURY NOTE	0.750% 10/31/2018 DD 10/31/16		4,368
		UNIV OF CALIFORNIA CA RGTS MED	6.583% 05/15/2049 DD 12/17/09		260
		UNIV OF CALIFORNIA CA REVENUES	6.270% 05/15/2031 DD 08/27/09		328
		VERIZON COMMUNICATIONS INC	4.150% 03/15/2024 DD 03/17/14		1,045
		VISA INC	3.150% 12/14/2025 DD 12/14/15		402
		WACHOVIA CORP	VAR RT 06/15/2017 DD 06/08/07		1,000
		WAL-MART STORES INC	3.300% 04/22/2024 DD 04/22/14		1,028
		WELLS FARGO BANK NA	VAR RT 06/15/2017 DD 06/12/14		900
		WELLS FARGO COMMERICIA NXS4 ASB	3.522% 12/15/2048 DD 12/01/15		929
		Total Bond Fund			107,360

International Stock
		INTL STOCK INDEX	BGI MSCI ACWI EX-US INDEX SUPERFUND		19,052

Interest Bearing Cash
	*	DREYFUS GOVERNMENT CASH MANAGEMENT FUND			1,797

* Loans to Plan Participants			4.25% - 10.50%		64,369

		Total		$	1,847,575

* Party-in-Interest

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 22 , 2017

EXHIBIT INDEX

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

Exhibit

Number

23	Consent of Independent Registered Public Accounting Firm