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, 2019
 
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:
 
AT&T RETIREMENT
 
SAVINGS
 
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
 
 
 
 
 
 
AT&T Retirement
 
Savings Plan
 
Financial Statements, Supplemental Schedules and Exhibit
 
Table of
 
Contents
 
 
 
Page
Reports of Independent Registered Public Accounting
 
Firm
 
 
1
 
Financial Statements:
 
 
Statements of Net Assets Available
 
for Benefits as of December 31, 2019 and 2018
 
 
2
 
Statements of Changes in Net Assets Available
 
for Benefits for the Year
 
Ended December 31, 2019
 
 
3
 
Notes to Financial Statements
 
 
4
 
Supplemental Schedules:
 
 
Schedule H, Part IV,
 
Line 4(a) – Schedule of Delinquent Participant Contributions
 
for the Year
 
Ended December 31,
2019
 
 
20
 
Schedule H, Part IV,
 
Line 4(i) – Schedule of Assets (Held at End of Year)
 
as of December 31, 2019
 
 
21
 
 
 
1
 
 
Report of Independent Registered Public Accounting
 
Firm
 
Plan Administrator and Plan Participants
 
AT&T
 
Retirement Savings Plan
 
AT&T
 
Puerto Rico Retirement Savings Plan
 
Dallas, Texas
 
Opinion on the Financial Statements
 
We have audited
 
the accompanying statements of net assets available for benefits
 
of AT&T
 
Retirement Savings Plan and AT&T
Puerto Rico Retirement Savings Plan (Plans) as of December
 
31, 2019 and 2018, the related statements of changes in net
 
assets
available for benefits for the year ended December
 
31, 2019, 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 AT&T
 
Retirement Savings Plan and AT&T
 
Puerto Rico Retirement Savings Plan as of December 31,
 
2019 and 2018,
and the changes in net assets available for benefits for
 
the year ended December 31, 2019,
 
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 audits.
 
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 Plans 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 Plans are not required to have, nor were we engaged
 
to perform, an audit of their internal control over financial
 
reporting. As part
of our audits 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 schedules
 
of delinquent participant contributions for the year
 
ended December 31,
2019, and assets (held at end of year) as of December
 
31, 2019, have been subjected to audit procedures performed
 
in conjunction
with the audit of the Plans’ financial statements. The supp
 
lemental schedules are the responsibility of the Plans’ management.
 
Our
audit procedures included determining whether the
 
supplemental schedules reconcile 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 schedules. In forming
 
our opinion on the supplemental schedules, we evaluated
 
whether the
supplemental schedules, including their form and
 
content, are 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
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 29, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2
 
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Statements of Net Assets Available
 
For Benefits
 
(Dollars in Thousands)
 
 
 
December 31, 2019
 
 
December 31, 2018
 
 
AT&T
Retirement
Savings Plan
 
 
AT&T
Puerto Rico
Retirement
Savings Plan
 
 
AT&T
Retirement
Savings Plan
 
AT&T
Puerto Rico
Retirement
Savings Plan
 
Assets
 
 
 
 
Investment in AT&T
 
Savings Plan Master Trust, (Note 4)
 
$48,415,529
$ 127,881
$36,217,189
 
$ 101,101
 
Notes receivable from participants
 
 
 
854,483
 
 
 
9,472
 
 
 
816,145
 
 
 
8,157
 
Employer contribution receivable
 
 
 
3,937
 
 
 
1
 
 
 
4,144
 
 
 
 
Participant contribution receivable
 
 
 
7,024
 
 
 
2
 
 
 
7,249
 
 
 
 
 
 
 
 
 
Total Receivables
 
 
 
865,444
 
 
 
9,475
 
 
 
827,538
 
 
 
8,157
 
 
 
 
 
 
Net Assets Available
 
for Benefits
 
$49,280,973
$ 137,356
$37,044,727
 
$ 109,258
 
 
 
 
 
 
See Notes to Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
3
 
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Statements of Changes in Net Assets Available
 
For Benefits
 
For the Year
 
Ended December 31, 2019
 
(Dollars in Thousands)
 
 
 
AT&T
Retirement
Savings Plan
 
 
AT&T
Puerto Rico
Retirement
Savings Plan
 
 
Net Assets Available
 
for Benefits, December 31, 2018
 
$37,044,727
 
$ 109,258
 
Changes in Net Assets:
 
 
Contributions:
 
 
 
Participant contributions
 
1,200,165
 
7,180
Employer contributions
 
589,761
 
4,386
Rollover contributions
 
288,862
 
Investment Income
 
Net income from investment in AT&T
 
Savings Plan Master Trust
 
8,367,999
 
24,782
Interest income on notes receivable from participants
 
40,188
 
443
Administrative Expenses
 
(23,664)
 
(265)
Distributions
 
(4,088,284)
 
(8,428)
 
Net increase before plan transfers
 
6,375,027
 
28,098
Net asset transfer from AlienVault
 
401(k) Plan (Note 1)
6,634
 
Net asset transfer from Otter Media Holdings, LLC 401(k)
 
Plan (Note 1)
 
174
 
Net asset transfer from Warner
 
Media, LLC Savings Plan (Note 1)
5,854,411
 
 
 
 
Net increase after plan transfers
 
12,236,246
 
28,098
Net Assets Available
 
for Benefits, December 31, 2019
 
$49,280,973
 
$
 
137,356
 
 
 
 
See Notes to Financial Statements.
 
 
 
4
 
 
AT&T Retirement
 
Savings Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Notes to Financial Statements
 
(Dollars in Thousands)
 
NOTE 1. PLAN DESCRIPTIONS
 
The following descriptions provide only general information.
 
Detailed provisions covering participant eligibility,
 
participant
allotments from pay,
 
participant withdrawals, participant loans, employer contributions
 
and related vesting of contributions and plan
expenses are provided in the plan texts and prospectuses. The AT&T
 
Retirement Savings
 
Plan and AT&T
 
Puerto Rico Retirement
Savings Plan (collectively referred to as the Plans)
 
are defined contribution plans and are subject to the provisions
 
of the Employee
Retirement Income Security Act of 1974, as amended
 
(ERISA).
 
The AT&T
 
Retirement Savings Plan (ARSP) was originally established by
 
BellSouth Corporation (BellSouth) to provide a convenient
way for eligible non-management and bargained
 
for 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 ARSP became sponsored by
AT&T
 
Inc. effective December 31, 2008.
 
The AT&T
 
Puerto Rico Retirement Savings Plan (ARSP-PR) was originally
 
established by CCPR Inc. to provide a convenient way
for eligible employees of its Puerto Rico subsidiary,
 
CCPR Services Inc., and certain affiliates, to save on
 
a regular and long-term
basis. The ARSP-PR became sponsored by AT&T
 
effective December 31, 2008.
 
Effective at the close of business on April 30,
 
2019, the AlienVault
 
401(k) Plan was merged into the ARSP.
 
As a result, $6,634 net
assets including $114 in participant
 
loans were transferred to the ARSP on April 30, 2019.
Effective at the close of business on October
 
31, 2019, the Otter Media Holdings, LLC 401(k) Plan was merged
 
into the ARSP.
 
As a
result, $174 net assets were transferred to the ARSP on October
 
31, 2019.
Effective at the close of business on December
 
31, 2019, the Warner
 
Media, LLC Savings Plan was merged into
 
the ARSP.
 
The
merger included $5,854,411
 
of net assets including $61,326 in participant loans.
 
The Plans participate in the AT&T
 
Savings Plan Master Trust (AT&T
 
Master Trust) for certain participant
 
investment fund options as
described below. The
 
AT&T
 
Master Trust invests in the AT&T
 
Savings Group Investment Trust (Group
 
Trust) for the remaining
participant investment fund options. The Bank of New
 
York
 
Mellon Corporation (BNY Mellon) serves as trustee for
 
both the AT&T
Master Trust and Group Trust.
 
With respect to the ARSP-PR, BNY Mellon
 
serves as a U.S. custodian pursuant to a custodian
agreement and Oriental Financial Group serves as trustee
 
of the associated trust known as the AT&T
 
Puerto Rico Retirement Savings
Plan Trust. Fidelity Investments Institutional
 
Operations Company,
 
Inc. (Fidelity) serves as recordkeeper for the Plans.
 
During 2019 and 2018,
 
participants could invest their contributions in one or more
 
of eleven funds in 1% increments:
 
 
• AT&T
 
Total Return Bond
 
Fund*
• Small
 
and Mid-Sized U.S. Stock Index Fund**
• AT&T
 
U.S. Stock Fund*
• International
 
Stock Index Fund**
• AT&T
 
International Stock Fund*
• Large
 
Cap U.S. Stock Index Fund**
• AT&T
 
Stable Value
 
Fund*
• AT&T
 
Shares Fund**
• AT&T
 
Age-Based Asset Allocation Funds
(based on retirement date)**
• Fidelity
 
BrokerageLink
®
**
• Total
 
U.S. Stock Market Index Fund**
 
* Investment
 
fund option of the Group Trust.
 
** Investment fund option of the AT&T
 
Master Trust.
 
 
 
 
 
5
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Notes to Financial Statements (Continued)
 
(Dollars in Thousands)
 
Participants contribute to the Plans through payroll allotments. The
 
Company contributes to the Plans by matching the participants’
contributions based on the provisions of the respective
 
plan. For the ARSP,
 
some matching contributions are made in the form
 
of cash
and are participant directed immediately upon allocation.
 
The majority of Company matching contributions for the ARSP
 
and all
Company matching contributions for the ARSP-PR are made
 
solely in the form of shares of AT&T’s
 
common stock. Matching
contributions made in stock into the ARSP are held in an
 
Employee Stock Ownership Plan (ESOP), which is part
 
of the AT&T
 
Shares
Fund, within the AT&T
 
Master Trust. Matching contributions made
 
in stock into the ARSP-PR are held in a separate stock bonus
portion of the ARSP-PR. Company contributions made
 
to the Plans can be immediately diversified into any of the fund
 
options above.
 
Dividends on AT&T
 
shares held in the ARSP 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 (or
 
pass-through) 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
2019, participants in the ARSP elected to receive $36,147
 
in dividend distributions, which are included in distributions on the
statements of changes in net assets available for benefits. Dividends
 
on AT&T
 
shares held in the ARSP are reinvested in the AT&T
Shares Fund on a quarterly basis. Dividends on AT&T
 
shares held in the ARSP-PR are not eligible for pass-through
 
and are reinvested
in the AT&T
 
Shares Fund on a quarterly basis.
 
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 the 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 obligation 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 Plans to discontinue its contributions at any
 
time and
to terminate the Plans subject to the provisions of ERISA.
 
In the event that the Plans are terminated, subject to the conditions set
 
forth
by ERISA, the account balances of all participants shall
 
be 100% vested.
 
Administrative and Operating Expenses; Investment Manager
 
Fees
Except to the extent paid by the Company,
 
all expenses incident to
the administration and operation of the Plans are charged
 
to participants, either directly to their accounts or through the investment
funds offered under the Group Trust
 
or AT&T
 
Master Trust, in accordance with administrative
 
procedures established by the Plan
administrator. Investment
 
manager fees are charged through the investment funds.
 
Expenses charged directly to participant accounts
(e.g., recordkeeping, communications fees) are reflected
 
as a periodic fee on the participant account statements. In
 
addition, expenses
and fees with respect to certain transactions and
 
services (e.g., plan loan initiation fees) are charged directly
 
to participants who incur
them rather than to the Plans as a whole.
 
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 investments 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.
 
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.
 
 
 
 
6
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Notes to Financial Statements (Continued)
 
(Dollars in Thousands)
 
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 Plans. The Group
 
Trust invests in fully benefit-responsive and
 
synthetic guaranteed 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.
 
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 income (loss) includes the Plan’s
 
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.
 
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, 2019 or 2018. 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 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. The Plan
has adopted this standard retrospectively.
 
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 determ
 
ine 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.
 
The Plan has adopted this standard,
 
retrospectively.
 
In August 2018, the FASB
 
issued Accounting Standards Update No. 2018-13 “Fair
 
Value
 
Measurement (Topic
 
820) Disclosure
Framework-
 
Changes to the Disclosure Requirements for Fair Value
 
Measurement” (ASU 2018-13). ASU 2018-13 eliminates and
modifies certain disclosure requirements for fair
 
value measurements of non-public entities. The eliminated
 
disclosure requirements
include (i) the amount of and reasons for transfers between
 
Level 1 and Level 2 of the fair value hierarchy,
 
(ii) the policy for timing of
transfers between fair value hierarchy levels, (iii) the
 
valuation processes for Level 3 fair value measurements
 
and (iv) the changes in
unrealized gains and losses for the period included in
 
earnings for recurring Level 3 fair value measurements held at
 
the end of the
reporting period. The modified disclosure requirements
 
include (i) In lieu of a rollforward for Level 3 fair value measurements
disclosing the transfers into and out of Level 3 of the fair
 
value hierarchy and purchases and issuances of Level 3 assets and
 
liabilities
and (ii) for entities that use the practical expedient measure
 
of fair value the requirement disclosing the timing of liquidation
 
of an
investee’s assets and the
 
date when restrictions from redemption might lapse only
 
if the investee has communicated the timing to the
entity or announced the timing publicly.
 
The new standard is effective for fiscal years beginning
 
after December 15, 2019 with certain
retrospective applications. Early adoption is permitted.
 
Management is currently evaluating this updated guidance.
 
 
 
 
7
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Notes to Financial Statements (Continued)
 
(Dollars in Thousands)
 
NOTE 3. FAIR VALUE
 
MEASUREMENTS
 
ASC 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, 2019 and 2018.
 
See Note 4 for fair value hierarchy for the Group Trust’s
 
and AT&T
 
Master Trust’s
 
investments.
 
NOTE 4. INVESTMENTS
 
The Plans held investments in the AT&T
 
Master Trust (for certain investment fund
 
options as disclosed in Note 1), and the AT&T
Master Trust held an investment in
 
the Group Trust as of December 31, 2019
 
and 2018.
 
AT&T Savings Plan
 
Master Trust Investments
 
AT&T
 
established the AT
 
&T Master Trust to manage assets of pooled
 
investment options among various AT&T
 
sponsored employee
benefit plans.
 
Each participating plan’s
 
interest in the investment fund options (i.e., separate
 
accounts) of the AT&T
 
Master Trust is based on
account balances of the participants and their elected investment
 
fund options. The AT&T
 
Master Trust assets are allocated among
 
the
participating plans by assigning to each plan those transactions
 
(primarily contributions, benefit payments, and expenses) that
 
can be
specifically identified, and by allocating investment income
 
and administrative expenses related to the AT&T
 
Master Trust on a daily
basis based on each participant’s
 
account balance within each investment fund option.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Notes to Financial Statements (Continued)
 
(Dollars in Thousands)
 
The participating plans and ownership percentages of
 
the AT&T
 
Master Trust are listed below:
 
 
 
December 31,
 
 
2019
 
 
2018
 
AT&T
 
Retirement Savings Plan
 
 
99.74%
 
99.72%
AT&T
 
Puerto Rico Retirement Savings Plan
 
 
0.26%
 
0.28%
 
 
 
Total
 
 
100.00%
 
100.00%
 
 
 
 
The Plans’ percentage interest in each of the investment
 
fund options within the AT&T
 
Master Trust is disclosed below:
 
 
 
December 31, 2019
 
 
December 31, 2018
 
 
AT&T
Retirement
Savings
Plan
 
*
 
AT&T
Puerto Rico
Retirement
Savings
Plan
 
 
AT&T
Retirement
Savings
Plan
 
AT&T
Puerto Rico
Retirement
Savings
Plan
 
Total U.S. Stock
 
Market Index Fund
 
99.820%
0.180%
 
99.840%
 
0.160%
Large Cap U.S. Stock Index Fund
 
99.670%
0.330%
 
99.700%
 
0.300%
Small and Mid-Sized U.S. Stock Index Fund
 
99.640%
0.360%
 
99.680%
 
0.320%
International Stock Index Fund
 
99.360%
0.640%
 
99.450%
 
0.550%
AT&T
 
Shares Fund
 
99.720%
0.280%
 
99.750%
 
0.250%
AT&T
 
Age-Based Asset Allocation Funds:
 
 
AT&T
 
Age-Based Allocation 2000 Fund
 
99.810%
0.190%
 
99.830%
 
0.170%
AT&T
 
Age-Based Allocation 2005 Fund
 
99.900%
0.100%
 
99.920%
 
0.080%
AT&T
 
Age-Based Allocation 2010 Fund
 
99.840%
0.160%
 
99.840%
 
0.160%
AT&T
 
Age-Based Allocation 2015 Fund
 
99.910%
0.090%
 
99.920%
 
0.080%
AT&T
 
Age-Based Allocation 2020 Fund
 
99.800%
0.200%
 
99.800%
 
0.200%
AT&T
 
Age-Based Allocation 2025 Fund
 
99.870%
0.130%
 
99.850%
 
0.150%
AT&T
 
Age-Based Allocation 2030 Fund
 
99.630%
0.370%
 
99.640%
 
0.360%
AT&T
 
Age-Based Allocation 2035 Fund
 
99.580%
0.420%
 
99.570%
 
0.430%
AT&T
 
Age-Based Allocation 2040 Fund
 
99.400%
0.600%
 
99.360%
 
0.640%
AT&T
 
Age-Based Allocation 2045 Fund
 
99.320%
0.680%
 
99.300%
 
0.700%
AT&T
 
Age-Based Allocation 2050 Fund
 
99.560%
0.440%
 
99.570%
 
0.430%
AT&T
 
Age-Based Allocation 2055 Fund
 
99.830%
0.170%
 
99.850%
 
0.150%
AT&T
 
Age-Based Allocation 2060 Fund
 
99.700%
0.300%
 
99.730%
 
0.270%
Fidelity BrokerageLink
®
 
99.990%
0.010%
 
99.990%
 
0.010%
*December 31, 2019 investment fund options allocations above
 
for the ARSP do not include the net assets transferred from the
Warner Media,
 
LLC Savings Plan. This plan transfer is reflected as a receivable
 
in the AT&T
 
Master Trust financial position and
 
not
allocated to the fund options as of December 31,
 
2019.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Notes to Financial Statements (Continued)
 
(Dollars in Thousands)
 
The financial position of the AT&T
 
Master Trust was as follows:
 
 
December 31, 2019
AT&T
 
Master Trust
AT&T
 
Retirement
Savings Plan Interest
AT&T
 
Puerto Rico Retirement
Savings Plan Interest
AT&T
 
common stock
 
$
 
6,396,097
 
 
$
 
6,378,188
 
 
$
 
17,909
 
Mutual funds
 
77,376
 
 
77,093
 
 
283
 
Common/collective trust funds
21,384,074
 
21,308,331
 
75,743
 
Fidelity BrokerageLink
 
2,381,817
 
 
2,381,579
 
 
238
Investment in Group Trust
13,522,761
 
 
13,488,621
 
 
34,140
 
AT&T
 
Master Trust investments
 
$
 
43,762,125
 
 
$
 
43,633,812
 
 
$
 
128,313
 
Receivable from the Time Warner
Defined Contribution Plans Master
Trust
 
4,779,355
 
 
4,779,355
 
 
-
 
Net other assets and liabilities
 
1,930
 
2,362
(432)
 
 
Net assets available for benefits
 
$
 
48,543,410
 
 
$
 
48,415,529
 
 
$
 
127,881
 
 
December 31, 2018
AT&T
 
Master Trust
AT&T
 
Retirement
Savings Plan Interest
AT&T
 
Puerto Rico Retirement
Savings Plan Interest
AT&T
 
common stock
 
$
 
4,885,378
 
 
$
 
4,873,164
 
 
$
 
12,214
 
Mutual funds
 
81,446
 
 
81,152
 
 
294
 
Common/collective trust funds
 
17,850,871
 
 
17,792,771
 
 
58,100
 
Fidelity BrokerageLink
 
2,007,335
 
 
2,007,134
 
 
201
 
Investment in Group Trust
 
11,511,251
 
 
11,480,679
 
 
30,572
 
AT&T
 
Master Trust investments
 
$
 
36,336,281
 
 
$
 
36,234,900
 
 
$
 
101,381
 
Net other assets and liabilities
 
(17,991)
 
(17,711)
 
(280)
 
 
Net assets available for benefits
 
$
 
36,318,290
 
 
$
 
36,217,189
 
 
$
 
101,101
 
 
 
Net Appreciation in Fair Value
 
of AT&T Master
 
Trust Investments
 
and
 
Total
 
Investment Income for the Year
 
Ended December 31, 2019
 
 
 
2019
 
Net appreciation in fair value of AT&T
 
Master Trust Investments
 
$ 6,790,842
Investment income:
Dividends
 
 
343,331
Interest
 
 
923
Gain from investment in Group Trust
 
 
1,257,685
 
 
Net investment income of Master Trust Investments
 
$ 8,392,781
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Notes to Financial Statements (Continued)
 
(Dollars in Thousands)
 
The following tables set forth by level, within the fair
 
value hierarchy, the
 
AT&T
 
Master Trust’s assets at fair
 
value, excluding its
investment in the Group Trust:
 
 
 
AT&T Master Trust
 
Assets at Fair Value as of
December 31, 2019*
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
Total
 
 
AT&T
 
common stock
 
$ 6,396,097
 
$ —
 
$ —
 
$ 6,396,097
 
Mutual funds
 
 
 
77,376
 
 
 
 
 
 
 
 
 
77,376
 
Self-directed brokerage accounts
 
 
 
2,373,290
 
 
 
8,527
 
 
 
 
 
 
2,381,817
 
 
 
 
 
 
Total
 
assets in fair value hierarchy
$8,846,763
$ 8,527
$
 
 
$ 8,855,290
 
 
 
 
 
Common/collective trusts measured at net asset value
 
 
 
 
Asset allocation funds
1
 
 
 
 
 
 
7,289,231
 
Total U.S. stock
 
market index fund
2
 
 
 
 
 
 
1,848,014
 
Large cap U.S. stock index fund
3
 
 
 
 
 
 
6,473,912
 
Small and mid-sized U.S. stock index fund
4
 
 
 
 
 
 
3,234,832
 
International stock index fund
5
 
 
 
 
 
 
2,538,085
 
 
 
 
 
 
Total
 
assets at fair value
 
 
 
$30,239,364
 
 
 
 
 
1
 
This category includes 13 common/collective trust funds
 
also known as Aged-Based Asset Allocation Funds 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 through
 
the
projected retirement date and for a number of years thereafter.
 
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.
 
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 Dow Jones Total U.S.
 
Stock Market Index. There are currently no
redemption restrictions on this investment.
 
3
 
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 Standard and Poor’s Composite Stock Price Index
 
of 500 stocks (the
S&P 500
®
). There are currently no redemption restrictions on this investment.
 
4
 
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 Dow Jones U.S. Completion Total
 
Stock Market Index. There are
currently no redemption restrictions on this investment.
 
5
 
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.
 
*December 31, 2019 fair value hierarchy table above does not
 
include the assets transferred from the Warner
 
Media, LLC Savings
Plan. This plan transfer is reflected as a receivable
 
in the AT&T
 
Master Trust financial position and
 
not allocated to the three levels as
of December 31, 2019.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Notes to Financial Statements (Continued)
 
(Dollars in Thousands)
 
 
 
AT&T Master Trust
 
Assets at Fair Value as of
December 31, 2018
 
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
Total
 
 
AT&T
 
common stock
 
$4,885,378
 
$ —
 
$ —
 
$ 4,885,378
 
Mutual funds
 
 
 
81,446
 
 
 
 
 
 
 
 
 
81,446
 
Self-directed brokerage accounts
 
 
1,998,969
 
 
 
8,366
 
 
 
 
 
 
2,007,335
 
 
 
 
 
 
Total assets in fair value
 
hierarchy
 
$6,965,793
 
$ 8,366
 
$ —
 
$ 6,974,159
 
 
 
 
 
 
Common/collective trusts measured at net asset value
 
 
 
 
Asset allocation funds
1
 
 
 
 
 
 
6,278,200
 
Total U.S. stock
 
market index fund
2
 
 
 
 
 
 
1,478,274
 
Large cap U.S. stock index fund
3
 
 
 
 
 
 
5,271,702
 
Small and mid-sized U.S. stock index fund
4
 
 
 
 
 
 
2,744,791
 
International stock index fund
5
 
 
 
 
 
 
2,077,904
 
 
 
 
 
 
Total assets at fair value
 
 
 
 
$ 24,825,030
 
 
 
 
 
 
1
 
This category includes 13 common/collective trust funds
 
also known as Aged-Based Asset Allocation Funds 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 through
 
the
projected retirement date and for a number of years thereafter.
 
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.
 
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 Dow Jones Total U.S.
 
Stock Market Index. There are currently no
redemption restrictions on this investment.
 
3
 
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 Standard and Poor’s Composite Stock Price Index
 
of 500 stocks (the
S&P 500
®
). There are currently no redemption restrictions on this investment.
 
4
 
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 Dow Jones U.S. Completion Total
 
Stock Market Index. There are
currently no redemption restrictions on this investment.
 
5
 
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.
 
 
 
 
 
 
 
 
 
 
 
12
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
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 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 AT&T
 
Master Trust’s
 
interest in each of the investment fund options within the Group Trust
 
is disclosed below as of
December 31, 2019.
 
 
AT&T Total
Return Bond
Fund*
AT&T U.S.
Stock Fund*
AT&T International Stock Fund
AT&T Stable Value
 
Fund
Group Trust
AT&T Master
Trust
AT&T Master
Trust
AT&T Master
Trust
BellSouth
Savings and
Security Plan
AT&T Master
Trust
BellSouth
Savings and
Security Plan
Total
Interest bearing cash
 
$
 
1,060
 
 
$
 
-
 
 
$
 
2
 
 
$
 
-
 
 
$
 
-
 
 
$
 
-
 
 
$
 
1,062
 
Foreign cash
 
7,378
 
 
-
 
 
77
 
 
1
 
 
-
 
 
-
 
 
7,456
 
Mortgage-backed securities
 
379,956
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
379,956
 
Corporate debt
 
847,135
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
847,135
 
Government securities
 
195,789
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
195,789
 
Common/collective trust funds
 
1,090,769
 
 
2,485,301
 
 
447,390
 
 
6,544
 
 
-
 
 
-
 
 
4,030,004
 
Equities - common stock
 
-
 
 
398,270
 
 
199,296
 
 
2,915
 
 
-
 
 
-
 
 
600,481
 
Equities - preferred stock
 
2,427
 
 
-
 
 
3,742
 
 
55
 
 
-
 
 
-
 
 
6,224
 
Futures
 
(1,714)
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(1,714)
Registered investment companies
 
269,023
 
 
64,059
 
 
4,581
 
 
67
 
 
74,332
 
 
6,163
 
 
418,225
 
Group Trust investments at fair value
 
2,791,823
 
 
2,947,630
 
 
655,088
 
 
9,582
 
 
74,332
 
 
6,163
 
 
6,484,618
 
receivable from the Time Warner Defined
Contribution Plans Master Trust
 
220,271
 
 
-
 
 
315,016
 
 
-
 
 
478,443
 
 
-
 
 
1,013,730
 
Unsettled trades/other
 
(203,119)
 
(196)
 
1,326
 
 
19
 
(1,717)
 
323
 
(203,364)
Fully benefit-responsive investments contracts
valued at contract value
 
-
 
 
-
 
 
-
 
 
-
 
 
6,243,864
 
 
517,689
 
 
6,761,553
 
Group Trust net assets
 
$
 
2,808,975
 
 
$
 
2,947,434
 
 
$
 
971,430
 
 
$
 
9,601
 
 
$
 
6,794,922
 
 
$
 
524,175
 
$
 
14,056,537
 
*
 
BellSouth Savings and Security Plan does not hold
 
any investments in AT&T
 
Total Return Bond
 
Fund or AT&T
 
U.S. Stock Fund.
 
 
 
 
 
 
 
 
 
 
 
 
 
13
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Notes to Financial Statements (Continued)
 
(Dollars in Thousands)
 
 
The AT&T
 
Master Trust’s
 
interest in each of the investment fund options within the Group Trust
 
is disclosed below as of
December 31, 2018.
 
 
AT&T Total
Return Bond
Fund*
AT&T U.S.
Stock Fund*
AT&T International Stock
Fund
AT&T Stable Value
 
Fund
Group Trust
AT&T
Master Trust
AT&T
Master Trust
AT&T
Master Trust
BellSouth
Savings and
Security Plan
AT&T
Master Trust
BellSouth
Savings and
Security Plan
Total
Interest bearing cash
 
$
 
8,064
 
 
$
 
500
 
 
$
 
3
 
 
$
 
-
 
 
$
 
-
 
 
$
 
-
 
 
$
 
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
 
 
155,359
 
 
2,163
 
 
-
 
 
-
 
 
3,075,397
 
103-12 investment entities
 
-
 
 
-
 
 
233,699
 
 
3,253
 
 
-
 
 
-
 
 
236,952
 
Equities - common stock
 
-
 
 
324,930
 
 
191,236
 
 
2,662
 
 
-
 
 
-
 
 
518,828
 
Equities - preferred stock
 
-
 
 
-
 
 
4,466
 
 
62
 
 
-
 
 
-
 
 
4,528
 
Futures
 
(245)
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(245)
Registered investment companies
 
291,899
 
 
6,090
 
 
3,487
 
 
49
 
 
171,316
 
 
14,400
 
 
487,241
 
Group Trust investments at fair value
 
2,355,451
 
 
2,492,968
 
 
588,266
 
 
8,189
 
 
171,316
 
 
14,400
 
 
5,630,590
 
Unsettled trades/other
 
(395,768)
 
(263)
 
790
 
 
11
 
 
(1,140)
 
369
 
(396,001)
Fully benefit-responsive investments
contracts valued at contract value
 
-
 
 
-
 
 
-
 
 
-
 
 
6,299,631
 
 
529,520
 
 
6,829,151
 
Group Trust net assets
 
$
 
1,959,683
 
 
$
 
2,492,705
 
 
$
 
589,056
 
$
 
8,200
 
 
$
 
6,469,807
 
 
$
 
544,289
 
$
 
12,063,740
 
*
 
BellSouth Savings and Security Plan does not hold
 
any investments in AT&T
 
Total Return Bond
 
Fund or AT&T
 
U.S. Stock Fund.
 
 
Net Appreciation in Fair Value
 
of Group Trust
 
Investments and
 
Total
 
Investment Income for the Year
 
Ended December 31, 2019
 
 
 
Group
Trust
 
 
Net appreciation in fair value of Group Trust
 
Investments
 
$
 
913,769
Investment Income:
 
Interest
 
226,978
Dividends
 
22,461
Less: investment management expenses
 
 
(9,179)
 
 
Net investment income of Group Trust
 
Investments
 
$
 
1,154,029
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T
 
Puerto Rico Retirement Savings
 
Plan
 
Notes to Financial Statements (Continued)
 
(Dollars in Thousands)
 
 
The following tables sets forth by level, within the fair value hierarchy,
 
the Group Trust’s
 
assets at fair value as of December 31, 2019
and 2018:
 
 
Group Trust Assets at Fair Value
December 31, 2019*
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
Total
 
 
Corporate debt
 
$ —
 
$ 841,471
 
$ 5,664
 
$ 847,135
 
Mortgage-backed securities
 
 
 
 
376,318
 
 
3,638
 
 
379,956
 
Interest bearing cash
 
 
 
 
1,062
 
 
 
 
1,062
 
Foreign cash
 
 
7,456
 
 
 
 
 
 
7,456
 
Equities - common stock
 
 
598,435
 
 
 
 
2,046
 
 
600,481
 
Equities - preferred stock
 
 
3,797
 
 
2,427
 
 
 
 
6,224
 
Futures
 
 
(1,713)
 
(1)
 
 
 
 
(1,714)
Registered investment companies
 
 
418,225
 
 
 
 
 
 
418,225
 
Government securities
 
195,789
 
 
195,789
 
 
 
 
 
Total
 
assets in fair value hierarchy
$1,026,200
$ 1,417,066
$
 
11,348
 
$ 2,454,614
 
 
 
 
 
Investments measured at net asset value
 
 
 
 
U.S. common/collective trusts
1
 
 
 
 
 
3,525,120
 
International common/collective trusts
2
 
 
 
 
 
187,908
 
103-12 investments
3
 
 
 
 
 
266,026
 
Non-publicly traded registered investments companies
4
 
 
 
 
50,950
 
 
 
 
 
 
Total
 
assets at fair value
 
 
 
$ 6,484,618
 
 
 
 
 
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.
 
*December 31, 2019 fair value hierarchy table above does not
 
include the assets transferred from the Warner
 
Media, LLC Savings
Plan. This plan transfer is reflected as a receivable
 
in the AT&T
 
Master Trust financial position and
 
not allocated to the three levels as
of December 31, 2019.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Notes to Financial Statements (Continued)
 
(Dollars in Thousands)
 
 
 
 
Group Trust Assets 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 cash
 
 
 
 
 
 
8,567
 
 
 
 
 
 
8,567
 
Foreign cash
 
 
 
3,908
 
 
 
 
 
 
 
 
 
3,908
 
Equities - common stock
 
 
 
518,828
 
 
 
 
 
 
 
 
 
518,828
 
Equities - preferred stock
 
 
 
4,528
 
 
 
 
 
 
 
 
 
4,528
 
Futures
 
 
(245)
 
 
 
 
 
 
 
(245)
Registered investment companies
 
 
 
487,241
 
 
 
 
 
 
 
 
 
487,241
 
Government securities
 
 
 
 
 
 
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.
 
 
 
16
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
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
 
Fund’s investment assets. The gains
 
(losses) are located on the Statement
of Changes in Net Assets Available
 
for Benefits as Net Loss from Investment in AT&T
 
Savings Plan Master Trust to the extent of
 
the
Plans’ ownership in the AT&T
 
Master Trust. 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.
 
At December 31, 2019 and 2018, the fair value of derivative financial
 
instruments held by the AT&T
 
Master Trust 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
AT&T
 
Master Trust, investment managers
 
for the Group Trust enter into various futures
 
contracts to economically hedge investments
in domestic securities. These contracts, which are
 
considered derivatives under ASC 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, 2019 and 2018
 
were used primarily to hedge and manage the duration risk 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 Trust’s
 
investments denominated in foreign currencies. On
 
behalf of the AT&T
 
Master Trust, investment
managers for the Group Trust 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 and are included
 
in the Statement of Net Assets
Available for
 
Benefits to the extent of the Plans’ ownership in the AT&T
 
Master Trust.
 
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.
 
 
 
17
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Notes to Financial Statements (Continued)
 
(Dollars in Thousands)
 
 
 
The investments held by the Stable Value
 
Fund as of December 31, 2019 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.
 
Interest Bearing Cash
At December 31, 2019 and 2018, ARSP held approximately
 
$20,300 and $18,400, respectively,
 
and ARSP-PR held approximately
$124 and $101, respectively,
 
of unallocated interest bearing cash related to contributions, uncashed
 
checks and fees pending allocation
to participant accounts or clearance through the plan
 
funds.
 
Investment Risk
 
Investments held by the Group Trust
 
and the AT&T
 
Master Trust 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 funds holding
 
AT&T
 
stock 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.
 
 
 
 
 
 
 
 
 
 
 
 
18
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Notes to Financial Statements (Continued)
 
(Dollars in Thousands)
 
NOTE 5. PARTIES
 
-IN-INTEREST TRANSACTIONS
 
The Plan may,
 
at the discretion of the Plan’s participants
 
or via the Company match, invest through the Master Trust
 
in the Company’s
common stock through the AT&T
 
Shares Fund. The Master Trust held 163,66
 
6,768 and 171,176,516 shares of the Company’s
common stock as of December 31, 2019 and 2018,
 
respectively. Dividends
 
earned by the Master Trust on the Company’s
 
common
stock were $343,331 for the year ended December 31,
 
2019.
 
The assets of the Plans are invested in AT&T
 
stock either through the Group Trust or
 
AT&T
 
Master Trust. Because the Company
 
is
the plan sponsor of the Plans, transactions involving the
 
Company’s stock qualify as party-in-interest
 
transactions. In addition, certain
investments held by the Plans, Group Trust,
 
and AT&T
 
Master Trust are managed by BNY Mellon
 
and Fidelity as trustee or custodian
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 ARSP has received a determination letter from the IRS dated
 
August 12, 2015, stating that the ARSP is qualified under
Section 401(a) of the IRC and, therefore, the related trust
 
is exempt from taxation. Subsequent to this determination
 
by the IRS the
Plan was amended. Once qualified, the ARSP is required
 
to operate in conformity with the IRC to maintain its qualification.
 
The Plan
administrator believes the ARSP is being operated
 
in compliance with the applicable requirements of the IRC and,
 
therefore, believes
that the Plan, as amended, is qualified and the related
 
trust is tax exempt.
 
The ARSP-PR has received a determination letter from
 
the Commonwealth of Puerto Rico’s
 
Department of Treasury (Tre
 
asury) dated
May 29, 2018 stating that the ARSP-PR is qualified
 
under Section 1081.01 of the Internal Revenue Code for a New
 
Puerto Rico (the
Puerto Rico Code), and therefore, the related trust is exempt from
 
taxation. Once qualified, the ARSP-PR is required to operate
 
in
conformity with the Puerto Rico Code to maintain its qualification.
 
The Plan administrator believes the ARSP-PR is being operated
 
in
compliance with the applicable requirements of the
 
Puerto Rico Code and, therefore, believes that the ARSP-PR, as amended,
 
is
qualified and the related trust is tax exempt.
 
Accounting principles generally accepted in the United
 
States require Plan management to evaluate uncertain tax positions
 
taken by
the Plans. 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 or Treasury.
 
The Plans’ administrator has analyzed the tax positions
taken by the Plans, and has concluded that as of December
 
31, 2019,
 
there were no uncertain positions taken or expected to be taken.
The Plans have recognized no interest or penalties related
 
to uncertain tax positions. The Plans are 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, 2019:
 
 
 
AT&T
Retirement
Savings Plan
 
 
AT&T
Puerto Rico
Retirement
Savings Plan
 
 
Net Assets Available
 
for Benefits per the financial statements
 
$49,280,973
$ 137,356
 
Distributions payable to participants
 
 
(11,958)
 
(31)
 
 
 
Net Assets Available
 
for Benefits per the Form 5500
 
$49,269,015
 
$ 137,325
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19
 
AT&T Retirement
 
Savings
 
Plan
 
AT&T Puerto Rico
 
Retirement Savings
 
Plan
 
Notes to Financial Statements (Continued)
 
(Dollars in Thousands)
 
The following is a reconciliation of Net Assets Available
 
for Benefits per the financial statements to the Form
 
5500 as of
December 31, 2018:
 
 
 
AT&T
Retirement
Savings Plan
 
 
AT&T
Puerto Rico
Retirement
Savings Plan
 
 
Net Assets Available
 
for Benefits per the financial statements
 
$37,044,727
 
$ 109,258
 
Distributions payable to participants
 
 
(9,072)
 
(30)
 
 
 
Net Assets Available
 
for Benefits per the Form 5500
 
$37,035,655
 
$ 109,228
 
 
 
 
 
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
ARSP financial statements to the Form 5500 for the year
 
ended December 31, 2019:
 
 
 
AT&T
Retirement
Savings Plan
 
 
AT&T
Puerto Rico
Retirement
Savings Plan
 
 
Distributions to participants per the financial statements
 
$ 4,088,284
$ 8,428
 
Distributions payable to participants at December 31, 2018
 
 
(9,072)
 
(30)
Distributions payable to participants at December 31, 2019
 
 
 
11,958
 
 
 
31
 
 
 
 
Distributions to participants per the Form 5500
 
$ 4,091,170
 
$ 8,429
 
 
 
 
NOTE 8. SUBSEQUENT EVENTS
 
Effective at the close of business on April 30,
 
2020, the Xandr Inc. 401(k) Plan was merged into
 
the ARSP.
 
As a result, approximately
$78,000 net assets were transferred to the ARSP on April
 
30, 2020.
In March 2020, the COVID-19 outbreak was declared a
 
pandemic by the World
 
Health Organization. The COVID-19 pandemic
 
has
led to extreme volatility in financial markets and
 
has affected, and may continue to affect,
 
the market price of AT&T
 
’s common stock
and other Plan assets. While the potential economic
 
impact brought by, and the
 
duration of, COVID-19 may be difficult to assess or
predict, a widespread pandemic could result in significant
 
disruption of global financial markets. The extent to which
 
COVID-19
impacts the financial markets will depend on future
 
developments that are highly uncertain and cannot be predicted.
The Coronavirus Aid Relief, and Economic Security Act (CARES Act)
 
was passed by the U.S. Senate on March 26,
 
2020. Section
2202 of the CARES Act permits eligible Plan participants to
 
request penalty-free distributions of up to $100,000
 
for qualifying
coronavirus-related reasons. These reasons include adverse
 
financial consequences due to being quarantined, furloughed, laid
 
off,
having work hours reduced or being unable to work
 
due to a lack of childcare due to COVID-19. Plan Man
 
agement is in the process
of reviewing the CARES Act and any resulting changes
 
to the Plan.
 
 
 
 
 
 
 
 
 
 
 
20
 
 
SCHEDULE H, LINE 4(a)—SCHEDULE OF DELIQUENT
 
PARTICIPANT
 
CONTRIBUTIONS
 
December 31, 2019
 
(Dollars in Thousands)
 
AT&T RETIREMENT
 
SAVINGS
 
PLAN
 
EIN 43-1301883, PLAN NO. 009
 
 
Participant Contributions
Transferred Late to the Plan
 
Total That Constitute Nonexempt Prohibited
Transactions
 
 
 
$9
Check Here if Late Participant
Loan Repayments are included:
 
Contributions
Not Corrected
 
 
Contributions
Corrected
Outside
VCFP
 
 
Contributions
Pending
Correction
in VCFP
 
 
Total Fully
Corrected Under
VCFP and PTE
2002-51
 
 
$ —
 
$ 8
 
$ 1
 
 
N/A
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21
 
SCHEDULE H, LINE 4(i)—SCHEDULE OF ASSETS (HELD AT
 
END OF YEAR)
 
December 31, 2019
 
(Dollars in Thousands)
 
AT&T RETIREMENT
 
SAVINGS
 
PLAN
 
EIN 43-1301883, PLAN NO. 009
 
 
Identity of Issue
 
Description of Investment
 
Current
Value
 
 
Loan Fund
 
 
*
 
Notes Receivable from Participants
 
3.25% - 10.50%
$ 854,
 
483
 
 
 
 
 
TOTAL
 
$ 854,
 
483
 
 
 
 
*
 
Party-in-Interest.
 
 
 
AT&T PUERTO
 
RICO RETIREMENT SAVINGS
 
PLAN
EIN 43-1301883, PLAN NO. 011
Identity of Issue
 
Description of Investment
 
Current
Value
 
 
Loan Fund
 
 
*
 
Notes Receivable from Participants
 
3.50% - 9.25%
$ 9,472
 
 
 
 
 
TOTAL
 
$ 9,472
 
 
 
 
*
 
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) has duly caused this annual report to
 
be signed by the undersigned thereunto duly authorized.
 
 
 
AT&T
 
Retirement Savings 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 29, 2020
 
 
 
 
EXHIBIT INDEX
 
Exhibit identified below,
 
Exhibits 23 is filed herein as exhibit hereto.
 
 
Exhibit
Number
 
 
 
 
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