<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                                                                     EXHIBIT 99A


                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549

                                   FORM 11-K

              [X] Annual Report Pursuant to Section 15(d) of
                  the Securities Exchange Act of 1934

                  For the fiscal year ended December 31, 1999

                                       or

              [_] Transition Report Pursuant to Section 15(d)
                  of the Securities Exchange Act of 1934

 For the transition period from                          Commission file number
      _______ to _______                                          1-8607

                       BellSouth Retirement Savings Plan

                             BellSouth Corporation
                          1155 Peachtree Street, N.E.
                          Atlanta, Georgia 30309-3610

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------


<PAGE>

                       BELLSOUTH RETIREMENT SAVINGS PLAN

                               Table of Contents

<TABLE>
<CAPTION>
Item                                                                        Page
----                                                                        ----
<S>                                                                         <C>
1. Financial Statements
   Report of Independent Accountants.......................................   2
   Consent of Independent Accountants......................................   3
   Statement of Net Assets Available for Benefits, With Fund
    Information as of December 31, 1999....................................   4
   Statement of Net Assets Available for Benefits, With Fund
    Information as of December 31, 1998....................................   6
   Statement of Changes in Net Assets Available for Benefits, With Fund
    Information for the Year ended December 31, 1999.......................   8
   Statement of Changes in Net Assets Available for Benefits, With Fund
    Information for the Year ended December 31, 1998.......................  10
   Statement of Changes in Net Assets Available for Benefits, With Fund
    Information for the Year ended December 31, 1997.......................  12
   Notes to Financial Statements...........................................  14
2. Supplemental Schedule
   H4(i)--Schedule of Assets Held for Investment Purposes.................. S-1
</TABLE>

                                       1
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Participants and Plan Administrator of
the BellSouth Retirement Savings Plan:

In our opinion, the accompanying statements of net assets available for
benefits and the related statements of changes in net assets available for
benefits present fairly, in all material respects, the net assets available
for benefits of the BellSouth Retirement Savings Plan (the "Plan") at December
31, 1999 and 1998, and the changes in net assets available for benefits for
each of the three years in the period ended December 31, 1999 in conformity
with accounting principles generally accepted in the United States. 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 of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit 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 the opinion expressed above.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of Assets
Held for Investment Purposes is presented for the purpose of additional
analysis and is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The Fund Information in the statements of net assets
available for benefits and the statements of changes in net assets available
for benefits is presented for purposes of additional analysis rather than to
present the net assets available for benefits and changes in net assets
available for benefits of each fund. The supplemental schedule and Fund
Information have been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.

PricewaterhouseCoopers LLP
Atlanta, Georgia

June 26, 2000

                                       2
<PAGE>

                       CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-38264) of BellSouth Corporation of our report
dated June 26, 2000 relating to the financial statements of the BellSouth
Retirement Savings Plan, which appears in this Form 11-K.

PricewaterhouseCoopers LLP

Atlanta, Georgia
June 26, 2000

                                       3
<PAGE>

                                                                BELLSOUTH RETIRE

                                               STATEMENT OF NET ASSETS AVAILABLE

                                                                        December
                                                                         (In Tho

<TABLE>
<CAPTION>
                                                            Vanguard
                                                              Index   Fidelity
                             BellSouth   Indexed   Interest   Trust    Growth
                               Stock      Stock     Income   Growth   & Income  Balanced
                                Fund       Fund      Fund   Portfolio Portfolio   Fund
            ASSETS           ---------- ---------- -------- --------- --------- --------
   <S>                       <C>        <C>        <C>      <C>       <C>       <C>
   Share of Trust net as-
    sets...................  $2,043,032 $1,249,328 $942,806 $250,596  $191,653  $113,737
   Investment in BellSouth
    Retirement Savings
    Employee Stock Owner-
    ship Plan Trust:
    Shares of BellSouth
     common stock allocated
     to participants.......         --         --       --       --        --        --
    Shares of BellSouth
     common stock held for
     future allocation.....         --         --       --       --        --        --
    Temporary cash invest-
     ments.................         --         --       --       --        --        --
                             ---------- ---------- -------- --------  --------  --------
     Total Investments.....   2,043,032  1,249,328  942,806  250,596   191,653   113,737
   Contributions receiv-
    able...................       1,965      1,414      673      583       498       195
   Fund, BellSouth Savings
    and Security Plan and
    other transfers
    receivable--net........         --         424      --       319       --        --
                             ---------- ---------- -------- --------  --------  --------
     Total Assets..........   2,044,997  1,251,166  943,479  251,498   192,151   113,932
                             ---------- ---------- -------- --------  --------  --------
         LIABILITIES
   Distributions payable...         703        603      100       33        21        27
   Fund, BellSouth Savings
    and Security Plan and
    other transfers
    payable--net...........         143        --       702      --        389       485
   Notes payable...........         --         --       --       --        --        --
                             ---------- ---------- -------- --------  --------  --------
     Total Liabilities.....         846        603      802       33       410       512
                             ---------- ---------- -------- --------  --------  --------
   Net Assets Available for
    Benefits...............  $2,044,151 $1,250,563 $942,677 $251,465  $191,741  $113,420
                             ========== ========== ======== ========  ========  ========
</TABLE>


                                             The accompanying notes are an integ

                                       4

<PAGE>

MENT SAVINGS PLAN

FOR BENEFITS, WITH FUND INFORMATION

31, 1999
usands)

<TABLE>
<CAPTION>

         T. Rowe               Personal                 DFA U.S.                         Employee Stock
          Price    DFA U.S.     Choice         DFA      Large Cap                        Ownership Plan
 Bond    Mid-Cap  6-10 Value  Retirement- International Value II  Participant        ----------------------
 Fund    Growth  Portfolio II   Account   Value II Fund   Fund       Loans    Other  Allocated  Unallocated   Total
-------  ------- ------------ ----------- ------------- --------- ----------- ------ ---------- ----------- ----------
<S>      <C>     <C>          <C>         <C>           <C>       <C>         <C>    <C>        <C>         <C>

$97,496  $78,505   $62,984      $41,515      $39,662     $28,003    $67,106   $1,677 $      --   $    --    $5,208,100






    --       --        --           --           --          --         --       --   1,288,767       --     1,288,767


    --       --        --           --           --          --         --       --         --    643,593      643,593

    --       --        --           --           --          --         --       --       2,040    13,858       15,898
-------  -------   -------      -------      -------     -------    -------   ------ ----------  --------   ----------
 97,496   78,505    62,984       41,515       39,662      28,003     67,106    1,677  1,290,807   657,451    7,156,358

    114      219       140          --            84          85        --       --         --        --         5,970



    --       144       343        2,311          486         277        247      --         --        --         4,551
-------  -------   -------      -------      -------     -------    -------   ------ ----------  --------   ----------
 97,610   78,868    63,467       43,826       40,232      28,365     67,353    1,677  1,290,807   657,451    7,166,879
-------  -------   -------      -------      -------     -------    -------   ------ ----------  --------   ----------

      7       13        13          --             2           4        --       --         176       --         1,702



     11      --        --           --           --          --         --     1,677        105       --         3,512
    --       --        --           --           --          --         --       --         --    264,056      264,056
-------  -------   -------      -------      -------     -------    -------   ------ ----------  --------   ----------
     18       13        13          --             2           4        --     1,677        281   264,056      269,270
-------  -------   -------      -------      -------     -------    -------   ------ ----------  --------   ----------

$97,592  $78,855   $63,454      $43,826      $40,230     $28,361    $67,353   $  --  $1,290,526  $393,395   $6,897,609
=======  =======   =======      =======      =======     =======    =======   ====== ==========  ========   ==========
</TABLE>


ral part of these financial statements.

                                       5
<PAGE>

                                                                BELLSOUTH RETIRE

                                               STATEMENT OF NET ASSETS AVAILABLE

                                                                        December
                                                                         (In Tho

<TABLE>
<CAPTION>
                                                         Vanguard
                                                           Index   Fidelity
                          BellSouth   Indexed   Interest   Trust    Growth
                            Stock      Stock     Income   Growth   & Income  Balanced
                             Fund       Fund      Fund   Portfolio Portfolio   Fund
         ASSETS           ---------- ---------- -------- --------- --------- --------
<S>                       <C>        <C>        <C>      <C>       <C>       <C>
Share of Trust net
 assets.................  $2,206,688 $1,105,530 $950,384 $129,181  $179,926  $114,254
Investment in BellSouth
 Retirement Savings
 Employee Stock
 Ownership Plan Trust:
 Shares of BellSouth
  common stock allocated
  to participants.......         --         --       --       --        --        --
 Shares of BellSouth
  common stock held for
  future allocation.....         --         --       --       --        --        --
 Temporary cash
  investments...........         --         --       --       --        --        --
                          ---------- ---------- -------- --------  --------  --------
  Total Investments.....   2,206,688  1,105,530  950,384  129,181   179,926   114,254
Contributions
 receivable.............       1,590      1,379      579      299       421       201
Fund, BellSouth Savings
 and Security Plan and
 other transfers
 receivable--net........      43,691        --       --       --        --        --
                          ---------- ---------- -------- --------  --------  --------
  Total Assets..........   2,251,969  1,106,909  950,963  129,480   180,347   114,455
                          ---------- ---------- -------- --------  --------  --------
      LIABILITIES
Distributions payable...         543        151      178       23        36        23
Fund, BellSouth Savings
 and Security Plan and
 other transfers
 payable--net...........         --       1,788   40,544       83        30       226
Notes payable...........         --         --       --       --        --        --
                          ---------- ---------- -------- --------  --------  --------
  Total Liabilities.....         543      1,939   40,722      106        66       249
                          ---------- ---------- -------- --------  --------  --------
Net Assets Available for
 Benefits...............  $2,251,426 $1,104,970 $910,241 $129,374  $180,281  $114,206
                          ========== ========== ======== ========  ========  ========
</TABLE>



                                             The accompanying notes are an integ

                                       6


<PAGE>

MENT SAVINGS PLAN

FOR BENEFITS, WITH FUND INFORMATION

31, 1998
usands)

<TABLE>
<CAPTION>

          T. Rowe                            DFA U.S.                         Employee Stock
           Price    DFA U.S.        DFA      Large Cap                        Ownership Plan
  Bond    Mid-Cap  6-10 Value  International Value II  Participant        ----------------------
  Fund    Growth  Portfolio II Value II Fund   Fund       Loans    Other  Allocated  Unallocated   Total
--------  ------- ------------ ------------- --------- ----------- ------ ---------- ----------- ----------
<S>       <C>     <C>          <C>           <C>       <C>         <C>    <C>        <C>         <C>

$119,953  $57,098   $67,832       $32,723     $30,967    $59,503   $8,552 $      --   $    --    $5,062,591






     --       --        --            --          --         --       --   1,257,725       --     1,257,725


     --       --        --            --          --         --       --         --    848,865      848,865

     --       --        --            --          --         --       --       4,962    13,726       18,688
--------  -------   -------       -------     -------    -------   ------ ----------  --------   ----------
 119,953   57,098    67,832        32,723      30,967     59,503    8,552  1,262,687   862,591    7,187,869

     124      155       165            70          82        --       --         --        --         5,065



     --        27       234           100         --          69      --         --        --        44,121
--------  -------   -------       -------     -------    -------   ------ ----------  --------   ----------
 120,077   57,280    68,231        32,893      31,049     59,572    8,552  1,262,687   862,591    7,237,055
--------  -------   -------       -------     -------    -------   ------ ----------  --------   ----------

       7        2         4             5           3         26    7,171        110       --         8,282



     230      --        --            --          315        --     1,381         34       --        44,631
     --       --        --            --          --         --       --         --    313,122      313,122
--------  -------   -------       -------     -------    -------   ------ ----------  --------   ----------
     237        2         4             5         318         26    8,552        144   313,122      366,035
--------  -------   -------       -------     -------    -------   ------ ----------  --------   ----------

$119,840  $57,278   $68,227       $32,888     $30,731    $59,546   $  --  $1,262,543  $549,469   $6,871,020
========  =======   =======       =======     =======    =======   ====== ==========  ========   ==========
</TABLE>



ral part of these financial statements.

                                       7

<PAGE>

                                                                BELLSOUTH RETIRE

                                                            STATEMENT OF CHANGES
                                                              FOR BENEFITS, WITH

                                                                  Year Ended Dec
                                                                         (In Tho

<TABLE>
<CAPTION>
                                                           Vanguard
                                                             Index   Fidelity                       T. Rowe
                          BellSouth    Indexed    Interest   Trust    Growth                         Price
                            Stock       Stock      Income   Growth   & Income   Balanced    Bond    Mid-Cap
                             Fund        Fund       Fund   Portfolio Portfolio    Fund      Fund    Growth
                          ----------  ----------  -------- --------- ---------  --------  --------  -------
<S>                       <C>         <C>         <C>      <C>       <C>        <C>       <C>       <C>
Net Assets Available for
 Benefits,
 December 31, 1998......  $2,251,426  $1,104,970  $910,241 $129,374  $180,281   $114,206  $119,840  $57,278
                          ----------  ----------  -------- --------  --------   --------  --------  -------
Employee contributions..      59,895      46,729    31,079   17,866    16,939      7,306     4,558    6,967
Transfer of partici-
 pants' balances--net...     (30,420)    (52,577)   74,445   69,439   (14,643)    (9,183)  (18,483)   3,624
Supplemental contribu-
 tions..................         --          --        --       --        --         --        --       --
Allocation of shares to
 participants...........         --          --        --       --        --         --        --       --
Transfer for loan repay-
 ment...................         --          --        --       --        --         --        --       --
                          ----------  ----------  -------- --------  --------   --------  --------  -------
Total Contributions,
 Allocations and
 Transfers..............      29,475      (5,848)  105,524   87,305     2,296     (1,877)  (13,925)  10,591
Share of Trust invest-
 ment
 activities.............     (88,643)    221,237    52,988   48,269    18,251      8,543    (2,110)  13,898
                          ----------  ----------  -------- --------  --------   --------  --------  -------
Total Additions.........     (59,168)    215,389   158,512  135,574    20,547      6,666   (16,035)  24,489
                          ----------  ----------  -------- --------  --------   --------  --------  -------
Less: Distributions to
 participants...........     148,107      69,796   126,076   13,483     9,087      7,452     6,213    2,912
  Interest on notes
   payable..............         --          --        --       --        --         --        --       --
                          ----------  ----------  -------- --------  --------   --------  --------  -------
Net Assets Available for
 Benefits,
 December 31, 1999......  $2,044,151  $1,250,563  $942,677 $251,465  $191,741   $113,420  $ 97,592  $78,855
                          ==========  ==========  ======== ========  ========   ========  ========  =======
</TABLE>


                                             The accompanying notes are an integ

                                       8
<PAGE>

MENT SAVINGS PLAN

IN NET ASSETS AVAILABLE
FUND INFORMATION

ember 31, 1999
usands)

<TABLE>
<CAPTION>

               Personal       DFA      DFA U.S.                         Employee Stock
  DFA U.S.      Choice   International Large Cap                        Ownership Plan
 6-10 Value   Retirement   Value II    Value II  Participant        -----------------------
Portfolio II   Account       Fund        Fund       Loans    Other  Allocated   Unallocated   Total
------------  ---------- ------------- --------- ----------- -----  ----------  ----------- ----------
<S>           <C>        <C>           <C>       <C>         <C>    <C>         <C>         <C>


   $68,227     $   --       $32,888     $30,731    $59,546   $ --   $1,262,543   $549,469   $6,871,020
   -------     -------      -------     -------    -------   -----  ----------   --------   ----------
     5,617         --         3,055       2,951        --      --          --         --       202,962

   (14,894)     42,305          (46)     (4,761)     3,489    (119)    (10,649)       --        37,527

       --          --           --          --         --      --          --      48,889       48,889

       --          --           --          --         --      --      130,890   (130,890)         --

       --          --           --          --         --      --      (15,134)    15,134          --
   -------     -------      -------     -------    -------   -----  ----------   --------   ----------


    (9,277)     42,305        3,009      (1,810)     3,489    (119)    105,107    (66,867)     289,378


     7,210       1,521        5,516       1,030      7,007     119     (36,417)   (61,709)     196,710
   -------     -------      -------     -------    -------   -----  ----------   --------   ----------
    (2,067)     43,826        8,525        (780)    10,496     --       68,690   (128,576)     486,088
   -------     -------      -------     -------    -------   -----  ----------   --------   ----------

     2,706         --         1,183       1,590      2,689     --       40,707        --       432,001

       --          --           --          --         --      --          --      27,498       27,498
   -------     -------      -------     -------    -------   -----  ----------   --------   ----------


   $63,454     $43,826      $40,230     $28,361    $67,353   $ --   $1,290,526   $393,395   $6,897,609
   =======     =======      =======     =======    =======   =====  ==========   ========   ==========
</TABLE>


ral part of these financial statements.

                                       9
<PAGE>

                                                                BELLSOUTH RETIRE

                                                            STATEMENT OF CHANGES
                                                              FOR BENEFITS, WITH

                                                                  Year Ended Dec
                                                                         (In Tho

<TABLE>
<CAPTION>
                                                             Vanguard
                                                               Index   Fidelity
                             BellSouth   Indexed    Interest   Trust    Growth
                               Stock      Stock      Income   Growth   & Income   Balanced
                                Fund       Fund       Fund   Portfolio Portfolio    Fund
                             ---------- ----------  -------- --------- ---------  --------
   <S>                       <C>        <C>         <C>      <C>       <C>        <C>
   Net Assets Available for
    Benefits,
    December 31, 1997......  $1,155,485 $1,040,696  $896,002 $ 46,552  $161,078   $105,313
                             ---------- ----------  -------- --------  --------   --------
   Employee contributions..      38,881     49,196    31,162    8,531    15,368      7,731
   Transfer of
    participants'
    balances--net..........     195,300   (181,786)   17,034   49,022   (27,030)   (10,731)
   Supplemental
    contributions..........         --         --        --       --        --         --
   Allocation of shares to
    participants...........         --         --        --       --        --         --
   Transfer for loan
    repayment..............         --         --        --       --        --         --
                             ---------- ----------  -------- --------  --------   --------
   Total Contributions,
    Allocations and
    Transfers..............     234,181   (132,590)   48,196   57,553   (11,662)    (3,000)
   Share of Trust
    investment activities..     951,469    267,172    56,477   29,180    42,185     20,798
                             ---------- ----------  -------- --------  --------   --------
   Total Additions.........   1,185,650    134,582   104,673   86,733    30,523     17,798
                             ---------- ----------  -------- --------  --------   --------
   Less: Distributions to
         participants......      89,709     70,308    90,434    3,911    11,320      8,905
     Interest on notes
        payable............         --         --        --       --        --         --
                             ---------- ----------  -------- --------  --------   --------
   Net Assets Available for
    Benefits,
    December 31, 1998......  $2,251,426 $1,104,970  $910,241 $129,374  $180,281   $114,206
                             ========== ==========  ======== ========  ========   ========
</TABLE>


                                             The accompanying notes are an integ

                                       10

<PAGE>

MENT SAVINGS PLAN

IN NET ASSETS AVAILABLE
FUND INFORMATION

ember 31, 1998
usands)

<TABLE>
<CAPTION>

          T. Rowe                            DFA U.S.                         Employee Stock
           Price  DFA U.S. 6-       DFA      Large Cap                        Ownership Plan
  Bond    Mid-Cap   10 Value   International Value II  Participant        -----------------------
  Fund    Growth  Portfolio II Value II Fund   Fund       Loans    Other  Allocated   Unallocated   Total
--------  ------- ------------ ------------- --------- ----------- -----  ----------  ----------- ----------
<S>       <C>     <C>          <C>           <C>       <C>         <C>    <C>         <C>         <C>


$110,032  $41,001   $102,314      $31,817     $37,756    $60,917   $ --   $  671,576   $ 227,922  $4,688,461
--------  -------   --------      -------     -------    -------   -----  ----------   ---------  ----------
   5,207    5,285      7,440        3,026       3,321        --      --          --          --      175,148


   4,693    3,946    (31,294)      (4,852)    (11,553)        35    (733)    (11,693)        --       (9,642)

     --       --         --           --          --         --      --          --       47,444      47,444

     --       --         --           --          --         --      --      116,832    (116,832)        --

     --       --         --           --          --         --      --      (12,910)     12,910         --
--------  -------   --------      -------     -------    -------   -----  ----------   ---------  ----------


   9,900    9,231    (23,854)      (1,826)     (8,232)        35    (733)     92,229     (56,478)    212,950

   9,655    9,425     (5,649)       4,538       3,751      4,941     733     547,026     409,620   2,351,321
--------  -------   --------      -------     -------    -------   -----  ----------   ---------  ----------
  19,555   18,656    (29,503)       2,712      (4,481)     4,976     --      639,255     353,142   2,564,271
--------  -------   --------      -------     -------    -------   -----  ----------   ---------  ----------

   9,747    2,379      4,584        1,641       2,544      6,347     --       48,288         --      350,117

     --       --         --           --          --         --      --          --       31,595      31,595
--------  -------   --------      -------     -------    -------   -----  ----------   ---------  ----------


$119,840  $57,278   $ 68,227      $32,888     $30,731    $59,546   $ --   $1,262,543   $ 549,469  $6,871,020
========  =======   ========      =======     =======    =======   =====  ==========   =========  ==========
</TABLE>


ral part of these financial statements.

                                       11
<PAGE>

                                                                BELLSOUTH RETIRE

                                                            STATEMENT OF CHANGES
                                                              FOR BENEFITS, WITH

                                                                  Year Ended Dec
                                                                         (In Tho

<TABLE>
<CAPTION>
                                                          Vanguard
                                                            Index   Fidelity
                          BellSouth    Indexed   Interest   Trust    Growth
                            Stock       Stock     Income   Growth   & Income  Balanced   Bond
                             Fund        Fund      Fund   Portfolio Portfolio   Fund     Fund
                          ----------  ---------- -------- --------- --------- -------- --------
<S>                       <C>         <C>        <C>      <C>       <C>       <C>      <C>
Net Assets Available for
 Benefits,
 December 31, 1996......  $1,052,299  $  761,227 $826,463  $   --   $ 56,617  $ 82,348 $119,638
                          ----------  ---------- --------  -------  --------  -------- --------
Employee contributions..      34,434      55,032   36,179    1,195    14,476     9,858    5,541
Transfer of
 participants'
 balances--net..........    (228,972)     39,775   82,261   44,262    67,796     3,014  (13,621)
Employing company
 contributions..........         --          --       --       --        --        --       --
Supplemental
 contributions..........         --          --       --       --        --        --       --
Allocation of shares to
 participants...........         --          --       --       --        --        --       --
Transfer for loan
 repayment..............         --          --       --       --        --        --       --
                          ----------  ---------- --------  -------  --------  -------- --------
Total Contributions,
 Allocations and
 Transfers..............    (194,538)     94,807  118,440   45,457    82,272    12,872   (8,080)
Share of Trust
 investment activities..     392,729     255,306   54,817    1,570    28,682    18,321    8,987
                          ----------  ---------- --------  -------  --------  -------- --------
Total Additions.........     198,191     350,113  173,257   47,027   110,954    31,193      907
                          ----------  ---------- --------  -------  --------  -------- --------
Less: Distributions to
      participants......      95,005      70,644  103,718      475     6,493     8,228   10,513
  Interest on notes
     payable............         --          --       --       --        --        --       --
                          ----------  ---------- --------  -------  --------  -------- --------
Net Assets Available for
 Benefits,
 December 31, 1997......  $1,155,485  $1,040,696 $896,002  $46,552  $161,078  $105,313 $110,032
                          ==========  ========== ========  =======  ========  ======== ========
</TABLE>


                                             The accompanying notes are an integ

                                       12

<PAGE>

MENT SAVINGS PLAN

IN NET ASSETS AVAILABLE
FUND INFORMATION

ember 31, 1997
usands)

<TABLE>
<CAPTION>

 T. Rowe                    DFA       DFA U.S.              American                              Employee Stock
  Price     DFA U.S.   International  Large Cap          Century/Twentieth                         Ownership Plan
 Mid-Cap   6-10 Value    Value II     Value II  Berger    Century Growth   Participant          ----------------------
  Growth  Portfolio II     Fund         Fund   100 Fund   Investors Fund      Loans     Other   Allocated  Unallocated   Total
--------  ------------ ------------- --------- --------  ----------------- ----------- -------  ---------  ----------- ----------
<S>       <C>          <C>           <C>       <C>       <C>               <C>         <C>      <C>        <C>         <C>


$   --    $ 40,004      $28,022     $19,709   $ 39,805      $ 15,099        $58,275   $   230  $455,081    $ 93,129     $3,647,946
-------   --------      -------     -------   --------      --------        -------   -------  --------    --------     ----------
  1,061      6,088        3,355       2,633      2,725         1,194            --        --        --          --         173,771


 39,161     42,050        2,685      10,590    (46,616)      (19,486)         1,464    (1,106)  (14,367)        --           8,890

    --         --           --          --         --            --             --        --      7,224         --           7,224

    --         --           --          --         --            --             --        --        --       44,536         44,536

    --         --           --          --         --            --             --        --     71,595     (71,595)           --

    --         --           --          --         --            --             --        --    (11,878)     11,878            --
-------   --------      -------     -------   --------      --------        -------   -------  --------    --------     ----------


 40,222     48,138        6,040      13,223    (43,891)      (18,292)         1,464    (1,106)   52,574     (15,181)       234,421

  1,046     17,555         (503)      7,193      6,506         4,809          4,293     1,050   197,965     185,174      1,185,500
-------   --------      -------     -------   --------      --------        -------   -------  --------    --------     ----------
 41,268     65,693        5,537      20,416    (37,385)      (13,483)         5,757       (56)  250,539     169,993      1,419,921
-------   --------      -------     -------   --------      --------        -------   -------  --------    --------     ----------

    267      3,383        1,742       2,369      2,420         1,616          3,115       174    34,044         --         344,206

    --         --           --          --         --            --             --        --        --       35,200         35,200
-------   --------      -------     -------   --------      --------        -------   -------  --------    --------     ----------


$41,001   $102,314      $31,817     $37,756   $    --       $    --         $60,917   $   --   $671,576    $227,922     $4,688,461
=======   ========      =======     =======   ========      ========        =======   =======  ========    ========     ==========
</TABLE>


ral part of these financial statements.

                                       13

<PAGE>

                       BELLSOUTH RETIREMENT SAVINGS PLAN

                         NOTES TO FINANCIAL STATEMENTS

            (Dollars in Thousands, Except Per-Participant Amounts)

1. Plan Description

General

  The following description of the BellSouth Retirement Savings Plan (the
Plan) provides only general information. For additional information,
participants should refer to the Plan Prospectus/Summary Plan Description, as
supplemented (SPD). A copy of the SPD can be obtained by calling the BellSouth
Participant Service Center at 1-800-995-1000. In addition, copies of the Plan,
trust agreement and other related documents which include details of the Plan
can be obtained by writing to: Secretary, BellSouth Savings Plan Committee,
Room 13C09, 1155 Peachtree Street, N.E., Atlanta, Georgia 30309-3610.

  The Plan was established by BellSouth Corporation (BellSouth) to provide a
convenient way for management employees to save for their retirement on a
long-term basis and to acquire an ownership interest in BellSouth. The Plan
consists of two parts: one is a profit sharing plan which includes a qualified
cash or deferred arrangement and which is intended to qualify as such under
Sections 401(a), 401(k) and 401(m) and related sections of the Internal
Revenue Code of 1986, as amended (the Code); the second part is an employee
stock ownership plan (ESOP) which is designed as a stock bonus plan to invest
primarily in shares of BellSouth Common Stock and which is intended to qualify
under Sections 401(a), 401(m) and 4975(e)(7) and related sections of the Code.
All regular full-time and part-time employees of participating BellSouth
companies who are not covered by a collective bargaining agreement, have
attained the age of 18, and have completed at least one month of service are
eligible to participate. The Plan is subject to the Employee Retirement Income
Security Act of 1974, as amended.

Master Trust

  For investment purposes, the assets of the Plan are held in the BellSouth
Master Savings Trust (the Master Savings Trust). The Master Savings Trust also
holds the assets of the BellSouth Savings and Security Plan (SSP).

Investment Options

  At December 31, 1999, the Plan's assets were comprised of the following
investment vehicles: BellSouth Stock Fund, Indexed Stock Fund, Interest Income
Fund, Bond Fund, Balanced Fund, Personal Choice Retirement Account and the
following mutual funds: Fidelity Growth & Income Portfolio, Vanguard Index
Trust Growth Portfolio, DFA U.S. 6-10 Value Portfolio II, T. Rowe Price Mid-
Cap Growth, DFA U.S. Large Cap Value II Fund and DFA International Value II
Fund. All investments are valued on a daily basis.

  The Personal Choice Retirement Account, or PCRA, was added as an investment
option in 1999. Unlike the other funds offered by the Plan, the PCRA is an
individual brokerage account in which participants act as their own investment
advisor and may choose from a broad range of investment options. The
investment options include no-load and load mutual funds, most stocks listed
on many U.S. securities exchanges, bonds and other fixed-income investments.
Participants who open a PCRA are also assessed additional fees and commissions
which are discussed in Note 4. At December 31, 1999 there were 431
participants invested in the PCRA.

  Funds within the PCRA cannot be accessed directly for loans, withdrawals or
distributions. Participants who want a loan, withdrawal or distribution to
include amounts held in the PCRA must first transfer the desired amount from
the PCRA to another fund in the Plan for a minimum of one day.

  During 1997, the T. Rowe Price Mid-Cap Growth and the Vanguard Index Trust
Growth Portfolio replaced the Berger 100 Fund and the American
Century/Twentieth Century Growth Investors Fund as investment options. All
participant balances in, and subsequent contributions to, the replaced funds
were reallocated according to participant direction or into the Interest
Income Fund in the absence of such direction.

                                      14
<PAGE>

                       BELLSOUTH RETIREMENT SAVINGS PLAN

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

            (Dollars in Thousands, Except Per-Participant Amounts)

1. Plan Description--(continued)

Concentrations of Risk

  At December 31, 1999 and 1998, the Plan's assets were significantly
concentrated in shares of BellSouth Common Stock, the value of which is
subject to fluctuations related to corporate, industry and economic factors.

  The Plan's other investment options include a variety of stocks, bonds,
fixed income securities, mutual funds and other investment securities.
Investment securities subject participants to various risks, such as interest
rate, market and credit risks. Due to the level of risk associated with
certain investment securities, it is at least reasonably possible that changes
in the values of investment securities will 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 With
Fund Information.

Vesting

  All participant and employing company contributions vest immediately.

Participant Loans (Whole Dollars)

  Participants may borrow from their fund accounts a minimum of $1,000 up to
the lesser of $50,000 or 50 percent of their before-tax account balances as
defined by the Plan document and any amounts rolled over to the Plan from
other qualified plans. Loan balances are secured by the assets allocated to
the participant's accounts and bear interest at various rates which ranged
from 8.75% to 9.25% at December 31, 1999. Principal and interest are paid
ratably through periodic payroll deductions for active employees and by coupon
for nonactive employees. As discussed earlier, amounts held in a PCRA are not
directly available for loans.

Service Providers

  As of May 1, 1999, State Street Bank & Trust Company serves as the Trustee
for the Master Savings Trust. During 1998, and in 1999 prior to May 1, Bankers
Trust Company served as the Trustee for the Master Savings Trust. Metropolitan
Life Insurance Company serves as the recordkeeper and service center provider
for the Plan. Charles Schwab & Co. Inc. provides brokerage services for the
PCRA.

2. Accounting Policies

  The financial statements of the Plan have been prepared in accordance with
generally accepted accounting principles. Such financial statements include
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities and the amounts
of revenues and expenses. Actual results could differ from those estimates.

  With respect to the Statements of Net Assets Available for Benefits with
Fund Information for the years presented, allocated share of Trust net assets
includes investments at fair value, accrued interest income, accrued
dividends, receivables for investments sold, payables for investments
purchased and accrued administrative expenses of the Master Savings Trust.

  With respect to the Statements of Changes in Net Assets Available for
Benefits with Fund Information for the years presented, allocated share of
Trust investment activities includes the sum of realized gains, net of
realized losses, the net change in unrealized appreciation/(depreciation) on
the fair value of the investments, interest income, dividends, investment
manager fees and other administrative fees paid by the Master Savings Trust.

                                      15
<PAGE>

                       BELLSOUTH RETIREMENT SAVINGS PLAN

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

            (Dollars in Thousands, Except Per-Participant Amounts)

2. Accounting Policies--(continued)

  The values of investments in the Master Savings Trust are determined as
follows:

  .  Shares of BellSouth Common Stock and equity securities underlying the
     Indexed Stock Fund are valued on the basis of the closing price per
     share on December 31, 1999 and 1998 as reported on the New York Stock
     Exchange or, if no sales were made on that date, at the closing price on
     the next preceding day on which sales were made;

  .  The values of mutual funds, all of which are traded on a national
     securities exchange, are based on published daily closing net asset
     values as reported by the respective securities exchanges;

  .  Over-the-counter securities and government obligations are valued based
     on the bid prices on December 31, 1999 and 1998 from published sources
     where available and, if not available, from other sources considered
     reliable; and

  .  Securities in the PCRA are valued by methods which are consistent with
     the methods discussed above.

  .  Annuity contracts with insurance companies and synthetic contracts are
     valued at principal plus reinvested interest.

  Purchases and sales of securities are reflected as of the trade date.

  Realized gains and losses on sales of investments are determined on the
basis of average cost.

  Dividend income is recognized on the date the trust is entitled to the
benefit. Interest earned on investments is recognized on the accrual basis.

3. Contributions

  Employee contributions to the Plan are recorded based on basic contributions
of up to 6% and, for those participants wishing to contribute additional
amounts, supplemental contributions of up to 9%, such that total contributions
may not exceed 15% of compensation. Contributions are designated by the
participants as before-tax or after-tax, subject to certain IRS limitations on
before-tax contributions.

  As discussed in Section 3 of the Plan document, participants may also
rollover amounts into the Plan from other qualified plans.

  The employing company makes matching contributions to the ESOP in respect of
each participant's authorized basic contributions. The rate of the employing
company matching contributions remains in effect for a twelve-month period
from April 1 through March 31. The employing company matches 100% of a
participant's first 2% of basic contributions. Basic contributions in excess
of 2% are matched at a rate that varies from company to company. The ranges of
matching rates for basic contributions in excess of 2% for the three years
ended December 31, 1999 were as follows:

<TABLE>
<CAPTION>
                                                    1999       1998      1997
                                                 ---------- ---------- ---------
<S>                                              <C>        <C>        <C>
January-March................................... 25% - 100% 25% -  85% 25% - 75%
April-December.................................. 25% - 100% 25% - 100% 25% - 85%
</TABLE>

4. Plan Expenses

  Each participant in the Plan is charged a flat annual fee for Plan
administrative expenses, including recordkeeping, trustee and other expenses
considered reasonable by the Plan administrator. The fee is divided on a pro
rata basis among each investment option of the participant. The per-
participant fee was $33.00 for 1999, $33.00 for 1998 and $30.00 for 1997.
Additional fees are charged to individual participants for various services
provided by the Plan's recordkeeper and the BellSouth Participant Service
Center.

                                      16
<PAGE>

                       BELLSOUTH RETIREMENT SAVINGS PLAN

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

            (Dollars in Thousands, Except Per-Participant Amounts)

4. Plan Expenses--(continued)

  Participants who open a PCRA are charged a $50 fee for the initial transfer
into the PCRA and are charged an additional monthly fee of $2.50 for each
month that the participant maintains a PCRA balance.

  Investment manager fees are paid by the Master Savings Trust. Investment
manager fees, included in allocated share of Trust investment activities in
the Statements of Changes in Net Assets Available for Benefits with Fund
Information for the years presented, were as follows:

<TABLE>
<CAPTION>
                                                              For the Year Ended
                                                                 December 31,
                                                              ------------------
                                                               1999  1998  1997
                                                              ------ ---- ------
<S>                                                           <C>    <C>  <C>
BellSouth Stock Fund......................................... $  278 $--  $  --
Indexed Stock Fund...........................................    396  182    190
Interest Income Fund.........................................    417  363    426
Balanced Fund................................................    133  106    114
Bond Fund....................................................    161  331    367
                                                              ------ ---- ------
                                                              $1,385 $982 $1,097
                                                              ====== ==== ======
</TABLE>

  The Master Savings Trust did not pay investment management fees for the
BellSouth Stock Fund during 1998 and 1997.

  For the mutual funds, investment manager fees are not paid directly from the
Master Savings Trust. However, these investments are subject to mutual fund
management fees which reduce the overall return of the respective mutual fund.
These fees, expressed as percentages of fund assets, which were assessed
against the mutual funds by their respective managers, were as follows:

<TABLE>
<CAPTION>
                                                                For the Year
                                                                   Ended
                                                                December 31,
                                                               ----------------
                                                               1999  1998  1997
                                                               ----  ----  ----
<S>                                                            <C>   <C>   <C>
Vanguard Index Trust Growth Portfolio*........................ 0.12% 0.20% 0.20%
Fidelity Growth & Income Portfolio............................ 0.68% 0.71% 0.75%
T. Rowe Price Mid-Cap Growth*................................. 0.91% 0.91% 1.04%
DFA U.S. 6-10 Value Portfolio II.............................. 0.44% 0.45% 0.75%
DFA International Value II Fund............................... 0.50% 0.55% 0.75%
DFA U.S. Large Cap Value II Fund.............................. 0.37% 0.39% 0.75%
Berger 100 Fund*..............................................  --    --   1.41%
American Century/Twentieth Century Growth Investors Fund*.....  --    --   1.00%
</TABLE>
--------
* During 1997, the T. Rowe Price Mid-Cap Growth and the Vanguard Index Trust
 Growth Portfolio replaced the Berger 100 Fund and the American
 Century/Twentieth Century Growth Investors Fund. For additional information,
 see Note 1.

5. Tax Status

  The Internal Revenue Service has determined and informed BellSouth by a
favorable determination letter dated April 14, 1998 that the Plan and related
Trust meet the requirements of Section 401(a) of the Code and are exempt from
federal income taxes under Section 501(a) of the Code.

  The Plan has been amended subsequent to the determination letter referred to
above. BellSouth believes that the Plan, in its current form, will maintain
its tax exempt status. Therefore, no provision for income taxes has been
included in the Plan's financial statements.

  The federal income tax effects on participants with respect to the Plan are
described in the SPD.

                                      17
<PAGE>

                       BELLSOUTH RETIREMENT SAVINGS PLAN

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

            (Dollars in Thousands, Except Per-Participant Amounts)


6. Termination Priorities

  BellSouth intends to continue the Plan indefinitely but reserves the right
to terminate or amend it. In the event the Plan is terminated and if BellSouth
or its subsidiaries sponsor another defined contribution plan, the
participants may elect to have their account balances transferred to the other
plan. If BellSouth or its subsidiaries do not sponsor such a plan, the
participants would receive a lump-sum distribution of their account balances.

7. Interest in BellSouth Master Savings Trust

  The assets of the Plan are held in the Master Savings Trust and are
commingled with the assets of the SSP. The assets of the Master Savings Trust
are allocated to the Plan based upon the total of each individual plan
participant's share of the Master Savings Trust's assets. The Plan's allocated
share of the total net assets of all funds in the Master Savings Trust was
65.57168% at December 31, 1999 and 64.52177% at December 31, 1998. The Plan's
allocated share of the net assets of each fund in the Master Savings Trust at
December 31, 1999 and 1998 were as follows:

<TABLE>
<CAPTION>
                                                               1999      1998
                                                             --------- ---------
   <S>                                                       <C>       <C>
   BellSouth Stock Fund..................................... 53.82512% 52.01435%
   Indexed Stock Fund....................................... 85.80108% 85.68681%
   Interest Income Fund..................................... 72.94221% 73.61537%
   Vanguard Index Trust Growth Portfolio.................... 73.57265% 73.84212%
   Fidelity Growth & Income Portfolio....................... 73.01791% 72.63523%
   Balanced Fund............................................ 81.91873% 82.69798%
   Bond Fund................................................ 92.69418% 93.03495%
   T. Rowe Price Mid-Cap Growth............................. 79.40384% 80.18008%
   DFA U.S. 6-10 Value Portfolio II......................... 84.92757% 83.44243%
   Personal Choice Retirement Account....................... 100.0000%      -- %
   DFA International Value II Fund.......................... 87.58686% 87.97291%
   DFA U.S. Large Cap Value II Fund......................... 75.17285% 74.56399%
   Participant Loans........................................ 63.13932% 66.53608%
   Other.................................................... 49.57092% 69.80486%
</TABLE>

  The financial position of the Master Savings Trust at December 31, 1999 and
1998 was as follows:

<TABLE>
<CAPTION>
                                                             1999       1998
                                                             ----       ----
<S>                                                       <C>        <C>
Assets:
 Investments at value:
  BellSouth Stock Fund:
   Shares of BellSouth Common Stock#..................... $3,775,655 $4,203,286
   Temporary cash investments............................     16,370    129,190
   Distributable shares .................................         63         84
  Indexed Stock Fund:
   Equity Index Fund#....................................  1,456,096  1,287,238
   Temporary cash investments............................        --          28
  Interest Income Fund:
   General account investment contracts..................     93,672    111,043
   Security backed investments...........................  1,096,133  1,086,643
   Temporary cash investments............................     96,209     92,759
  Vanguard Index Trust Growth Portfolio:
   Securities............................................    340,612    174,581
   Temporary cash investments............................        --           4
  Fidelity Growth & Income Portfolio:
   Securities............................................    262,475    247,529
   Temporary cash investments............................        --           6
</TABLE>

                                      18
<PAGE>

                       BELLSOUTH RETIREMENT SAVINGS PLAN

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

             (Dollars in Thousands, Except Per-Participant Amounts)

7. Interest in BellSouth Master Savings Trust--(continued)

<TABLE>
<CAPTION>
                                                           1999        1998
                                                           ----        ----
<S>                                                     <C>         <C>
  Balanced Fund:
   Securities..........................................     126,019     127,085
   Temporary cash investments..........................      12,975      11,050
  Bond Fund:
   Securities..........................................     113,524     144,785
   Temporary cash investments..........................       1,786       2,555
  T. Rowe Price Mid-Cap Growth:
   Securities..........................................      98,869      71,251
   Temporary cash investments..........................         --            1
  DFA U.S. 6-10 Value Portfolio II:
   Securities..........................................      74,162      81,518
  DFA International Value II Fund:
   Securities..........................................      45,283      36,986
   Temporary cash investments..........................         --            3
  Personal Choice Retirement Account:
   Securities..........................................      43,594         --
  DFA U.S. Large Cap Value II Fund:
   Securities..........................................      37,252      40,975
 Participant Loans:
  Loans to participants................................     106,282      89,430
 Contribution Account+:
  Temporary cash investments...........................          42         155
 Distribution Account+:
  Securities...........................................         --        1,075
  Temporary cash investments...........................          47       8,496
 Expense Account+:
  Temporary cash investments...........................       3,290       2,524
 Dividends and interest income receivable..............       7,787       2,206
 Receivable for investments sold.......................      13,074       4,310
 Other receivables.....................................         469       5,934
                                                        ----------- -----------
                                                          7,821,740   7,962,730
Liabilities:
 Payable for investments purchased.....................      23,378     115,408
 Variation margin payable..............................         224         892
 Other payables........................................         --          102
                                                        ----------- -----------
 Trust net assets (excluding ESOP Trusts)..............   7,798,138   7,846,328

Investment in ESOP Trusts:
 Shares of BellSouth Common Stock allocated to partici-
  pants#...............................................   2,350,638   2,333,414
 Distributable shares..................................           1         107
 Shares of BellSouth Common Stock held for future allo-
  cation#..............................................     949,327   1,259,180
 Temporary cash investments............................      25,505      34,783
                                                        ----------- -----------
 Total investments.....................................  11,123,609  11,473,812


Liabilities:
 Notes payable.........................................     391,429     467,018
                                                        ----------- -----------
 Trust net assets...................................... $10,732,180 $11,006,794
                                                        =========== ===========
 Investments at cost................................... $ 7,276,780 $ 6,453,240
                                                        =========== ===========
</TABLE>
--------
# Represents an individual investment which is 5% or more of the Net Assets of
 the Master Savings Trust.
+ These accounts are combined and presented as the as "Other" fund in the
 accompanying financial statements.

  Distributions from the BellSouth Stock Fund and the ESOP Trusts that are
payable in shares of BellSouth Common Stock are separated from the "Shares of
BellSouth Common Stock" and "Shares of BellSouth Common Stock allocated to
participants" lines and reflected as "Distributable Shares" instead.

                                       19
<PAGE>

                       BELLSOUTH RETIREMENT SAVINGS PLAN

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

            (Dollars in Thousands, Except Per-Participant Amounts)
7. Interest in BellSouth Master Savings Trust--(continued)

  Assets in the BellSouth Stock Fund, Bond Fund, Indexed Stock Fund, mutual
funds and some of the assets in the Balanced Fund are invested in securities
which fluctuate in market value, and the values of the units fluctuate daily.

Assets in the Interest Income Fund are invested in the following types of
financial vehicles:

  .  General Account Investment Contracts--These contracts are also referred
     to as traditional investment contracts. An investment contract is termed
     "general account" when the assets committed to the contract are
     commingled with other general assets of the contract issuer. The
     contract issuer promises to return the invested principal plus a stated
     rate of interest upon maturity. The quality of the promise is a function
     of the financial condition of the contract issuer.

  .  Security Backed Investments--These are generic terms which refer to
     investment contracts other than "traditional" general account investment
     contracts as defined above. These investments consist of a combination
     of marketable securities, owned directly by the Plan or as units of a
     separate account or trust owned by the Plan, and an investment contract
     that provides liquidity for eligible employee benefits at book value.
     Market value securities are investments in fixed income securities owned
     by the Plan without a corresponding investment contract. Liquidation of
     these securities to pay eligible benefit events is at market value.

    -  Group Trust Investment Contracts--Group Trust refers to the PRIMCO
       Group Trust for Employees Benefit Plans. The PRIMCO Group Trust
       contains a series of commingled investment funds, available only to
       PRIMCO clients, constructed to provide a stable value portfolio with
       the beneficial elements of various fixed income management
       strategies. PRIMCO, as the investment manager of the Funds within
       the PRIMCO Group Trust, has hired Bankers Trust Company to serve as
       the Trustee. One form of a "synthetic" investment contract as
       described below, the Plan's investment in any one of the various
       PRIMCO Group Trust Funds is unitized and may be "wrapped" by an
       independent financial institution through the issuance of an
       investment contract.

    -  Separate Account Investment Contracts--An investment contract is
       termed "separate account" when the assets committed to the contract
       are segregated from the general assets of the contract issuer
       through the use of a specifically identifiable separate account. The
       separate account may be comprised of investments from one Plan or
       Trust, or comprised of investments from multiple qualified
       retirement Plans and Trusts. Though ownership of the assets held in
       a separate account is retained by the contract issuer, the assets
       are protected from liabilities arising from the contract issuers'
       general operations. The investment performance of a separate account
       investment contract may be a function of the investment performance
       of the investments held in the separate account.

    -  Synthetic Investment Contract--The term "synthetic" investment
       contract is used to describe a variety of investment contracts under
       which a Plan retains ownership of the invested assets, or owns units
       of an account or trust which holds the invested assets. To ensure
       these invested assets may be accounted for at book value, a
       "synthetic" investment contract, also referred to as a "wrap"
       contract, is negotiated with an independent financial institution.
       Under the terms of these investment contracts, the contract issuer
       ensures the Plan's ability to pay eligible employee benefits at book
       value. The investment performance of a synthetic investment contract
       may be a function of the investment performance of the invested
       assets.

                                      20
<PAGE>

                       BELLSOUTH RETIREMENT SAVINGS PLAN

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

            (Dollars in Thousands, Except Per-Participant Amounts)

7. Interest in BellSouth Master Savings Trust--(continued)

  The value of the Interest Income Fund reflected in these financial
statements is based upon the principal invested and the interest credited. The
fair value of the Interest Income Fund, by investment type, at December 31,
1999 and 1998 was as follows:
<TABLE>
<CAPTION>
                                                       December 31, December 31,
                                                           1999         1998
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   General account investment contracts...............  $   93,672   $  111,043
   Security backed investments:
    Underlying assets.................................   1,093,149    1,084,936
    Wrapper contracts.................................       2,984        1,707
                                                        ----------   ----------
     Total contracts..................................  $1,189,805   $1,197,686
                                                        ==========   ==========
</TABLE>

  The contracts held by the Master Savings Trust in the Interest Income Fund
are considered fully benefit-responsive in accordance with AICPA Statement of
Position 94-4. The crediting interest rate was 6.12% at December 31, 1999 and
6.49% at December 31, 1998. The average yield was 6.23% in 1999 and 6.13% in
1998. Interest rates are reset on a semi-annual, quarterly or monthly basis to
move the current book value of these investments toward the projected future
market value over the life of the contract.

  During 1990, the BellSouth Management Savings and Employee Stock Ownership
Plan Trust and the BellSouth Savings and Security ESOP Trust (the ESOP Trusts)
issued medium-term notes in the aggregate amount of $850 million to fund the
purchase of BellSouth Common Stock to be utilized at later dates to fulfill
match obligations. Shares purchased with such funds are released for
allocation to participant accounts based on a prescribed schedule coinciding
with payments on the ESOP notes.

  Assets held in the Master Savings Trust are generally unavailable to service
the ESOP debt; however, the notes are guaranteed by and are subject to direct
recourse against BellSouth. BellSouth contributes to the ESOP Trusts an amount
necessary, net of ESOP dividends and interest, to service the ESOP notes. Such
contributions are classified as Supplemental Contributions in the accompanying
Statements of Changes in Net Assets Available for Benefits With Fund
Information. These contributions are subject to the claims of holders of debt
securities issued by the ESOP Trusts but are held at BellSouth and paid to the
ESOP Trusts twice yearly to fund, on a same day basis, required payments by
the ESOP Trusts on the notes. Such contributions would not remain in the ESOP
Trusts unless there was a default on the debt securities by the ESOP Trustee
after having received the required contributions from BellSouth. Therefore,
holders of the debt securities should not rely on the assets of the ESOP
Trusts in arriving at an investment decision with respect to the debt
securities.

  In addition to Supplemental Contributions, BellSouth contributes amounts
necessary to purchase any additional shares required to meet the match
obligations after shares released by the ESOP Trusts have been used. Such
contributions are classified as Employing Company Contributions in the
accompanying Statements of Changes in Net Assets Available for Benefits With
Fund Information.

  In lieu of receiving cash dividends earned on shares of BellSouth Common
Stock which have been allocated to participants from the ESOP Trusts,
participant accounts are credited with equivalent shares of BellSouth Common
Stock. Dividends on the related ESOP shares are transferred to the Unallocated
ESOP Fund and are applied towards the service of the ESOP notes. The transfer
of these earnings is classified as Transfer for Loan Repayment in the
accompanying Statements of Changes in Net Assets Available for Benefits With
Fund Information.

                                      21
<PAGE>

                       BELLSOUTH RETIREMENT SAVINGS PLAN

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

            (Dollars in Thousands, Except Per-Participant Amounts)
7. Interest in BellSouth Master Savings Trust--(continued)

  BellSouth made cash contributions to the ESOP Trusts in the amount of
$73,389 in 1999, $71,857 in 1998 and $68,393 in 1997 for the purpose of
servicing the guaranteed debt. BellSouth also made cash contributions in the
amount of $8,322 in 1998 and $21,675 in 1997 to purchase additional shares to
meet the match obligations.

  A description of each debt issue is as follows:

  BellSouth Management Savings and Employee Stock Ownership Plan Trust:

<TABLE>
<CAPTION>
                   Title                      Amount  Interest Rate   Due Date
                   -----                     -------- ------------- ------------
<S>                                          <C>      <C>           <C>
Amortizing Medium-Term Notes, Series A...... $275,000    9.125%     July 1, 2003
Amortizing Medium-Term Notes, Series A...... $275,000    9.19%      July 1, 2003
                                             --------
  Total..................................... $550,000
                                             ========
</TABLE>

  BellSouth Savings and Security ESOP Trust:

<TABLE>
<CAPTION>
                   Title                      Amount  Interest Rate   Due Date
                   -----                     -------- ------------- ------------
<S>                                          <C>      <C>           <C>
Amortizing Medium-Term Notes, Series A...... $300,000    9.125%     July 1, 2003
</TABLE>

  Maturities of the ESOP Trusts' long-term debt outstanding at December 31,
1999 were as follows:

<TABLE>
<CAPTION>
                                       2000    2001     2002     2003    Total
                                      ------- ------- -------- -------- --------
<S>                                   <C>     <C>     <C>      <C>      <C>
Maturities........................... $84,470 $94,128 $104,648 $108,183 $391,429
                                      ======= ======= ======== ======== ========
</TABLE>

  Investment activities of the Master Savings Trust are allocated to the Plan
based upon the total of each individual Plan participant's share of the Master
Savings Trust investment activities during the period ended December 31, 1999.

  The Master Savings Trust investment activities for the years ended December
31, 1999, 1998 and 1997 were as follows:

<TABLE>
<CAPTION>
                                                   For the Year Ended
                                                      December 31,
                                            ----------------------------------
                                               1999        1998        1997
                                            ----------  ----------  ----------
<S>                                         <C>         <C>         <C>
Investment Activities:
 Dividends on shares of BellSouth Common
  Stock.................................... $  119,742  $  110,822  $  117,861
 Interest Income Fund income...............     71,112      78,395      77,381
 Other interest............................     66,375      46,717      38,778
 Net change in unrealized
  appreciation/(depreciation) on
  investments.............................. (1,264,789)  2,617,133     689,077
 Net realized gain on investments..........  1,084,574   1,161,504     991,088
 Investment manager fees...................     (1,880)     (1,198)     (1,308)
 Other fees................................     (2,999)     (3,262)     (2,960)
                                            ----------  ----------  ----------
Net investment activities.................. $   72,135  $4,010,111  $1,909,917
                                            ==========  ==========  ==========
</TABLE>

                                      22
<PAGE>

                         BELLSOUTH MASTER SAVINGS TRUST

                   EMPLOYER IDENTIFICATION NUMBER: 58-1533433

             H4(i)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES

                                 (In Thousands)

<TABLE>
<CAPTION>
                                                           December 31, 1999
                                                    -------------------------------
                                                    Number of
                                                    Shares or
                                                    Principal             Carrying
         Name of Issuer and Title of Issue           Amount      Cost      Value
         ---------------------------------          --------- ---------- ----------
                              BELLSOUTH STOCK FUND
<S>                                                 <C>       <C>        <C>
Shares of BellSouth Common Stock*#--99.6%..........   80,656  $2,948,395 $3,775,718
                                                              ---------- ----------
Temporary Cash Investments--0.4%...................   16,370  $   16,370 $   16,370
                                                              ---------- ----------
  Total BellSouth Stock Fund--100.0%...............           $2,964,765 $3,792,088
                                                              ---------- ----------
                               INDEXED STOCK FUND

Bankers Trust Pyramid Equity Index Fund#--100.0%...      412  $  906,100 $1,456,096
                                                              ---------- ----------
    Total Indexed Stock Fund--100.0%...............           $  906,100 $1,456,096
                                                              ---------- ----------
                             INTEREST INCOME FUND+

General Account Investment Contracts--7.3%
 Metropolitan Life Insurance Co., 6.58%, 08/06/01.. $ 15,385  $   15,385 $   15,302
 New York Life Insurance Co., (5.62%-6.80%),
  (07/22/00-12/17/01).............................. $ 25,450  $   25,450 $   25,314
 SunAmerica Life Insurance Co., 9.32%-01/02/04..... $  1,461  $    1,461 $    1,450
 John Hancock Life Insurance (5.74%-6.35%),
  (01/03/00-12/02/02).............................. $ 50,421  $   50,421 $   50,175
 Monumental Life Insurance Co., 5.97%, 03/30/00.... $  1,437  $    1,437 $    1,431
                                                              ---------- ----------
                                                              $   94,154 $   93,672
                                                              ---------- ----------
Group Trust Investment Contracts--29.0%
 Continental Assurance Co., 5.44%, 02/01/06........ $ 42,788  $   42,788 $   42,596
 Chase Manhattan Bank, 6.67%, 12/30/03............. $ 25,920  $   25,920 $   25,182
 Bank of America NT & SA, 8.9%, 12/30/02........... $ 12,086  $   12,086 $   11,999
 Bankers Trust, 6.1%, 12/30/02..................... $127,115  $  127,115 $  126,477
 Continental Assurance, 5.78%, 06/30/04............ $ 56,581  $   56,581 $   56,312
 Transamerica Life & Annuity, 6.31%, 06/30/04...... $ 27,232  $   27,232 $   27,091
 CDC, 6.22%, 03/30/00.............................. $ 58,348  $   58,348 $   58,044
 Chase Manhattan Bank, 6.52%, 12/01/09............. $ 25,317  $   25,317 $   25,778
                                                              ---------- ----------
                                                              $  375,387 $  373,479
                                                              ---------- ----------
Separate Account Investment Contracts--22.5%
 Aetna Life Insurance Company, 6.51%, 12/30/02..... $ 53,916  $   53,916 $   53,628
 Allstate Life Insurance Company, 5.48%, 07/01/02.. $ 75,389  $   75,389 $   75,049
 John Hancock Life Insurance Company, 7.72%,
  05/01/07......................................... $ 94,279  $   94,279 $   93,719
 Massachusetts Mutual, 6.50%, 07/05/02............. $  7,138  $    7,138 $    7,100
 Massachusetts Mutual, 5.98%, 11/30/03............. $ 12,402  $   12,402 $   12,340
 Metropolitan Life Insurance Co., 5.75%, 12/30/02.. $ 40,593  $   40,593 $   40,401
 Prudential Insurance Company of America, 15.18%,
  07/14/01......................................... $     75  $       75 $       74
 Prudential Insurance Company of America, 10.7%,
  09/15/01......................................... $  6,415  $    6,415 $    6,360
 Prudential Insurance Company of America, 7.91%,
  11/20/00......................................... $    684  $      684 $      680
                                                              ---------- ----------
                                                              $  290,891 $  289,351
                                                              ---------- ----------
</TABLE>

                                      S-1
<PAGE>

                         BELLSOUTH MASTER SAVINGS TRUST

                   EMPLOYER IDENTIFICATION NUMBER: 58-1533433

      H4(i)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES--(Continued)

                                 (In Thousands)
<TABLE>
<CAPTION>
                                                          December 31, 1999
                                                      --------------------------
                                                      Number of
                                                      Shares or
                                                      Principal         Carrying
   Name of Issuer and Title of Issue                   Amount    Cost    Value
   ---------------------------------                  --------- ------- --------
<S>                                      <C>          <C>       <C>     <C>
Synthetic Investment Contracts--33.7%
Bank of America Natl. Trust & Savings,
 5.67%, 11/27/06
<CAPTION>
           Underlying Assets             Market Value
           -----------------             ------------
<S>                                      <C>          <C>       <C>     <C>
 Newcourt Equipment Trust...............   $17,375
 United States Treasury.................   $14,843
 United States Treasury.................   $10,467
 United States Treasury.................   $10,260
 United States Treasury.................   $ 9,938
 United States Treasury.................   $ 8,980
 United States Treasury.................   $ 4,847
 United States Treasury.................   $ 4,076
 MBNA Master Trust......................   $ 9,924
 Residential Funding II.................   $ 6,105
                                           -------
                                           $96,815     $97,739  $97,739 $97,468
                                           -------
Monumental Life Insurance Co., 6.03%, 12/08/09
<CAPTION>
           Underlying Assets             Market Value
           -----------------             ------------
<S>                                      <C>          <C>       <C>     <C>
 Household Affinity CC MT...............   $16,030
 Pinnacle CBO FSA.......................   $13,585
 Carondelel Health - MBIA...............   $10,217
 Premier Auto Master Trust..............   $ 9,851
 Pacific Life CBO 98-1..................   $ 9,430
 Province of Quebec.....................   $ 8,427
 Home Ownership Fund Corp 1.............   $ 7,150
 Home Ownership Fund Corp 2.............   $ 4,781
 Merill Lynch Huntoon Pg................   $ 3,734
 GMAC Comm. Mort. Securities............   $ 2,585
 ATT Capital Eq. Trust..................   $ 2,573
 World Omni Auto Lease..................   $ 2,160
 Ameresco...............................   $ 1,471
                                           -------
                                           $91,994     $94,859  $94,859 $94,373
                                           -------
Rabobank Nederland, (6.05%-7.72%),
 (04/25/00-12/08/09)
<CAPTION>
           Underlying Assets             Market Value
           -----------------             ------------
<S>                                      <C>          <C>       <C>     <C>
 Sears Credit Account MT................   $ 5,485
 Neiman Marcus CC MT....................   $18,123
 Fleetwood Financial....................   $ 2,566
 Fannie Mae.............................   $ 5,617
 World Omni Auto Lease Trs..............   $ 3,875
 GMAC - MBIA Wrapped....................   $ 7,542
 First Union/LEH Broths.................   $ 3,239
 Chemical Bank Master Trust.............   $ 5,000
 World Omni Auto Lease Trs..............   $ 4,320
 Fannie Mae.............................   $ 6,725
 Federal Home Loan Mortgage Co..........   $ 2,947
 GOSA Mortgage Security Corp II.........   $ 4,580
                                           -------
                                           $70,019     $70,197  $70,197 $69,793
                                           -------
</TABLE>

                                      S-2
<PAGE>

                         BELLSOUTH MASTER SAVINGS TRUST

                   EMPLOYER IDENTIFICATION NUMBER: 58-1533433

      H4(i)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES--(Continued)

                                 (In Thousands)
<TABLE>
<CAPTION>
                                                        December 31, 1999
                                                 -------------------------------
                                                 Number of
                                                 Shares or
                                                 Principal             Carrying
 Name of Issuer and Title of Issue                Amount      Cost      Value
 ---------------------------------               --------- ---------- ----------
<S>                                 <C>          <C>       <C>        <C>
State Street Bank & Trust,
 6.21%, 11/17/03

<CAPTION>
         Underlying Assets          Market Value
         -----------------          ------------
<S>                                 <C>          <C>       <C>        <C>
 Nissan Auto Receivables...........   $ 11,937
 Honda Auto Lease Trust............   $  9,990
 Green Tree Financial..............   $  9,963
 EqiCredit HEQ Loan................   $  9,928
 Federal Home Loan Mortgage Co. ...   $  9,925
 Union Acceptance Corp. ...........   $  9,908
 Caterpillar Fin. Asset Trust......   $  9,888
 Green Tree Home Improv. Ln........   $  7,325
 Advanta Mortgage Loan.............   $  6,889
 Green Tree Financial..............   $  5,005
 CIT RV Trust......................   $  4,910
 Green Tree Financial..............   $  3,997
 United States Treasury............   $  1,020
                                      --------
                                      $100,685   $101,942  $  101,942 $  101,313
                                      --------
Union Bank of Switzerland (7.64%-
 8.3%), (06/15/00)

<CAPTION>
         Underlying Assets          Market Value
         -----------------          ------------
<S>                                 <C>          <C>       <C>        <C>
 Advanta Credit Card Master Trust..   $ 20,076   $ 20,067  $   20,067 $   19,937

<CAPTION>
                                    Market Value
                                    ------------
<S>                                 <C>          <C>       <C>        <C>
CDC Investment (6.20%-7.25%),
 (05/31/00-12/12/02)                  $ 50,730   $ 50,730  $   50,730 $   50,419
                                                           ---------- ----------
                                                           $  435,534 $  433,303
                                                           ---------- ----------
Temporary Cash Investments--7.5%                 $ 96,209  $   96,209 $   96,209
                                                           ---------- ----------
  Total Interest Income Fund--100%                         $1,292,175 $1,286,014
                                                           ---------- ----------
</TABLE>

                                      S-3
<PAGE>

                         BELLSOUTH MASTER SAVINGS TRUST

                   EMPLOYER IDENTIFICATION NUMBER: 58-1533433

      H4(i)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES--(Continued)

                                 (In Thousands)
<TABLE>
<CAPTION>
                                                           December 31, 1999
                                                      ---------------------------
                                                      Number of
                                                      Shares or
                                                      Principal          Carrying
          Name of Issuer and Title of Issue            Amount     Cost    Value
          ---------------------------------           --------- -------- --------
                                   BOND FUND
<S>                                                   <C>       <C>      <C>
U.S. Government Securities--13.3%
 Federal Natl. Mtg. Assn., 5.125%, 02/13/04..........  $   800  $    756 $    753
 GNMA Pool, 6.375%, 05/20/22.........................  $ 4,055  $  4,151 $  4,109
 U.S. Treasury Notes, 3.625%, 07/15/02...............  $ 3,145  $  2,610 $  3,113
 U.S. Treasury Notes, 3.375%, 01/15/07...............  $ 2,755  $  2,158 $  2,596
 U.S. Treasury Notes, 3.625%, 01/15/08...............  $ 1,974  $  1,892 $  1,880
 U.S. Treasury Notes, 3.875%, 01/15/09...............  $   819  $    798 $    791
 U.S. Treasury Bonds, 12.000%, 08/15/13..............  $ 1,600  $  3,092 $  2,136
                                                                -------- --------
                                                                $ 15,457 $ 15,378
                                                                -------- --------
Loans Secured By Mortgages--50.5%
 Advanta Mtg. Ln. Tr., 6.810%, 05/25/14..............  $ 2,745  $  2,745 $  2,733
 Citicorp Mtg. Secs. Inc., 6.500%, 11/25/27..........  $ 9,959  $ 10,009 $  9,766
 Green Tree Finl. Corp., 6.970%, 04/01/31............  $ 3,000  $  3,000 $  2,983
 Federal Home Ln. Mtg., PC GTI, 7.000%, 02/15/27.....  $12,187  $ 12,260 $ 10,854
 Government Natl. Mtg. Assn., 6.000%, 09/20/28.......  $ 5,393  $  5,194 $  4,358
 Norwest Asset Secs. Corp., 6.750%, 05/25/28.........  $ 8,000  $  7,813 $  7,022
 Residential Fdg. Mtg. Secs., I, 7.000%, 04/25/27....  $ 6,285  $  6,399 $  6,197
 Residential Fdg. Secs. I Inc., 7.000%, 11/25/27.....  $ 5,000  $  5,052 $  4,664
 Small Business Admin. Part., 7.540%, 08/10/09.......  $ 5,000  $  5,000 $  5,000
 U.S. Dept. Veteran Affairs, 6.000%, 05/15/25........  $ 5,000  $  5,037 $  4,620
                                                                -------- --------
                                                                $ 62,509 $ 58,197
                                                                -------- --------
Corporate Obligations--10.4%
 Case Cr. Corp. 5.850%, 02/20/01.....................  $ 2,100  $  2,070 $  2,063
 Sanwa Finl. Aruba AEC 8.350%, 07/15/09..............  $ 2,000  $  2,005 $  2,007
 Sumitome Bk. Intl. NV 8.500%, 06/15/09..............  $ 5,000  $  5,096 $  5,068
 USA Waste Svcs. Inc. 6.125%, 07/15/01...............  $ 3,000  $  2,994 $  2,855
                                                                -------- --------
                                                                $ 12,165 $ 11,993
                                                                -------- --------
Corporate Debt Preferred--24.2%
 Associates Corp. North Amer. 5.750%, 11/01/03.......  $ 5,000  $  4,998 $  4,769
 Ford Motor Credit Company 7.750%, 11/15/02..........  $ 5,000  $  5,317 $  5,083
 General Mtrs. Accept. Corp. 5.750%, 11/10/03........  $ 5,000  $  4,981 $  4,761
 General Mtrs. Accept. Corp. 6.750%, 02/07/02........  $ 6,000  $  6,134 $  5,968
 Philadelphia Elec. Co. 5.625%, 11/01/01.............  $ 5,000  $  4,938 $  4,881
 Philip Morris 7.250%, 01/15/03......................  $   300  $    311 $    295
 Transamerica Finl. Corp. Mtn. 6.000%, 12/14/01......  $ 2,200  $  2,200 $  2,199
                                                                -------- --------
                                                                $ 28,879 $ 27,956
                                                                -------- --------
 Temporary Cash Investments--1.5%....................    1,786  $  1,786 $  1,786
                                                                -------- --------
                                                                $  1,786 $  1,786
                                                                -------- --------
  Total Bond Fund--100.0%............................           $120,796 $115,310
                                                                -------- --------
</TABLE>


                                      S-4
<PAGE>

                         BELLSOUTH MASTER SAVINGS TRUST

                   EMPLOYER IDENTIFICATION NUMBER: 58-1533433

      H4(i)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES--(Continued)

                                 (In Thousands)
<TABLE>
<CAPTION>
                                                                     December 31, 1999
                                                              -------------------------------
                                                              Number of
                                                              Shares or
                                                              Principal             Carrying
             Name of Issuer and Title of Issue                 Amount      Cost      Value
             ---------------------------------                --------- ---------- ----------

                                 BALANCED FUND
<S>                                                           <C>       <C>        <C>
BT Equity Index Fund--54.3%.................................       21   $   42,279 $   75,464
                                                                        ---------- ----------
BT Pyramid Large Capitalization--34.9%......................   22,325   $   39,065 $   48,530
                                                                        ---------- ----------
U.S. Treasury Bill, Exp. 03/16/00--0.8%.....................   $1,060   $    1,040 $    1,040
                                                                        ---------- ----------
U.S. Treasury Bill, Exp. 05/11/00--0.7%.....................   $1,010   $      985 $      985
                                                                        ---------- ----------
Temporary Cash Investments--9.3%............................   12,975   $   12,975 $   12,975
                                                                        ---------- ----------
  Total Balanced Fund--100.0%...............................            $   96,344 $  138,994
                                                                        ---------- ----------

                       FIDELITY GROWTH & INCOME PORTFOLIO

Shares of Fidelity Secs. Growth & Income Com. Stk.--100.0%..    5,566   $  201,810 $  262,475
                                                                        ---------- ----------
  Total Fidelity Growth & Income Portfolio--100.0%..........            $  201,810 $  262,475
                                                                        ---------- ----------

                     VANGUARD INDEX TRUST GROWTH PORTFOLIO

Shares of Vanguard Index--100.0%............................    8,636   $  266,158 $  340,612
                                                                        ---------- ----------
  Total Vanguard Index Trust Growth Portfolio--100.0%.......            $  266,158 $  340,612
                                                                        ---------- ----------

                        DFA U.S. 6-10 VALUE PORTFOLIO II

Shares of Dimensional Invt Grp Small Cap Val. Com. Stk.--
 100.0%.....................................................    4,800   $   76,050 $   74,162
                                                                        ---------- ----------
  Total DFA U.S. 6-10 Value Portfolio II--100.0%............            $   76,050 $   74,162
                                                                        ---------- ----------

                          T. ROWE PRICE MID-CAP GROWTH

Shares of T. Rowe Price Mid-Cap Growth--100.0%..............    2,464   $   78,206 $   98,869
                                                                        ---------- ----------
  Total T. Rowe Price Mid-Cap Growth--100.0%................            $   78,206 $   98,869
                                                                        ---------- ----------

                        DFA U.S. LARGE CAP VALUE II FUND

Shares of Dimensional Invt Grp Inc Lrge Cap Val. Com. Stk.--
 100.0%.....................................................    2,255   $   38,906 $   37,252
                                                                        ---------- ----------
  Total DFA U.S. Large Cap Value II Fund--100.0%............            $   38,906 $   37,252
                                                                        ---------- ----------
</TABLE>

                                      S-5
<PAGE>

                        BELLSOUTH MASTER SAVINGS TRUST

                  EMPLOYER IDENTIFICATION NUMBER: 58-1533433

      H4(i)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES--(Continued)

                                (In Thousands)

<TABLE>
<CAPTION>
                                                        December 31, 1999
                                                 --------------------------------
                                                 Number of
                                                 Shares or
                                                 Principal             Carrying
       Name of Issuer and Title of Issue          Amount      Cost       Value
       ---------------------------------         --------- ---------- -----------

                        DFA INTERNATIONAL VALUE II FUND

<S>                                              <C>       <C>        <C>
Shares of Dimensional Invt Grp Intl Com. Stk.--
 100.0%.........................................    3,538  $   42,306 $    45,283
                                                           ---------- -----------
  Total DFA International Value II Fund--100.0%.           $   42,306 $    45,283
                                                           ---------- -----------

                      PERSONAL CHOICE RETIREMENT ACCOUNT

Charles Schwab Self Managed Fund--100.0%........   43,594  $   43,594 $    43,594
                                                           ---------- -----------
  Total Personal Choice Retirement Account......           $   43,594 $    43,594
                                                           ---------- -----------

                               PARTICIPANT LOANS

Loans to Participants (8.75%--.25%)--100.0%..... $106,282  $  106,282 $   106,282
                                                           ---------- -----------
  Total Loan Fund--100.0%.......................           $  106,282 $   106,282
                                                           ---------- -----------

                            CONTRIBUTION ACCOUNT++

Temporary Cash Investments--100.0%..............       42  $       42 $        42
                                                           ---------- -----------
  Total Contribution Acct.--100.0%..............           $       42 $        42
                                                           ---------- -----------

                            DISTRIBUTION ACCOUNT++

Temporary Cash Investments--100.0%..............       47  $       47 $        47
                                                           ---------- -----------
  Total Distribution Acct.--100.0%..............           $       47 $        47
                                                           ---------- -----------

                               EXPENSE ACCOUNT++

Temporary Cash Investments--100.0%..............    3,290  $    3,290 $     3,290
                                                           ---------- -----------
  Total Expense Acct.--100.0%...................           $    3,290 $     3,290
                                                           ---------- -----------

                         EMPLOYEE STOCK OWNERSHIP PLAN

Shares of BellSouth Common Stock*#--99.2%.......   70,493  $1,014,404 $ 3,299,966
                                                           ---------- -----------
Temporary Cash Investments--0.8%................   25,505  $   25,505 $    25,505
                                                           ---------- -----------
  Total Employee Stock Ownership Fund--100.0%...           $1,039,909 $ 3,325,471
                                                           ---------- -----------
  TOTAL INVESTMENTS.............................           $7,276,780 $11,125,881
                                                           ========== ===========
</TABLE>
--------
NOTES
Percentages represent the percentage of the investments of each fund of the
Master Savings Trust.

 * This investment is a security issued by a party-in-interest to the Plan.
 # Represents an individual investment which is 5% or more of the Net Assets
   of the Master Savings Trust.
 + The contracts with these insurance companies (interest rates indicated in
   parentheses) guarantee the repayment of principal and the crediting of
   interest resulting in a composite effective annual interest rate of 6.23%
   for the year 1999. The timing of the remittance of participating employee
   contributions and other participating employee-directed transactions may
   cause the actual yield to vary from this rate. The composite interest rate
   is subject to annual adjustment.
++ These accounts are combined and presented as the "Other" fund in the Plan's
   Financial Statements.

                                      S-6