Solid Cash Flows: Fed Tightening

Key Takeaways Long-term factors that continue to support our business model: • Demographics support a growing demand for cash yield as the world's population ages. This global demand for yield supports the long-term valuations of mortgage REITS. • There is a need for private capital in the US housing finance system as the Federal Reserve attempts to reduce its investment in Agency RMBS and GSE reform may create new investment opportunities. Furthermore, demographics also support the need for more housing in the United States. • Given our view of the environment, we believe long term investors should seek and favor experienced management teams. Dynex brings significant experience and expertise in managing securitized real estate assets through multiple economic cycles. • In our opinion, the optimal portfolio for the environment is a diversified pool of highly liquid mortgage investments with minimal credit risk. • At Dynex we believe dividends are, and will continue to be a key driver of long term total returns for equity holders. DYNEX CAPITAL INC. 7

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