SHAREHOLDER LETTER
Published on September 17, 1997
Exhibit 99.1
September 16, 1997
Dear Shareholder:
We appreciate your choice of Dynex Capital, Inc. to help meet your financial
goals and we are proud of the confidence you have placed in us. In the enclosed
Prospectus you will find detailed information about the Company's new Dividend
Reinvestment and Stock Purchase Plan to become effective September ____, 1997
(the "Plan"). Upon such effective date the Plan will supersede and replace the
existing Dividend Reinvestment and Stock Purchase Plan.
The Plan provides you with a convenient and economical way to reinvest cash
dividends and Optional Cash Deposits (as defined in the Prospectus) in shares of
the Company's common stock purchased automatically through the Plan
Administrator at a discount, in most cases, to the market price. See the section
entitled "The Plan" within the Prospectus. First Union National Bank ("First
Union"), the transfer agent, acts as the Plan Administrator for participating
shareholders.
Here are answers to a few commonly-asked questions about the Company's Plan.
Please read the enclosed Prospectus carefully before deciding whether to
participate. Each shareholder currently participating in the existing Plan will
continue to participate in the new Plan without any further action required on
his or her part.
What is the Dividend Reinvestment and Stock Purchase Plan?
As a shareholder in the Company, you have the opportunity to re-invest your
cash dividends declared and paid on your shares of Common or Preferred Stock (as
defined in the Prospectus) in shares of the Company's Common Stock at a
discount, in most cases, from the market price. This service is offered by the
Company for your benefit through First Union, the dividend disbursing agent for
the Company. Shareholders may also choose to make Optional Cash Deposits to be
invested each month on the Investment Date (as defined in the Prospectus) in the
Company's Common Stock.
What options are available?
The Authorization Card provides for the purchase of shares of the Company's
Common Stock through the following investment options:
(1) Full Dividend Reinvestment - the Plan Administrator will apply any cash
dividends on all shares of the Common and Preferred Stock registered in your
name, together with any Optional Cash Deposits, toward the purchase of shares of
the Common Stock.
(2) Partial Dividend Reinvestment - the Plan Administrator will apply any
cash dividends on only the number of participating shares of the Common and
Preferred Stock you specify on the Authorization Card, together with any shares
acquired through the Plan, toward the purchase of shares of Common Stock.
(3) Optional Cash Deposits Only - you will continue to receive any cash
dividends on shares of the Common and Preferred Stock currently registered in
your name, and the Plan Administrator will apply only Optional Cash Deposits
received from you toward the purchase of shares of the Common Stock. Dividends
on Plan Shares acquired with the Optional Cash Deposits and credited to your
account will be automatically reinvested.
The Company retains the right to limit the amount of Optional Cash Deposits
it accepts for investment during any month based upon general business and
market considerations In such case, each Optional Cash Deposit of each
Participant would be reduced by the same percentage and the amount not accepted
would be promptly returned without interest.
Can I change my options?
Yes. Participants may change their investment options at any time by
requesting a new Authorization Card and returning it to First Union at the
address listed on the back of the card.
How does the plan work?
With respect to reinvested dividends, all you have to do is enroll. Once you
have enrolled, First Union will automatically reinvest your dividends after each
dividend payment date, First Union will purchase shares of Dynex Capital Common
Stock with your dividends. Shares purchased for you, through the Plan, including
fractional shares, will be credited to your Plan account.
With respect to the Optional Cash Deposit aspect of the Plan, you must
submit an Authorization Card and make a cash deposit in the amount you wish to
have invested at least one business day immediately preceding the first business
day of the ensuing Pricing Period (as defined in the Prospectus) which is
equivalent to 13 days prior to the Investment Date. In most cases, Optional Cash
Deposits are subject to a $50 minimum investment per month and a $20,000 per
month maximum investment. However, Participants may seek a waiver of the maximum
limitation by submitting a Request for Waiver Form to the Company and receiving
a confirmation of acceptance of the Request for Waiver from the Company. See the
Section entitled "Share Price and Discounts" for a discussion on how the prices
of shares acquired under the Plan will be determined.
No certificates will be issued for shares purchased under the Plan and
credited to your Plan account. Upon receipt of a written request for withdrawal,
First Union will issue and deliver to you a certificate for whole number of
shares for which withdrawal has been requested. Certificates for shares
purchased under the Plan will be held by First Union, at no cost to you, until
you request delivery of the certificates to you.
How do I enroll?
All shareholders of the Company's Common and Preferred Stock are eligible.
If you hold shares of Dynex Capital in your own name, complete the Authorization
Card in the back of the enclosed prospectus and mail it to First Union at the
address provided on the card. Stockholders previously enrolled in the existing
Dividend Reinvestment and Stock Purchase Plan will continue to participate in
the new Plan without any further action required on their part.
If your stock is registered in a name other than your own (e.g., in the name
of a broker or bank nominee) and you want to participate in the Plan, you may
request that your broker or nominee enroll on your behalf. Participants whose
shares are registered in the name of their broker or nominee must verify for
themselves the extent to which the broker or nominee will provide all of the
services and features of the Plan directly to the Participant. All
communications regarding the Plan by these shareholders must be made directly to
the broker or nominee. See the section entitled "Enrollment" within the
prospectus for further details.
Is there a cost to participate?
Dynex Capital will pay all costs relating to the administration and
maintenance of the Dividend Reinvestment and Stock Purchase Plan. Participants
will not pay brokerage commissions or fees on shares issued by and purchased
from the Company or on shares purchased in the open market. Participants will,
however, be charged for any brokerage fees incurred in connection with any sales
of Plan Shares sold by the Company upon request of the Participant.
Whom should I contact for additional information?
If you hold shares in your own name, questions pertaining to the Dividend
Reinvestment and Stock Purchase Plan should be directed to:
First Union National Bank
Shareholder Services Group
1525 West W.T. Harris Blvd. 3C3, NC1153
Charlotte, North Carolina 28288-1153
(800) 829-8432
If your shares are not held in your name, contact your brokerage firm, bank
or other nominee for more information.
Questions pertaining to Dynex Capital, Inc. should be directed to the
Office of Investor Relations at the address listed in the prospectus or call
(804) 217-5800.
Please take a few moments to consider carefully the advantages of enrolling
in this program.
Sincerely,
Thomas H. Potts
President