SC 13D: Schedule filed to report acquisition of beneficial ownership of 5% or more of a class of equity securities

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934

(AMENDMENT NO. ___)*

DYNEX CAPITAL, INC.
(NAME OF ISSUER)

COMMON STOCK, $0.01 PAR VALUE PER SHARE
(TITLE OF CLASS SECURITIES)

26817Q506
(CUSIP NUMBER)

MICHAEL R. KELLY
550 WEST C STREET
SAN DIEGO, CA 92101
(619) 687-5000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)

MARCH 29, 2000
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)

IF THE FILING PERSON HAS PREVIOUSLY FILED A STATEMENT ON
SCHEDULE 13G TO REPORT THE ACQUISITION THAT IS THE SUBJECT OF
THIS SCHEDULE 13D, AND IS FILING THIS SCHEDULE BECAUSE OF
RULE 13D-1(e), 13D-1(f) OR 13D-1(g), CHECK THE FOLLOWING BOX. / /

Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).


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COVER PAGES
- ----------------------------- ------------------------------
CUSIP NO. 26817Q506 13D PAGE 2 OF 4 PAGES
- ----------------------------- ------------------------------
- ------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOs. OF ABOVE PERSONS (ENTITIES ONLY)
California Investment Fund, LLC
33-0688954
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*(a) /X/
(b) / /
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of California
- ------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 572,178
EACH
REPORTING ------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER

------------------------------------------------------
10 SHARED DISPOSITIVE POWER 572,178

- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 572,178
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* / /
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.00%

- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- ------------------------------------------------------------------------------

* See Instructions


2


- ----------------------------- ------------------------------
CUSIP NO. 26817Q506 13D PAGE 3 OF 4 PAGES
- ----------------------------- ------------------------------

- ------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOs. OF ABOVE PERSONS (ENTITIES ONLY)
Richard Kelly

- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- ------------------------------------------------------------------------------
3 SEC USE ONLY

- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*

- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / /
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- ------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 572,178
EACH
REPORTING ------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER

------------------------------------------------------
10 SHARED DISPOSITIVE POWER 572,178

- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 572,178
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* / /
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.00%

- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ------------------------------------------------------------------------------
* See Instructions

3



- ----------------------------- ------------------------------
CUSIP NO. 26817Q506 13D PAGE 4 OF 4 PAGES
- ----------------------------- ------------------------------

- ------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOs. OF ABOVE PERSONS (ENTITIES ONLY)
Michael R. Kelly
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- ------------------------------------------------------------------------------
3 SEC USE ONLY

- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*

- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / /
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- ------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER 572,178
EACH
REPORTING ------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER

------------------------------------------------------
10 SHARED DISPOSITIVE POWER 572,178

- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 572,178
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* / /
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.00%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ------------------------------------------------------------------------------

* See Instructions

4



ITEM 1. SECURITY AND ISSUER.

Title of Class of
Equity Security: Common Stock, $0.01 par value per share

Name of Issuer: Dynex Capital, Inc. ("Dynex")
Address of 10900 Nuckols Road, 3rd Floor
Principal Office: Glen Allen, Virginia 23060


ITEM 2. IDENTITY AND BACKGROUND.

(a) NAME OF PERSON FILING:

A. California Investment Fund, LLC, a California limited liability company.
("California Investment Fund ")

B. Michael R. Kelly, an individual

C. Richard Kelly, an individual
(California Investment Fund, Michael R. Kelly, and Richard Kelly are
collectively referred to herein as the "Reporting Persons")

This Schedule 13D is jointly filed pursuant to Rule 13d-1(k)(1) promulgated by
the Securities and Exchange Commission ("SEC") under Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Act") by: (i) California
Investment Fund, LLC, by virtue of its direct beneficial ownership of Common
Stock of Dynex; (ii) Michael R. Kelly, by virtue of his indirect beneficial
ownership of Common Stock of Dynex via his ownership of half of the membership
interests in California Investment Fund, LLC, and (iii) Richard Kelly, by virtue
of his indirect beneficial ownership of Common Stock of Dynex via his ownership
of half of the membership interests in California Investment Fund, LLC.

Certain information required by this Item 2 concerning the members and control
persons of California Investment Fund, LLC is set forth on Schedule 1 attached
hereto, which is incorporated herein by reference.

The Reporting Persons may be deemed to constitute a "group" for purposes of
Section 13(d)(3) of the Act.

(b) RESIDENCE OR BUSINESS ADDRESS:

A. California Investment Fund, LLC. 550 West C Street, Suite 1000, San
Diego, CA 92101. Also, see Schedule 1 attached hereto.


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B. Michael R. Kelly. 550 West C Street, Suite 1000, San Diego, CA 92101.
Also, see Schedule 1 attached hereto.

C. Richard Kelly. 550 West C Street, Suite 1000, San Diego, CA 92101. Also,
see Schedule 1 attached hereto.

(c) PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND THE NAME, PRINCIPAL
BUSINESS AND ADDRESS OF COMPANY IN WHICH EMPLOYMENT IS CONDUCTED:

A. California Investment Fund, LLC - California Investment Fund, LLC is a
limited liability company primarily engaged in real estate and other types of
investments.

B. Michael R. Kelly - Michael R. Kelly is the managing member of California
Investment Fund, LLC a limited liability company involved in real estate and
other types of investments. Also, see Schedule 1 attached hereto.

The principal business and principal office of California Investment Fund,
LLC is set forth under Item 2(b).

C. Richard Kelly is a member of California Investment Fund, LLC, a limited
liability company involved in real estate and other types of investments. Also,
see Schedule 1 attached hereto.

(d) WHETHER OR NOT, DURING THE LAST FIVE YEARS, SUCH PERSON HAS BEEN CONVICTED
IN A CRIMINAL PROCEEDING (EXCLUDING TRAFFIC VIOLATIONS OR SIMILAR MISDEMEANORS)
AND, IF SO, GIVE THE DATES, NATURE OF CONVICTION, NAME AND LOCATION OF COURT,
ANY PENALTY IMPOSED, OR OTHER DISPOSITION OF THE CASE:

During the past five years, none of the Reporting Persons has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors).


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(e) WHETHER OR NOT, DURING THE LAST FIVE YEARS, SUCH PERSON WAS A PARTY TO A
CIVIL PROCEEDING OF A JUDICIAL OR ADMINISTRATIVE BODY OF COMPETENT JURISDICTION
AND AS A RESULT OF SUCH PROCEEDING WAS OR IS SUBJECT TO A JUDGMENT, DECREE OR
FINAL ORDER ENJOINING FUTURE VIOLATIONS OF, OR PROHIBITING OR MANDATING
ACTIVITIES SUBJECT TO, FEDERAL OR STATE SECURITIES LAWS OR FINDING ANY VIOLATION
WITH RESPECT TO SUCH LAWS; AND, IF SO, IDENTIFY AND DESCRIBE SUCH PROCEEDINGS
AND SUMMARIZE THE TERMS OF SUCH JUDGMENT, DECREE OR FINAL ORDER:

During the past five years, none of the Reporting Persons nor, to the best
knowledge of such persons, any of the persons named in Schedule 1 to this
Schedule 13D, was a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction as a result of which such person was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activity subject to, federal or state securities laws
or finding any violation with respect to such laws.

(f) CITIZENSHIP:

A. California Investment Fund, LLC - California. Also, see Schedule 1
attached hereto.

B. Michael R. Kelly - United States of America

C. Richard Kelly - United States of America


ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION

To date, working capital of California Investment Fund, LLC has been used to
purchase the Dynex securities at an approximate total cost of $3,033,549.30. No
borrowings or other types of consideration other than cash has been used to date
for these purchases. If and when future purchases of Dynex securities are made,
the Reporting Persons may use a variety of sources of funds; however, the
Reporting Persons have no present plan, arrangement, or understanding in
connection with sources of funds for future purchases of the securities.


ITEM 4. PURPOSE OF TRANSACTION.

The Reporting Persons' purposes for the acquisition of the Dynex securities may
include, without limitation, plans or proposals such as the following: (1)
dispositions of the Dynex securities through


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sales, transfers and other means of disposing of the securities; (2) causing the
sale or transfer of assets of Dynex or any of its subsidiaries; (3) a change in
the present board of directors or management of Dynex; (4) change in the
capitalization or dividend policy of Dynex; (5) a change in Dynex's charter,
bylaws or other corporate documents and instruments; (6) causing a class of
securities of Dynex to be delisted or not traded on an exchange, system or
association; (7) causing a class of securities of Dynex to become eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; (8) a corporate transaction, such as a merger,
reorganization or liquidation involving Dynex or any of its subsidiaries; (9) a
joint venture, partnership or management arrangement impacting Dynex, or any of
its subsidiaries and/or affiliate entities or persons; (10) acquisitions of
additional securities of Dynex; (11) other changes in Dynex's business or
corporate structure; and (12) other actions similar to any of those listed
above.


ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.

(a) AGGREGATE NUMBER AND PERCENTAGE OF SECURITIES BENEFICIALLY OWNED:

California Investment Fund, LLC is the direct beneficial owner of 572,178 shares
of Common Stock, representing approximately 5.00% of Dynex's Common Stock. By
virtue of the relationship between Michael R. Kelly, Richard Kelly, and
California Investment Fund, LLC described in Item 2, Michael R. Kelly and
Richard Kelly may be deemed to possess indirect beneficial ownership of the
shares of Common Stock beneficially owned by California Investment Fund, LLC.
Ownership percentages of Common Stock is based upon the common shares
outstanding per Dynex's Form 10-Q Report for the Quarter ended September 30,
1999 (11,443,840 shares of Common Stock outstanding at October 31, 1999.)


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(b) NUMBER OF SHARES AS TO WHICH SUCH PERSON HAS VOTING AND DISPOSITIVE
POWER:

A. California Investment Fund, LLC:

(i) Sole power to vote or to direct the vote - 0

(ii) Shared power to vote or to direct the vote -- 572,178

(iii) Sole power to dispose or to direct the disposition -- 0

(iv) Shared power to dispose or to direct the disposition --
572,178

B. Michael R. Kelly:

(i) Sole power to vote or to direct the vote -- 0

(ii) Shared power to vote or to direct the vote - 572,178

(iii) Sole power to dispose or to direct the disposition -- 0

(iv) Shared power to dispose or to direct the disposition --
572,178

C. Richard Kelly:

(i) Sole power to vote or to direct the vote -- 0

(ii) Shared power to vote or to direct the vote - 572,178

(iii) Sole power to dispose or to direct the disposition -- 0

(iv) Shared power to dispose or to direct the disposition --
572,178

(C) TRANSACTIONS EFFECTED DURING THE PAST 60 DAYS OR SINCE THE MOST RECENT
FILING ON SCHEDULE 13D, WHICHEVER IS LESS: