# LETTER TO
SHAREHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/real-estate-reit-mortgage/NYSE_DX_2022/NYSE_DX_2022.mmd` · pages 2-8_

---

LETTER TO
SHAREHOLDERS

Dear Fellow Shareholders,

This decade, which started in January 2020, ushered in a new environment, more complex and layered risks, unprecedented monetary policy moves, war, and a new market paradigm. At Dynex, we held a view that surprises are highly probable and three years into it, events keep unfolding.

My four-decade career on Wall Street began with a deep curiosity in economics. As a young trader, I learned the value of a disciplined process for risk management. My experience and the collective experience of our team has laid a foundation for navigating the current period. We believe our top-down macroeconomic and risk management approach rises to meet the challenges that we are facing. We continue to manage your investment with a long-term approach, prioritizing book value protection while aiming to generate an attractive total-economic return.

Dynex once again outperformed our peer group and major fixed-income indices. Our 3-year total economic return through 2022 is 8.3%. We remain the top performer in our peer group and our returns are well above investment alternatives with similar risk profiles.

During 2022, financial markets experienced extreme volatility. The bond market had the worst performance on record since 1926. As we were faced with turmoil, Dynex once again outperformed our peer group and major fixed-income indices. Our 3-year total economic return through 2022 is 8.3%. We remain among the top performers in our peer group, and our returns are well above investment alternatives with similar

![](images/2_0.jpg)

risk profiles. In the context of the worst bond market performance in almost 100 years, I am proud of our team's efforts and the results we have delivered. Maintaining a flexible mindset, curiosity, and scenario planning are cornerstones of our investment process.

I have previously shared that I believe we are in a big moment in history. We have long believed that rapid debt build-up created fragility for global markets, and the removal of liquidity had the potential to create additional challenges. We are now in the midst of dealing with multiple bank collapses and the unintended consequences of central bank policies. We have built our portfolio for this environment where we believe liquidity and flexibility are fundamental to navigating market turbulence. This position provides excess liquidity in this type of uncertain market and allows us to take advantage of investment opportunities as they present themselves. In addition to the benefits of liquidity and a

<--- Page Split --->

government guarantee, we believe Agency RMBS continues to offer excellent returns. Preparation is one of the core tenets of our investment strategy. As your fellow shareholders, the Dynex team and I remain focused on creating value and managing our investments for the long term. I am confident in our ability to take advantage of the market opportunities that we believe will be created in the coming year to position us well for the future.

## Positioning for the Future

Now more than ever, I am proud of the core values I share with everyone at Dynex: Stewardship, Performance, Integrity, Trust, Kindness, Equality & Inclusion, Innovation, and Collaboration. Our daily actions are aligned with our core values and our purpose. They guide our learning culture, the decisions we make, and our interactions with our business partners and the broader community. Dynex remains dedicated to our long-term vision of building a multigenerational organization that can stand the test of time. This decade, Dynex has grown and is committed to continuing to manage our business with a long-term view, including plans to continue growing our capital base and investing in people, processes, and technologies. We are focused on achieving the most advantageous operating scale for our investors while maintaining nimbleness and finding attractive and actionable opportunities.

## Human Capital

Detailed strategic planning is critical to running a successful business. As part of our succession planning strategy, at the end of 2020, we promoted Smriti Popenoe to President of Dynex. In 2022, we successfully executed the CFO leadership transition, continuing the legacy of prudent stewardship of the company. I would like to take a moment to recognize the contributions of our former CFO, Steve Benedetti. Steve was an integral part of Dynex for 28 years, a valuable business partner to me, and he played a vital role in the Company's success. We are grateful for his dedicated service and commitment to the Company.

Rob Colligan, who joined the team in August of 2022 as our new CFO, brings a wealth of experience in finance and accounting and broad industry knowledge. Rob enhances our outstanding team-oriented and ethical culture and is a valuable addition to the Company. The addition of Rob and the promotion of Smriti illustrates our focus on experience, long-term planning, and a culture that encourages diversity in skills, backgrounds, and critical thinking. Beyond Rob and Smriti, our Company has a cohesive team of professionals with decades of experience who are positioned to manage through a range of market conditions that we may encounter.

In closing, in the face of the unprecedented market volatility in 2022, Dynex has delivered an industry-leading performance demonstrating the value of our top-down framework that focuses on risk management, disciplined capital allocation, and scenario analysis. The collective experience of our team is an important factor that we believe will continue to differentiate our performance as we move through 2023 and beyond. I am optimistic and excited to continue to serve our shareholders and to deliver dividend income and attractive long-term total economic returns now and in the future.

![](images/3_0.jpg)

## BYRON L. BOSTON

Chief Executive Officer and Co-Chief Investment Officer
March 2023