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      Form 8-K
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>UNITED
      STATES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECURITIES
      AND EXCHANGE COMMISSION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Washington,
      D.C. 20549</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>___________</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>FORM
      8-K</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CURRENT
      REPORT</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of
      1934</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
      of
      Report (Date of earliest event reported): </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>September
      8, 2006</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>___________</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>DYNEX
      CAPITAL, INC.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      name of registrant as specified in its charter)</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Virginia</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                or other jurisdiction</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of
                incorporation)</font></div>
            </td>
            <td colspan="2" valign="top" width="24%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>1-9819</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission
                File Number)</font></div>
            </td>
            <td valign="top" width="24%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>52-1549373</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(IRS
                Employer</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Identification
                No.)</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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            <td align="left" colspan="2" valign="top" width="24%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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            <td align="left" valign="top" width="24%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>4551
                Cox Road, Suite 300</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Glen
                Allen, Virginia</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
                of principal executive offices)</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>23060</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Zip
                Code)</font></div>
            </td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registrant&#8217;s
      telephone number, including area code: </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(804)
      217-5800</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Not
      Applicable</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Former
      name or former address, if changed since last report)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions:</font></div>
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                  communications pursuant to Rule 425 under the Securities Act (17
                  CFR
                  230.425)</font></div>
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              <td style="width: 18pt;">&#160;</td>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Soliciting
                  material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
                  240.14a-12)</font></div>
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              <td style="width: 18pt;">&#160;</td>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">o</font></div>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
                  communications pursuant to Rule 14d-2(b) under the Exchange Act
                  (17 CFR
                  240.14d-2(b))</font></div>
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              <td style="width: 18pt;">&#160;</td>
              <td style="width: 18pt;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">o</font></div>
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              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
                  communications pursuant to Rule 13e-4(c) under the Exchange Act
                  (17 CFR
                  240.13e-4(c))</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      1.01 Entry into a Material Definitive Agreement.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 8, 2006, Issued Holdings Capital Corporation (IHCC), a subsidiary
      of
      Dynex Capital, Inc. ( &#8220;Dynex&#8221;), entered into a Limited Liability Agreement of
      Copperhead Ventures, LLC (the &#8220;Agreement&#8221;) with DBAH Capital, LLC (DBAH), an
      affiliate of Deutsche Bank AG, in order to establish a joint venture. The joint
      venture will focus primarily on mortgage-related investments and special
      situations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">IHCC
      and
      DBAH each own 49.875% of Copperhead Ventures, LLC (the &#8220;LLC&#8221;), and an
      unaffiliated third party, Dartmouth Investments, LLP, owns 0.25%. IHCC and
      DBAH
      are voting members, each with the right to elect one member of the Board of
      Directors of the LLC. The business of the LLC will be managed by the two-member
      Board, and all material decisions of the LLC, including decisions regarding
      the
      investment of capital of the LLC, require unanimous Board approval. Dynex was
      appointed as the initial Manager of the LLC, with limited
      authority.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      the
      terms of the Agreement, income, losses, gains and distributions are allocated
      among the members in proportion to their respective interests. The Agreement
      contains customary provisions with respect to various governance, tax,
      accounting and regulatory matters. The LLC may be dissolved if authorized by
      the
      Board, and it may also be dissolved under a variety of other circumstances,
      including automatic dissolution sixty days after the redemption of certain
      assets contributed to the LLC, which redemption is expected to occur on February
      15, 2009. Each of IHCC and DBAH may withdraw from the LLC under certain
      circumstances without penalty. These circumstances include upon a change of
      control event with respect to Dynex, the operations of the LLC causing Dynex
      to
      fail to qualify as a REIT, the operations of the LLC causing Dynex to be
      considered a registered investment company, or the operations of the LLC causing
      a materially adverse impact on DBAH from a regulatory, compliance, tax, or
      accounting standpoint. Otherwise, either IHCC or DBAH may withdraw from the
      LLC
      at a 10% discount to fair value through September 15, 2007, and a 4% discount
      to
      fair value through September 15, 2008. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">IHCC
      will
      contribute certain ownership interests in a commercial mortgage-backed security,
      and will enter into a derivative payment agreement with the LLC which is based
      on the performance of a second commercial mortgage-backed security owned by
      Dynex. These contributions are valued at $36.5 million. Certain other interests
      in these securities were retained by IHCC. DBAH will contribute $36.5 million
      in
      cash. The contributions will be made on or before September 15, 2006. There
      are
      provisions within the Agreement to distribute cash capital to the LLC&#8217;s members
      if cash and equivalents exceed 30% of the net assets of the LLC, after an
      initial period of nine months, for any period of six consecutive calendar months
      in order to make such percentage 10% or less. The Agreement permits its members
      to compete with the LLC for investment opportunities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      foregoing description of the terms of the Agreement is qualified in its entirety
      by reference to the full text of the Agreement, which will be attached as an
      exhibit to the Company&#8217;s quarterly report on Form 10-Q for the period ended
      September 30, 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of the contribution of its interests to the joint venture, Dynex expects
      to remove approximately $278 million in securitized finance receivables,
      including delinquent loans of approximately $25 million, and approximately
      $253
      million in securitization financing from its consolidated balance sheet, and
      record a non-cash loss of approximately $0.7 million. The Company will account
      for its investment in the joint-venture under the equity method of
      accounting.</font></div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Note:
      This document contains &#8220;forward-looking statements&#8221; within the meaning of the
      Private Securities Litigation Reform Act of 1995. The words &#8220;believe,&#8221; &#8220;expect,&#8221;
&#8220;forecast,&#8221; &#8220;anticipate,&#8221; &#8220;estimate,&#8221; &#8220;project,&#8221; &#8220;plan, &#8220; and similar
      expressions identify forward-looking statements that are inherently subject
      to
      risks and uncertainties, some of which cannot be predicted or quantified. The
      Company&#8217;s actual results and timing of certain events could differ materially
      from those projected in or contemplated by the forward-looking statements as
      a
      result of unforeseen external factors. These factors may include, but are not
      limited to, changes in general economic and market condition, variability in
      investment portfolio cash flows, availability of suitable reinvestment
      opportunities, defaults by borrowers, fluctuations in interest rates,
      fluctuations in property capitalization rates and values of commercial real
      estate, defaults by third-party servicers, prepayments of investment portfolio
      assets, other general competitive factors, the impact of regulatory changes,
      and
      the impact of Section 404 of the Sarbanes-Oxley Act of 2002. For additional
      information, see the Company&#8217;s Quarterly Report on Form 10-Q for the period
      ended June 30, 2006, and the Company&#8217;s Annual Report on Form 10-K for the period
      ended December 31, 2005, and other reports filed with and furnished to the
      Securities and Exchange Commission.</em></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br>&#160;</div>
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            <td align="left" valign="top" width="29%">&#160;</td>
            <td align="left" valign="top" width="33%">&#160;<strong><font size="2">DYNEX
              CAPITAL, INC.</font></strong></td>
            <td align="left" valign="top" width="4%">&#160;</td>
          </tr>

      </table>
    </div>
    <div>&#160;</div>
    <div>&#160;</div>
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            </td>
            <td align="left" valign="top" width="29%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">September
                14, 2006</font></div>
            </td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
                Stephen J. Benedetti</font></div>
            </td>
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            <td align="left" valign="bottom" width="29%">&#160;</td>
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            <td align="left" valign="bottom" width="33%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stephen
                J. Benedetti</font></div>
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          </tr>
          <tr>
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            <td align="left" valign="bottom" width="29%">&#160;</td>
            <td align="left" valign="bottom" width="4%">&#160;</td>
            <td align="left" valign="bottom" width="33%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Principal
                Executive Officer</font></div>
            </td>
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[{"type": "8-K", "sequence": "1", "filename": "body.htm", "description": "FORM 8-K", "secsgml_size_bytes": 31810}]
{"company-data": {"conformed-name": "DYNEX CAPITAL INC", "cik": "0000826675", "assigned-sic": "6798", "irs-number": "521549373", "state-of-incorporation": "VA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-09819", "film-number": "061090834"}, "business-address": {"street1": "4551 COX RD", "street2": "STE 300", "city": "GLEN ALLEN", "state": "VA", "zip": "23060", "phone": "8042175815"}, "mail-address": {"street1": "4551 COX RD", "street2": "STE 300", "city": "GLEN ALLEN", "state": "VA", "zip": "23060"}, "former-company": [{"former-conformed-name": "RESOURCE MORTGAGE CAPITAL INC/VA", "date-changed": "19930722"}, {"former-conformed-name": "RESOURCE MORTGAGE INVESTMENT CORP", "date-changed": "19930505"}, {"former-conformed-name": "RAC MORTGAGE INVESTMENT CORP /VA/", "date-changed": "19930505"}]}
Form 8-K
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
Washington,
      D.C. 20549
___________
FORM
      8-K
CURRENT
      REPORT
Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of
      1934
Date
      of
      Report (Date of earliest event reported):
September
      8, 2006
___________
DYNEX
      CAPITAL, INC.
(Exact
      name of registrant as specified in its charter)
Virginia
(State
                or other jurisdiction
of
                incorporation)
1-9819
(Commission
                File Number)
52-1549373
(IRS
                Employer
Identification
                No.)
4551
                Cox Road, Suite 300
Glen
                Allen, Virginia
(Address
                of principal executive offices)
23060
(Zip
                Code)
Registrant's
      telephone number, including area code:
(804)
      217-5800
Not
      Applicable
(Former
      name or former address, if changed since last report)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions:
o
Written
                  communications pursuant to Rule 425 under the Securities Act (17
                  CFR
                  230.425)
o
Soliciting
                  material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
                  240.14a-12)
o
Pre-commencement
                  communications pursuant to Rule 14d-2(b) under the Exchange Act
                  (17 CFR
                  240.14d-2(b))
o
Pre-commencement
                  communications pursuant to Rule 13e-4(c) under the Exchange Act
                  (17 CFR
                  240.13e-4(c))
Item
      1.01 Entry into a Material Definitive Agreement.
On
      September 8, 2006, Issued Holdings Capital Corporation (IHCC), a subsidiary
      of
      Dynex Capital, Inc. ( "Dynex"), entered into a Limited Liability Agreement of
      Copperhead Ventures, LLC (the "Agreement") with DBAH Capital, LLC (DBAH), an
      affiliate of Deutsche Bank AG, in order to establish a joint venture. The joint
      venture will focus primarily on mortgage-related investments and special
      situations.
IHCC
      and
      DBAH each own 49.875% of Copperhead Ventures, LLC (the "LLC"), and an
      unaffiliated third party, Dartmouth Investments, LLP, owns 0.25%. IHCC and
      DBAH
      are voting members, each with the right to elect one member of the Board of
      Directors of the LLC. The business of the LLC will be managed by the two-member
      Board, and all material decisions of the LLC, including decisions regarding
      the
      investment of capital of the LLC, require unanimous Board approval. Dynex was
      appointed as the initial Manager of the LLC, with limited
      authority.
Under
      the
      terms of the Agreement, income, losses, gains and distributions are allocated
      among the members in proportion to their respective interests. The Agreement
      contains customary provisions with respect to various governance, tax,
      accounting and regulatory matters. The LLC may be dissolved if authorized by
      the
      Board, and it may also be dissolved under a variety of other circumstances,
      including automatic dissolution sixty days after the redemption of certain
      assets contributed to the LLC, which redemption is expected to occur on February
      15, 2009. Each of IHCC and DBAH may withdraw from the LLC under certain
      circumstances without penalty. These circumstances include upon a change of
      control event with respect to Dynex, the operations of the LLC causing Dynex
      to
      fail to qualify as a REIT, the operations of the LLC causing Dynex to be
      considered a registered investment company, or the operations of the LLC causing
      a materially adverse impact on DBAH from a regulatory, compliance, tax, or
      accounting standpoint. Otherwise, either IHCC or DBAH may withdraw from the
      LLC
      at a 10% discount to fair value through September 15, 2007, and a 4% discount
      to
      fair value through September 15, 2008.
IHCC
      will
      contribute certain ownership interests in a commercial mortgage-backed security,
      and will enter into a derivative payment agreement with the LLC which is based
      on the performance of a second commercial mortgage-backed security owned by
      Dynex. These contributions are valued at $36.5 million. Certain other interests
      in these securities were retained by IHCC. DBAH will contribute $36.5 million
      in
      cash. The contributions will be made on or before September 15, 2006. There
      are
      provisions within the Agreement to distribute cash capital to the LLC's members
      if cash and equivalents exceed 30% of the net assets of the LLC, after an
      initial period of nine months, for any period of six consecutive calendar months
      in order to make such percentage 10% or less. The Agreement permits its members
      to compete with the LLC for investment opportunities.
The
      foregoing description of the terms of the Agreement is qualified in its entirety
      by reference to the full text of the Agreement, which will be attached as an
      exhibit to the Company's quarterly report on Form 10-Q for the period ended
      September 30, 2006.
As
      a
      result of the contribution of its interests to the joint venture, Dynex expects
      to remove approximately $278 million in securitized finance receivables,
      including delinquent loans of approximately $25 million, and approximately
      $253
      million in securitization financing from its consolidated balance sheet, and
      record a non-cash loss of approximately $0.7 million. The Company will account
      for its investment in the joint-venture under the equity method of
      accounting.
1
Note:
      This document contains "forward-looking statements" within the meaning of the
      Private Securities Litigation Reform Act of 1995. The words "believe," "expect,"
"forecast," "anticipate," "estimate," "project," "plan, " and similar
      expressions identify forward-looking statements that are inherently subject
      to
      risks and uncertainties, some of which cannot be predicted or quantified. The
      Company's actual results and timing of certain events could differ materially
      from those projected in or contemplated by the forward-looking statements as
      a
      result of unforeseen external factors. These factors may include, but are not
      limited to, changes in general economic and market condition, variability in
      investment portfolio cash flows, availability of suitable reinvestment
      opportunities, defaults by borrowers, fluctuations in interest rates,
      fluctuations in property capitalization rates and values of commercial real
      estate, defaults by third-party servicers, prepayments of investment portfolio
      assets, other general competitive factors, the impact of regulatory changes,
      and
      the impact of Section 404 of the Sarbanes-Oxley Act of 2002. For additional
      information, see the Company's Quarterly Report on Form 10-Q for the period
      ended June 30, 2006, and the Company's Annual Report on Form 10-K for the period
      ended December 31, 2005, and other reports filed with and furnished to the
      Securities and Exchange Commission.
2
SIGNATURE
Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.
DYNEX
              CAPITAL, INC.
Date:
September
                14, 2006
By:
/s/
                Stephen J. Benedetti
Stephen
                J. Benedetti
Principal
                Executive Officer
3