UNITED STATES
                 SECURITIES AND EXCHANGE COMMISSION
                        Washington, DC 20549



                                FORM 8-K

                             CURRENT REPORT

 Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

                    Date of Report: October 18, 2000


                              DYNEX CAPITAL, INC.
              (Exact Name of Registrant as Specified in Charter)


Virginia                   1-9819                 52-1549373
(State or Other    (Commission File Number)      (IRS Employer
Jurisdiction of                                  Identification No.)
Incorporation)

4551 Cox Road, Suite 300, Glen Allen, Virginia    23060
(Address of Principal Executive Offices)          (Zip Code)


                            (804) 217-5800
         (Registrant's telephone number, including area code)

Item 5.       OTHER EVENTS.


     On September 29, 2000,  Dynex Capital,  Inc. (the "Company") and California
Investment Fund, LLC ("CIF"),  a private real estate  investment  company,  each
executed a letter agreement regarding CIF's possible  acquisition of the Company
(the "Transaction").  The letter agreement provided for an exclusivity period of
three weeks during which time CIF would  complete its due  diligence and seek to
obtain  commitments for the financing  necessary to consummate the  transaction.
During such time  period,  the Company  agreed not to engage in  discussions  or
negotiations  with  any  third  party  in  regard  to  an  alternative  business
transaction. This letter agreement is the only agreement among the parties.

     On October 17,  2000,  CIF filed an  amendment to its Schedule 13D with the
Securities and Exchange Commission,  which includes as an exhibit a draft merger
agreement  (the  "Document)  prepared by CIF. This Document does not reflect any
agreement by the  Company's  management  or its Board of Directors to enter into
the  Transaction  or to the  terms set  forth in such  Document,  which was also
indicated in CIF's amendment to it's Schedule 13D.


                                                             SIGNATURES

     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.


Date:    October 18, 2000                      DYNEX CAPITAL, INC.


                                               By:      /s/ Thomas H. Potts
                                                        Thomas H. Potts
                                                        President