AGNC Management LLC

FEES AND COMPENSATION [Item 5]

Pursuant to the terms of its management agreement with AGNC, AGNC Manager earns a
base management fee equal to 1/12 of 1.25% of AGNC’s month-end stockholders’
equity, adjusted to exclude the effect of any unrealized gains or losses included in either
retained earnings or other comprehensive income (loss), each as computed in accordance
with U.S. generally accepted accounting principles (“GAAP”). The management fee is
payable monthly in arrears. AGNC Manager is an indirectly held, wholly owned
subsidiary of AGNC. The only client of AGNC Manager is its consolidated parent,
AGNC. Accordingly, any fees that may be paid to AGNC Manager pursuant to the
management agreement with AGNC are eliminated through consolidation with its parent.

Under the terms of the management agreement, AGNC Manager is entitled to a
termination fee in the event of the termination of the management agreement with AGNC
without cause or a material breach of the agreement by AGNC equal to three times the
average annual management fee earned by AGNC Manager during the prior 24-month
period immediately preceding the most recently completed month prior to the effective
date of termination.

Additionally, AGNC Manager is entitled to reimbursement from AGNC for all of its
operating expenses, including fees, costs and expenses directly related to the purchase
and sale of its investments, taxes, fees of auditors and counsel, insurance, litigation
expenses, custodial expenses and any extraordinary expenses but excluding employment-
related expenses. Pursuant to the terms of the management agreement, there are no limits
on such expense reimbursements. AGNC’s prospectus contains complete information on
the expenses payable by AGNC.

PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENT [Item 6]

AGNC Manager does not charge performance-based fees.

The value of some of AGNC’s investments may not be readily determinable. The fair
value of such investments is measured quarterly, in accordance with guidance set forth in
FASB Accounting Standards Codification, or ASC, Topic 820, Fair Value Measurements
and Disclosures. The fair value at which AGNC’s assets may be recorded may not be an
indication of their realizable value. Ultimate realization of the value of an asset depends
on economic and other conditions that are beyond the control of AGNC Manager, AGNC
or their respective Boards. Further, fair value is only an estimate based on good faith
judgment of the price at which an investment can be sold since market prices of
investments can only be determined by negotiation between a willing buyer and seller. If
AGNC were to liquidate a particular asset, the realized value may be more than or less
than the amount at which such asset is valued. Accordingly, the value of AGNC’s
common stock could be adversely affected by the determinations regarding the fair value
of its investments, whether in the applicable period or in the future. Additionally, such
valuations may fluctuate over short periods of time.

In most cases, AGNC Manager’s determination of the fair value of AGNC’s investments
will include inputs provided by third-party dealers and pricing services. Valuations of
certain investments in which AGNC may invest are often difficult to obtain or unreliable.
In general, dealers and pricing services heavily disclaim their valuations. Dealers may
claim to furnish valuations only as an accommodation and without special compensation,
and so they may disclaim any and all liability for any direct, incidental, or consequential
damages arising out of any inaccuracy or incompleteness in valuations, including any act
of negligence or breach of any warranty. Depending on the complexity and illiquidity of
a security, valuations of the same security can vary substantially from one dealer or
pricing service to another. Therefore, AGNC’s results of operations for a given period
could be adversely affected if the determinations regarding the fair market value of these
investments are materially different than the values that AGNC ultimately realizes upon
their disposal.

TYPES OF CLIENTS [Item 7]

AGNC Manager provides investment advice to its parent, AGNC, a publicly traded
REIT. AGNC does not have suitability or net worth qualifications.

METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS