HSM Helios Strategic Mortgage Income Fund (The) Common Stock

The Hyperion Brookfield Strategic Mortgage Income Fund, Inc. (the "Fund") (NYSE: HSM) today announced that its board of directors reduced the Fund's monthly dividend by $0.0175 per share to $0.0725 per share. The next monthly dividend is payable on September 25, 2008 to stockholders of record on September 16, 2008. The ex-dividend date is September 12, 2008. Based on the NYSE closing price of $7.09 on August 27, 2008, the Fund's yield is 12.27%.

Dividends may include net investment income, capital gains and/or return of capital. The dividend yield referenced above is calculated as the annualized amount of the most recent dividend declared divided by the stated stock price.

The dividend reduction reflects management's investment strategy in response to the volatile credit environment. The Fund's management has maintained a significant allocation to AAA rated U.S. Agency mortgage-backed securities and Treasury securities, has lowered the Fund's level of leverage and increased its allocation to cash and cash equivalents. Additionally, as higher-yielding securities have matured, the Fund's management reinvested the proceeds into higher-rated, but lower-yielding securities. All of these measures have resulted in an earnings reduction.

"We expect to maintain our current asset allocation until we are more comfortable with the credit environment," said Clifford Lai, President of the Fund. "When we see stability returning to the credit markets, we plan to increase the Fund's allocation to higher-yielding securities, add to its leverage and reduce its cash and cash equivalent balances. However, the current market volatility has lasted longer than anticipated, and this has resulted in the need for a reduction in the dividend at this time. Finally, while the credit environment has resulted in a decrease in the market value of the Fund, it is our expectation that the fundamental value of the portfolio exceeds that of the current net asset value."

The Hyperion Brookfield Strategic Mortgage Income Fund, Inc. is managed by Hyperion Brookfield Asset Management, Inc, a registered investment advisor located in New York City. The firm was founded in 1989 to provide relative value driven fixed income investment strategies, such as core fixed income, high yield, and specialized MBS. Hyperion Brookfield manages approximately $22 billion for a client base including pension funds, financial institutions, mutual funds, insurance companies and foundations. Hyperion Brookfield is a subsidiary of Brookfield Asset Management Inc., a global asset manager focused on property, power and other infrastructure assets with approximately US$95 billion of assets under management.

Forward-Looking Information

This news release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements that are based on various assumptions (some of which are beyond our control) may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "anticipate," "continue," "should," "intend," or similar terms or variations on those terms or the negative of those terms. Although we believe that the expectations contained in any forward-looking statement are based on reasonable assumptions, we can give no assurance that our expectations will be attained. We do not undertake, and specifically disclaim any obligation, to publicly release any update or supplement to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Contacts: The Hyperion Brookfield Strategic Mortgage Income Fund, Inc. Three World Financial Center 200 Vesey Street, 10th Floor New York, NY 10281-1010 1-800-HYPERION