HSM Helios Strategic Mortgage Income Fund (The) Common Stock

Helios Strategic Mortgage Income Fund, Inc. (the "Fund") (NYSE: HSM) today announced that its Board of Directors reduced the monthly dividend from $0.0560 per share to $0.0525 per share. The dividend is payable on December 23, 2010 to stockholders of record on December 17, 2010. Based on the NYSE closing price of $6.41 on December 2, 2010, the Fund's yield was 9.83%.

As market prices have improved for the securities in which the Fund invests, the Fund's net asset value has increased, but market yields continue to decline given the low interest rate environment. Therefore, it remains difficult to add substantial income to the Fund without sacrificing credit quality. As the Fund is currently over-distributed, we believe the new dividend rate is expected to be more closely aligned with the projected level of income, consistent with both the current portfolio as well as the targeted portfolio allocation.

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 monthly dividend declared divided by the stated stock price.

The Fund uses its web site as a channel of distribution of material company information. Financial and other material information regarding the Fund is routinely posted on and accessible at www.brookfieldim.com.

Helios Strategic Mortgage Income Fund, Inc. is managed by Brookfield Investment Management Inc., an SEC-registered investment advisor specializing in core fixed income, high yield, structured products (Commercial MBS, Residential MBS and ABS) as well as global REITs and listed infrastructure securities. Headquartered in New York, the firm had approximately $23 billion of assets under management(i) as of September 30, 2010. Brookfield Investment Management Inc. is a subsidiary of Brookfield Asset Management Inc., a global asset manager focused on property, power and other infrastructure assets with approximately $100 billion of assets under management as of September 30, 2010.

(i)Includes assets managed through AMP Capital Brookfield Pty Limited.

Contacts: Helios Strategic Mortgage Income Fund, Inc. Three World Financial Center 200 Vesey Street, 10th Floor New York, NY 10281-1010 (800) 497-3746 funds@brookfield.com