The Hyperion(R) Strategic Mortgage Income Fund, Inc. Dividend Declaration June 1, 2007

The Board of Directors of the Hyperion Strategic Mortgage Income Fund, Inc. (the "Fund") (NYSE: HSM) declared a monthly dividend of $0.090 per share, payable on June 28, 2007 to shareholders of record on June 12, 2007. The ex-dividend date is June 8, 2007. Based on the NYSE closing price of $13.07 on May 31, 2007, the Fund's yield was 8.26%. Based on the net asset value per share of $13.37 on May 31, 2007, the yield of the Trust was 8.07%. As of May 31, 2007, the portfolio's average duration, as measured on a net assets basis, was 4.9 years; the average duration of total assets was 3.4 years; and leverage equaled 25.3%. 95% of interest rate risk due to leverage is hedged using interest rate swaps and floating rate securities that have a weighted average life of 1.9 years.

Portfolio of Investments as of May 31, 2007
Sector Allocation as a Percentage of Total Assets

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Non-Agency Residential Mortgage-Backed Securities ("MBS")         20.9%
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Commercial MBS                                                    31.3%
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Agency MBS Pass-throughs                                          32.3%
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Asset-Backed Securities                                            6.4%
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U.S. Treasury and Agency Securities                                9.2%
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Credit Allocation as a Percentage of Total Assets

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U. S. Government / Agency and AAA Rated                           43.3%
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AA Rated                                                           1.9%
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A Rated                                                            8.4%
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BBB Rated                                                         27.1%
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Below Investment Grade                                            19.3%
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The Hyperion 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 in excess of $21 billion for a client base including pension funds, financial institutions, mutual funds, insurance companies, REITs 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 $70 billion of assets under management.

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