6-K

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of February, 2013

Commission File Number: 033-97038

BROOKFIELD ASSET MANAGEMENT INC.

(Translation of registrant's name into English)

Brookfield Place

Suite 300

181 Bay Street, P.O. Box 762

Toronto, Ontario, Canada M5J 2T3

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 Form 20-F  o  Form 40-F  x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by

Regulation S-T Rule 101(b)(1): ____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by

Regulation S-T Rule 101(b)(7): ____

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby

furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 Yes o  No  x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________

INCORPORATION BY REFERENCE

The Form 6-K of Brookfield Asset Management Inc. dated February 15, 2013 and the exhibit thereto are hereby incorporated by reference as exhibits to Brookfield Asset Management Inc.’s registration statement on Form F-9 (File No. 333-112049).

EXHIBIT LIST

Exhibit
99.1	BROOKFIELD ASSET MANAGEMENT REPORTS SOLID 2012 FINANCIAL RESULTS
99.2	LETTER TO SHAREHOLDERS

 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, thereunto duly authorized.

	BROOKFIELD ASSET MANAGEMENT INC.
Date: February 15, 2013	By:	/s/ B. D. Lawson
		Name: B. D. Lawson Title: Managing Partner & CFO

 

EX-99.1

Exhibit 99.1

 Brookfield Asset Management  

News Release

Investors, analysts and other interested parties can access Brookfield Asset Management’s 2012 Year End and Fourth Quarter Results as well as the Shareholders’ Letter and Supplemental Information on Brookfield’s website under the Investors/Financial Reports section at www.brookfield.com.

The conference call can be accessed via webcast on February 15, 2013 at 11:00 a.m. Eastern Time at www.brookfield.com or via teleconference at 1-800-319-4610 toll free in North America. For overseas calls please dial 1-604-638-5340, at approximately 10:50 a.m. Eastern Time. The teleconference taped rebroadcast can be accessed at 1-800-319-6413 or 1-604-638-9010 (Password 2811#).

BROOKFIELD ASSET MANAGEMENT REPORTS SOLID 2012 FINANCIAL RESULTS

·   NET INCOME ATTRIBUTABLE TO SHAREHOLDERS OF $1.4 BILLION, OR $1.97 PER SHARE

·   12% INCREASE IN FUNDS FROM OPERATIONS FOR 2012

·   7% DIVIDEND INCREASE

TORONTO, February, 15 2013 – Brookfield Asset Management Inc. (NYSE: BAM) (TSX: BAM.A)  (Euronext: BAMA) today announced its financial results for the quarter and year ended December 31, 2012.

Our operating performance was strong in 2012, with acquisitions and organic expansion initiatives in recent years making a significant contribution to our cash flow and the intrinsic value of our assets. We have set the stage for solid future growth, as both our private and public asset management franchises expanded significantly during the year and are well positioned to attract an increasing amount of capital from our clients and increase our management and performance fees.

Annual Performance Highlights

·   Net income attributable to shareholders was $1.4 billion, or $1.97 per share, compared to

$2.89 per share in 2011. The 2011 results included significant valuations gains.

·   Funds from operations (“FFO”) for 2012 increased 12%to $1.4 billion. Excluding disposition gains, FFO was $1.1 billion, representing an 11% increase over the comparable 2011 result.

·   Total return to common shareholders was $3.4 billion, a 12.4% return in 2012.

·   Intrinsic value for common shareholders increased to $28.6 billion or $44.93 per share.

·   Total assets under management (“AUM”) increased 13% to $181 billion.

·   Annualized base management fees, including incentive distributions, increased 38% to $415 million.

·   Accumulated performance fees increased by $310 million, and $34 million of previously accumulated fees were crystallized.

·   $7 billion of fee bearing capital was raised during the year for our private and listed funds, increasing fee bearing capital, after capital distributed to investors, to $60 billion.

Bruce Flatt, CEO of Brookfield, commented: “We achieved significant growth in funds from operations in 2012, reflecting strong performance from most of our operations. We are well positioned to continue to deliver solid results, as we raise and deploy further capital for clients. We are expanding our global platforms to support our public and private funds, whose global presence and scale provide us with a competitive advantage when investing our capital.”

1 | Brookfield Asset Management Inc. – 2012 Year End Results

Financial Results

	Three months ended December 311				Years ended December 311
US$ millions (except per share amounts)	2012		2011		2012		2011
Net income1,2	$	492	$	588	$	1,380	$	1,957
Funds from operations2,3,4		459		397		1,356		1,211
- excluding disposition gains		312		250		1,073		970
Total return2,3		1,842		1,868		3,403		3,345
Per Brookfield share
Net income2	$	0.72	$	0.86	$	1.97	$	2.89
Funds from operations2,3,4		0.67		0.58		1.94		1.76
Total return2,3,4		2.92		2.98		5.39		5.33

1.   Financial results are based on International Financial Reporting Standards (“IFRS”) unless otherwise noted

2.   Attributable to Brookfield shareholders. Excludes amounts attributable to non-controlling interests

3.   Non-IFRS measure. See Basis of Presentation on page 4 for details

4.   Funds from operations includes disposition gains

Consolidated net income was $2.75 billion, of which $1.38 billion (or $1.97 per share) accrued to Brookfield shareholders. The remaining $1.37 billion accrues to the other investors in our consolidated operations. This compares to $1.96 billion for Brookfield shareholders (or $2.89 per share) in 2011, which included a larger amount of valuation gains recognized within our retail property operations.

Total Return for Brookfield shareholders for the year was $3.40 billion, or $5.39 per share. Total Return includes our share of FFO, which was $1.36 billion for the year, plus $2.18 billion of valuation gains, less preferred share dividends, and represents a 12.4% return during 2012. We distributed $0.55 per share to shareholders as dividends and the balance was retained in the business.

FFO totalled $2.92 billion for the year on a consolidated basis, of which $1.36 billion (or $1.94 per share) accrued to Brookfield shareholders and $1.56 billon accrues to the other investors in our consolidated entities. This compared to $1.21 billion of FFO for Brookfield shareholders in 2011 (or $1.76 per share). The increase in FFO compared to the prior year reflects improved operating performance in most of our core operations, including a higher level of base fees and performance income generated on a larger amount of fee bearing capital, higher cash flows in our property operations reflecting improved leasing, acquisitions and completed developments, and the impact of increased housing activity in the United States on operations within our private equity and residential development group. In addition, we monetized a number of assets during the year and recorded an increased amount of disposition gains within FFO relative to the prior year.

Valuation gains of $2.18 billion (or $3.45 per share) include fair value changes recorded in net income and other comprehensive income, as well as changes in incremental values that we record in respect of items not otherwise revalued in our financial statements. These include continued strengthening in commercial property valuations, gains within our housing-related private equity investments, and an increase in our asset management franchise value reflecting the continued increase in fee bearing third-party capital, and associated revenues.

The intrinsic value of our common equity was $44.93 per share at December 31, compared to $40.99 at the beginning of the year. The increase reflects the total return generated during the year, after payment of common share dividends to shareholders, and also reflects the impact of foreign currency exchange rate changes and share repurchases.

2 | Brookfield Asset Management Inc. – 2012 Year End Results

Operating Highlights

We expanded our asset management franchise with both listed and private entities.

Our strategy is to own and operate assets that generate long-term stable and growing returns. Our listed and private funds have established solid long-term track records using this approach, and as a result, investors increased their allocation of capital to our platforms, which allowed us to add $7 billion of fee-bearing assets under management in our private and listed funds, increasing total fee bearing capital to $60 billion after reflecting capital distributions to investors.

We received $3.6 billion of new third-party commitments to our private funds, and had first and subsequent closes on four funds. We are marketing a total of six funds to our clients, with a total fundraising goal of an additional $5 billion. The capitalization of our listed entities increased by $4.8 billion to $21.3 billion due to issuance of additional capital and value appreciation. Our annualized base management fees and incentive distributions are now tracking at $415 million, up 38% from the previous year, and we earned $344 million in performance fees, of which $34 million was realized and included in our financial results. We finished the year with over $5billionof capital that we can deploy on behalf of our private fund clients.

We expect to launch our third flagship listed entity, Brookfield Property Partners, in the near future and believe it will rank as one of the largest and highest quality publicly traded global property businesses. This will increase both fee bearing capital and base management fees.

We invested in growth opportunities in all our major operating businesses, increasing the capital deployed by both our listed entities and private funds.

We announced or completed acquisitions and capital expansions totalling $13.1 billion during the year, deploying $7.7 billion of equity capital on behalf of clients and Brookfield shareholders. We expect these businesses will make a significant contribution to our future cash flows and value increases.

In our property business, we acquired attractive properties in London and Sydney with a total value of  $1.8 billion and broke ground on a major project in New York, where we will build above an existing rail yard. We also purchased a U.S. industrial property portfolio with strong growth potential. Our infrastructure business acquired a South American toll road network, a UK utility business and a North American district heating system, investing a total of $2.1 billion in new projects. Our renewable power business deployed $600 million to purchase four large U.S. hydroelectric facilities with 378 megawatts of generating capacity and announced an agreement to acquire a second large portfolio for $760 million that is expected to close in the first quarter of 2013.

We launched or completed a number of development and operational initiatives that increased the value of our assets and the associated cash flows.

Our property business opened an office complex in Perth, Australia, we began construction on new projects in Toronto and Calgary and are actively leasing vacancy in retail and office projects acquired over the past four years. Our infrastructure group completed a $600 million expansion of our Australian railroad and expects to finish a $750 million new-build electrical transmission system in Texas this year. We began producing electricity at new power facilities and advanced new generation projects in North and South America. In our private equity business, we continued to invest in opportunities related to the natural gas industry and experienced outstanding performance from a number of our cyclical investments linked to the North American housing industry.

We generated $29 billion of capital over the course of the year through asset sales, equity issuance, fund formations and debt financings.

We recycled capital by selling mature assets and investing in sectors where we see opportunities to achieve superior returns. We improved our liquidity and lowered our financing costs through our financing activities, and we continue to see opportunities to raise capital at attractive rates. We refinanced $8.0 billion of debt within our retail property portfolios, generating net proceeds of $1.6 billion. Our infrastructure business was awarded an investment grade credit rating and we issued $3.8 billion of capital throughout our infrastructure business at attractive terms. The renewable power platform refinanced $2.3 billion of debt, including an inaugural preferred share issue.

3 | Brookfield Asset Management Inc. – 2012 Year End Results

We raised our quarterly dividend by 7% to $0.60 on an annualized basis.

The increase in our dividend reflects our policy of raising the distributions over time by an amount that corresponds to the growth in cash flow from our businesses, while ensuring we retain capital to maintain our assets and take advantage of growth opportunities.

Intrinsic Value of Common Equity

The intrinsic value of Brookfield’s common equity was $44.93 per share at December 31, 2012. This includes our estimate of net invested capital of $37.71 per share and $7.22 per share related to our asset management franchise.

Dividend Declaration

The Board of Directors declared a quarterly dividend of US$0.15 per share (representing US$0.60 per annum), payable on May 31, 2013, to shareholders of record as at the close of business on May 1, 2013. This represents an increase of 7% over the current dividend rate. The Board also declared all of the regular monthly and quarterly dividends on its preferred shares.

Information on our dividends can be found on our website under Investors/Stock and Dividend Information.

Basis of Presentation

This news release and accompanying financial statements are based on International Financial Reporting Standards (“IFRS”) unless otherwise noted and make reference to total return, funds from operations, invested capital and intrinsic value, which are non-IFRS measures.

Total return is defined as comprehensive income excluding deferred tax expenses and the impact of foreign currency fluctuations on the long-term capital invested in non-U.S. operations, and including incremental valuation adjustments for assets not otherwise revalued under IFRS. Brookfield uses total return to assess the performance of the overall business as well as its individual business units.

Funds from operations is defined as net income prior to fair value changes, depreciation and amortization, and deferred income taxes, and includes certain disposition gains that are not otherwise included in net income as determined under IFRS. Brookfield uses funds from operations to assess its operating results and the value of its business and believes that many of its shareholders and analysts also find this measure of value to them.

Invested capital represents the capital invested by the company in its operations, net of the underlying liabilities and non-controlling interests. These balances are derived from the company’s IFRS balance sheets and are adjusted to exclude deferred income taxes and to include adjustments to present the fair value of assets and liabilities that are carried at historical book values or otherwise not reflected in the company’s IFRS balance sheets. Common equity on this basis is referred to as net invested capital.

Intrinsic value includes net invested capital as well as the value attributed to the company’s asset management franchise. Asset management franchise value represents management’s estimate of the value attributable to the company’s asset management activities that is not otherwise included in net invested capital based on current capital under management, associated fee arrangements, and potential growth.

Total return, funds from operations, invested capital and intrinsic value and their per share equivalents are non-IFRS measures which do not have any standard meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. The company provides additional information on the determination of total return, funds from operations, invested capital and intrinsic value and a reconciliation between total return and comprehensive income attributable to Brookfield shareholders, funds from operations and net income attributable to Brookfield shareholders, and invested capital and intrinsic value and common equity in the Supplemental Information available at www.brookfield.com.

4 | Brookfield Asset Management Inc. – 2012 Year End Results

Additional Information

The Letter to Shareholders and the company’s Supplemental Information for the year ended

December 31, 2012 contain further information on the company’s strategy, operations and financial results. Shareholders are encouraged to read these documents, which are available on the company’s website.

The attached statements are based primarily on information that has been extracted from our annual financial statements for the year ended December 31, 2012, which have been prepared using IFRS.  The amounts have not been audited and are not subject to review by Brookfield’s external auditor.

* * * * *

Brookfield Asset Management Inc. is a global alternative asset manager with over $175 billion in assets under management. The company has over a 100-year history of owning and operating assets with a focus on property, renewable power, infrastructure and private equity. Brookfield offers a range of public and private investment products and services, and is co-listed on the New York and Toronto Stock Exchanges under the symbol BAM and BAM.A, respectively. For more information, please visit our website at www.brookfield.com.

Please note that Brookfield’s previous audited annual and unaudited quarterly reports have been filed on EDGAR and SEDAR and can also be found in the investor section of its website at www.brookfield.com. Hard copies of the annual and quarterly reports can be obtained free of charge upon request.

For more information, please visit our website at www.brookfield.com or contact:

Media:	Investors:
Andrew Willis SVP, Communications & Media Tel: (416) 369-8236   Fax: (416) 363-2856 Email: andrew.willis@brookfield.com	Katherine Vyse SVP, Investor Relations Tel: (416) 369-8246   Fax: (416) 363-2856 Email: katherine.vyse@brookfield.com

Note: This news release contains “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the company and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods, and include words such as “expects,” “anticipates,” “plans,” “believes,” “estimates,” “seeks,” “intends,” “targets,” “projects,” “forecasts” or negative versions thereof and other similar expressions, or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.”

Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause the actual results, performance or achievements of the company to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business; the behavior of financial markets, including fluctuations in interest and foreign exchange rates; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; strategic actions including dispositions; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); the effect of applying future accounting changes; business competition; operational and reputational risks; technological change; changes in government regulation and legislation within the countries in which we operate; changes in tax laws, catastrophic events, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments including terrorist acts; and other risks and factors detailed from time to time in our documents filed with the securities regulators in Canada and the United States.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise.

5 | Brookfield Asset Management Inc. – 2012 Year End Results

CONSOLIDATED BALANCE SHEETS

	December 31		December 31
US$ millions	2012		2011
Assets
Cash and cash equivalents	$	2,844	$	2,027
Other financial assets		3,111		3,773
Accounts receivable and other		6,945		6,723
Inventory		6,579		6,060
Investments		11,689		9,401
Investment properties		33,161		28,366
Property, plant and equipment		31,114		22,832
Timber		3,283		3,155
Intangible assets		5,764		3,968
Goodwill		2,490		2,607
Deferred income tax asset		1,664		2,110
Total Assets	$	108,644	$	91,022
Liabilities and Equity
Accounts payable and other	$	11,599	$	9,266
Corporate borrowings		3,526		3,701
Non-recourse borrowings
Property-specific mortgages		33,648		28,415
Subsidiary borrowings		7,585		4,441
Deferred income tax liability		6,419		5,817
Capital securities		1,191		1,650
Interests of others in consolidated funds		425		333
Equity
Preferred equity		2,901		2,140
Non-controlling interests in net assets		23,190		18,516
Common equity		18,160		16,743
Total equity		44,251		37,399
Total Liabilities and Equity	$	108,644	$	91,022

6 | Brookfield Asset Management Inc. – 2012 Year End Results

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)	Three Months Ended						Years Ended
For the periods ended December 31 US$  millions (except per share amounts)	2012			2011			2012			2011
Revenues	$	5,385		$	4,122		$	18,590		$	15,921
Direct costs		(4,129	)		(2,759	)		(13,849	)		(11,488	)
		1,256			1,363			4,741			4,433
Equity accounted income		339			584			1,243			2,205
		1,595			1,947			5,984			6,638
Expenses
Interest		(637	)		(620	)		(2,497	)		(2,352	)
Corporate costs		(40	)		(40	)		(158	)		(168	)
Net income prior to valuation items and income tax		918			1,287			3,329			4,118
Valuation items
Fair value changes		401			158			1,197			968
Depreciation and amortization		(352	)		(228	)		(1,263	)		(904	)
Income tax		(191	)		(257	)		(516	)		(508	)
Net income	$	776		$	960		$	2,747		$	3,674
Net income attributable to:
Brookfield shareholders	$	492		$	588		$	1,380		$	1,957
Non-controlling interests		284			372			1,367			1,717
	$	776		$	960		$	2,747		$	3,674
Net income per share
Diluted	$	0.72		$	0.86		$	1.97		$	2.89
Basic	$	0.74		$	0.90		$	2.02		$	3.00

Note:

The foregoing table includes the results attributable to non-controlling interests whereas the corporation’s segmented operating results discussed elsewhere do not.

7 | Brookfield Asset Management Inc. – 2012 Year End Results

RECONCILIATION OF COMPREHENSIVE INCOME TO TOTAL RETURN1

(Unaudited)	Three Months Ended						Years Ended
For the periods ended December 31 US$  millions (except per share amounts)	2012			2011			2012			2011
Net income attributable to Brookfield shareholders (see page 7)2	$	492		$	588		$	1,380		$	1,957
Valuation gains included in:     other comprehensive income2		858			1,663			843			1,244
Comprehensive income2		1,350			2,251			2,223			3,201
Remove: deferred income taxes included in net income2		91			112			268			96
Add: fair value changes not included in IFRS comprehensive     income		436			(466	)		1,041			154
		1,877			1,897			3,532			3,451
Less: preferred share dividends		(35	)		(29	)		(129	)		(106	)
Total return3	$	1,842		$	1,868		$	3,403		$	3,345
– Per share	$	2.92		$	2.98		$	5.39		$	5.33

(Unaudited)	Three Months Ended						Years Ended
For the periods ended December 31 US$  millions	2012			2011			2012			2011
Total return consists of:
Funds from operations	$	459		$	397		$	1,356		$	1,211
Valuation gains		1,418			1,500			2,176			2,240
less: preferred share dividends		(35	)		(29	)		(129	)		(106	)
	$	1,842		$	1,868		$	3,403		$	3,345

RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS1

(Unaudited)	Three Months Ended						Years Ended
For the periods ended December 31 US$  millions	2012			2011			2012			2011
Net income prior to valuation items and income tax (see page 7)	$	918		$	1,287		$	3,329		$	4,118
Adjust for:
Fair value changes within equity accounted income		(113	)		(425	)		(577	)		(1,529	)
Current income taxes		(35	)		(17	)		(135	)		(97	)
Disposition gains recorded in equity under IFRS		84			18			306			181
		854			863			2,923			2,673
Non-controlling interest		(395	)		(466	)		(1,567	)		(1,462	)
Funds from operations3	$	459		$	397		$	1,356		$	1,211

RECONCILIATION OF COMMON EQUITY TO INTRINSIC VALUE1

(Unaudited)	2012				2011
As at December 31 US$  millions, (except per share amounts)	Total		Per Share		Total		Per Share
Common equity per IFRS financial statements	$	18,160	$	28.99	$	16,743	$	26.77
Add back deferred income taxes4		2,339		3.55		2,255		3.42
Incremental values3		3,400		5.17		2,850		4.33
Net invested capital		23,899		37.71		21,848		34.52
Asset management franchise value		4,750		7.22		4,250		6.47
Total intrinsic value3	$	28,649	$	44.93	$	26,098	$	40.99

Notes:

1.   See Basis of Presentation on page 4

2.   Excludes amounts attributable to non-controlling interests

3.   Non-IFRS measure

4.   Net of non-controlling interests

8 | Brookfield Asset Management Inc. – 2012 Year End Results

EX-99.2

Exhibit 99.2

Brookfield Asset Management Inc.  

Letter to Shareholders

Overview

During the last 12 months a number of investments made in recent years started to pay off. This includes the incredible array of assets we assembled by sponsoring both the recapitalization of Babcock & Brown and General Growth Properties in 2009 and 2010, respectively. In addition, all of our operations were very active during 2012 with both new acquisitions and add-on investments. New asset additions include 23 renewable power facilities, more than 3,200 kilometres of toll roads in South America, a gas utility business in the UK, office properties in Australia and the city of London, and a district energy business in Canada.

The fiscal issues in the U.S. and Europe dominated the financial news during most of the year, but this did not stop the recovery of underlying business fundamentals in most of our operations, which we expect to continue to improve their performance in the current year.

The total return for each Brookfield share was $5.39 in 2012, a 12.4% return on our calculated intrinsic value of the business, in line with our long-term goals. There are two components to this performance: $1.4 billion ($1.94 per share) of funds from operations amounting to approximately a 5% return from cash generated; and a further $2.2 billion ($3.45 per share) or approximately 8% from the overall increase in the value of the equity of the company. Values of real assets generally increased across the board, with a substantial increase in our private equity investments in the housing industry, offset in part by investments impacted by the low natural gas prices.

We advanced our brand internationally by adding many new global clients, and we are honoured to have their support. In aggregate, we raised $5 billion of private fund capital and increased the permanent capital base of our listed issuers by a further $5 billion. With the public listing of our property group imminent, the size and scope of our listed issuers are poised to grow significantly. This family of flagship listed issuers, Brookfield Infrastructure Partners, Brookfield Renewable Energy Partners, and the soon to be listed Brookfield Property

Partners, in conjunction with our private funds, should allow us to continue to grow each of these businesses globally with access to a broad array of capital sources.

Market Environment

Global equity markets were largely up in 2012, led by the strong performance of the S&P 500. Markets were buoyed by a combination of the aggressive reflationary policies of the world’s central banks, the perceived lower risk of significant systemic events, and the continuation of positive economic performance from both the U.S. and China.

In the U.S., both banks and the capital markets are making credit more freely available to businesses and consumers and this has resulted in positive recoveries in the housing and auto sectors, and consequently, among other things, rising employment levels. In addition, the U.S. banking system is healthy and household formation is finally on the rise. With growing investments in housing, energy-related industries and manufacturing, the U.S. economy has the potential to surprise on the upside as the year progresses. Of course, the ongoing U.S. fiscal debate and political issues represent a risk to this view, but we expect common sense to prevail.

1 | Brookfield Asset Management Inc. – 2012 Year End Letter to Shareholders

In Europe, the banking system is still contracting, with both the amount and availability of credit shrinking. The economy will not start to grow until this trend is reversed. We expect, however, to find attractive investment opportunities in Europe as we assist corporations in recapitalizing their operations.

China has almost finished its once-in-a-decade leadership change, and is poised to continue its gradual transition into an economy that is less dependent on investment-led growth. Retail sales have grown in a strong and steady fashion and China’s positive trade balance has been maintained, despite the challenges with the economies of some of its major trading partners. Our expectation is that China will meet the economic objectives disclosed in its recently released five year plan. This is a positive development for all of our Australasian and South American investments.

Our View of the Investment Landscape

There are three long-term trends that will drive our future results. First, we believe global institutional investors will continue to allocate more of their funds to Real Assets. This bodes well for the continuing growth of our assets under management. Second, interest rates are unlikely to go much lower. While we cannot predict timing, interest rates will eventually rise. As a result, we are avoiding long-term fixed income investments and locking in as much long-term financing as we can. Third, we believe that equity markets look cheap compared to most alternatives, in particular when compared to fixed income markets, with many global companies in excellent shape and multiples low.

With the fear of market collapse dissipating, we believe that capital will also start to rotate from bonds back into equities. The opposite has occurred for the past five years. This, in conjunction with the global recession, caused the S&P to generate compound returns of approximately 2% in the last five years versus 7% from bonds. The net impact has been that many investors have given up on equities, resulting in an allocation to the sector that is now at historic lows.

We believe that markets usually revert to the mean. Therefore, we are positive on the current valuations in the equity markets. In addition, increasing investor allocations to equities should provide upward strength to share prices for the foreseeable future.

In addition, the global reflationary policies represent much more to us than just a macro-economic policy initiative. They represent a compelling opportunity with many sovereign interest rates actually negative on a “real,” or “net of inflation” basis. The opportunity presented is to capitalize on this by locking in long-term, low-cost capital on assets whose revenues are expected to grow substantially. In this regard, during 2012, our various businesses issued approximately $12 billion of long-term fixed rate financing with an average term of nine years at an average coupon interest rate of 4.75%.

2 | Brookfield Asset Management Inc. – 2012 Year End Letter to Shareholders

Investment Performance

Our share price increased 35% in 2012. More relevant is that at year end, the compound annual performance for our shares over both 10 and 20 years was approximately 20%. This compared well with most other investment alternatives during these periods.

Investment Performance	Brookfield NYSE			Brookfield Intrinsic Value			S&P 500			10 Year Treasuries
1		35	%		12	%		16	%		4	%
3		20	%		12	%		11	%		9	%
5		3	%		n/a			2	%		7	%
10		22	%		n/a			7	%		6	%
20		19	%		n/a			8	%		6	%

More important than stock market performance was the increase in our estimate of the intrinsic value of our business, which rose to $44.93 at year end from $40.99 at the start of the year. In conjunction with dividends received by you during the year, the total return for a shareholder was 12.4%.

This point is particularly relevant as Brookfield is managed to generate long-term wealth, and tax-efficient compounding, versus being a short-term stock market investment. As a result, our shares sometimes trade at less than intrinsic value. The negative part of this is that should you wish to monetize your investment, there will be times that you may not realize its intrinsic

value. More important though is that when you buy or own a share you usually have more value compounding for you.

In addition to Brookfield’s strong overall performance, the results in virtually all of our listed issuers, and our private and listed securities funds managed by us were also excellent during 2012, most exceeding relevant benchmarks by wide margins.

2012 Returns	Flagship Listed Entities			Private Funds			Listed Securities Funds
Infrastructure		33	%		17	%		19	%
Renewable Energy		14	%		n/a			n/a
Property		n/a			18	%		33	%
Private Equity		n/a			19	%		n/a
Timber		n/a			7	%		n/a

Our flagship listed entities performed well, with Brookfield Infrastructure generating a 33% return for shareholders and Brookfield Renewable Energy generating 14%. Both entities increased their cash distributions and have achieved three year returns of 28%, results that set these entities up well when they seek access to capital in order to grow their operations.

Funding Strategy

We have virtually completed the establishment of our family of flagship operating platforms, which will run our global businesses in the future. This approach features a flagship publicly listed issuer and a major private fund in each of our property, power and infrastructure platforms. Our private equity business is not as well suited to the public markets and consequently is funded only with private capital.

3 | Brookfield Asset Management Inc. – 2012 Year End Letter to Shareholders

In building our business, we have taken great pains to ensure alignment of interest between Brookfield and all of our investment partners and clients, including investing very significant amounts of our own capital alongside them. We have also carefully designed these entities to ensure there are no conflicts between public and private investors.

During the year, we raised $3.6 billion of capital for our private funds from institutional and high net worth investors. We also increased the equity base of our listed issuers by a further

$5 billion and deployed $7 billion of capital in investments. We continue to have $9 billion of investable capital, are currently marketing six new funds and expect to raise over $5 billion

of additional capital from institutional clients in the next 24 months.

We expect that over the next 10 years, most institutions will increase their allocations of real assets to between 25% and 40%.  We believe the impact of this trend will be similar to what took place decades ago, when institutions shifted from bonds to common stocks and valuations on equities soared. While there is some risk that returns will be driven down by these major capital flows, it is important to note that there is a confluence of events occurring. That is, the supply of assets available for investment is also likely to grow dramatically, as governments undertake the deleveraging that must occur to get their fiscal books in order.

As institutions continue to increase allocations to real assets, we believe we are one of a few global asset managers who have the depth of experience, capital and operational capabilities to participate meaningfully in this transformation.

Investment Process

Our goal is to generate consistent long-term investment returns for our clients. To meet that objective, our approach to investing attempts to focus on utilizing our strengths as a company in order to ensure we have a competitive advantage when investing capital. We believe these competitive advantages to consist of (i) size and access to capital, (ii) our extensive global operating platforms and people, and (iii) our longer-term investment horizon and disciplined approach to investing developed over the years. In particular, we believe this investment process allows us to be successful owners and operators of real assets despite the fact that the company has grown substantially over the past 20 years.

Our investment process relies on a team approach that brings together the skills of our investment professionals and our operating teams in developing investment opportunities, executing transactions and running the businesses we acquire. We believe that we enjoy a competitive advantage as asset managers, due in part to the depth of our operating teams, many of whom have worked together for decades. These teams are in turn overseen by our investment professionals, who can draw on their expertise in capital markets and years of experience in each of these businesses.

Over the past few years, this approach to investing was put to work in various distressed real estate and infrastructure investments, and more recently in Europe, where our initial thesis was that companies would need to dispose of assets to recapitalize their balance sheets. We moved senior executives to Europe, where they indentified owners and operators and worked hard at building relationships.  These relationships resulted in a series of negotiated transactions, most of which featured European companies re-focusing on their home market by selling us their assets in other markets.

4 | Brookfield Asset Management Inc. – 2012 Year End Letter to Shareholders

Our recent investments also highlight the fact that we attempt to be contrarian in our approach to investing, which means we often find ourselves acquiring businesses during periods of economic distress. Our belief is that our value-based investment approach allows us to purchase assets at a discount to their replacement cost, building a margin of safety into our acquisitions, while our operating expertise gives us the ability to underwrite decisions when assets and capital structures are more fluid than many organizations are able to work with.

International Financial Reporting Standards (“IFRS”)

We report under IFRS as we are a Canadian Corporation and this accounting framework is mandated in Canada. The main difference of IFRS reporting to U.S. GAAP is that a number of asset classes are carried at fair value under IFRS, as opposed to historical depreciated cost. IFRS is the reporting framework for most developed economies and is the standard in virtually every country where we operate, other than the United States.

We also use fair values to report to the investors in our Funds, both under IFRS and under U.S. GAAP for investment funds which permits fair value accounting. These principles are also widely utilized by asset managers and therefore clients, auditors and management teams are well versed in applying and interpreting them. As a result, IFRS accounting is very suitable for a global business of our type and, in particular, for reporting on the performance of the asset classes in which we invest.

IFRS also provides a solid foundation for the performance metric used by a number of the larger public U.S. asset managers and investment analysts, which they refer to as Economic Net Income (ENI). This metric is comparable to what we refer to as Total Return. Total Return for us means the operating cash flow generated within our businesses together with changes in their intrinsic value.

Under IFRS, we carry at fair value virtually all of our commercial office and retail properties, renewable power facilities, most of our timber operations and many of the assets within our infrastructure operations. Financial assets are mostly carried at fair value, similar to U.S. GAAP.  Changes in the values are determined at least annually and reported as gains or losses in our financial statements. We believe this is valuable information that would not otherwise be available to investors under U.S. GAAP, and it forms a major component of Total Return.

There are certain assets that are not carried at fair value under IFRS and accordingly we provide a management estimate of the amount that should be added to our common equity in order to provide a consistent and complete assessment of the changes in the value of

our shares. These include assets such as regulatory rate bases and concessions within our infrastructure business and residential development land.

In order to complete the picture, we also provide a mechanical estimate of the franchise value of our asset management activities. We make these adjustments so that you have our most realistic assessment of what the values could be. We attempt to provide all of this information in a format so that you can make your own decision about whether to add some or all of these amounts to your assessment of the value of the company.

Accordingly, we think IFRS is a valuable reporting framework because it allows us to anchor two of our key performance metrics, Total Return and Intrinsic Value, to our audited financial statements. As noted above, Total Return is comprised of Funds from Operations and Valuation Gains. Funds from Operations is reconciled to our Net Income, and Total Return (prior to changes in management estimates for assets not carried at fair value and franchise value) is reconciled to Comprehensive Income.

5 | Brookfield Asset Management Inc. – 2012 Year End Letter to Shareholders

We describe how valuations are determined in more detail within the notes to our consolidated financial statements and our MD&A.  In summary, however, IFRS values are intended to be the value at which a buyer will purchase an asset in the absence of any undue influence such as financial pressure.  In the case of physical assets, fair value is typically based on projected future cash flows using a discounted cash flow analysis; financial assets are valued based on quoted market prices or, if unavailable, by benchmarking to similar assets or using fundamental analysis.

We prepare most of the analysis internally, however we also receive external appraisals for roughly one-third of our assets each year.  Furthermore, because many of our assets are held through our funds, or because we require appraisals for financing purposes, frequently a larger portion of our assets are appraised externally.

An important concept to note is that while a number of assets that we fair value are held through a public company, we carry our interest in the public company (in the case of an equity accounting investment such as General Growth Properties) or the underlying assets (in the case of a consolidated entity such as Brookfield Infrastructure Partners) based on our proportionate interest in the fundamental underlying value of the assets.  In many cases, the stock market value may differ from the fundamental value, and can be higher or lower.

For example at year end this year, our investments that we own through Brookfield Infrastructure Partners are marked at values based on IFRS that are quite a bit lower than the stock price of Brookfield Infrastructure Partners that we own. On the other hand, our office assets held through Brookfield Office Properties are marked at a price slightly higher than the current trading price. Of course, we pay attention to stock market prices for our businesses, but they are not necessarily relevant for our accounting.

Our view of IFRS after applying it for a number of years is that it does provide our shareholders with a useful snapshot of the values of the company. In conjunction with IFRS, we try to provide you with as much detail as possible so that you can assess these values yourself and therefore make informed decisions.  No accounting regime is perfect, but we believe IFRS is helpful in our efforts to describe the business to you.

Brookfield Property Partners (“BPY”)

We hope to complete the distribution of BPY units to you shortly. We encourage you to read all of the materials on BPY so that you can make an informed decision before you decide to hold or sell your units. There is a prospectus filed with the securities regulators in Canada and the U.S., and supplemental materials on our website, so you can further your knowledge of what we are doing.

In the simplest terms, BPY is a spin-off to you of a direct interest in our property operations, which we have benefited significantly from over the past 20 years. This business has generated an annual compound ±15% return since 1989, and while we cannot promise it, we see no reason why returns should not be similar.

6 | Brookfield Asset Management Inc. – 2012 Year End Letter to Shareholders

Our property business today is large, but highly focused on using our competitive advantages of scale and operating expertise to opportunistically acquire and surface value from high quality real estate on a global basis. We intend to use these advantages to make BPY one of the best property investments in the capital markets, and once we are cleared by the securities commissions, we will complete the distribution of units to you.

Operating Reports

Property Group

Our property operations remain our largest operation and generated $1.25 billion of cash flow. Total assets under management increased to $103 billion, and we are currently investing capital through Brookfield Property Partners and our private institutional Opportunity Fund.

We acquired Thakral Holdings, a $1 billion Australian property company, and purchased 80% of an 18 million square foot industrial portfolio in the southern U.S. and Mexico with a $900 million enterprise value, along with various other smaller transactions. We collected most of the loans in the New Zealand portfolio which we bought in 2011 from a European financial institution, earning exceptional returns. We acquired an office portfolio in the city of London, increased our interest in a number of retail malls and sold numerous non-core office, industrial and retail properties.

We completed the new Brookfield Place – Perth office tower which houses BHP and is now an iconic complex in this rapidly growing Australian city. In Toronto, we leased 420,000 square feet at Bay Adelaide East to Deloitte and started construction on this tower. We also completed the makeover of First Canadian Place which was well received by tenants and retailers.

Leasing activity in office markets in the U.S. has become much stronger over the past six months which bodes well for the progress we plan to make on leasing in 2013 and 2014. We leased a total of 7 million square feet; at rental rates 35% higher than what was formerly in place.

Retail sales in the U.S. have been strong, and as a result, GGP’s performance was strong, and expected to continue to outperform, driven by solid tenant leasing demand and tenant sales. During the year we acquired 11 Sears stores in our malls, and are now transforming a number of these spaces into more traditional mall interiors, filled with in-line retailers. In this regard, the redevelopment of the Sears store at our Ala Moana Mall in Hawaii will be an exceptional addition to one of the best retail centres in the world.

From an investment perspective, we acquired 18 million additional GGP warrants, GGP repurchased 52 million warrants, and we settled the issues we had with a co-shareholder in a positive manner for all parties. As a result of all of this, we now own 43% of GGP in our investment group.

Infrastructure Group

Organic growth and acquisitions combined to increase the scale and performance of our infrastructure business. Cash flow from operations increased to $680 million, an increase of 24% over last year. Total infrastructure assets under management increased to $27 billion and we are currently investing capital through Brookfield Infrastructure Partners and our private institutional fund.

7 | Brookfield Asset Management Inc. – 2012 Year End Letter to Shareholders

We completed four major transactions in 2012, including the acquisition of the other half of our Santiago toll road; 50% of the controlling stake in 3,200 kilometres of toll roads in Brazil; a gas utility business in the UK, which we merged with a similar company we owned; and acquired the Toronto city district energy company. The Toronto energy business provides heating and cooling to major property complexes, and we believe we can generate attractive returns given our related property operations.

We sold half of our 50% investment in our western Canadian timberlands and are considering a number of alternatives for our timber assets, which could include further institutional ownership or listing in the public market.

Brookfield Infrastructure was established as an investment-grade debt issuer, and completed an inaugural issuance of C$400 million of bonds at a U.S. swapped coupon for five years of 2.7%.

We also completed our $600 million Australian rail construction project to expand the rail network to carry iron ore. This project is supported by take-or-pay contracts which will contribute meaningfully to increased cash flows in 2013.

Power Group

The financial performance of our power group was weak as a result of extremely low water levels and electricity prices that reflected low natural gas prices during the year. Generation totalled 15,821 gigawatt hours, which was 13% below plan. However, total assets under management increased to $19 billion as we are capitalizing on this low price environment to expand the portfolio. We are currently investing capital through Brookfield Renewable Energy Partners and a private institutional fund.

We own one of the world’s largest renewable power operations, and our ability to undertake large time-consuming transactions makes us a preferred partner for industrial companies and utilities that seek to sell their power assets. We committed to invest $2 billion in new acquisitions in 2012, adding 1,000 megawatts of power to our operations. This included two major acquisitions: 378 megawatts of plants from Alcoa and 351 megawatts from NextEra.

The Alcoa transaction included four facilities in the southeastern U.S. which formerly powered aluminum smelters. The NextEra transaction, when completed, will include

19 facilities in Maine on rivers where we already operate, and came about because this highly-rated large utility was refocusing on their core business. We believe both acquisitions will be strong performers over the longer term and they increased our total installed capacity of renewable energy to more than 5,000 megawatts.

During the year we continued construction on three new hydro projects in Canada and Brazil, and acquired a number of smaller facilities.

Brookfield Renewable has flourished since it was established in 2011 as a listed company and the stock price increased 27% since then. We are currently working on a dual listing of this business on the NYSE, and expect to complete this in the first quarter of 2013.

8 | Brookfield Asset Management Inc. – 2012 Year End Letter to Shareholders

Private Equity Group

Our private equity group had a good year. We closed the Brookfield Capital Partners Fund III, realized on a number of investments and saw meaningful increases in value of investments made in industries related to the housing sector over the past five years. Total private equity assets under management increased to $26 billion, and we are currently investing through Capital Partners Fund III and from our own balance sheet when additional capital is required.

Norbord and Ainsworth, which sell oriented strand board (OSB) to homebuilders, endured five difficult years, during which time we invested a substantial amount of capital in their franchises. With recovering housing fundamentals, the share prices of both companies have more or less tripled, with OSB prices having more than doubled from approximately $160 per board foot to over $350.

Brookfield Residential's share price more than doubled from $8 to $18 at year end, and is over $20 today. Investor interest in the housing sector enabled us to complete a primary equity offering and bond offering. Net proceeds of this capital raising totalled more than $800 million, enabling us to complete the recapitalization of Brookfield Residential, and allowing them to acquire new tracts of land in California and Alberta.

We sold our U.S. residential brokerage operations to Berkshire Hathaway for cash and a one-third ownership interest in the combined business which is now branded under the name Berkshire Hathaway HomeServices. We believe they will do very well with this business and therefore we will benefit accordingly on our remaining investment.

Strategy and Goals

Our strategy is to provide world-class alternative asset management services on a global basis, focused on real assets such as property, renewable power, infrastructure, and private equity investments. Our business model utilizes our global reach to identify and acquire high quality assets at favourable valuations, finance them prudently, and then enhance the cash flows and values of these assets through our established operating platforms to achieve reliable attractive long-term total returns for the benefit of our shareholders and clients.

Our primary long-term goal is to achieve 12% to 15% compound annual returns in the underlying value of our business measured on a per share basis. This increase will not occur consistently each year, but we believe we can achieve this objective over the longer term by:

·   Offering a focused group of Funds on a global basis to our investment partners; while utilizing our balance sheet capital to invest beside our partners, and to support our Funds in undertaking transactions they could not otherwise contemplate without our assistance.

·   Focusing the majority of our investments on high quality, long-life, cash-generating real assets that require minimal sustaining capital expenditures with some form of barrier to entry, and characteristics that lead to appreciation in the value of these assets over time.

·   Utilizing our operating experience, global platform, scale and extended investment horizons to enhance returns over the long term.

9 | Brookfield Asset Management Inc. – 2012 Year End Letter to Shareholders

·   Maximizing the value of our operations by actively managing our assets to create operating efficiencies, lower our cost of capital and enhance cash flows. Given that our assets generally require a large initial capital investment, have relatively low variable operating costs, and can be financed on a long-term, low-risk basis, even a small increase in the top-line performance typically results in a proportionately larger contribution to the bottom line.

·   Actively managing our capital. Our strategy of operating our businesses as separate units provides us with opportunities from time to time to enhance value by buying or selling parts of a business if the capital markets enable access to capital at attractive terms. As a result, in addition to the underlying value created in the business, this strategy allows us to earn extra returns over that which would otherwise be earned on the assets we own.

In the short term, our goals include substantial fund raising for our private funds, listing Brookfield Renewable Energy Partners on the NYSE, the spin-off of Brookfield Property Partners, and surfacing value from our timber assets and numerous businesses related to the housing sector.

Summary

We remain committed to being a world-class alternative asset manager, and investing capital for you and our investment partners in high-quality, simple-to-understand assets which earn a solid cash return on equity, while emphasizing downside protection of the capital employed.

The primary objective of the company continues to be generating increased cash flows on a per share basis, and as a result, higher intrinsic value per share over the longer term.

And, while I personally sign this letter, I respectfully do on behalf of all of the members of the Brookfield team, who collectively generate the results for you. Please do not hesitate to contact any of us, should you have suggestions, questions, comments, or ideas you wish to share with us.

J. Bruce Flatt

Chief Executive Officer

February 15, 2013

10 | Brookfield Asset Management Inc. – 2012 Year End Letter to Shareholders