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 August, 2011

Commission File Number: 033-97038

BROOKFIELD ASSET MANAGEMENT INC.

(Translation of Registrant’s Name into English)

Suite 300, Brookfield Place, 181 Bay Street, P.O. Box 762, Toronto, Canada M5J 2T3

(Address of Principal Executive Offices)

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

Form 20-F  ¨             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 the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ¨            No  x

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

DOCUMENTS FILED AS PART OF THIS FORM 6-K

See the Exhibit Index to this Form 6-K.

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: August 15, 2011	By:	/s/ Jeffrey Haar
	Name:	Jeffrey Haar
	Title:	Senior Vice President, Legal and Corporate Secretary

EXHIBIT INDEX

Exhibit	Description
1	Interim Report to Shareholders
	Interim Report to Shareholders of Brookfield Asset Management Inc. for the quarter ended June 30, 2011
2	Certification of Chief Executive Officer pursuant to Canadian Law
3	Certification of Chief Financial Officer pursuant to Canadian Law

EX-1

Exhibit 1

Interim Report Q2 2011

	Three Months Ended June 30				Six Months Ended June 30
	2011		2010		2011		2010
OPERATING RESULTS
Per fully diluted share
Cash flow from operations	$	0.50	$	0.53	$	0.83	$	1.13
Net income		1.26		0.12		1.67		0.37
Total (MILLIONS)
Cash flow from operations	$	342	$	327	$	573	$	693
Net income
Total		1,428		373		1,998		782
For Brookfield shareholders		838		89		1,116		253
			As At
			Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
SHARE VALUES
Per fully diluted share
Intrinsic value1			$	39.31	$	37.76	$	37.45
Net tangible asset value2				33.26		31.71		30.96
Total (MILLIONS)
Intrinsic value1			$	25,069	$	24,046	$	22,261
Net tangible asset value2				21,069		20,046		18,261

1. Represents net tangible asset value (see Note 2) plus the estimated value of the company’s asset management franchise, as at June 30, 2011, March 31, 2011 and December 31, 2010

2. Reflects carrying values on a pre-tax basis prepared in accordance with procedures and assumptions utilized to prepare the company’s IFRS financial statements, adjusted to reflect asset values not recognized under IFRS (see Management’s Discussion and Analysis of Financial Results) as at June 30, 2011, March 31, 2011 and December 31, 2010

  LETTER TO SHAREHOLDERS

OVERVIEW

The news since we last wrote to you has been consumed by negative macro-economic events led by European sovereign risks, the U.S. debt ceiling negotiations and a downgrade, Chinese interest rate tightening, an Indian stock market correction, and volatility across stock, currency and interest rate markets.

In contrast, at the grass roots business level, credit is available to well capitalized companies at very reasonable rates and overall business conditions continue to improve. We view this as a natural evolution of the economy and markets as we work through both the build up of the extremes that occurred during the 2005 to 2007 period, and the money pumped into the global economy in 2008 to 2010 in order to avert further economic issues.

For companies such as ours, with strong balance sheets and access to capital, business is good. Cash flows continue to improve and borrowing rates are attractive. The lack of credit available to marginal players enables us to continue to expand our operations on a value basis, selectively picking our spots. Acquisitions of assets by those prepared to buy through the reorganization process, or deal with the complexities of entities in financial turmoil, have never been more compelling on a risk reward basis.

We remain committed to building the company using investment grade leverage with the majority of this borrowing done at the asset level with no recourse to the corporation. This strategy, as in other uncertain times, should serve us well.

Q2 2011 INTERIM REPORT 1

OPERATIONS

During the second quarter, we recorded total net income of $1.4 billion, of which $838 million was attributable to Brookfield shareholders. Operating cash flows were $342 million for Brookfield shareholders, up substantially on a comparative basis to 2010, and assets under management now exceed $150 billion. We continue to experience improved operating results, and we are selectively expanding our businesses through both acquisitions and development initiatives.

Renewable Power Generation

• Our power operations recorded a strong quarter with excellent rainfall in most of our watersheds and higher pricing on spot marketed power due to hot weather in a number of our markets. Second quarter results were therefore on plan and well ahead of 2010. Water levels are currently 4% above long-term average, so we are positioned well for the rest of the summer.

• We closed the purchase of a 30 megawatt hydro facility in Brazil for R$300 million. This facility is near our other operations in Mato Grosso State and therefore was easily integrated into our operations.

• Renewable power projects under construction totalling approximately 400 megawatts of capacity, with a construction cost of $1.2 billion, are on budget and will be commissioned in late 2011 or early 2012.

Commercial Properties

• Property leasing was strong in Canada, Australia, and our major U.S. markets. We leased 1.7 million square feet during the quarter, bringing the total to 4.6 million square feet to date this year. Some of our other markets were less robust but we continue to see progress towards higher occupancies and rental rates.

• We closed the purchase of a 75% interest in a 1.8 million square foot office property in midtown Manhattan, on a valuation of $520 million. This building is adjacent to our 5.4 million square foot West Side development site, and our plan is to refurbish the property to provide premier office and retail space for tenants in this emerging West Side office market.

• We agreed to purchase a 50% interest in BankWest Tower, a 423,000 square foot office property in Perth for A$130 million. This property is across the street from City Square, the 1.2 million square foot signature office complex we are building with BHP as its major tenant. BankWest Tower’s anchor tenant will be vacating the building by 2014, and with the Perth office market tight for space, we believe our returns will be strong in this property.

• We also acquired an additional 50% interest in the Southern Cross West office tower in Melbourne for A$120 million. This office property is part of our landmark Southern Cross development, comprising approximately 510,000 square feet in the heart of Melbourne, and leased to the Australian Post Office. The property was built by us and opened in 2009.

• We sold 100% of a 1.3 million square foot office building in Houston to Chevron for $340 million. Chevron occupies 100% of this property, and they have also leased a further 311,000 square feet of office space in one of our other properties in Houston.

• We traded 33% interests in two malls in Arizona for $75 million of cash and the acquisition of freehold interests in six big box anchor locations in our malls that were owned by another company.

• On the financing front, we refinanced approximately $2 billion of retail mortgages generating net cash to the prior mortgages of approximately $600 million. $500 million of this cash was used by General Growth Properties (“GGP”) to repurchase its shares, with the balance available for corporate purposes.

• GGP announced last week that it would distribute the shares of Rouse Properties Inc. to shareholders, which will own 30 shopping malls requiring more intensive redevelopment work over the next five years. This spin-off will enable a new management team to focus entirely on this collection of malls, and allow GGP to focus on its fortress asset portfolio, which post spin-off will have average sales of close to $500 per square foot. We intend to keep our shares of Rouse and support this new entity on its launch into the capital market.

2 BROOKFIELD ASSET MANAGEMENT

Infrastructure

• Shipping volumes were up, timber had another favourable quarter, and our other infrastructure operations were largely on budget reflecting the stable nature of the operations.

• We signed a new large customer contract for our rail expansion plans in western Australia. This contract with Karara Mining Limited supports our investment of over $400 million to upgrade our rail tracks. We also expect to sign three further contracts requiring investment of an additional $100 million, which in total should increase our rail net operating income, over a two-year period, from approximately $100 million today to over $250 million.

• We received regulatory approval to begin construction of our Texas transmission project at a total cost of approximately $750 million. Project financing has been secured and construction will start in the third quarter.

Private Equity & Opportunistic Investing

• We recapitalized an office property fund for $175 million by acquiring bank debt and converting it to equity. The fund owns a five million square foot portfolio of office properties on the west coast of the U.S., predominantly California, and we expect to earn strong returns on invested capital as we work with management to reposition the portfolio over the next five years.

• We committed a $125 million senior secured loan to an infrastructure manufacturer who was facing a debt default. Our loan is well secured, and should earn us very good returns as we have provided the company with time to restructure its financial affairs.

• Longview Fibre issued $480 million of high yield bonds and repatriated the net proceeds back to our Special Situations Fund II. Proceeds to Brookfield were close to $200 million with our Fund continuing to own 100% of the operation.

• Housing continues to be strong in Brazil with many projects largely sold on launch. In western Canada, where most of our Canadian housing assets reside, housing performance is strong as a result of an oil backed economy. In the U.S., operations are stable in the markets in which we operate.

• We closed the merger and a $510 million rights offering of Brookfield Residential, which was well subscribed with a 70% take-up by shareholders. Other shareholders invested ±$180 million into the rights offering and as a result, we now own 72% of the merged company.

• We sold our Australian residential land business to a publicly traded developer for A$270 million. These operations largely consisted of two land assemblies in Perth. We decided to exit this business given its relatively small scale and the valuation of residential land in Australia compared to other areas where we operate.

DURABLE COMPETITIVE ADVANTAGES

We focus the largest portion of our investment capital on businesses with assets that have durable competitive advantages. What this means is that we are seldom invested in the “new new thing,” and correspondingly it means that we avoid the risks that come with attempting to stay ahead of the increasingly swift and dramatic shift in consumer tastes and attitudes, as well as technologies that affect many of these businesses.

Our major investment areas share specific competitive advantages, and we look for these same characteristics when considering a new business:

• Limited Risk of Technological Obsolescence – We look for simple assets with high barriers to entry and proven long-term uses. Equally important is that they do not suffer from technological obsolescence that can destroy many investments. Barring something unforeseen, virtually all of our assets should continue to be a major part of the global economy and generally produce better results as the businesses grow and globalize.

Q2 2011 INTERIM REPORT 3

• Long-Lives with Minimal Sustaining Capital Expenditures Required – After the upfront investment, most of our assets require only modest ongoing sustaining capital investment and therefore the cash that is generated is largely available for investment into other opportunities or distribution to owners.

• Stability of Cash Flows – Due to the nature of the assets and contracts in place, the cash flows are usually highly stable, often with inflation protection or other types of locked-in escalators. This enables us to benefit from stable operating cash flows, and also allows us to finance these assets on a non-recourse basis on attractive terms.

• Capital Appreciation Potential – These assets generally appreciate in value given their location so the return is a combination of the current cash flows, and the increased value of the asset at the end of the period (versus many assets that deplete over time).

• Embedded Optionality – Many of our assets have “options” embedded in the revenue streams by way of features in the contracts or in the asset profile, that over time enable an active owner to out-perform what would otherwise be expected. An example are office or retail leases which often generate payment for cancelation as well as the opportunity to re lease. Another example are hydro plants, which often have reservoirs that can be tapped to capture peak pricing periods, versus other forms of electricity production which sell at average market prices.

• Ability to Build Scale – We have the ability to expand many operations, build scale and productively deploy large amounts of capital. Despite this, each investment is distinct and can generally be separated financially from the others to ensure that one poor investment does not affect others or threaten the entire company.

EXPANSION IN AUSTRALIA

Given our favourable experience investing in commodity based economies and our goal seven years ago to geographically diversify our operations, we were naturally attracted to Australia.

Since acquiring major investments in the property and infrastructure areas in Australia over the past five years, we have assembled an incredible portfolio that is an extension of virtually all our operations. And while we are now a very substantial investor in the country, we plan to further increase our investment. In addition, our presence in Australia has assisted us in establishing small operations in India, China and the Middle East, which have the potential to be extremely meaningful to the company in five to ten years.

In total, we own approximately $15 billion of assets in Australia, representing some of the finest property and infrastructure projects in the country.

We targeted Australia as we felt comfortable doing business in the country given it is English speaking and has an excellent legal system. We also believed that because of its rich commodity base, the odds favoured its economy outpacing most other countries, with its currency benefiting correspondingly. And, while we do not target countries to benefit principally from currency movements, as an international investor, it is far easier to meet your return targets when you have the currency winds behind your back versus the opposite scenario, where you are trying to earn out-sized returns on investments because the currency is working against you.

Over the past five years, China’s raw material demands have had a dramatic effect on Australia, with over $200 billion being invested in infrastructure projects for natural gas, coal, bauxite, iron ore and other products. All of this has enhanced returns in Australia and increased the currency with enormous in-flows into the country in relation to its economy and population of ±20 million people. Although no investment or country is without its risks, we believe the future of Australia is positive, and in particular for our areas of operation.

In Australia, we today own and manage 44 office and retail properties encompassing 16 million square feet. This includes some of the newest and highest quality office properties in Sydney, Perth, Melbourne and Brisbane. We also own five premium office development sites including City Square in Perth. When complete, the City Square complex will comprise over 1.2 million square feet of office and retail space and will become the business heart of Perth. We also recently added two 50% interests in properties to the Australian portfolio and continue to seek opportunities to grow the business.

4 BROOKFIELD ASSET MANAGEMENT

We own one of the largest commercial construction companies in Australia which is currently active constructing office, retail, infrastructure and hospital projects across the country and around the world. This includes the $1.7 billion Fiona Stanley Hospital in Perth which is 38% complete.

We own 5,100 kilometres of rail tracks in western Australia where we earn tolls from customers who operate trains on our tracks. These tracks are irreplaceable as it would be close to impossible to find easements to lay down competitive tracks, and even if this was possible, the cost to replicate our infrastructure would be many multiples of our current investment value. Traditionally, our tracks were used for grain haulage but with the massive amount of investment being made in the mining sector, in particular iron-ore on the west coast, virtually all our future growth will be derived from mines coming on stream to feed the global commodity markets. This should enable us to virtually triple the cash flows from these assets over the next few years with possibly greater upside from there.

We own the Dalrymple Bay Coal Terminal (“DBCT”), a port facility which exports primarily metallurgical coal mined in the Bowen Basin region of Queensland, Australia. This area contains one of the lowest cost and most prolific coal deposits in the world, and DBCT is one of the world’s largest coal terminals, with an annual capacity of 85 million tons, accounting for 21% of global metallurgical seaborne coal exports.

In addition, we have used our base in Australia to expand our executive relocations businesses to all the major markets in the country, and attracted a number of institutional fund and other relationships for our businesses. We are also building our real estate and infrastructure advisory presence in Australia to mirror what we have elsewhere in the world, and believe each of these businesses have capacity to grow rapidly.

PRICE VERSUS VALUE

We are great believers that over the longer term the “Price” of a security will equal its “Value.” Despite this, in the short term, for many reasons, Price often does not equal Value. Investors, of course, have a daily mechanism to determine the Price of assets which are quoted in the stock market. On the other hand, we attempt to give you as much information about Value as we can without overwhelming you. Despite this, Value is often difficult to ascertain, in particular, during periods of market volatility such as those experienced over the past few years.

In our view, Price in the stock market is merely a function of the supply and demand characteristics for capital that desires to be invested in the stock market on a whole, in a sector of the market, or in a specific stock. The Price is therefore often influenced by topical news of the day and other matters that may or may not have any relevance to the Value of a specific security.

Value, on the other hand, is the net present value of the future cash flows of a business based on assumptions for future growth and discounted at an appropriate risk rate. The difficulty is that there is no absolute Value for anything, as there can always be wide views over an asset’s growth profile and the appropriate discount rate.

As a result of the above, in the short term, the Price of a publicly traded security often does not equate to its Value. Sometimes it is lower and sometimes it is higher. As a general rule, we do, however, believe that stock markets undervalue great businesses. This is largely because stock markets have difficulty placing a finite current value on the future value of a strong franchise.

This is particularly acute today when you look at large capitalization multi-national franchises that trade at low double digit multiples, have large amounts of cash on the balance sheet to deploy, and have meaningful prospects for earnings growth.

We attempt to provide you with our Value, which we refer to in our materials as Intrinsic Value. This is a combination of our book values, adjusted for some assets and operations which are not reflected at their fair values under IFRS accounting. The current number is approximately $39.31 and as shown in the following table, we believe that based on one’s view of the discount rates and market assumptions, this number could reasonably be higher or lower by $7.50 per share. We view this as the liquidation value on the low end and business value on the high end.

On a liquidation basis, you may take the view that realized values would be less than the underlying values, as we own a lot of assets and liquidating them all at once might be difficult. Alternatively, if you believe that a company should be valued as a going concern at

Q2 2011 INTERIM REPORT 5

the value willing buyers and sellers would pay for assets or businesses in a normal market, then you might conclude that achievable sales prices are above their appraised values, in particular when the current cash flows are still at low points as many operations recover from the recession.

The following table summarizes our estimate of values, as described above:

	Per Share
	Total		Base Case		Liquidation Value			Business Value
AS AT JUNE 30, 2011 (MILLIONS, EXCEPT PER SHARE AMOUNTS)
Adjusted Asset Value		$  21,069		$  39.31		$  39.31			$  39.31
100-basis point change in IRR’s1						(7.50	)		7.50
Value Range						$  31.81			$  46.81

1. Management estimates

SUMMARY

We continue to see a vast number of opportunities to add assets to our principal operating units. Most of these emanate from corporate and asset reorganizations caused by businesses having too much leverage. We are confident of our ability to add assets to our business in the next few years but are never sure when we will execute on a meaningful addition relative to the organic growth underway and planned.

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

Our primary objective continues to be generating increased cash flows and net asset values on a per share basis, and as a result, creating higher value over the long term for shareholders.

And, while I personally sign this letter, I respectfully do so 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 investment ideas.

J. Bruce Flatt

Chief Executive Officer

August 10, 2011

6 BROOKFIELD ASSET MANAGEMENT

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Interim Report contains forward-looking information within the meaning of Canadian provincial securities laws and other “forward-looking statements” within the meaning of certain securities laws including 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 harbour” provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations. We may make such statements in the report, in other filings with Canadian regulators or the SEC or in other communications. See “Cautionary Statement Regarding Forward-Looking Statements” on page 70.

BASIS OF PRESENTATION

Use of Non-IFRS Accounting Measures

This Interim Report, including the Management’s Discussion and Analysis (“MD&A”), makes reference to Cash Flow from Operations, Net Tangible Asset Value and Intrinsic Value, all on a total and per share basis. Management uses these metrics as key measures to evaluate performance and to determine the net asset value of its businesses. These measures are not generally accepted measures under International Financial Reporting Standards (“IFRS”) and may differ from definitions used by other companies.

We derive operating cash flow from the information contained in our consolidated financial statements, which are prepared in accordance with IFRS. We define operating cash flows (which we use interchangeably with cash flow from operations) as net income prior to such items as fair value changes, depreciation and amortization, future income tax expense and certain non-cash items that in our view are not reflective of the underlying operations. We also incorporate most of the elements in net income that are not included in cash flow from operations, along with components of other comprehensive income, in determining our intrinsic and net tangible asset values.

We measure invested capital based on net tangible asset value unless otherwise stated, using the procedures and assumptions that we follow in preparing our financial statements under IFRS. These values are reported on a pre-tax basis, meaning that we have not reflected adjustments that we expect to make in our IFRS financial statements to reflect the difference between carrying values of assets and their tax basis. We do this because we do not expect to liquidate the business and, until any such taxes become payable, we have the ability to invest this capital to generate cash flow and value for shareholders. We have also included adjustments to revalue certain assets and businesses that are not otherwise carried at fair value in our financial statements. Intrinsic value includes both net tangible asset value and our estimate of the value of our asset management business franchise.

We provide additional information on how we determine Intrinsic Value, Net Tangible Asset Value and Operating Cash Flow in the balance of this document. We provide a reconciliation between Operating Cash Flow and Net Income and both Intrinsic Value and Net Tangible Value to Common Equity in the Reconciliation Between Consolidated and Segmented Financial Information on pages 59 to 64.

Information Regarding the Interim Report

Unless the context indicates otherwise, references in this Interim Report to the “Corporation” refer to Brookfield Asset Management Inc., and references to “Brookfield” or “the company” refer to the Corporation and its direct and indirect subsidiaries and consolidated entities.

We utilize operating cash flow and net asset values in the Report when assessing our operating results and financial position, and do this on a deconsolidated basis organized by operating platform. This is consistent with how we review performance internally and, in our view, represents the most straightforward approach.

We measure invested capital based on net asset value unless otherwise stated, using the procedures and assumptions that we intend to follow in preparing our financial statements under IFRS, which we believe provides a much better representation of our financial position than historical book values.

Q2 2011 INTERIM REPORT 7

The U.S. dollar is our functional and reporting currency for purposes of preparing our consolidated financial statements, given that we conduct more of our operations in that currency than any other single currency. Accordingly, all figures are presented in U.S. dollars, unless otherwise noted.

The Report and additional information, including the Corporation’s Annual Information Form, is available on the Corporation’s web site at www.brookfield.com and on SEDAR’s web site at www.sedar.com.

8 BROOKFIELD ASSET MANAGEMENT

Q2 2011 INTERIM REPORT 9

OVERVIEW

Brookfield is a global asset manager, with a focus on renewable power, property, and infrastructure. Our business model is simple: utilize our global reach to identify and acquire high quality real assets at favourable valuations, finance them on a long-term, low-risk basis, and enhance the cash flows and values of these assets through our leading operating platforms to earn reliable, attractive long-term total returns for the benefit of our partners and ourselves.

We create value for shareholders in the following ways:

• As an owner-operator, we aim to increase the value of the assets within our platforms and the cash flows they produce through our operating expertise, development capabilities and effective financing;

• As an investor and capital allocator, we strive to invest at attractive valuations, particularly in distress situations that create opportunities for superior valuation gains and cash flow returns, or by monetizing assets at appropriate times to realize value; and

• As an asset manager, by performing the foregoing activities not just with our own capital, but also with that of our clients. This enables us to increase the scale of our operations, which differentiates us from others, and enhances our financial returns through base management fees and performance-based income.

Our primary financial objective is to increase the intrinsic value of Brookfield, on a per share basis, at a rate in excess of 12% when measured over the longer term. Our intrinsic value has two main components:

• The net tangible asset value of our equity. This is based on the appraised value of our net tangible assets as reported in our audited financial statements, with adjustments to eliminate deferred income taxes and revalue the assets which are not otherwise carried at fair value in our financial statements. We refer to this as Net Tangible Asset Value and use this basis of presentation throughout the MD&A; and

• The value of our asset management franchise. Asset management franchises are typically valued using multiples of fees or assets under management. We have provided an assessment of this value, based on our current capital under management, associated fees and potential growth. We refer to this as Asset Management Franchise Value. This value, together with Net Tangible Asset Value, forms what we call Intrinsic Value. We provide a number of key metrics to assist in valuing this component of our intrinsic value.

The foregoing does not include our overall business franchise, which to us represents our ability to maximize values based on our extensive operating platforms and global presence, our execution capabilities, and relationships which have been established over decades. This value has not been quantified and is not reflected in our calculations of Intrinsic Value but may be the most valuable of them all.

Cash flow from operations is another important metric for us, as it serves as an important benchmark for valuing many of our assets and our operational efficiency. We provide additional information on how we determine Intrinsic Value, Net Tangible Asset Value and Operating Cash Flow in the balance of this document. We provide a reconciliation between Operating Cash Flow and Net Income and both Intrinsic Value and Net Tangible Value to Common Equity in the Reconciliation Between Consolidated and Segmented Financial Information on pages 59 to 64.

10 BROOKFIELD ASSET MANAGEMENT

Statements of Affairs

The following table summarizes the assets that we manage for ourselves and our clients along with the intrinsic value of our invested capital and our share of net operating cash flows on a segmented basis:

	Assets Under Management				Brookfield’s Invested Capital						Net Operating Cash Flow
AS AT JUN. 30, 2011 AND DEC. 31, 2010 AND FOR THE THREE MONTHS ENDED JUN. 30 (MILLIONS, EXCEPT PER SHARE AMOUNTS)	2011		2010		2011			2010			2011			2010
Asset management and other services	$	2,160	$	1,930	$	1,943		$	1,800		$	99		$	78
Operating platforms
Renewable power generation		16,230		15,835		7,879			7,492			63			149
Commercial properties		76,369		53,369		9,613			6,909			122			102
Infrastructure		18,364		16,634		1,983			1,905			56			34
Development activities		15,469		9,351		3,594			3,184			24			37
Private equity and finance		22,128		21,390		1,930			2,155			122			38
Cash and financial assets		2,018		1,850		1,763			1,543			25			42
Other assets		1,447		1,199		715			919			—			—
	$	154,185	$	121,558		29,420			25,907			511			480
Less: Corporate borrowings/interest						(3,330	)		(2,905	)		(48	)		(45	)
Contingent swap accruals						(921	)		(858	)		(27	)		(24	)
Accounts payable and other/expenses						(1,512	)		(1,556	)		(84	)		(75	)
Preferred shares and capital securities						(2,588	)		(2,327	)		(10	)1		(9	)1
Net tangible asset value of common equity						21,069			18,261			342			327
Asset management franchise value						4,000			4,000			n/a			n/a
Intrinsic value/Operating cash flow					$	25,069		$	22,261		$	342	1	$	327	1
– Per share					$	39.31		$	37.45		$	0.50		$	0.53

1. Prior to preferred share dividends of $26 million (2010 – $19 million) which have been deducted in per share results

Total Return and Intrinsic Value

The following table allocates the components of total return and our intrinsic value by segment during the second quarter of 2011:

	Components of Total Return												Continuity of Intrinsic Values
FOR THE THREE MONTHS ENDED JUN. 30, 2011 (MILLIONS, EXCEPT PER SHARE AMOUNTS)	Operating Cash Flow			Fair Value Changes			Recorded Gains1			Total Return			Opening Value			Total Return			Capital Allocation			Closing Value
Asset management and other services	$	99		$	84		$	—		$	183		$	2,591		$	183		$	(116	)	$	2,658
Renewable power		63			164			—			227			7,685			227			(33	)		7,879
Commercial properties		122			524			—			646			8,842			646			125			9,613
Infrastructure		56			38			—			94			1,920			94			(31	)		1,983
Development		24			124			—			148			3,314			148			132			3,594
Private equity and finance		122			(66	)2		(61	)		(5	)		2,226			(5	)		(291	)		1,930
Cash and financial assets		25			—			—			25			1,513			25			225			1,763
		511			868			(61	)		1,318			28,091			1,318			11			29,420
Corporate obligations		(195	)3		(19	)		—			(214	)		(8,045	)		(214	)		(92	)		(8,351	)
Net tangible asset value		316			849			(61	)		1,104			20,046			1,104			(81	)4		21,069
Asset management franchise		—			—			—			—			4,000			—			—			4,000
Common equity	$	316		$	849		$	(61	)	$	1,104		$	24,046		$	1,104		$	(81	)	$	25,069
– Per share	$	0.50		$	1.27		$	(0.09	)	$	1.68		$	37.76		$	1.68		$	(0.13	)	$	39.31

1. Represents gains that are not recorded in equity under IFRS

2. Reduction includes $23 million of disposition gains that are included in operating cash flow

3. Includes preferred share dividends of $26 million

4. Represents share dividends

Note: The foregoing tables exclude accounting provisions for future tax liabilities and include management estimates of the value of items not otherwise carried at fair value in our financial statements

Q2 2011 INTERIM REPORT 11

PERFORMANCE HIGHLIGHTS

We recorded solid financial and operational performance during the second quarter of 2011, and achieved a number of important growth objectives. The following is a summary of the more important highlights, with a particular emphasis on those that impacted our financial results and which may be likely to influence our future performance:

• Operating cash flow was $829 million on a consolidated basis, of which $342 million ($0.50 per share) accrued to Brookfield shareholders, representing meaningful growth over 2010 on a comparable basis.

• We increased tangible net asset values by $1.1 billion during the quarter, resulting in a total return of $1.68 per share during the quarter.

Total return reflects the cash flow generated within the business and increases in the net tangible value of our assets. We distributed $0.13 per share as dividends and the balance will continue to compound in the business.

• We continued to expand our asset management franchise as measured by third party capital under management, base management fees and performance-based returns.

We will be fundraising for seven funds seeking total third party commitments of more than $4 billion. Base management fees totalled $47 million compared to $37 million in the 2010 quarter and we added $95 million of unrealized performance-based income. Capital under management for other increased by $1.4 billion during the quarter to $53.4 billion.

• We completed $4.7 billion of capital raising initiatives in the second quarter of 2011, bringing the total to $16.0 billion for 2011.

We continue to accelerate refinancing initiatives to take advantage of the current low interest rate environment and extend our maturity profile. These activities enhanced our liquidity, refinanced near-term maturities and funded new investment initiatives. This included the virtual completion of the refinancing of our U.S. Office Fund portfolio debt. Core liquidity was $4.3 billion at June 30, consistent with levels at the end of the first quarter.

• Our operating teams completed a number of important initiatives to increase the values and cash flows of our assets.

We acquired assets with a total value of $2.0 billion, which enabled us to invest $1.6 billion of capital, to expand our asset base and cash flows across all of our operating segments. This includes the acquisition of a 30 megawatt hydroelectric facility in Brazil for R$300 million, the purchase of interests in three office properties in New York, Melbourne and Perth and the sale of an office property in Houston. We signed 1.7 million square feet of new commercial office leases bringing the year-to-date total to 4.6 million square feet, and have a further 7 million square feet in serious discussions, benefitting from continued improvement in most of our major markets. We completed the spin-off of our North American residential businesses, which raised $180 million of equity capital from investors, and our Brazilian residential businesses completed R$746 million of launches and contracted sales of R$1,088 million, reflecting continued growth in this market.

• We are working on a number of attractive growth opportunities, including expansion of our existing operations and potential acquisitions.

We completed a major long-term contract that will enable us to commence a nearly A$500 million expansion in our Western Australian rail lines and are also pursuing an expansion of our coal terminal in Eastern Australia. We are well advanced towards commencing construction of a $750 million transmission line in Texas and have a number of capital projects in our South American transmission and UK connections businesses.

In our renewable power business, we have eight projects in advanced stages of development with an estimated cost of $1.4 billion that will have approximately 500 megawatts of installed capacity and annual expected generation of 1,500 gigawatt hours. Commercial office development activities are focused on six projects comprising nine million square feet and a total value of approximately $7 billion. Our U.S. retail operations recently announced a plan to spin-off a portfolio of 30 non-core retail malls in order to focus on its core fortress mall portfolio.

12 BROOKFIELD ASSET MANAGEMENT

Cash Flow from Operations

The following table sets out our operating cash flows for the quarter on a segmented basis:

	Three Months Ended June 30						Six Months Ended June 30
(MILLIONS, EXCEPT PER SHARE AMOUNTS)	2011			2010			2011			2010
Asset management and other services	$	99		$	78		$	175		$	149
Renewable power generation		63			149			115			262
Commercial properties		122			102			226			172
Infrastructure		56			34			106			64
Development activities		24			37			39			45
Private equity and finance		122			38			154			170
Investment and other income		25			42			92			128
		511			480			907			990
Unallocated costs:
Interest expense		(85	)		(78	)		(170	)		(153	)
Operating costs		(84	)		(75	)		(163	)		(139	)
Current income taxes		—			—			(1	)		(5	)
Operating cash flow	$	342		$	327		$	573		$	693
– Per share	$	0.50		$	0.53		$	0.83		$	1.13

Cash flow from operations for the second quarter increased by $15 million over the same quarter last year. The increase reflects improved results throughout our operations, including a return to normalized hydrology in our renewable power generation business offset by a lower level of major disposition gains. The 2010 results included a $102 million gain on the partial sale of equity in our Canadian renewable power assets whereas the 2011 results included a $61 million gain on the partial monetization of a private equity investment.

Asset management fees and the contribution from other services increased to $99 million. Performance-based income during the quarter was $95 million but this was entirely deferred for accounting purposes until clawback periods expire. Base management fees increased to $47 million from $37 million as a result of new funds and increased third-party capital under management, over the past twelve months, particularly in our infrastructure business. The net contribution from construction and property services increased by $15 million to $42 million, which more than offset a lower level of transaction and advisory fees. Annualized base management fees are approximately $190 million, unchanged from the end of the first quarter of 2011.

Renewable power operations contributed net operating cash flow of $63 million. The 2010 results included $47 million from operations and the aforementioned disposition gain of $102 million. Generation levels returned to approximately normalized levels, which were 33% higher than the unusually low levels during the 2010 quarter and 2% below expected long-term averages, reflecting improved hydrology levels in Ontario, Quebec and New York. The impact of better hydrology was partially offset by lower pricing on the sale of uncontracted power as well as the reduced ownership in our Canadian operations.

The contribution from our commercial properties business increased by $20 million. This reflects a $47 million contribution from our ownership of General Growth Properties, offset by a lower contribution from our commercial office business. General Growth continues to benefit from improving sales results and post reorganization restructuring initiatives such as debt refinancing, cost reductions and portfolio optimization. Our office property results reflect a lower interest in our Australian operations following the merger of this business into our 50%-owned listed global office company and lease expiries in our U.S. operations in the third quarter of 2010. We leased 1.7 million square feet during the quarter, and our occupancy rate was 93.4% at quarter end with a 7.1-year average term. The average rent in the portfolio increased to $29 per square foot, which continues to be approximately 14% below market rents.

Q2 2011 INTERIM REPORT 13

Infrastructure cash flows totalled $56 million in the second quarter of 2011, compared to $34 million for the same period in 2010. Our utilities businesses contributed $9 million more than the same period last year due to increased ownership levels and our timber business increased its contribution by $7 million due to continued strong demand from Asia. Our utilities, transportation and energy businesses are largely regulated or contractual in nature, providing stable operating results that increase with inflation and the investment of additional capital.

Our development activities include residential real estate and opportunistic property investments, both of which are focused primarily on a shorter term investment time frame than our power, property and infrastructure businesses, which have a much longer ownership time frame. The combined contribution from these activities decreased to $24 million in the second quarter from $37 million in the same quarter last year. We continue to experience strong growth in Brazil reflected in launches and contracted sales; however the number of project completions in Brazil was below normalized levels and we experienced delays in closing lot sales in Canada, resulting in the deferral of profit recognition into future quarters.

Private equity and finance cash flows totalled $122 million for the second quarter of 2011, which includes $61 million of gains related to the partial monetization of a private equity investment, and $61 million representing our share of operating earnings within the porfolios. This compares to $38 million of operating earnings for the same period in 2010. Operating earnings continue to improve at most of our portfolio companies and we believe there are meaningful unrecognized gains to be reflected in our results in future periods based on current values.

Investment and other income totalled $25 million in the second quarter of 2011, compared to $42 million in 2010, the result of a lower level of investment and currency gains than in 2010. Unallocated costs, including corporate interest expense, increased by $16 million reflecting the impact of term debt issued during 2010 and our expanded operating base.

Total Return and Intrinsic Value

The intrinsic value of our common equity totalled $25.1 billion at quarter-end, or $39.31 per share. We achieved a total return during the quarter of $1.1 billion which consists primarily of operating cash flow and fair value increases. The components of total return are summarized on page 11 and described in greater detail throughout this report.

We recorded total fair value increases of $849 million which reflect increased valuations of U.S. office and retail properties as well as the impact of currency appreciation on the capital invested in our operations in Australia, Brazil and Canada.

Total return and changes in intrinsic value during the quarter are summarized in the table on page 60.

	Jun. 30, 2011				Mar. 31, 2011				Dec. 31, 2010
AS AT JUN. 30, 2011, MAR. 31, 2011 AND DEC. 31, 2010 (MILLIONS, EXCEPT PER SHARE AMOUNTS)	Total		Per Share		Total		Per Share		Total		Per Share
Net tangible asset value	$	21,069	$	33.26	$	20,046	$	31.71	$	18,261	$	30.96
Asset management franchise value		4,000		6.05		4,000		6.05		4,000		6.49
Intrinsic value	$	25,069	$	39.31	$	24,046	$	37.76	$	22,261	$	37.45

The valuations assume normal transaction circumstances. We believe that these values would be lower on a liquidation basis (which we have no intention of undertaking) and higher if assessed in the context of a strategic sale over a period of time. Furthermore, we believe that disciplined owners can extract additional value by selling assets primarily when market imbalances result in premium valuations and usually exceed appraisal valuations as a result. We estimate that a 100-basis point decrease in the discount rates used to value our commercial properties, renewable power generating facilities, and infrastructure operations would increase our values by approximately $5 billion in aggregate, or $7.50 per share. A corresponding 100-basis point increase would have the opposite effect on our values. Key valuation assumptions are presented in Section 2 of the MD&A and our 2010 Annual Report.

14 BROOKFIELD ASSET MANAGEMENT

Capital Managed For Third Parties

The following table illustrates the capital managed for third parties, which totalled $53.4 billion at June 30, 2011. This includes $45.3 billion of capital that is currently invested as well as allocations of capital to private funds totalling $8.1 billion that have yet to be invested.

AS AT (MILLIONS)	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Private funds	$	17,577	$	17,563	$	16,859
Managed listed issuers		6,207		5,897		5,425
Public securities		22,308		21,627		21,069
Other listed entities		7,299		6,885		6,580
	$	53,391	$	51,972	$	49,933

Capital managed in our private funds was largely unchanged during the quarter. The increase of capital invested in our managed listed issuers increased due to higher stock market valuations totalling $310 million. The value of assets managed within our public securities operations increased by $681 million, representing net inflows of $360 million and increased valuations of $321 million.

We are currently working on a number of fundraising initiatives. We will have seven funds in the market over the course of 2011 and 2012 seeking more than $4 billion of third-party capital. This capital and the associated management arrangements give us the opportunity to earn additional base management and additional performance returns and carried interest, typically once returns exceed a pre-determined hurdle.

Invested Capital and Capital Deployed

Our capital continues to be invested primarily in (i) renewable hydroelectric power plants in North America and Brazil; (ii) commercial office properties in central business districts of major international centres and high quality retail properties; and (iii) a global portfolio of regulated infrastructure assets. These segments, together with cash and financial assets, represent approximately 73% of our invested capital and contribute to the strength and stability of our capitalization, operating cash flows and net asset values. Approximately 19% of our invested capital is deployed in more cyclical activities, such as residential development activities and our private equity and finance groups, with commensurately higher return expectations. The remaining 8% of capital is deployed in working capital and carrying values associated with our service businesses.

Q2 2011 INTERIM REPORT 15

The allocation of invested capital is shown in the following table:

	Brookfield’s Invested Capital1						% of Capital
AS AT (MILLIONS)	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010		Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Operating platforms
Renewable power generation	$	7,879	$	7,685	$	7,492		27%		27%		29%
Commercial properties		9,613		8,842		6,909		33%		31%		27%
Infrastructure		1,983		1,920		1,905		7%		7%		7%
Development activities		3,594		3,314		3,184		12%		12%		12%
Private equity and finance		1,930		2,226		2,155		7%		8%		8%
Asset management and other services		1,943		1,867		1,800		6%		7%		7%
Cash and financial assets		1,763		1,513		1,543		6%		5%		6%
Other assets		715		724		919		2%		3%		4%
	$	29,420	$	28,091	$	25,907		100%		100%		100%

1. At net tangible asset value, excluding asset management franchise values

Invested capital increased by $1.3 billion or 5% during the quarter to $29.4 billion. We invested $1.6 billion of capital during the second quarter for ourselves and our clients through acquisitions and development activities bringing the year-to-date total to $4.4 billion. The major items are highlighted in the following table in total as well as our proportionate share:

	Three Months Ended				Six Months Ended
PERIOD ENDING JUN. 30, 2011 (MILLIONS)	Total		Brookfield’s Share		Total		Brookfield’s Share
Commercial properties	$	345	$	345	$	2,205	$	2,205
Renewable energy		470		330		605		465
Infrastructure		215		215		320		320
Development activities		515		385		825		695
Private equity		40		10		400		110
	$	1,585	$	1,285	$	4,355	$	3,795

The carrying values of assets located in Australia, Brazil and Canada also increased as a result of currency appreciation, as did the associated liabilities. The increases in currencies from the end of the prior quarter for our major non-U.S. currencies were as follows: Australia - 3.8%; Brazil - 4.3%; and Canada - 0.8%.

Financing Activities and Liquidity

We completed $4.7 billion of financings during the second quarter to supplement our liquidity, finance growth activities and extend our maturity profile, as shown in the following table:

(MILLIONS)	Proceeds		Rate		Term
Borrowings
Unsecured	$	300		2.40%		3 years
Asset specific		3,750		5.45%		4 years
Equity/asset sales		635		n/a		Perpetual
Private funds		35		n/a		9 years
	$	4,720

16 BROOKFIELD ASSET MANAGEMENT

The refinancing activities have enabled us to extend or maintain our average maturity term at favourable rates. The continued steepness in the yield curve and prepayment terms on existing debt continues to reduce the attractiveness of pre-financing a number of our maturities; however we are aggressively refinancing short dated maturities and longer-dated maturities when these are economical. Our objective is to lock in the current lower yield interest rate environment and, importantly, to extend term to match fund our long-life assets.

Core liquidity, which represents cash and financial assets and undrawn credit facilities at the Corporation and our principal operating subsidiaries, was approximately $4.3 billion at June 30, 2011, consistent with levels at end of the first quarter and 2010. This includes $3.0 billion at the corporate level and $1.3 billion at our principal operating units. We maintained an elevated level of liquidity as we continue to see a substantial number of highly promising investment opportunities. We also have client allocations of an additional $8.1 billion to finance acquisitions.

Capitalization

We continue to finance our operations on an investment-grade basis. The high quality and stable profile of our asset base and the strength of our financial relationships has enabled us to continuously refinance maturities in the normal course on an optimal basis. The average term to maturity of our corporate debt is eight years and we have no maturities until October 2012.

The following table summarizes our corporate capitalization, based on net tangible equity value:

	Corporate Capitalization						% of Capitalization
AS AT (MILLIONS)	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010		Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Corporate borrowings	$	3,330	$	3,062	$	2,905		11%		11%		11%
Contingent swap accruals		921		885		858		3%		3%		3%
		4,251		3,947		3,763		14%		14%		14%
Accounts payable and other		1,512		1,516		1,556
Preferred shares and capital securities		2,588		2,582		2,327		9%		9%		9%
Common equity		21,069		20,046		18,261		72%		71%		71%
Net tangible equity		23,657		22,628		20,588		81%		80%		80%
Total corporate capitalization	$	29,420	$	28,091	$	25,907		100%		100%		100%

Corporate borrowings and contingent swap obligations represented a 14% debt-to-net tangible capital ratio while equity securities totalled 81% of our deconsolidated capitalization, consistent with prior years. On a proportionately consolidated basis, reflecting our pro rata share of borrowings in our operating platforms, this ratio is 44% (2010 – 44%).

Net Income

We do not utilize net income on its own as a key metric in assessing the performance of our business because, in our view, it does not provide a consistent measure of the ongoing performance of the underlying operations. For example, net income includes fair value adjustments for our commercial properties, timber and financial assets but not our renewable power, utility and development assets. Nevertheless we recognize that others may wish to utilize net income as a key measure and therefore provide a discussion of net income and a reconciliation to operating cash flow below and in Part 3 of our MD&A. Furthermore, we incorporate most of the elements of net income that are not included in operating cash flow, along with components of other comprehensive income, in determining our intrinsic values and total return.

Q2 2011 INTERIM REPORT 17

The following table reconciles operating cash flow to net income for the three and six months ended June 30:

	Three Months Ended June 30							Six Months Ended June  30
(MILLIONS, EXCEPT PER SHARE AMOUNTS)		2011			2010				2011			2010
Revenues		$	4,136		$	3,376			$	7,719		$	6,407
Operating cash flow and gains		$	342		$	327			$	573		$	693
Less: unrecognized disposition gains1			(61	)		(102	)			(64	)		(187	)
			281			225				509			506
Other items
Fair value changes			768			(5	)			924			58
Depreciation and amortization			(174	)		(184	)			(338	)		(341	)
Deferred income taxes			(37	)		53				21			30
Net income attributable to Brookfield shareholders		$	838		$	89			$	1,116		$	253
– Per share (diluted)		$	1.26		$	0.12			$	1.67		$	0.37

1. Represents gains that are recorded in equity for IFRS purposes, as offered to net income

Operating cash flow and gains is reduced by the amount of economic gains that are not recognized in net income for IFRS purposes, which amounted to $61 million in the current period. We recorded $768 million in fair value changes, which relates principally to increased valuations for our U.S. commercial office and retail properties and reflects higher cash flows as well as lower discount and capitalization rates.

18 BROOKFIELD ASSET MANAGEMENT

RENEWABLE POWER GENERATION

Overview

The following table presents certain key metrics that we consider in assessing the performance of our power business:

AS AT JUN. 30, 2011 AND DEC. 31, 2010 AND FOR THE THREE MONTHS ENDED JUN. 30	2011		2010
Realized price (per MWh) – Hydroelectric generation	$	74	$	83
Generation (GWh)		4,482		3,373
Long-term average generation (GWh)		4,581		4,479
% of contracted revenue for balance of the year
– Total		95%		93%
– Long-term contracts only		71%		70%
Duration of long-term contracts (years)		13		13
Debt to capitalization		41%		40%
Average term of debt (years)		10		11

The following table summarizes the capital invested in our renewable power operations and our share of the operating cash flows:

	Net Invested Capital				Net Operating Cash Flow
AS AT JUN. 30, 2011 AND DEC. 31, 2010 AND FOR THE THREE MONTHS ENDED JUN. 30 (MILLIONS)	2011		2010		2011			2010
Hydroelectric generation	$	5,749	$	5,709	$	81		$	57
Other forms of generation		170		231		9			11
Facilities under development		484		239		–			–
Corporate assets and capitalization		476		713		(27	)		(21	)
Operating cash flow – excluding gains		–		–		63			47
Realization gains		–		–		–			102
Brookfield’s IFRS values		6,879		6,892		63			149
Values not recognized under IFRS		1,000		600		–			–
Brookfield’s invested capital and cash flows	$	7,879	$	7,492	$	63		$	149

We own the majority of our U.S. and Brazilian operations, with the exception of a few joint ventures. Most of our Canadian and certain U.S. operations are held through our 34% owned Brookfield Renewable Power Fund.

Q2 2011 INTERIM REPORT 19

Invested Capital

The following table presents the capital invested in our renewable power operations by major geographic region and asset class based on net asset values:

		0000000		0000000		0000000		0000000		0000000		0000000		0000000		0000000
	United States				Canada				Brazil				Total
AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	2011		2010		2011		2010		2011		2010		2011		2010
Hydroelectric generation	$	4,873	$	4,819	$	5,424	$	5,194	$	2,517	$	2,319	$	12,814	$	12,332
Wind energy		—		–		560		554		–		–		560		554
Co-generation and pumped storage		96		95		62		63		–		–		158		158
Facilities under development		166		59		354		101		125		79		645		239
		5,135		4,973		6,400		5,912		2,642		2,398		14,177		13,283
Accounts receivable and other		378		499		273		393		484		409		1,135		1,301
		5,513		5,472		6,673		6,305		3,126		2,807		15,312		14,584
Property specific borrowings		1,833		1,873		1,499		1,284		691		677		4,023		3,834
Accounts payable and other		147		176		548		418		208		244		903		838
Co-investor interests		302		220		1,772		1,578		157		70		2,231		1,868
	$	3,231	$	3,203	$	2,854	$	3,025	$	2,070	$	1,816		8,155		8,044
Corporate debt														1,276		1,152
Values not recognized under IFRS														1,000		600
Net invested capital													$	7,879	$	7,492

Net invested capital increased by $387 million as a result of operating cash flow and currency appreciation. We also invested additional capital into facilities under development, particularly Canadian and U.S. wind projects, that was funded with additional borrowings and cash resources.

Co-investor interests in Canada include C$250 million of preferred shares and equity units in our Canadian power fund, which are carried at market value.

The increase of $400 million in “values not recognized under IFRS” consists largely of offsets to depreciation expense ($224 million) and the mark-to-market increase of minority interest in the Canadian power fund ($160 million) during the first half of 2011, to achieve consistency with the IFRS policy of revaluing the associated operating assets only on an annual basis.

20 BROOKFIELD ASSET MANAGEMENT

Operating Results

We recorded $63 million of operating cash flow prior to gains, compared to $47 million in the 2010 quarter. The following table sets out operating cash flows by region:

		0000		0000		0000		0000		0000		0000		0000		0000
	United States				Canada				Brazil				Total
FOR THE THREE MONTHS ENDED JUN. 30 (MILLIONS)	2011		2010		2011		2010		2011		2010		2011		2010
Hydroelectric generation	$	98	$	86	$	53	$	29	$	57	$	39	$	208	$	154
Wind energy		–		–		12		7		–		–		12		7
Co-generation and pumped storage		2		5		5		3		–		–		7		8
Net operating income		100		91		70		39		57		39		227		169
Property specific interest expense		35		35		23		23		22		17		80		75
Co-investor interests		21		14		34		12		2		–		57		26
	$	44	$	42	$	13	$	4	$	33	$	22		90		68
Unallocated expenses
Interest expense														16		18
Current tax expenses														11		3
Net operating cash flow - excluding gains														63		47
Realization gains														–		102
Net operating cash flow and gains													$	63	$	149

The principal operating variances included:

• An increase of $54 million in the net operating income from hydroelectric facilities to $208 million, reflecting higher generation, primarily in Ontario, Quebec and New York; offset by

• An increase of $31 million in co-investor interests, reflecting increased generation as well as our reduced ownership of our Canadian power fund compared to the 2010 quarter;

• The 2010 results include a $102 million gain on the sale of a partial interest in the Canadian power fund.

Realized Prices

The following table illustrates revenues and operating costs for our hydroelectric facilities:

	2011								2010
FOR THE THREE MONTHS ENDED JUNE 30 (GIGAWATT HOURS AND $ MILLIONS)	Production (GWh)		Realized Revenues		Operating Costs		Net Operating Income		Production (GWh)		Realized Revenues		Operating Costs		Net Operating Income
United States		2,042	$	145	$	47	$	98		1,589	$	135	$	49	$	86
Canada		1,287		76		23		53		726		54		25		29
Brazil		783		83		26		57		738		66		27		39
Total		4,112	$	304	$	96	$	208		3,053	$	255	$	101	$	154
Per MWh			$	74	$	23	$	51			$	83	$	33	$	50

Operating cash flow on a per MWh basis increased to $51 per MWh in 2011 from $50 per MWh in 2010. Realized prices declined 11% to $74 per MWh as we experienced a higher proportion of generation from hydro facilities in regions subject to lower spot market prices such as New York and Quebec. In addition, the 2011 quarter included a smaller contribution from short-term financial contracts than 2010. Operating costs decreased on a per unit basis as our costs, which are primarily fixed, were spread over a higher base of generation.

Our Brazil portfolio is 98% contracted and is not exposed to significant volume risk as the regulatory regime normalizes generation for producers. Accordingly, the increased revenues reflect development projects completed in 2010 and currency appreciation.

Q2 2011 INTERIM REPORT 21

Generation

The following table summarizes generation during 2011 and 2010:

									Variance of Results
	Actual Production				Long-Term Average				Actual vs. Long-term Average						Actual vs. Prior Year
FOR THE THREE MONTHS ENDED JUNE 30 (GIGAWATT HOURS)	2011		2010		2011		2010		2011			2010			2011
Hydroelectric generation - existing capacity
United States		2,042		1,589		1,829		1,835		213			(246	)		453
Canada		1,287		726		1,488		1,384		(201	)		(658	)		561
Brazil		719		681		713		751		6			(70	)		38
Total hydroelectric operations		4,048		2,996		4,030		3,970		18			(974	)		1,052
Acquisitions - during 2010 and 2011		64		57		65		62		(1	)		(5	)		7
Wind energy		151		102		160		129		(9	)		(27	)		49
Co-generation and pumped storage		219		218		326		318		(107	)		(100	)		1
Total generation		4,482		3,373		4,581		4,479		(99	)		(1,106	)		1,109
% Variance										(2%	)		(25%	)		33%

Hydroelectric generation from existing capacity long-term averages, reflecting a return to average rainfall and water flows in all regions. Generation in the second quarter of 2010 was 25% below long-term averages.

As noted above, generation in Brazil is subject long-term average generation rather than actual generation produced, mitigating the impact of changing water levels.

Contract Profile

We have hedged approximately 95% and 79% of our long-term average generation during the balance of 2011 and 2012, respectively. Approximately 67% of the expected generation is hedged with long-term contracts that have an average term of 13 years while 24% of our revenue for 2011 is hedged with shorter-term financial contracts.

The following table profiles our contracts over the next five years for generation from our existing facilities, assuming long-term average hydrology:

			Years ended December 31
	Balance of 2011		2012		2013		2014		2015
Generation (GWh)
Contracted
Power sales agreements
Hydro		4,788		9,368		9,185		8,449		7,907
Wind		447		1,197		1,197		1,197		1,197
Gas and other		218		398		398		134		–
		5,453		10,963		10,780		9,780		9,104
Financial contracts		1,877		2,198		–		–		–
Total contracted		7,330		13,161		10,780		9,780		9,104
Uncontracted		360		3,507		6,109		6,800		7,342
Long-term average generation		7,690		16,668		16,889		16,580		16,446
Contracted generation – as at June 30, 2011
% of total generation		95%		79%		64%		59%		55%
Price (per MWh)	$	86	$	89	$	97	$	93	$	93

22 BROOKFIELD ASSET MANAGEMENT

The average contracted price fluctuates from period to period as existing contracts expire and new contracts are entered into and as a result of changes in currency exchange rates for contracts in Brazil and Canada. We have been able to increase the overall contract level in the first two years of our contract profile because of the higher portion of long-term contracts, which do not typically expose us to any volume risk.

The following table illustrates the stability of our power generating revenues by presenting our results for the past four years with the revenues for our hydroelectric and wind power operations adjusted to reflect long-term hydrology and 2010 exchange rates, thereby eliminating currency and hydrology fluctuations.

YEARS ENDED DECEMBER 31	2007		2008		2009		2010
Revenues (MILLIONS)
Long-term	$	419	$	514	$	534	$	839
Short-term		432		496		427		285
Ancillary		54		69		75		58
	$	905	$	1,079	$	1,036	$	1,182
Expected generation (GWh)		12,649		13,729		14,335		14,866
Average realized price (per MWh)	$	72	$	79	$	72	$	80
Long-term revenues
% of total hydro and wind revenues		46%		48%		52%		71%
Average price (per MWh)	$	68	$	72	$	75	$	86

The completion of major long-term revenue contracts in recent years has increased the volume and price of long-term contracted power generating revenues to 71% in 2010, and an average price of $86 per megawatt hour.

Furthermore, a 10% variance in our short-term energy revenues and ancillaries represents less than 3% of the revenues from these operations. Given the current low price environment and our expectation that demand for renewable energy will continue to increase, we believe there is much more potential for substantial increases in our overall revenues.

Business Development

We advanced development of five hydroelectric facilities and three wind facilities in North America and Brazil including the start of construction on a 102 megawatt (MW) wind farm in California. The hydroelectric facilities are designed to have installed capacity of 109 MW and expected annual generation of 431 GWh for total estimated project costs of approximately $500 million. The wind facilities are designed to have installed capacity of 367 MW, expected annual generation of 1,074 GWh and total project costs of approximately $900 million. The facilities are expected to be commissioned between 2011 and 2013. We are also actively pursuing a number of small and large acquisition opportunities.

Outlook

Water inflows and generation during the second quarter were at or above long-term average and reservoir levels were above average at the end of the quarter. Accordingly, we are in a position to achieve long-term generation targets for the balance of the year should normal water conditions prevail. We also expect to benefit in future years from the contribution from the development and acquisition of additional hydroelectric and wind facilities, as described above under “Business Development”. We have 95% of our expected generation under contract for the balance of the year, and 79% of 2012 at attractive prices. This significantly reduces our exposure to short-term or spot pricing, which continues to be at low levels. Over the longer term, we expect that renewable energy such as the hydroelectric and wind power we produce will continue to command a premium in the market and lead to extended increases in realized prices and operating cash flows.

Q2 2011 INTERIM REPORT 23

Commercial Properties

Overview

The following table summarizes the capital we have invested in our commercial properties operations and our proportionate share of the operating cash flows:

	Net Invested Capital				Net Operating Cash Flow
AS AT JUN. 30, 2011 AND DEC. 31, 2010 AND FOR THE THREE MONTHS ENDED JUN. 30 (MILLIONS)	2011		2010		2011		2010
Office properties	$	5,321	$	4,810	$	77	$	101
Retail properties		4,073		1,606		45		1
Office development properties		194		168		–		–
		9,588		6,584		122		102
Values not recognized under IFRS		25		325		–		–
	$	9,613	$	6,909	$	122	$	102

Net invested capital increased by $2.7 billion to $9.6 billion during 2011 primarily due to the investment of an additional 12% interest in General Growth Properties (“GGP”) in the first quarter, increasing our retail property operations by $1.7 billion, combined with an $800 million increase in the value of our office and retail properties during the second quarter.

Retail property cash flows reflect the contribution from our U.S. retail operations, held through our interest in General Growth which was acquired in the fourth quarter of 2010.

Office property net operating income on a “same store” basis increased by 7%, however remained flat after removing the impact of currency appreciation as lower occupancy offset increases in in-place rents. The decline in overall cash flows reflect a lower interest in our Australian properties that were merged into our 50%-owned global office property company last year.

Office Properties

The following table presents key performance metrics relating to our commercial office properties operations:

AS AT JUN. 30, 2011 AND DEC. 31, 2010	2011		2010
Occupancy		93.4%		95.0%
Average lease term (years)		7.1		7.2
Average “in-place” rental rate (per sq. ft.)	$	29.00	$	28.15
Debt to capitalization		50%		50%
Average financing term (years)		4.7		4.3

We own our U.S., Canadian and most of our Australian properties through 50%-owned Brookfield Office Properties. Brookfield Office Properties in turn operates a number of private and listed entities through which public and institutional investors participate in our portfolios. This gives rise to co-investor interests in the invested capital, operating cash flows and fair value changes that accrue to these investors. Our European operations consist primarily of our 22% interest in Canary Wharf Group (UK).

24 BROOKFIELD ASSET MANAGEMENT

Invested Capital – Office

The following table presents the capital invested in our office properties by region:

	United States				Canada				Australia				Europe				Total
AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	2011		2010		2011		2010		2011		2010		2011		2010		2011		2010
Office properties	$	7,586	$	7,327	$	4,409	$	3,971	$	3,712	$	3,432	$	540	$	518	$	16,247	$	15,248
Unconsolidated properties		2,957		2,674		–		–		1,052		997		854		698		4,863		4,369
Accounts receivable and other		542		760		278		214		541		454		130		169		1,491		1,597
		11,085		10,761		4,687		4,185		5,305		4,883		1,524		1,385		22,601		21,214
Property specific borrowings		3,661		3,669		1,781		1,672		2,548		2,666		456		443		8,446		8,450
Accounts payable and other		787		933		121		–		201		162		37		37		1,146		1,132
Co-investor interests		957		861		421		399		682		674		–		–		2,060		1,934
	$	5,680	$	5,298	$	2,364	$	2,114	$	1,874	$	1,381	$	1,031	$	905		10,949		9,698
Unallocated
Corporate debt																		303		188
Capital securities																		1,050		1,038
Co-investor interests																		4,275		3,662
																		5,321		4,810
Values not recognized under IFRS																		25		–
Net invested capital																	$	5,346	$	4,810

Net invested capital increased by $0.5 billion during 2011, to $5.3 billion at June 30, 2011. The increase reflects operating cash flow net of gains of $77 million, fair value gains of $0.3 billion and currency appreciation. The fair value gains primarily reflect increases in the appraised values of our United States properties, due primarily to lower discount rates. Unallocated co-investor interests relate primarily to the interests of other shareholders in Brookfield Office Properties, whereas the co-investor interests in each region relate to funds and joint ventures in those regions.

Unconsolidated properties primarily include: in the United States, our U.S. Office Fund ($2.0 billion) and 245 Park Avenue ($0.6 billion); in the UK, Canary Wharf ($0.9 billion); and, in Australia, a variety of property funds and joint venture interests.

The key valuation metrics of our commercial office properties are presented in the following table. The valuations are most sensitive to changes in the discount rate. A 100-basis point change in the discount rate and terminal capitalization rate results in an $1.7 billion change in our common equity value after reflecting the interests of minority shareholders. Average discount and capitalization rates declined in the Unites States, giving rise to the increased valuations. Rates were largely unchanged in other regions.

	United States				Canada				Australia
AS AT JUN. 30, 2011 AND DEC. 31, 2010	2011		2010		2011		2010		2011		2010
Discount rate		7.8%		8.1%		6.9%		6.9%		9.1%		9.1%
Terminal capitalization rate		6.5%		6.7%		6.3%		6.3%		7.5%		7.4%
Investment horizon (years)		11		10		11		11		10		10

Q2 2011 INTERIM REPORT 25

Operating Results – Office

The following table shows our operating results:

	United States				Canada				Australia				Europe				Total
FOR THE THREE MONTHS ENDED JUNE 30 (MILLIONS)	2011		2010		2011		2010		2011		2010		2011		2010		2011			2010
Existing properties	$	97	$	104	$	68	$	62	$	78	$	61	$	8	$	8	$	251		$	235
Acquired, developed and sold		11		8		–		1		6		2		–		–		17			11
Unconsolidated properties		55		61		5		4		–		1		–		–		60			66
		163		173		73		67		84		64		8		8		328			312
Interest expense		59		58		22		18		56		39		7		7		144			122
Co-investor interests		8		8		4		3		13		10		–		–		25			21
	$	96	$	107	$	47	$	46	$	15	$	15	$	1	$	1		159			169
Unallocated items
Disposition gains																		33			20
Investment income and other																		12			26
Interest expense																		(19	)		(17	)
Operating costs																		(22	)		(30	)
Co-investor interests																		(86	)		(67	)
Net operating cash flow																	$	77		$	101

Net operating income generated by existing office properties (i.e. those held throughout the periods) is presented in the following table on a constant exchange rate, using the average exchange rate during the current period for the comparative periods as well. This table illustrates the stability of these cash flows that arises from the high occupancy levels and long-term lease profile.

FOR THE THREE MONTHS ENDED (MILLIONS)	Jun. 30 2011		Mar. 31 2011			Dec. 31 2010			Jun. 30 2010
United States	$	97	$	99		$	100		$	104
Canada		68		65			65			66
Australia		78		73			76			74
Europe		8		8			8			8
		251		245			249			252
Currency variance		–		(3	)		(12	)		(17	)
	$	251		242		$	237		$	235
Average per square foot	$	29.00	$	28.37		$	28.15		$	26.72

Net operating income on a comparable basis remained flat versus the second quarter in 2010, and increased by 7% including currency appreciation. Contractual increases in existing leases and new leasing activity which led to higher in-place rents were more than offset by reduced occupancy following the expiry of leases in two properties in Lower Manhattan and Boston.

The contribution from properties acquired, developed and sold since the beginning of the comparative period includes acquisitions in Houston and Washington D.C and the consolidation of the New Zealand Property Fund which includes eleven properties. The increase in interest expense reflects these activities as well as the impact of foreign currency translation on borrowings in Australia and Canada.

26 BROOKFIELD ASSET MANAGEMENT

Leasing Profile – Office

Our worldwide portfolio occupancy rate in our office properties at the end of the second quarter of 2011 was 93.4%. Occupancy levels in the United States declined to 91.3% due to the expiry of leases in lower Manhattan and Boston, while occupancy levels elsewhere remain favorable. We have leased over 4.6 million square feet during the first six months of 2011 and we are in serious discussions on an additional 7 million square feet, which would further improve our leasing profile.

									Expiring Leases (000’s sq. ft.)
AS AT JUNE 30, 2011	%     Leased		Average   Term		Net Rental  Area		Currently  Available		Balance of  2011		2012		2013		2014		2015		2016		2017 &  Beyond
North America
United States		91.3%		6.7		44,629		3,880		1,244		2,414		6,646		3,021		4,550		2,582		20,292
Canada		96.2%		8.2		17,163		652		165		457		2,453		456		2,474		1,605		8,901
Australia		97.9%		6.7		8,865		188		177		433		385		646		978		1,022		5,036
Europe		100.0%		10.1		556		–		–		–		–		262		–		–		294
Total/Average		93.4%		7.1		71,213		4,720		1,586		3,304		9,484		4,385		8,002		5,209		34,523
Percentage of total						100%		6.6%		2.2%		4.6%		13.3%		6.2%		11.2%		7.3%		48.6%

We use in-place net rents as a measure of leasing performance, and calculate this as the annualized amount of cash rent receivable from leases on a per square foot basis including tenant expense reimbursements, less operating expenses. This measure represents the amount of cash generated from leases in a given period.

Average in-place net rents across the North American portfolio approximate $25 per square foot compared to $24 per square foot at the end of 2010. We leased 1.6 million square feet in the quarter at rents that approximate expiring in-place leases. Net rents remain at a discount of approximately 20% to the average market rent of $30 per square foot. This gives us confidence that we will be able to maintain or increase our net rental income in the coming years and, together with our high overall occupancy, to exercise patience in signing new leases.

Average in-place rents in our Australian portfolio are A$49 per square foot, which approximates market rents. The occupancy rate across the portfolio remains high at 98% and the weighted average lease term is approximately seven years.

Retail Properties

Invested Capital – Retail

The following table presents our invested capital in these operations:

	North America				Brazil				Australia and UK				Total
AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	2011		2010		2011		2010		2011		2010		2011		2010
Retail properties	$	–	$	–	$	2,275	$	2,105	$	759	$	1,035	$	3,034	$	3,140
General Growth Properties		3,367		1,014		–		–		–		–		3,367		1,014
Accounts receivable and other		184		166		337		337		36		23		557		526
		3,551		1,180		2,612		2,442		795		1,058		6,958		4,680
Property specific borrowings		–		–		1,160		1,262		309		456		1,469		1,718
Accounts payable and other		–		–		145		153		109		147		254		300
Co-investor interests		234		198		902		821		–		–		1,136		1,019
	$	3,317	$	982	$	405	$	206	$	377	$	455		4,099		1,643
Unallocated corporate debt														–		14
Co-investor interests														26		23
														4,073		1,606
Values not recognized under IFRS														–		325
Net invested capital													$	4,073	$	1,931

Q2 2011 INTERIM REPORT 27

Invested capital in our retail properties increased by $2.1 billion to $4.1 billion from the prior year, reflecting the investment of a further $1.7 billion in GGP, increasing our direct and indirect ownership to 20% and 40% respectively. We record our retail malls at fair value in our financial statements and we recorded a $504 million increase in the carrying value of our U.S. mall portfolio in the second quarter reflecting increases in contractual cash flows and an overall 30 basis point decrease in capitalization rates. Co-investor interests in our U.S operations relates to the holdings of GGP belonging to certain of our co-investors that are consolidated in our financial statements.

We invested an additional R$300 million in our Brazilian retail operations in the current quarter, increasing our ownership interest from 25% to 39%. We refinanced the Fund’s acquisition debt, extending its maturity to nine years and used the proceeds of our equity injection to repay a portion of the debt. We disposed of our UK malls in the first quarter of 2011.

Operating Results – Retail

The following table presents operating results from our retail operations:

	North America				Brazil						Australia and UK				Total
FOR THE THREE MONTHS ENDED JUN. 30 (MILLIONS)	2011		2010		2011			2010			2011		2010		2011			2010
Net operating income	$	–	$	–	$	33		$	26		$	10	$	9	$	43		$	35
General Growth Properties		49		–		–			–			–		–		49			–
		49		–		33			26			10		9		92			35
Interest expense		–		–		37			27			8		8		45			35
Operating costs		–		–		3			–			–		–		3			–
Co-investor interests		2		–		(4	)		(1	)		1		–		(1	)		(1	)
Net operating cash flow	$	47	$	–	$	(3	)	$	–		$	1	$	1	$	45		$	1

Our U.S. mall operations, which we acquired in the fourth quarter of 2010, contributed $47 million of net operating cash flow during the quarter, representing our 20% share of GGP’s funds from operations of $229 million as reported under IFRS. Core funds from operations reported by GGP, which exclude certain items relating to the recent reorganization, were $200 million, consistent with $206 million in the same period last year and $220 million in the first quarter of 2011. Same store tenant sales increased 8.4% to $465 per square foot compared to the same quarter in the prior year and occupancy increased by 90 basis points to 92.5%, reflecting the continued improvement in performance of the high quality regional malls in our portfolio. We completed the refinancing of 11 malls with $2.2 billion of new debt at an average rate of 5.31% with a term of ten years.

Tenant sales in Brazil continued to perform well, however increases in local borrowing costs continue to offset growth in operating cash flow. Over the longer term we expect cash flow growth to outpace interest expense.

Office Development Properties

The following table presents capital invested in our office development activities:

	2011									2010
AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	Consolidated Assets		Consolidated Liabilities		Co-Investor Interests		Net Invested Capital			Consolidated Assets		Consolidated Liabilities		Co-Investor Interests		Net Invested Capital
Australia
City Square, Perth	$	752	$	317	$	218	$	217		$	597	$	203	$	197	$	197
Other		344		172		13		159			271		112		–		159
North America
Manhattan West, New York		280		227		27		26			280		227		27		26
U.S. Office Fund		28		–		14		14			28		–		14		14
Other		203		–		101		102			181		–		90		91
United Kingdom		105		–		53		52			74		–		37		37
Unsecured development debt		–		376		–		(376	)		–		356		–		(356	)
	$	1,712	$	1,092	$	426	$	194		$	1,431	$	898	$	365	$	168

28 BROOKFIELD ASSET MANAGEMENT

We continued development of the City Square project in Perth, which has a total projected construction cost of approximately A$935 million. City Square office tower is 100% pre-leased and the development is 91% pre-leased overall with leases pending for the balance of the space. The project is scheduled for completion in the first half of 2012.

We own development rights on Ninth Avenue between 31st Street and 33rd Street in New York City which entitles us to 5.4 million square feet of commercial office space entitlements. We expect that this will be one of the first sites for office development in Manhattan once new office properties become economic. We recently signed an agreement to acquire an adjacent property to further expand this important development initiative. We also hold a well positioned development site in London UK and expect to commence work on this project later this year.

Business Development

Deal flow is picking up across our global office markets and we are considering a number of different opportunities to acquire single assets, development sites and portfolios at attractive returns. In our continued effort to enhance returns through capital reallocation we are also looking to divest of all or a partial interest in a number of mature assets to capitalize on existing market conditions.

Given the small amount of new office development that occurred over the last decade and the near total development halt during the global financial crisis, we see an opportunity to advance our development inventory in the near term in response to demand we are seeing in our major markets. We are currently focused on six development projects totalling nine million square feet. This pipeline, once built could add more than $7 billion in assets and we are actively advancing planning and entitlements and seeking tenants for these sites.

In our retail business in the U.S., we continue to improve the profitability of the business by rationalizing the portfolio and leases, refinancing debt and reducing costs. GGP recently announced a proposal to spin out 30 smaller malls to its shareholders, including Brookfield, in line with the objective to focus on the core mall portfolio, which generates comparable tenant sales approaching $500 per square feet.

Outlook

Office leasing momentum has continued and we have successfully leased 1.7 million square feet in the second quarter bring the year-to-date total to 4.6 million square feet. We are in the middle of robust leasing discussions that cover 7 million square feet of additional space. If executed this could propel us to our highest leasing year ever, help maintain occupancy, and significantly reduce our lease-rollover exposure through 2016. Approximately 26% of this activity represents new or expanding tenants.

Our primary markets are in what we consider the second stage of recovery: meaning not only has leasing velocity picked up but we are seeing an improvement in lease economics as well. The other markets in which we operate are solidly in the initial stage of recovery: leasing velocity has picked up although to date we have not seen meaningful improvement in economics. We also continue to experience increasing sales and occupancy levels in our U.S. retail portfolio.

Q2 2011 INTERIM REPORT 29

INFRASTRUCTURE

Overview

The following table summarizes the capital we have invested in our infrastructure operations as well as our share of the operating cash flows:

	Net Invested Capital						Net Operating Cash Flow
AS AT JUN. 30, 2011 AND DEC. 31, 2010 AND FOR THE THREE MONTHS ENDED JUN. 30 (MILLIONS)	2011			2010			2011			2010
Utilities	$	574		$	556		$	27		$	18
Transport and energy		477			433			11			11
Timber		849			824			19			12
Corporate and other		(92	)		(33	)		(1	)		(7	)
Brookfield’s IFRS values		1,808			1,780			56			34
Values not recognized under IFRS		175			125			–			–
Brookfield’s invested capital	$	1,983		$	1,905		$	56		$	34

We own our various infrastructure businesses through several managed investment funds, including our two flagship entities: Brookfield Infrastructure Partners LP, which is publicly listed; and the Brookfield Americas Infrastructure Fund, which is privately held by institutional investors. We also operate a number of smaller listed and unlisted funds with specialized investment strategies. We consolidate all of our managed entities and most of the underlying operating businesses, although some of our operations are equity accounted. We completed a merger with partially owned Prime Infrastructure, through which we held a number of our Utilities, Transport and Energy business, in November 2010, (the “Prime merger”) which increased our ownership interest and led to the consolidation of a number of the underlying business units.

Operating Results

The following table sets out the variances in our operating results:

	Utilities				Transport & Energy				Timber				Total
FOR THE THREE MONTHS ENDED JUNE 30 (MILLIONS)	2011		2010		2011		2010		2011		2010		2011			2010
Net operating income	$	86	$	6	$	47	$	11	$	67	$	41	$	200		$	58
Unconsolidated businesses		31		34		15		23		1		1		47			58
		117		40		62		34		68		42		247			116
Interest expense		37		2		20		7		21		21		78			30
Co-investor interests		53		20		31		16		28		9		112			45
	$	27	$	18	$	11	$	11	$	19	$	12		57			41
Unallocated items
Investment income and other														8			–
Interest expense														(8	)		(2	)
Corporate costs														(11	)		(12	)
Co-investor share of unallocated costs														10			7
													$	56		$	34

Utilities

Our utilities operations contributed $27 million of net operating cash flow in the quarter, compared to $18 million in the same quarter of 2010. Improved operating results added a further $6 million, with the balance of the increase due to our increased ownership level and currency appreciation.

These businesses typically earn a pre-determined return based on their asset base, invested capital or capacity and the applicable regulatory frameworks and long-term contracts. Accordingly the returns are highly predictable and not impacted to any great degree by short-term volume or price fluctuations.

30 BROOKFIELD ASSET MANAGEMENT

The following table illustrates this stability by presenting operating cash flows prior to interest expense and co-investor interests on a constant exchange rate, using the average exchange rate during the current period for the preceeding quarters as well. We have also presented the 2010 quarters using the same basis of accounting employed following the Prime merger to enhance comparability.

FOR THE THREE MONTHS ENDED (MILLIONS)	Jun. 30 2011		Mar. 31 2011			Dec. 31 2010			Jun. 30 2010
Net operating income	$	86	$	89		$	80		$	70
Unconsolidated businesses		31		24			26			28
Comparable basis		117		113			106			98
Prior basis of accounting1		–		–			(43	)		(47	)
Currency variance		–		(6	)		(5	)		(11	)
Reported basis	$	117	$	107		$	58		$	40

1. To restate results to an equity accounted basis for businesses that were not consolidated prior to the Prime Acquisition

Net operating income from consolidated and unconsolidated businesses increased to $117 million in the second quarter of 2011 from $98 million on a comparable basis in the 2010 quarter. Our Australian Coal Terminal benefitted from higher reported cash flows compared to the second quarter of 2010 as a result of the implementation of a regulatory review that resulted in a higher regulated rate of return. Our South American transmission operations increased slightly due to revenue indexation and growth capital expenditures and our UK connections businesses continues to benefit from increased levels of developer contributions which are upfront payments from the installation of new connections of residential customers to gas and electricity distribution.

Transport and Energy

Our Transport and Energy businesses contributed $11 million in the quarter, consistent with the second quarter of 2010.

These businesses operate in most cases under long-term contracts or regulatory frameworks that govern prices, but not volumes. As a result, financial performance may fluctuate due to changes in activity levels; short-term price variances, however, are usually minimal.

The following table presents operating cash flows prior to interest expense and co-investor interests on a constant exchange rate, using the average exchange rate during the current period for the comparative periods as well. We have also presented the 2010 quarters to reflect the same basis of accounting used following the Prime merger to enhance comparability.

FOR THE THREE MONTHS ENDED (MILLIONS)	Jun. 30 2011		Mar. 31 2011			Dec. 31 2010			Jun. 30 2010
Net operating income	$	47	$	53		$	38		$	52
Unconsolidated businesses		15		18			16			36
Comparable basis		62		71			54			88
Prior basis of accounting1		–		–			(27	)		(46	)
Currency variance		–		(2	)		(3	)		(8	)
Reported basis	$	62	$	69		$	24		$	34

1. To restate results to an equity accounted basis for businesses that were not consolidated prior to the Prime Acquisition

This quarter’s results reflect a higher contribution from the UK port operations reflecting increased volumes and new customers. North American gas transmission results declined due to the implementation of a FERC rate settlement in July 2010 and softening market conditions which negatively impacted the value of ancillary products. Our Australian railroad reported lower cash flows year over year due to weak grain volumes attributable to the drought in Western Australia.

Q2 2011 INTERIM REPORT 31

Timber

Our Timber operations benefitted from a significant increase in demand from Asia, particularly for Douglas-fir and whitewood species. This enabled us to increase volumes and pricing by 25% and 15%, respectively. Unit costs also declined due to the impact of higher volumes on the fixed cost component of the business. As a result, net operating income increased by 62% from $42 million to $68 million and operating cash flow increased to $19 million from $12 million in the second quarter of 2010.

We exported 48% of our harvest, compared to 26% three years ago and we will continue to utilize the flexibility inherent in our operations to adjust both harvest levels and markets to maximize the value of our timberlands. While we are pleased with the increased demand from Asia, it will require a recovery of North American markets to enable us to achieve sustained optimal pricing and harvest levels. In the short term, we expect market conditions to remain favorable, however market supply may increase in the third quarter which could lead to lower prices.

Invested Capital

The following table presents the capital invested in our infrastructure operations by operating segment:

	Utilities				Transport & Energy				Timber				Total
AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	2011		2010		2011		2010		2011		2010		2011		2010
Operating assets	$	3,477	$	3,296	$	2,205	$	1,865	$	3,523	$	3,494	$	9,205	$	8,655
Unconsolidated businesses		685		754		555		446		72		71		1,312		1,271
Accounts receivable and other		276		235		456		530		767		714		1,499		1,479
		4,438		4,285		3,216		2,841		4,362		4,279		12,016		11,405
Property specific borrowings		2,208		2,125		952		867		1,493		1,489		4,653		4,481
Corporate debt		–		–		–		–		–		–		337		130
Accounts payable and other		315		280		470		402		675		641		1,460		1,323
Co-investor interests
Timber funds		–		–		–		–		929		904		929		904
Other1		1,341		1,324		1,317		1,139		416		421		2,829		2,787
	$	574	$	556	$	477	$	433	$	849	$	824		1,808		1,780
Values not recognized under IFRS														175		125
Net invested capital													$	1,983	$	1,905

1. Total includes co-investor interest on corporate debt within Brookfield Infrastructure

Consolidated assets and net invested capital held within our operations were relatively unchanged during the year. Co-investor interests reflect direct interests of others in our timber operations as well as in Brookfield Infrastructure, through which a portion of these businesses are held. We invested additional capital in our transport and energy businesses to finance growth initiatives, some of which was funded from corporate debt.

The average term of project financings was seven years at the end of June, with very few maturities before then, and an average rate of 5.3%. During the quarter we completed approximately $350 million of project financings, replacing a similar amount of short maturity debt. The new project financings had an average term of 11 years.

32 BROOKFIELD ASSET MANAGEMENT

Business Development

During the quarter, we made significant progress advancing the growth plan at our Australian railroad which is anticipated to have a remaining capital cost of approximately A$500 million over the next two years. The growth plan is comprised of six customer initiated projects which we anticipate will account for 24 million tons per annum of additional volume on our railroad by the end of 2015 representing a 45% increase. We recently signed a long-term agreement with our largest customer, that together with two other previously signed contracts will enable us to proceed with the growth initiative. This 15-year take-or-pay contract is subject to a financing condition precedent in our favour, which we expect to be in a position to satisfy during the third quarter. We have also agreed to commercial terms with our customers for the remaining three projects within the growth plan, which upon completion, will result in 60% of our revenues in this business being covered by take-or-pay arrangements. We expect to generate very attractive returns on this incremental capital, reflecting the significant historical investment that has been made in our rail system.

We continue to advance a number of other growth initiatives. In our utility segment, the capital backlog as of quarter end stands at $366 million, split between our transmission business and our UK connections business. During the quarter, we signed the engineering, procurement and construction contract to build our $750 million Texas transmission project. After quarter end, we recently closed the construction financing for this project with a syndicate of lenders. We are now actively acquiring the rights of way for land to build transmission towers, and we anticipate commercial operation of the project in the beginning of 2013. We are continuing to expand our UK port operations with modest capital and are actively pursing a major expansion of our Australian coal terminal.

Outlook

Our focus remains on both investing in expansion opportunities within our businesses, as well as pursuing the demonstrable increase in transaction activity. We continue to be disciplined in evaluating new investments as we have clearly witnessed upward pressure on asset valuations in this sector. Nonetheless, we believe that select opportunities exist for us to invest in new businesses at attractive risk-adjusted returns.

Our cash flows from our Utilities, Transport and Energy businesses are resilient and are expected to remain stable in the foreseeable future. In our timber business, we expect the favourable market prices to persist through the remaining of 2011. We expect our timber operations to be positively impacted in the mid-to-long term due to supply constraints and ongoing demand from Asian markets.

Q2 2011 INTERIM REPORT 33

DEVELOPMENT ACTIVITIES

Overview

The following table summarizes the capital we have invested in our development activities as well as our share of the operating cash flows:

	Net Invested Capital				Net Operating Cash Flow
AS AT JUN. 30, 2011 AND DEC. 31, 2010 AND FOR THE THREE MONTHS ENDED JUN. 30 (MILLIONS)	2011		2010		2011		2010
Residential development	$	1,931	$	1,634	$	15	$	30
Opportunity investments		292		244		5		11
Development land		496		431		4		(4	)
Brookfield’s IFRS values		2,719		2,309		24		37
Values not recognized under IFRS		875		875		–		–
Brookfield’s invested capital	$	3,594	$	3,184	$	24	$	37

Residential Development

Our residential operations are based primarily in Brazil and North America with smaller operations in Australia and the UK.

Our Brazilian business is one of the leading developers in Brazil’s real estate industry. These operations include land acquisition and development, construction, and sales and marketing of a broad range of residential and commercial office units, with a primary focus on middle income residential. The operations are conducted in Brazil’s main metropolitan areas, including São Paulo, Rio de Janiero, the Brasilia Federal District, and the three other markets that collectively account for the majority of the Brazilian real estate market.

Our North American operations are the result of the recent merger of our U.S. business and the residential operations of Brookfield Office Properties into a listed North American company named Brookfield Residential, in which we hold approximately 72%. Brookfield Residential is a land developer and homebuilder, with over 100,000 lots controlled in ten primary markets. Our principal markets are located in Alberta, California and Virginia. The major focus is on entitling and developing land and building homes for the communities that we develop and also the sale of lots to other builders.

The net operating cash flows attributable to each of these business units are as follows:

	North America						Brazil						Australia and UK						Total
FOR THE THREE MONTHS ENDED JUNE 30 (MILLIONS)	2011			2010			2011			2010			2011			2010			2011			2010
Revenues	$	187		$	230		$	438		$	296		$	35		$	68		$	660		$	594
Direct expenses		(165	)		(189	)		(385	)		(258	)		(40	)		(70	)		(590	)		(517	)
Net operating income		22			41			53			38			(5	)		(2	)		70			77
Operating costs and cash taxes		–			–			(3	)		(15	)		–			–			(3	)		(15	)
Net interest expense		–			–			(26	)		(8	)		(4	)		(3	)		(30	)		(11	)
Co-investor interests		(3	)		(15	)		(13	)		(6	)		–			–			(16	)		(21	)
Net operating cash flow	$	19		$	26		$	11		$	9		$	(9	)	$	(5	)	$	21		$	30

Brazil

Activity levels continue to be very high in this business. Contracted sales totalled R$1,088 million in the second quarter of 2011 which exceeds the average over the past six quarters of R$891 million. We launched new projects in the quarter totalling R$746 million compared to a six-quarter average of approximately R$700 million. Accounting profits for most of our projects, however, are not recorded until substantial completion, which typically does not occur until 18 to 24 months after launch, and 12 to 18 months after contracting. Accordingly, reported revenues in the current period of R$682 million reflect lower activity levels prior to 2010, and results are highly dependent on how many condominium and office projects reach substantial completion in a particular period.

34 BROOKFIELD ASSET MANAGEMENT

North America

North American cash flows declined to $13 million from $26 million recorded in the 2010 quarter reflecting lower sales volumes. A portion of this reflects a delay in closing lot sales in Canada that we expect to complete during the balance of 2011. In addition, the U.S. results in 2010 reflect higher sales activity as homebuyers took advantage of government tax credits to homeowners that expired partway through that period. We closed 465 homes and 734 lots during the period, compared to 705 and 1,205, respectively, during the 2010 quarter.

Invested Capital

The following is a breakout of our invested capital in residential development:

	North America				Brazil				Australia and UK				Total
AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	2011		2010		2011		2010		2011		2010		2011		2010
Inventory	$	1,242	$	1,258	$	2,135	$	1,878	$	293	$	126	$	3,670	$	3,262
Development land		887		799		1,204		775		312		477		2,403		2,051
Accounts receivable and other		259		313		2,429		1,831		52		56		2,740		2,200
		2,388		2,370		5,768		4,484		657		659		8,813		7,513
Debt		681		661		2,047		1,348		247		313		2,975		2,322
Accounts payable and other		246		231		2,075		1,780		37		37		2,358		2,048
Co-investor interests		527		622		1,022		887		–		–		1,549		1,509
	$	934	$	856	$	624	$	469	$	373	$	309		1,931		1,634
Values not recognized under IFRS														875		875
Net invested capital													$	2,806	$	2,509

The capital deployed in these activities increased by approximately $300 million since the end of 2010 due primarily to currency appreciation. During the first quarter, we merged our Canadian and United States operations into a single publicly listed entity that was jointly held by us and our 50%-owned office property subsidiary, as well as the public. The office property subsidiary then sold its interests in the merged entity to its shareholders, including us, in the second quarter thereby simplifying our ownership structure and creating a well positioned North American residential business.

We have continued to scale back our operations in Australia and the United Kingdom, including the sale of residential holdings in Perth with a net carrying value of approximately $100 million for similar proceeds in a transaction that closed in July, 2011.

Opportunity Investments

Our opportunity investment funds have $580 million of capital invested on behalf of ourselves and our clients. One of our funds is fully invested and we have been selling properties, while we are actively investing the capital in the two more recent funds. We deployed $324 million of capital during the first six months of this year in several transactions which included purchasing a loan secured by a portfolio of office buildings in Houston and bank debt secured by a five million square foot portfolio of office properties on the U.S. west coast. Our net invested capital is $292 million and our share of the underlying cash flow during the second quarter of 2011 was $5 million (2010 – $11 million).

Development Land

Development land includes our Brazilian agricultural land. We have operated an agri-business in Brazil for almost 30 years and are continuing our efforts to expand this business and capitalize on the growing global demand for Brazilian agriculture products such as cattle, cash crops and, in particular, sugar cane. A key strategy of ours is to develop sugar cane plantations that are leased on a long-term basis to ethanol producers who must locate the facilities in close proximity to the sugar cane. These lands are carried at net asset values under IFRS and revalued quarterly.

Q2 2011 INTERIM REPORT 35

Business Development and Outlook

Our Brazilian residential operations continue to benefit from a high level of activity evidenced by launches of new projects and contracted sales. This is attributed to favorable demographic trends in Brazil and supportive government programs. As at June 30, 2011 we held contracted revenues of R$6.0 billion, which we estimate should lead to net margin of approximately US$600 million after cash taxes and applicable selling expenses based on current exchange rates, which would be recognized as the projects are delivered between now and the end of 2013.

The recent merger of our U.S. and Canadian businesses forms a company that we believe is very well positioned to benefit from the eventual recovery in U.S. markets and our strong market share of the energy-focused Alberta market, which will provide us with a strong source of cash flow and a wide variety of attractive investment opportunities and growth. The North American backlog at the end of the second quarter was 733 homes with a sales value of $304 million, compared to 813 homes with a value of $298 million at the same time last year.

We intend to continue withdrawing capital from our Australian and UK operations on an opportunistic basis and redeploy the capital elsewhere in our operations. We remain confident that we can achieve attractive returns within our Brazilian agricultural operations based on the country’s strong competitive position as a leading agricultural producer and will endeavor to deploy additional capital on behalf of ourselves and our clients.

We continue to pursue a number of opportunistic real estate investments, primarily in the United States, where refinancing requirements and recapitalization opportunities are resulting in increased transaction activity.

36 BROOKFIELD ASSET MANAGEMENT

PRIVATE EQUITY AND FINANCE

Summarized Financial Results

The following table presents the net asset value of the capital invested in our Private Equity and Finance activities, together with our share of the operating cash flows:

	Net Invested Capital				Net Operating Cash Flow
AS AT JUN. 30, 2011 AND DEC. 31, 2010 AND FOR THE THREE MONTHS ENDED JUN. 30 (MILLIONS)	2011		2010		2011		2010
Restructuring	$	541	$	681	$	25	$	26
– Monetization gain		n/a		n/a		61		–
Real estate finance and lending		409		435		25		14
Other investments		530		589		11		(2	)
Brookfield’s IFRS values		1,480		1,705		122		38
Values not recognized under IFRS		450		450		–		–
Brookfield’s invested capital	$	1,930	$	2,155	$	122	$	38

Net invested capital was largely unchanged. Carrying values of our private equity and finance investments are based on the amortized cost for loans and fair value for owned properties. A number of restructuring and other investments are carried at historical book value and the associated property, plant and equipment is depreciated for IFRS purposes, and have an incremental unrecognized value as reflected by publicly available share prices and comparable valuations. We include these incremental amounts as “values not recognized under IFRS.”

Operating cash flows increased substantially due to a $61 million monetization gain within our restructuring operations, and disposition gains within our real estate finance operations and our other private equity investments.

Restructuring

Our restructuring funds are focused on restructuring, operation turnaround and other special situations where Brookfield’s operating platform can be utilized to create value. These funds have total invested capital of $1.2 billion and uninvested capital commitments from clients of $355 million. Our share of the net invested capital is $541 million.

The portfolio consists of eleven investments in a diverse range of industries. Our average investment is $47 million and our largest single exposure is $233 million. We concentrate our investing activities on businesses with tangible assets and cash flow streams in order to better protect our capital.

Our share of the operating cash flow produced by these businesses during the second quarter of 2011 was $25 million, compared to $26 million in 2010. The 2011 results also included a $61 million monetization gain recognized on the return of capital from an investee company.

These operating improvements, combined with increased acquisition activity and comparable transaction values imply unrealized fair value gains of approximately $450 million above carried costs, which in most cases reflect depreciated historical book values and distress acquisition prices.

Real Estate Finance and Bridge Lending

Our real estate finance funds have total committed capital of approximately $1.5 billion. We also originate and manage bridge loans in a variety of industries for institutional clients and ourselves. Our share of capital invested in these operations was $409 million at June 30, 2011 (December 31, 2010 – $435 million).

Q2 2011 INTERIM REPORT 37

These activities contributed $25 million of net operating cash flow and gains during 2011 compared to $14 million during 2010. The increased cash flow represents increased returns within a multi-residential portfolio, including $14 million from a disposition gain.

	Net Invested Capital						Net Operating Cash Flow
AS AT JUN. 30, 2011 AND DEC. 31, 2010 AND FOR THE THREE MONTHS ENDED JUN. 30 (MILLIONS)	2011			2010			2011			2010
Total real estate finance investments	$	2,986		$	2,709		$	99		$	29
Less: borrowings		(1,855	)		(1,507	)		(20	)		(16	)
Less: co-investor interests		(779	)		(828	)		(54	)		(8	)
		352			374			25			5
Bridge lending		57			61			–			9
Net investment in real estate finance funds	$	409		$	435		$	25		$	14

We have been careful to structure our financing arrangements to provide sufficient duration and flexibility to manage our investments with a longer-term horizon. We have matched terms in respect of asset and liability positions with an overall asset and liability duration of two years. The increase in borrowings represents financing of assets and portfolios that we have acquired as mentioned above.

Other Investments

We own a number of investments which will be sold once value has been maximized or integrated into our core operations. Although not core to our broader strategy, we occasionally make investments of this nature.

	Net Invested Capital				Net Operating Cash Flow
AS AT JUN. 30, 2011 AND DEC. 31, 2010 AND FOR THE THREE MONTHS ENDED JUN. 30 (MILLIONS)	2011		2010		2011		2010
Industrial and forest products	$	260	$	265	$	–	$	(6	)
Infrastructure		83		83		2		2
Business services		183		173		–		1
Property and other		4		68		9		1
	$	530	$	589	$	11	$	(2	)

Our largest industrial investment is a 63% fully diluted interest in Norbord Inc. (“Norbord”), which is one of the world’s largest producers of oriented strand board. The market value of our investment in Norbord at June 30, 2011 was approximately $348 million based on stock market prices, exceeding our carrying value of $228 million by approximately $120 million (December 31, 2010 – $230 million mark-to-market).

The net operating cash flow from these investments in 2011 totalled $11 million, compared to a negative $2 million for 2010. The current quarter cash flow includes a $9 million gain on the disposition of a non-core asset held within our property and other investments.

Business Development and Outlook

Our performance in these businesses is largely driven by disposition gains as opposed to operating earnings, as many of the assets are in a turnaround or restructuring process and consequently operating results are below stabilized levels. Nevertheless we are continuing to observe improving business conditions for most of our portfolio companies.

38 BROOKFIELD ASSET MANAGEMENT

ASSET MANAGEMENT FEES AND OTHER SERVICES

This section summarizes the capital under management for others throughout our operations and the associated fee revenues, as well as the contribution from our fee-based service businesses.

Capital Under Management

Capital under management increased by $1.4 billion during the quarter of which $324 million represents an increase in fee-bearing assets. The following table summarizes capital managed for clients and co-investors:

	2011										2010
AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	Private Funds		Listed Issuers		Public Securities		Other Listed Entities		Total		Total
Renewable power	$	–	$	1,646	$	–	$	–	$	1,646	$	1,428
Commercial properties		7,810		1,619		7,225		4,995		21,649		20,389
Infrastructure		6,086		2,942		1,089		–		10,117		8,751
Development		280		–		–		1,617		1,897		1,688
Private equity and finance		3,401		–		13,994		687		18,082		17,677
	$	17,577	$	6,207	$	22,308	$	7,299	$	53,391	$	49,933
March 31, 2011	$	17,563	$	5,897	$	21,627	$	6,885	$	51,972
December 31, 2010	$	16,859	$	5,425	$	21,069	$	6,580	$	49,933

Private Funds, Listed Issuers and Public Securities

Third-party capital commitments to private funds are consistent with the first quarter at $17.6 billion and includes $9.5 billion of invested capital that has an average term of nine years and $8.1 billion that has not been invested to date but which is available to pursue acquisitions within each fund’s specific mandate. Of the total uninvested capital, $3.1 billion relates to our global real estate turnaround investment program and $2.6 billion relates to our infrastructure funds. This uncalled capital has an average term of two years.

The market value of our listed issuers increased by 5% during the period to $6.2 billion due to increased market valuations and is perpetual capital.

In our public securities operations, we manage fixed income and equity securities with a particular focus on real estate and infrastructure, including high yield and distress securities. Our clients include pension funds and insurance companies throughout North America and Australia. Capital under management in this business line increased by $681 million since March 31, of which $360 million represents net inflows and $321 million represents valuation increase.

The following table summarizes client capital under management within these operations. We typically do not invest our own capital in these strategies as the assets under management tend to be securities rather than physical assets. The increase has occurred primarily within equity portfolio mandates, which tend to be higher margin:

AS AT JUN. 30, 2011, MAR.31, 2011 AND DEC. 31, 2010 (MILLIONS)	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Public securities
Fixed income	$	13,994	$	13,972	$	13,862
Equity		8,314		7,655		7,207
	$	22,308	$	21,627	$	21,069

Q2 2011 INTERIM REPORT 39

Other Listed Entities

We have established a number of our business units as listed public companies to allow other investors to participate and provide us with additional capital to expand these operations. This includes common equity issued to others by Brookfield Office Properties, Brookfield Residential and Brookfield Incorporações. We do not earn fees from this capital but it forms an important component of our overall capitalization and enables us to conduct our business at a greater scale than would otherwise be possible.

Operating Results

The following table summarizes fee revenues earned from clients for our asset management services as well as the net contribution (i.e. net of direct expenses) earned from our construction and property services businesses:

	Net Operating Cash Flow
FOR THE THREE MONTHS ENDED JUNE 30 (MILLIONS)	2011		2010
Asset management revenues	$	57	$	51
Construction and property services, net of direct expenses		42		27
	$	99	$	78

Asset Management and Other Fees

Asset management and other services contributed the following revenues during the quarter:

	Net Operating Cash Flow
FOR THE THREE MONTHS ENDED JUNE 30 (MILLIONS)	2011			2010
Base management fees1	$	47		$	37
Performance based income1		95			17
Investment banking and transaction fees1		10			6
		152			60
Less: deferred recognition2		(95	)		(9	)
	$	57		$	51

1. Revenues

2. Deferred into future periods, until clawback provisions expire

The increase in base management fees reflects the contribution from new funds and an increase in capital committed, particularly in our infrastructure operations. The weighted average term of the commitments related to these fees is ten years, and our goal is to increase the level of base management fees as we continue to expand our asset management activities. We accumulated $95 million of performance based income during the quarter which was deferred until expiry of any clawback provisions. Accumulated performance income totalled $399 million at June 30, 2011, and is included in unrecognized values, along with approximately $50 million that relates to the direct expenses that will arise on the realization of the return on that were accumulated to date (see page 45).

The compensation for approximately $4.5 billion of our private funds, and $1.6 billion of our managed listed entities is derived primarily from performance based measures and carried interests as opposed to base management fees. Annualized base management fees from other mandates totalled approximately $190 million at June 30, unchanged from March 31.

We have expanded our investment banking activities into the U.S. and the UK and continue to advise on a number of mandates in Canada and Brazil. Our primary focus is on real estate and infrastructure transactions.

40 BROOKFIELD ASSET MANAGEMENT

Construction and Property Services

The following table summarizes the operating results from our construction and property services operations:

	Net Operating Cash Flow
FOR THE THREE MONTHS ENDED JUNE 30 (MILLIONS)	2011		2010
Construction services
Australasia	$	20	$	5
Middle East		8		15
United Kingdom		3		2
		31		22
Property services		11		5
	$	42	$	27

Operating margins across the construction business increased to 10.3% for the quarter compared to 7.2% in the same quarter last year, prior to unallocated general and administrative costs. The larger contribution from Australasia reflects increased activity due to business growth. The reduced contribution from the Middle East reflects lower maturity levels following the completion of the major projects in 2010 whilst the UK margins remained constant.

The remaining work-in-hand totalled $4.2 billion at the end of June 30, 2011 and represented approximately 1.6 years of scheduled activity. We continue to pursue and secure new projects which should position us well for future growth.

The following table summarizes the work-in-hand at the end of the second and first quarters of 2011 and the end of last year:

AS AT JUN. 30, 2011, MAR. 31, 2011 AND DEC. 31, 2010 (MILLIONS)	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Australasia	$	2,703	$	2,478	$	2,681
Middle East		590		630		677
United Kingdom		898		948		960
	$	4,191	$	4,056	$	4,318

Property services fees include property and facilities management, leasing and project management and a range of real estate services. Cash flow from this business increased to $11 million in the second quarter compared to $5 million in the same period of last year.

Business Development and Outlook

We have significantly increased the level of capital under management for our clients in recent years, as well as the internal resources needed to manage this capital and source additional commitments. We believe the performance of our funds through the recent economic crisis and the attractiveness of our investment strategies to our clients should enable us to achieve our goal of increasing capital under management and the associated fees substantially in the coming years. We will be fundraising seven funds over the course of 2011 and 2012 seeking to raise over $4 billion of commitments from third party investors.

Q2 2011 INTERIM REPORT 41

CORPORATE CAPITALIZATION AND LIQUIDITY

We continue to maintain elevated liquidity levels because we believe that there will continue to be attractive investment opportunities. As at June 30, 2011, our consolidated core liquidity was approximately $4.3 billion, consisting of $3.0 billion at the corporate level and $1.3 billion within our principal operating subsidiaries. Core liquidity consists of cash, financial assets and undrawn committed credit facilities. In addition to our core liquidity, we have $8.1 billion of uninvested capital allocations to private funds from our investment partners that is available to fund qualifying investments.

Cash and Financial Assets

	Net Invested Capital									Net Operating Cash Flow
AS AT JUN. 30, 2011, MAR. 31, 2011 AND DEC. 31, 2010 AND FOR THE THREE MONTHS ENDED JUN. 30 (MILLIONS)	Jun. 30 2011			Mar. 31 2011			Dec. 31 2010			2011			2010
Financial assets
Government bonds	$	604		$	561		$	628
Corporate bonds		120			202			194
Other fixed income		58			69			66
High-yield bonds		198			106			98
Preferred shares		315			317			267
Common shares		351			330			328
Loans receivable/deposits		219			93			212
Total financial assets		1,865			1,678			1,793		$	33		$	67
Cash and cash equivalents		153			91			57			–			–
Deposits and other liabilities		(255	)		(256	)		(307	)		(8	)		(25	)
Net investment	$	1,763		$	1,513		$	1,543		$	25		$	42

Government and corporate bonds include short duration securities for liquidity purposes and longer dated securities that match insurance liabilities.

In addition to the carrying values of financial assets, we hold credit default swaps with a notional value of $75 million, consistent with year end. The carrying value of these derivative instruments reflected in our financial statements at June 30, 2011 was negligible. Deposits and other liabilities include broker deposits and a small number of borrowed securities that have been sold short.

Operating cash flow includes disposition gains and realized and unrealized gains or losses on other capital markets positions, including fixed income and equity securities, credit investments, foreign currency and interest rates.

We experienced a lower level of net investment gains during the quarter, which resulted in returns that were below our expectations and prior experience.

42 BROOKFIELD ASSET MANAGEMENT

Corporate Capitalization

Our corporate capitalization consists of financial obligations issued or guaranteed by the Corporation, and is detailed in the following table:

	Net Invested Capital						Net Operating Cash Flow
AS AT JUN. 30, 2011, MAR. 31, 2011 AND DEC. 31, 2010 AND FOR THE THREE MONTHS ENDED JUN. 30 (MILLIONS)	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010		2011		2010
Corporate borrowings
Bank borrowing and commercial paper	$	561	$	307	$	199	$	6	$	6
Term debt		2,769		2,755		2,706		42		39
		3,330		3,062		2,905		48		45
Contingent swap accruals		921		885		858		27		24
Accounts payable and other accruals/expenses		1,512		1,516		1,556		84		75
Capital securities		695		689		669		10		9
Shareholders’ equity
Preferred equity		1,893		1,893		1,658		26		19
Common equity1		21,069		20,046		18,261		316		308
		22,962		21,939		19,919		342		327
Total corporate capitalization	$	29,420	$	28,091	$	25,907	$	511	$	480
Debt to capitalization		14%		14%		14%
Interest coverage								6x		6x
Fixed charge coverage								4x		4x

1. Includes unrecognized values in addition to IFRS fair values

Our corporate capitalization increased by $1.3 billion during the quarter to $29.4 billion at June 30, 2011. Shareholders’ equity increased by $1.0 billion reflecting fair value increases as well as undistributed operating cash flow.

The increase in interest expense on term debt reflects the C$350 million 5.3% notes issued in October 2010 as well as the impact of the higher Canadian dollar on coupon payments for other Canadian denominated debt.

Our objective is to enhance returns for shareholders while maintaining a prudent leverage profile. The weighted average cost of our corporate borrowings, capital securities and preferred shares during the second quarter of 2011 was 5.2% on an annualized basis.

Corporate Borrowings

Commercial paper and bank borrowings represent shorter-term borrowings pursuant to or backed by $1,922 million of committed revolving term credit facilities of which $300 million have a 364-day term and $1,622 million have a four-year term. As at June 30, 2011 approximately $134 million (December 31, 2010 – $174 million) of the facilities were utilized for letters of credit issued to support various business initiatives at quarter-end.

Term debt consists of public bonds and private placements, all of which are fixed rate and have maturities ranging from 2012 until 2035. These financings provide an important source of long-term capital and an appropriate match to our long-term asset profile.

Our corporate borrowings have an average term of eight years (December 31, 2010 – eight years). The average interest rate on our corporate borrowings was 5.6% at June 30, 2011.

			Maturity
AS AT JUNE 30, 2011 (MILLIONS)	Average Term		2011		2012		2013		2014 & After		Total
Commercial paper and bank borrowings		4	$	–	$	–	$	–	$	561	$	561
Term debt		8		–		425		75		2,269		2,769
		8	$	–	$	425	$	75	$	2,830	$	3,330

Q2 2011 INTERIM REPORT 43

Contingent Swap Accruals

We entered into interest rate swap arrangements with AIG Financial Products (“AIG-FP”) in 1990, which include a zero coupon swap that was originally intended to mature in 2015. Our financial statements include an accrual of $921 million in respect of these contracts, which represents the compounding of amounts based on interest rates from the inception of the contracts. We have also recorded $252 million in accounts payable and other liabilities which represents the difference between the present value of any future payments under the swaps and the current accrual. We believe that the financial collapse of American International Group (“AIG”) and AIG-FP triggered a default under the swap agreements, thereby terminating the contracts with the effect that we are not required to make any further payments under the agreements, including the amounts which might, depending on various events and interest rates, otherwise be payable in 2015. AIG disputes our assertions and therefore we have commenced legal proceedings seeking a declaration from the court confirming our position. We recognize this may not be determined for a considerable period of time, and therefore will continue to account for the contracts as we have in prior years until we receive clarification.

Capital Securities

Capital securities are preferred shares that are mostly denominated in Canadian dollars and are classified as liabilities because the holders of the preferred shares have the right, after a fixed date, to convert the shares into common equity based on the market price of our Class A Limited Voting Shares at that time unless previously redeemed by us. The dividends paid on these securities are recorded in interest expense.

The average distribution yield on the capital securities at June 30, 2011 was 5.5% (December 31, 2010 – 5.5%) and the average term to the holders’ conversion date was three years as at June 30, 2011 (December 31, 2010 – three years).

Shareholders’ Equity

	Net Invested Capital1						Book Value2
AS AT (MILLIONS)	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010		Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Preferred equity	$	1,893	$	1,893	$	1,658	$	1,893	$	1,893	$	1,658
Common equity		21,069		20,046		18,261		15,765		14,691		12,795
	$	22,962	$	21,939	$	19,919	$	17,658	$	16,584	$	14,453

1. Pre-tax basis, including unrecognized values under IFRS (Net Tangible Asset Value)

2. Based on IFRS financial statements

The following table reconciles common equity per our IFRS financial statements to Net Tangible Asset Value and Intrinsic Value.

	Jun. 30, 2011				Mar. 31, 2011				Dec. 31, 2010
AS AT (MILLIONS, EXCEPT PER SHARE AMOUNTS)	Total		Per Share		Total		Per Share		Total		Per Share
Common equity per IFRS financial statements	$	15,765	$	25.22	$	14,691	$	23.60	$	12,795	$	22.09
Add back: deferred income taxes		1,954		2.96		1,930		2.92		2,216		3.60
Values not recognized under IFRS		3,350		5.08		3,425		5.19		3,250		5.27
Net tangible asset value		21,069		33.26		20,046		31.71		18,261		30.96
Asset management franchise value		4,000		6.05		4,000		6.05		4,000		6.49
Total intrinsic value	$	25,069	$	39.31	$	24,046	$	37.76	$	22,261	$	37.45

Values not recognized under IFRS are discussed in the following sections. Asset management franchise value is derived from the discounted cash flows that we expect to generate from existing fee arrangements and future growth of their business and is discussed in more detail in our 2010 Annual Report.

44 BROOKFIELD ASSET MANAGEMENT

Unrecognized Values

Certain assets and cash flows under IFRS are not reflected at fair value and as a result, we have provided an estimate of the incremental value of these items over their carried values to arrive at a more complete and consistent determination of net asset value. These include items carried at historical book values such as the values for our property services and construction businesses, renewable power and infrastructure development projects, assets acquired at distressed values that are not otherwise revalued and development land carried at the lower of cost or market.

The following table presents the unrecognized values by operating platform:

AS AT JUN. 30, 2011, MAR. 31, 2011, AND DEC. 31, 2010 (MILLIONS)	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Asset management and other services	$	825	$	775	$	775
Operating platforms
Renewable power generation		1,000		825		600
Commercial properties		25		350		325
Infrastructure		175		125		125
Development activities		875		875		875
Private equity and finance		450		475		450
Other assets		–		–		100
	$	3,350	$	3,425	$	3,250

The additional value attributed to our service businesses includes $399 million of accrued performance-based income that we would be entitled to receive based on current valuations, but which will not be recorded in our financial statements until the applicable clawback or determination period has expired, as well as an amount for the direct expenses that will arise on the realization of the returns. Also included is an incremental value above the carrying value of our property and construction services businesses, based on a multiple of cash flows.

Renewable power generation includes approximately $300 million relating to development projects that are carried at historical cost until completion. The incremental value typically arises at key stages of the development process such as regulatory approvals and, in particular, the procurement of long-term power sales agreements. In addition, we eliminate the quarterly depreciation on our operating assets in this business, as well as the quarterly mark-to-market of redeemable units in our Canadian Power fund, because the associated assets are revalued annually, not quarterly. These two items represent approximately $225 million and $160 million, respectively, at June 30, 2011 of which $114 million and $44 million, respectively, accumulated in the second quarter. Unrecognized values also include $300 million related to values associated with long-term power purchase agreements that are not reflected in the carrying values of the associated physical assets.

Unrecognized values for commercial properties at March 31, 2011 reflected $350 million of fair value gains related to our ownership of General Growth Properties that was recognized in our IFRS carrying values during the second quarter of 2011 and has therefore been eliminated from unrecognized values.

The carrying values of most of our infrastructure businesses are represented by physical assets that are revalued annually for financial statement purposes, similar to our renewable power business, or regulatory and other contractual arrangements that are recorded as intangible assets and typically not revalued. Our timber assets are revalued through net income on a quarterly basis. We recorded increases in the unrecognized values of our Australian and UK port operations totalling approximately $45 million during the quarter to reflect new contracts and comparable sales transactions that have not been otherwise reflected in our IFRS carrying values.

Our development businesses are carried primarily at historical cost, or the lower of cost and market, notwithstanding the length of time that some of our assets have been held and the value created through the development process. Accordingly, we look to metrics such as stock market valuations and financing appraisals to determine a more current value for these businesses and reflect any excess value as “unrecognized values.”

Q2 2011 INTERIM REPORT 45

Our private equity and finance investments include a number of investments in industrial businesses that are carried at depreciated cost because they are consolidated or equity-accounted. In circumstances where the investment is in a publicly listed entity we will typically record the difference between the carried value and the market value as “unrecognized value.” The decrease during the quarter reflects lower stock market valuations for certain of our portfolio investments that are not otherwise marked to market in our financial statements.

Unallocated Operating Costs

Operating costs include the costs of our asset management activities as well as corporate costs which are not directly attributable to specific business units.

	Net
FOR THE THREE MONTHS ENDED JUNE 30 (MILLIONS)	2011		2010		Variance
Operating costs	$	84	$	75	$	9

The increase in operating costs reflects continued expansion in our operations, including costs attributable to new asset management funds.

Interest Rates and Currencies

Interest Rates

The majority of our borrowings are fixed rate long-term financings. Accordingly, changes in interest rates have minimal short-term impact on our cash flows. We do not record changes in the value of our long-term financings in determining net asset value or operating results, with very limited exceptions.

As at June 30, 2011, our net floating rate liability position on a proportionate basis was $4.1 billion (December 31, 2010 –$4.1 billion). As a result, a 10-basis point increase in interest rates would decrease operating cash flow by $4 million. Notwithstanding our practice of match funding long-term assets with long-term debt, we do believe that the values and cash flows of certain assets are more appropriately matched with floating rate liabilities. We utilize interest rate contracts to manage our overall interest rate profile so as to achieve an appropriate floating rate exposure while preserving a long-term maturity profile.

The impact of a 10-basis point increase in long-term interest rates on financial instruments recorded at market value is estimated to be an increase in income of $4 million on an annualized basis before tax, based on our positions at June 30, 2011.

Foreign Currencies

As at June 30, 2011 our net tangible asset value of $21.1 billion was invested in the following currencies, prior to the impact of any financial contracts: United States - 48%; Australia - 16%; Brazil - 21%; Canada - 10%; and Other - 5%. We utilize financial contracts to adjust these exposures.

A change in a foreign currency against the U.S. dollar will impact the U.S. dollar value of the cash flows generated in those currencies. We estimate that a 10% change in the exchange rate of the three primary non-U.S. currencies in which we operate would have an impact on our annualized operating cash flows of approximately $37 million, and between $nil and $23 million for each specific currency. The economic impact of this is lessened to the extent of distributions and sustaining capital expenditures in those same currencies.

46 BROOKFIELD ASSET MANAGEMENT

Outlook

We have provided a summarized outlook within the preceding discussion of each operating segment. A large portion of our operating cash flow is generated by our renewable power, commercial office and retail and infrastructure businesses which we manage for ourselves and our clients. The revenues in all of these businesses are largely contracted through leases, power sales agreements and regulated rate base or operating agreements. This provides stability to the cash flows. In addition, these businesses are also financed largely with long-term asset specific borrowings which provides for additional stability. Our asset management contracts provide for base management fees earned on capital committed to our funds, many of which have initial terms of 10 years or more. We are experiencing low prices for uncontracted electricity sales, which we expect to persist during the balance of the year, but the pricing for 95% of our expected generation for the balance of 2011 is fixed under contracts. Leasing markets are improving in most of our major office markets and we are experiencing increased sales in most of our retail properties.

These cash flows are supplemented by earnings from businesses that are more closely correlated with the economic cycle. Some of these are producing results that are significantly below normalized levels as a result of the recent recession and ongoing low growth in areas, such as U.S. home building, however, we expect to benefit from growth in these businesses as these sectors ultimately recover.

We record disposition gains from time to time. These are, by their nature, difficult to predict with certainty but the breadth of our operations and active management of our assets have resulted in a meaningful amount of gains being realized in most periods.

Our businesses are located in a number of regions, including a substantial presence in the United States, Australia, Brazil and Canada. Accordingly, cash flows and net asset values will vary with changes in the applicable foreign exchange rates. Other factors that could impact our performance in 2011, both positively and negatively, are reviewed in Part 4 of our 2010 Annual Report and Annual Information Form.

We believe Brookfield is well positioned for continued growth through 2011 and beyond. This is based on the stability and growth potential of our operating businesses, the strength of our capitalization and liquidity, our execution capabilities and our expanded relationships, as discussed elsewhere in this MD&A.

Q2 2011 INTERIM REPORT 47

This section contains a review of our consolidated financial statements which are prepared in accordance with IFRS. It contains information to assist the reader in reconciling the basis of presentation in our consolidated financial statements to that employed in the MD&A, as well as a review of certain balances that are not reviewed elsewhere in the MD&A.

CONSOLIDATED STATEMENTS OF INCOME

The following table summarizes the major components of net income on a total basis and also the proportionate amounts that accrue to Brookfield:

	Total						Net to Brookfield1
FOR THE THREE MONTHS ENDED JUNE 30 (MILLIONS)	2011			2010			2011			2010			Variance
Operating cash flow attributable to Brookfield	$	342		$	327		$	342		$	327		$	15
Cash flow attributable to non-controlling interests		487	2		318			–			–			–
Operating cash flow – consolidated basis		829			645			342			327			15
Less: Disposition and monetization gains3		(155	)		(102	)		(61	)		(102	)		41
		674			543			281			225			56
Non-cash items
Fair value changes		1,088			(1	)		768			(5	)		773
Depreciation and amortization		(231	)		(208	)		(174	)		(184	)		10
Deferred income taxes		(103	)		39			(37	)		53			(90	)
		754			(170	)		557			(136	)		693
Net income	$	1,428		$	373		$	838		$	89		$	749

1. Net of non-controlling interests

2. Includes $393 million of operating cash flow and $94 million of disposition gains (see note 3)

3. Disposition and monetization gains that are not recorded in net income for IFRS purposes of which $94 million accrue to non-controlling interests and $61 million accrue to Brookfield

Consolidated net income for the second quarter of 2011 was $1,428 million, of which $838 million was attributable to our shareholders and $590 million was attributable to clients and co-investors in consolidated funds and subsidiary operations, and presented as “non-controlling interests”, on the consolidated statement of operations.

Net income attributable to Brookfield increased by $749 million, of which $56 million was attributable to cash flow from operations and $693 million from non-cash items, in particular fair value changes.

Disposition and Monetization Gains

IFRS precludes the recognition in net income of certain disposition and monetization gains that we include in operating cash flows. For example, gains on the sale of interests in controlled subsidiaries are recorded directly in equity if we continue to consolidate the investment after the sale. We consider the realization of investment gains to be an important component of performance measurement and accordingly include the economic gains in the determination of operating cash flow and gains. As such, they may become a reconciling item between net income and operating cash flow. There were $61 million and $102 million of such gains in the second quarter of 2011 and 2010, respectively.

48 BROOKFIELD ASSET MANAGEMENT

Fair Value Changes

Fair value changes for each principal operating segment are summarized in the following table:

	Total						Net1
FOR THE THREE MONTHS ENDED JUNE 30 (MILLIONS)	2011			2010			2011			2010			Variance
Operating assets
Commercial office
North America	$	250		$	(74	)	$	120		$	(29	)	$	149
U.S. Office Fund		264			49			101			24			77
Other equity accounted		49			24			24			13			11
Australian Office		103			(21	)		61			(21	)		82
North American retail		547			–			504			–			504
Other		45			117			26			59			(33	)
		1,258			95			836			46			790
Timber and agriculture		(11	)		(9	)		(4	)		3			(7	)
		1,247			86			832			49			783
Other fair value changes
Interest rate contracts		(11	)		(36	)		(11	)		(36	)		25
Power contracts		15			(59	)		15			(59	)		74
Redeemable units		(44	)		42			(44	)		42			(86	)
Other		2			(34	)		31			(1	)		32
		(38	)		(87	)		(9	)		(54	)		45
		1,209			(1	)		823			(5	)		828
Less: Recognized in operating cash flow		(121	)		–			(55	)		–			(55	)
	$	1,088		$	(1	)	$	768		$	(5	)	$	773

1. Net of non-controlling interests

Fair value changes pertaining to our operating assets totalled $1,247 million in aggregate during the second quarter, of which our pro rata share was $832 million. These relate primarily to increases in fair values of commercial and retail properties, as the operating assets within our renewable power and infrastructure businesses are generally revalued on an annual basis, in contrast to commercial properties which we revalue quarterly.

We recorded increases in the valuation of our North American and Australian commercial office properties during the second quarter of 2011. We equity account our investment in General Growth Properties and record our share of changes in the fair value of their properties in net income. We recorded a $504 million gain relating to increases in the value of GGP’s portfolio, based on increases in contractual tenant cash flows, as well as an approximate 30 basis point reduction in applicable discount and capitalization rates.

The decrease in timber values reflects the harvest of mature trees during the period which was offset in part by biological growth of younger trees.

Other fair value changes were negative $38 million in total during the quarter and negative $9 million to Brookfield. The change relates primarily to the increase in the market value of the units held by other investors in our Canadian power fund, which are treated as a liability for accounting purposes and marked to market quarterly as a result.

Q2 2011 INTERIM REPORT 49

Depreciation and Amortization

Depreciation and amortization for each principal operating segment is summarized in the following table:

	Total				Net1
FOR THE THREE MONTHS ENDED JUNE 30 (MILLIONS)	2011		2010		2011		2010		Variance
Renewable power generation	$	114	$	130	$	114	$	130	$	(16	)
Infrastructure		43		4		14		2		12
Development activities		5		4		4		3		1
Private equity and finance		50		48		25		28		(3	)
Asset management and other		19		22		17		21		(4	)
	$	231	$	208	$	174	$	184	$	(10	)

1. Net of non-controlling and minority interests

Depreciation relates mostly to our renewable power generating operations, with smaller amounts arising from infrastructure operations and industrial businesses held within our private equity and finance operations. We do not recognize depreciation or depletion on our commercial office and retail properties, standing timber, and agricultural assets respectively, as each of these asset classes are revalued on a quarterly basis in net income as part of “fair value changes.”

Deferred Income Taxes

Deferred income tax items typically relate to differences between the current tax liability and the tax liability that would otherwise be incurred based on the company’s net income. For example, fair value changes are typically not taxed until the asset is actually sold. In addition, deferred income taxes will reflect changes in the value of the our tax pools such as accumulated tax losses and the difference between the carrying value of balance sheet items and their tax bases and typically do not correlate with the amount of cash taxes which are low relative to our earnings base.

Revenues

	Three Months Ended June 30				Six Months Ended June 30
(MILLIONS)	2011		2010		2011		2010
Asset management and other services	$	847	$	576	$	1,470	$	1,143
Renewable power generation		337		267		635		604
Commercial properties		606		554		1,195		1,093
Infrastructure		495		212		939		408
Development activities		718		683		1,212		1,163
Private equity and finance		1,062		989		2,103		1,815
Cash, financial assets and other		71		95		165		181
Total consolidated revenues	$	4,136	$	3,376	$	7,719	$	6,407

Asset management and other services reflect higher activity levels in our Australian construction business, as well as a 20% increase in the value of the Australian dollar against the U.S. dollar compared to the second quarter of last year. Renewable power revenues reflect increased generation levels during the quarter. Commercial properties revenues reflect higher currency values as well as the consolidation of an Australian property fund. Similarly, our infrastructure revenues reflect higher currency values and the consolidation of several business units following the Prime merger in November 2010.

50 BROOKFIELD ASSET MANAGEMENT

CONSOLIDATED BALANCE SHEETS

Assets

We review changes in our financial position on a segmented basis in Part 2 – Review of Operations and reconcile this basis to our consolidated balance sheets on pages 59 and 62 in this section. We also provide an analysis in this section of the major balances that differ from those utilized in our segmented review.

Total consolidated assets increased to $86.2 billion as at June 30, 2011 from $78.1 billion at the end of 2010 as shown in the following table:

	Book Value
AS AT (MILLIONS)	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Cash and cash equivalents	$	1,997	$	2,034	$	1,713
Other financial assets		3,941		4,256		4,419
Accounts receivable and other		8,855		8,024		7,869
Inventory		6,548		6,317		5,849
Investments		9,692		8,535		6,629
Property, plant and equipment		19,258		18,580		18,148
Investment properties		23,918		23,331		22,163
Timber		3,276		3,216		3,206
Intangible assets		3,967		3,849		3,805
Goodwill		2,676		2,605		2,546
Deferred income tax		2,086		1,989		1,784
Total consolidated assets	$	86,214	$	82,736	$	78,131

The carrying values of our assets increased during 2011, reflecting currency appreciation, increased appraisal values of our commercial office properties, ongoing sustaining capital expenditures and investment activities. Investments include our stake in General Growth Properties, in which we invested a further $1.7 billion during the first quarter of 2011 and recorded $0.5 billion of valuation gains during the second quarter. The increase in accounts receivables and other primarily reflects the expansion of our Brazilian residential operations and our construction services. These increases were partially offset by depreciation and amortization of property, plant and equipment. We provide additional detail for certain categories, however there were few significant variances during the quarter other than those mentioned above.

Other Financial Assets

Other financial assets include our 22% common share investment in Canary Wharf Group, which is included in our commercial office property operations in our segmented analysis at a carried value of $854 million.

Q2 2011 INTERIM REPORT 51

Investments

Investments represent equity accounted interests in partially owned entities as set forth in the following table, which are discussed further within the relevant business segments in Part 2 – Review of Operations:

	Ownership Interest						Carrying Value
AS AT (MILLIONS)	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010		Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Renewable power generation
Bear Swamp Power Co. LLC		50%		50%		50%	$	96	$	90	$	95
Other renewable power generation		50%		50%		50%		221		190		171
Commercial properties
General Growth Properties		27%		27%		10%		3,367		2,783		1,014
U.S. Office Fund		47%		47%		47%		2,033		1,872		1,806
245 Park Avenue		51%		51%		51%		607		587		580
Other commercial properties1		20-75%		20-51%		20-51%		1,727		1,431		1,421
Infrastructure
Natural gas pipeline		26%		26%		26%		398		392		384
Transelec S.A.		28%		28%		28%		369		371		373
Other infrastructure assets		40-42%		40-42%		40-42%		443		391		395
Other		25-60%		25-60%		25-50%		431		428		390
Total							$	9,692	$	8,535	$	6,629

1. Other commercial properties include investments in Darling Park Trust, E&Y Centre Sydney and Four World Financial Center

The increase in the carrying value of Investments reflects our additional $1.7 billion investment in General Growth Properties in the first quarter of 2011 and increases in the fair values of the properties held within General Growth and our U.S. Office Fund during the second quarter.

Liabilities and Shareholders’ Equity

The following analysis of our liabilities and shareholders’ equity is based on our consolidated balance sheet, and therefore includes the obligations of consolidated entities, including partially owned funds and subsidiaries.

We note, however, that in many cases our consolidated capitalization includes 100% of the debt of the consolidated entities, even though in most cases we only own a portion of the entity and therefore our pro rata exposure to this debt is much lower. For example, we have access to the capital of our clients and co-investors through public market issuance and, in some cases, contractual obligations to contribute additional equity. In other cases, this basis of presentation excludes some or all of the debt of partially owned entities that are equity accounted or proportionately consolidated such as our U.S. Office Fund and several of our infrastructure businesses.

52 BROOKFIELD ASSET MANAGEMENT

Accordingly, we believe that the two most meaningful bases of presentation to use in assessing our capitalization are proportionate consolidation and deconsolidation. The following table depicts the composition of our capitalization on these bases, along with our consolidated capitalization, all based on the net asset value of our equity and the interests of other investors:

	Deconsolidated						Proportionate						Consolidated
AS AT (MILLIONS)	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010		Jun. 30 2011		Mar. 31 2011		Dec. 31 2010		Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Corporate borrowings	$	3,330	$	3,062	$	2,905	$	3,330	$	3,062	$	2,905	$	3,330	$	3,062	$	2,905
Non-recourse borrowings
Property-specific mortgages		–		–		–		18,843		18,244		15,956		25,180		24,712		23,454
Subsidiary borrowings1		921		885		858		3,977		4,079		3,610		4,504		4,297		4,007
Accounts payable and other2		1,512		1,516		1,556		8,729		8,419		7,577		14,098		13,629		13,088
Capital securities		695		689		669		1,216		1,207		1,188		1,745		1,733		1,707
Non-controlling interests		–		–		–		–		–		–		17,745		16,789		16,301
Shareholders’ equity3		22,962		21,939		19,919		22,964		21,939		19,919		22,962		21,939		19,919
	$	29,420	$	28,091	$	25,907	$	59,059	$	56,950	$	51,155	$	89,564	$	86,161	$	81,381
Debt to capitalization		14%		14%		15%		44%		45%		44%		37%		37%		37%

1. Includes $921 million (December 31, 2010 – $858 million) of contingent swap accruals which are guaranteed by the Corporation and are accordingly included in Corporate Capitalization

2. Net of deferred income taxes

3. Pre-tax basis, including unrecognized values under IFRS

The carrying values of liabilities increased in most cases due to the impact of higher currency values on non-U.S. borrowings, as well as debt associated with assets acquired during 2011. Debt to capitalization ratios are largely unchanged over the first six months of the year.

Our deconsolidated capitalization depicts the amount of debt that is recourse to the Corporation, and the extent to which it is supported by our deconsolidated invested capital and remitted cash flows. At the end of the second quarter, our deconsolidated debt to capitalization was 14% (December 31, 2010 – 15%) which is a prudent level in our opinion. This reflects our strategy of having a relatively low level of debt at the parent company level and financing our operations primarily at the asset or operating unit level with no recourse to the Corporation.

Proportionate consolidation, which reflects our proportionate interest in the underlying entities, depicts the extent to which our underlying assets are leveraged, which is an important component of enhancing shareholder returns. We believe the 44% debt-to-capitalization ratio at June 30, 2011 (December 31, 2010 – 44%) is appropriate given the high quality of the assets, the stability of the associated cash flows and the level of financings that assets of this nature typically support, as well as our liquidity profile. The increase in property specific mortgage reflects our increased interest in mortgages issued by General Growth Properties, which is equity accounted in our consolidated financial statements, following the increase in our ownership during the first quarter.

Our consolidated debt-to-capitalization ratio is 37% (December 31, 2010 – 37%). This reflects the full consolidation of partially-owned entities, notwithstanding that our capital exposure to these entities is limited. As noted above, it also excludes the debt of equity accounted investees, which results in a lower debt-to-capitalization than the proportionally consolidated numbers.

The table above illustrates our use of subsidiary and property-specific financings to minimize risk. As at June 30, 2011 only 13% of our consolidated debt capitalization is issued or guaranteed by the Corporation, whereas 76% is recourse only to specific assets or groups of assets and 11% is issued by subsidiaries and has no recourse to the Corporation.

Q2 2011 INTERIM REPORT 53

Subsidiary Borrowings

We capitalize our subsidiary entities to enable continuous access to the debt capital markets, usually on an investment-grade basis, thereby reducing the demand for capital from the Corporation and sharing the cost of financing equally among other equity holders in partially owned subsidiaries.

			Proportionate						Consolidated
AS AT (MILLIONS)	Average Term		Jun. 30 2011		Mar. 31 2011		Dec. 31 2010		Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Subsidiary borrowings
Renewable power generation		10	$	1,184	$	1,273	$	1,152	$	1,276	$	1,273	$	1,152
Commercial properties		3		1,013		1,129		757		679		707		579
Infrastructure		2		99		64		40		358		232		148
Development activities		3		198		186		278		201		186		278
Private equity and finance		3		526		506		488		1,033		978		955
Other		1		36		36		37		36		36		37
Contingent swap accruals1		4		921		885		858		921		885		858
Total		5	$	3,977	$	4,079	$	3,610	$	4,504	$	4,297	$	4,007

1. Guaranteed by the Corporation

Subsidiary borrowings have no recourse to the Corporation with only a limited number of exceptions. As at June 30, 2011, subsidiary borrowings included $921 million (December 31, 2010 – $858 million) of contingent swap accruals that are guaranteed by the Corporation (see page 44).

Property-Specific Borrowings

As part of our financing strategy, the majority of our debt capital is in the form of property-specific mortgages that have recourse only to the assets being financed and have no recourse to the Corporation.

		Proportionate						Consolidated
AS AT (MILLIONS)	Average Term	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010		Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Renewable power generation	10	$	2,886	$	2,841	$	2,818	$	4,023	$	3,905	$	3,834
Commercial properties	4		11,199		10,832		9,014		10,631		10,711		10,689
Infrastructure	7		2,049		2,032		1,995		4,632		4,569		4,463
Development activities	2		1,672		1,511		1,309		3,290		2,912		2,632
Private equity and finance	5		1,037		1,028		820		2,604		2,615		1,836
Total	5	$	18,843	$	18,244	$	15,956	$	25,180	$	24,712	$	23,454

Our proportionate share of property-specific borrowings in commercial properties increased since year-end due to our increased ownership of General Growth Properties. This did not impact consolidated liabilities as the investment is equity accounted.

Accounts Payable and Other

	Corporate						Consolidated
AS AT (MILLIONS)	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010		Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Accounts payable	$	270	$	219	$	163	$	5,150	$	4,722	$	4,581
Other liabilities		1,242		1,297		1,393		5,793		5,880		5,753
	$	1,512	$	1,516	$	1,556	$	10,943	$	10,602	$	10,334

The increase in accounts payable is due largely to the expansion of our Brazilian residential operations.

54 BROOKFIELD ASSET MANAGEMENT

Capital Securities

Capital securities are discussed on page 44.

		Proportionate						Consolidated
AS AT (MILLIONS)	Average Term to Conversion	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010		Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Issued by the Corporation	2	$	695	$	689	$	669	$	695	$	689	$	669
Issued by Brookfield Office Properties	3		521		518		519		1,050		1,044		1,038
	3	$	1,216	$	1,207	$	1,188	$	1,745	$	1,733	$	1,707

Non-controlling Interests in Net Assets

Interests of co-investors in net assets are comprised of three components: participating equity interests, interests held by other investors in funds that are treated as liabilities for accounting purposes, and non-participating preferred equity issued by subsidiaries.

	Number of Shares /% Interest						Book Value
AS AT (MILLIONS)	Jun. 30 2011		Mar. 31 2011		Dec. 31 2010		Jun. 30 2011		Mar. 31 2011		Dec. 31 2010
Participating interests in subsidiary companies
Renewable power generation		various		various		various	$	455	$	306	$	260
Commercial properties
Brookfield Office Properties		254.3 / 49%		253.6 / 49%		253.3 / 49%		5,552		4,927		4,730
Property funds and other		various		various		various		1,541		1,145		1,293
Infrastructure
Timber		various		various		various		1,106		1,134		1,118
Utilities and transport and energy		various		various		various		2,414		2,363		2,366
Development activities
Brookfield Residential Properties Inc.		28.9 / 28%		34.6 / 34%		11.3 / 38%		526		599		638
Brookfield Incorporações S.A.		273.3 / 59%		251.5 / 57%		251.5 / 57%		1,022		877		887
Brookfield Real Estate Opportunity Funds		various		various		various		288		303		292
Private equity and finance		various		various		various		1,755		2,008		1,864
								14,659		13,662		13,448
Interest of others in funds
Redeemable units								1,585		1,488		1,355
Limited life funds								239		221		207
								1,824		1,709		1,562
								16,483		15,371		15,010
Non-participating interests
Brookfield Australia								452		605		476
Brookfield Office Properties								553		555		562
Brookfield Renewable Power Fund								257		258		253
								1,262		1,418		1,291
							$	17,745	$	16,789	$	16,301

Participating interests in the equity of Brookfield Office Properties increased, reflecting their 49% interest in valuation gains recorded during the quarter.

The increase in “Property funds and other” relates to the consolidation of a New Zealand property fund in the second quarter of 2011. We issued equity to other investors from our Brazilian residential business (Brookfield Incorporações). Non-controlling interest in non-U.S. operations also increased as a result of higher exchange rates for the Australian, Brazilian and Canadian currency against the U.S dollar.

Q2 2011 INTERIM REPORT 55

Corporate Dividends

The distributions paid by Brookfield on outstanding securities during the first six months of 2011 and the same period in 2010 and 2009 are as follows:

	Distribution per Security
	2011		2010		2009
Class A Limited Voting Shares	$	0.26	$	0.26	$	0.26
Class A Preferred Shares
Series 2		0.27		0.19		0.21
Series 4 + Series 7		0.27		0.19		0.21
Series 8		0.38		0.27		0.30
Series 9		0.56		0.53		0.45
Series 10		0.73		0.69		0.60
Series 11		0.71		0.66		0.57
Series 12		0.69		0.65		0.56
Series 13		0.27		0.19		0.21
Series 14		0.96		0.68		0.81
Series 15		0.22		0.11		0.16
Series 17		0.61		0.57		0.49
Series 18		0.61		0.57		0.49
Series 21		0.64		0.60		0.52
Series 221		0.89		0.85		0.11
Series 242		0.69		0.60		–
Series 263		0.58		–		–
Series 284		0.30		–		–

1. Issued June 4, 2009

2. Issued January 14, 2010

3. Issued October 29, 2010

4. Issued February 8, 2011

Basic and Diluted Earnings Per Share

The components of basic and diluted earnings per share are summarized in the following table:

	Operating Cash Flow						Net Income
FOR THE THREE MONTHS ENDED JUNE 30 (MILLIONS)	2011			2010			2011			2010
Operating cash flow/net income	$	342		$	327		$	838		$	89
Preferred share dividends		(26	)		(19	)		(26	)		(19	)
		316			308			812			70
Capital securities dividends1		–			–			12			–
Operating cash flow/net income available for shareholders	$	316		$	308		$	824		$	70
Weighted average shares		613.2			573.8			613.2			573.8
Dilutive effect of the conversion of options using treasury stock method		12.4			9.7			12.4			9.7
Dilutive effect of the conversion of capital securities1,2		–			–			23.0			–
Shares and share equivalents		625.6			583.5			648.6			583.5

1. Subject to the approval of the Toronto Stock Exchange, the Series 10,11,12 and 21 shares, unless redeemed by the company for cash, are convertible into Class A Limited Voting shares at a price equal to the greater of 95% at the market price at the time of conversion and C$2.00, at the option of either the company or the holder

2. The number of shares is based on 95% of the quoted market price at period-end

The capital securities were not dilutive to net income in 2010 due to the lower earnings per share in that period.

56 BROOKFIELD ASSET MANAGEMENT

Issued and Outstanding Shares

Changes in the number of issued and outstanding shares during the three and six months ended June 30 are as follows:

	Three Months Ended				Six Months Ended
FOR THE PERIOD ENDED JUNE 30 (MILLIONS)	2011		2010		2011			2010
Outstanding at beginning of period		621.1		574.0		577.7			572.9
Issued (repurchased)
Share issuances		–		–		45.1			–
Repurchases		–		–		(3.2	)		–
Management share option plan		0.4		0.9		1.9			2.0
Outstanding at end of period		621.5		574.9		621.5			574.9
Unexercised options		38.9		41.0		38.9			41.0
Total diluted shares at end of period		660.4		615.9		660.4			615.9

In calculating our book value per share, the cash value of our unexercised options of $892 million (December 31, 2010 – $813 million) is added to the book value of our common equity of $15,765 million (December 31, 2010 – $12,795 million) prior to dividing by the total diluted shares presented above.

As of August 10, 2011, the Corporation had outstanding 621,508,851 Class A Limited Voting Shares and 85,120 Class B Limited Voting Shares.

CONSOLIDATED STATEMENTS OF CASH FLOWS

The following table summarizes the company’s cash flows on a consolidated basis:

	Three Months Ended						Six Months Ended
FOR THE PERIOD ENDED JUNE 30 (MILLIONS)	2011			2010			2011			2010
Operating activities	$	566		$	582		$	685		$	964
Financing activities		260			(475	)		1,170			(155	)
Investing activities		(863	)		32			(1,571	)		(700	)
(Decrease)/Increase in cash and cash equivalents	$	(37	)	$	139		$	284		$	109

Operating Activities

Cash flow from operating activities is reported on a consolidated basis in our financial statements, whereas the operating cash flow measure utilized elsewhere in the MD&A reflects only our pro rata share of the underlying cash flow. The following table reconciles these two measures:

	Three Months Ended						Six Months Ended
FOR THE PERIOD ENDED JUNE 30 (MILLIONS)	2011			2010			2011			2010
Operating cash flow and gains per MD&A	$	342		$	327		$	573		$	693
Operating cash flow attributable to non-controlling interests		393			318			678			533
Less: disposition gains		(61	)		(102	)		(64	)		(187	)
Cash flow from operating activities before the following:		674			543			1,187			1,039
Net change in working capital balances and other		7			48			(36	)		(61	)
Net investment in residential development inventory		(115	)		(9	)		(466	)		(14	)
Cash flow from operating activities per financial statements	$	566		$	582		$	685		$	964

We describe the variances in operating cash flow attributable to Brookfield’s net equity elsewhere in the MD&A. Cash flow attributable to non-controlling interests reflects the interests of other investors in the cash flow generated by entities consolidated in our financial statements.

Q2 2011 INTERIM REPORT 57

Financing Activities

	Three Months Ended					Six Months Ended
FOR THE PERIOD ENDED JUNE 30 (MILLIONS)	2011		2010			2011		2010
Per IFRS financial statements	$	260	$	(475	)	$	1,170	$	(155	)
Add: equity issued in exchange for General Growth shares not reflected in financial statements		–		–			907		–
Adjusted cash flow from financing	$	260	$	(475	)	$	2,077	$	(155	)

We recorded $260 million of cash flow from financing activities in the second quarter, compared to an outflow of $475 million in 2010. The current quarter included borrowings within subsidiaries to fund business development, whereas these facilities had been reduced during the comparable period in 2010. We increased distributions to investors in our listed and unlisted funds, including the return of monetization proceeds. The 2010 results include the repayment of approximately $500 million of property specific mortgages and other subsidiary debt, including debt associated with property that was sold. IFRS guidelines exclude equity issued in exchange for acquisitions to be included in the Consolidated Statements of Cash Flows included in the interim financial statements. Accordingly, we have reconciled for the excluded equity in the foregoing table.

Investing Activities

	Three Months Ended					Six Months Ended
FOR THE PERIOD ENDED JUNE 30 (MILLIONS)	2011			2010		2011			2010
Per IFRS financial statements	$	(863	)	$	32	$	(1,571	)	$	(700	)
Add: equity issued in exchange for General Growth shares in exchange for Class A Limited Voting Shares of the corporation		–			–		(907	)		–
	$	(863	)	$	32	$	(2,478	)	$	(700	)

We recorded $863 million of net cash outflows for investment activities in the second quarter. This included $699 million in property, plant and equipment during the quarter, roughly half of which went towards the development of renewable wind and hydroelectric generation facilities. We also acquired loans secured by commercial properties that are recorded as Investments in the statement of cash flows. Finally, we monetized a number of real estate securities included as “other financial assets”.

58 BROOKFIELD ASSET MANAGEMENT

RECONCILIATION BETWEEN CONSOLIDATED AND SEGMENTED FINANCIAL INFORMATION

Balance Sheet	As at June 30, 2011
(MILLIONS)	Renewable Power		Commercial Properties		Infrastructure		Development Activities			Private Equity and Finance		Cash and      Financial Assets		Asset   Management and Other			Corporate Capitalization			Consolidated Financial Statements
Assets
Operating assets
Property, plant and equipment	$	12,978	$	12	$	3,458	$	1		$	2,757	$	–	$	52		$	–		$	19,258
Investment properties		–		20,857		230		1,072			1,759		–		–			–			23,918
Timber and agriculture		–		–		2,737		475			64		–		–			–			3,276
Inventory		8		2		59		6,012			467		–		–			–			6,548
Investments		316		7,514		1,312		453			45		26		26			–			9,692
Cash and cash equivalents		313		377		249		394			404		153		107			–			1,997
Financial assets		6		754		–		(5	)		156		1,490		–			–			2,401
Loans and notes receivable		58		390		13		(220	)		1,080		219		–			–			1,540
Accounts receivable and other		1,473		943		2,316		1,887			956		130		1,150			–			8,855
Intangible assets		134		55		3,034		39			315		–		390			–			3,967
Goodwill		26		367		591		510			41		–		1,141			–			2,676
		15,312		31,271		13,999		10,618			8,044		2,018		2,866			–			84,128
Deferred tax asset		192		320		517		240			90		–		727			–			2,086
Total assets	$	15,504	$	31,591	$	14,516	$	10,858		$	8,134	$	2,018	$	3,593		$	–		$	86,214
Liabilities
Corporate borrowings	$	–	$	–	$	–	$	–		$	–	$	–	$	–		$	3,330		$	3,330
Non-recourse borrowings
Property specific mortgages		4,023		10,631		4,632		3,290			2,532		72		–			–			25,180
Subsidiary borrowings		1,276		679		358		201			1,033		36		–			921			4,504
Accounts payable and other liabilities		903		1,093		2,791		2,423			1,197		–		1,025			1,511			10,943
Deferred tax liability		2,586		750		1,182		339			239		–		–			13			5,109
Interests of others in funds		1,519		–		239		–			–		66		–			–			1,824
Capital securities		–		1,050		–		–			–		–		–			695			1,745
Equity
Non-controlling interests		712		7,923		3,519		1,992			1,686		81		8			–			15,921
Preferred equity		–		–		–		–			–		–		–			1,893			1,893
Common equity		4,485		9,465		1,795		2,613			1,447		1,763		2,560			(8,363	)		15,765
Total liabilities and equity	$	15,504	$	31,591	$	14,516	$	10,858		$	8,134	$	2,018	$	3,593		$	–		$	86,214
Common equity	$	4,485	$	9,465	$	1,795	$	2,613		$	1,447	$	1,763	$	2,560		$	(8,363	)	$	15,765
Deferred income taxes1		2,394		123		13		106			33		–		(727	)		12			1,954
Unrecognized values		1,000		25		175		875			450		–		825			–			3,350
Net tangible asset value		7,879		9,613		1,983		3,594			1,930		1,763		2,658			(8,351	)		21,069
Asset management franchise value		–		–		–		–			–		–		4,000			–			4,000
Intrinsic value	$	7,879	$	9,613	$	1,983	$	3,594		$	1,930	$	1,763	$	6,658		$	(8,351	)	$	25,069

1. Net of non-controlling interests

Q2 2011 INTERIM REPORT 59

		$803			$803			$803			$803			$803			$803			$803			$803			$803
Results from Operations	For the three months ended June 30, 2011
(MILLIONS)	Asset      Management/ Other			Renewable Power			Commercial Properties			Infrastructure			Development Activities			Private Equity and  Finance			Investment   Income  Gains			Unallocated			Consolidated Financial Statements
Asset management and other services	$	95		$	–		$	–		$	–		$	–		$	–		$	–		$	–		$	95
Revenues less direct operating costs
Renewable power generation		–			220			–			–			–			–			–			–			220
Commercial properties		–			–			372			–			–			11			–			–			383
Infrastructure		–			–			–			200			–			–			–			–			200
Development activities		–			–			–			–			83			–			–			–			83
Private equity and finance		–			–			–			–			–			151			–			–			151
Equity accounted income		4			7			113			47			1			–			1			–			173
Investment and other income		–			–			13			8			7			12			32			–			72
		99			227			498			255			91			174			33			–			1,377
Expenses
Interest		–			96			209			86			39			44			5			85			564
Operating costs		–			–			22			12			–			–			–			84			118
Current income taxes		–			11			2			(1	)		5			4			–			–			21
Non-controlling interests		–			57			143			102			23			65			3			–			393
		99			63			122			56			24			61			25			(169	)		281
Disposition gains		–			–			–			–			–			61			–			–			61
Cash flow from operations		99			63			122			56			24			122			25			(169	)		342
Less: disposition gains		–			–			–			–			–			(61	)		–			–			(61	)
Net income before the following		99			63			122			56			24			61			25			(169	)		281
Depreciation and amortization		–			(114	)		(16	)		(43	)		(2	)		(51	)		–			(5	)		(231	)
Fair value changes		–			(26	)		1,155			(6	)		–			(46	)		–			11			1,088
Deferred income taxes		–			–			(139	)		(31	)		(15	)		7			–			75			(103	)
Non-controlling interests		–			43			(319	)		54			–			30			–			(5	)		(197	)
Net income (loss)	$	99		$	(34	)	$	803		$	30		$	7		$	1		$	25		$	(93	)	$	838
Total Return and Change in Intrinsic Value	For the three months ended June 30, 2011
(MILLIONS)	Asset Management/ Other			Renewable Power			Commercial Properties			Infrastructure			Development Activities			Private Equity and  Finance			Cash and Financial  Assets			Unallocated			Total
Cash flow from operations	$	99		$	63		$	122		$	56		$	24		$	122		$	25		$	(169	)	$	342
Less: preferred share dividends		–			–			–			–			–			–			–			(26	)		(26	)
Cash flow for shares		99			63			122			56			24			122			25			(195	)		316
Fair value changes
Recorded in IFRS statements1
Revaluation gains/losses		–			19			815			(12	)		27			(1	)		(4	)		(14	)		830
Less: recorded in cash flow		–			–			(33	)		–			1			(23	)		–			–			(55	)
Depreciation and amortization		(12	)		(114	)		(2	)		(14	)		(4	)		(25	)		(3	)		–			(174	)
Foreign currency		46			84			54			14			101			8			7			(20	)		294
Other		–			–			15			–			(1	)		–			–			15			29
Unrecognized values		50			175			(325	)		50			–			(25	)		–			–			(75	)
Total fair value changes		84			164			524			38			124			(66	)		–			(19	)		849
Less: gains not recorded under IFRS		–			–			–			–			–			(61	)		–			–			(61	)
Total return		183			227			646			94			148			(5	)		25			(214	)		1,104
Capital invested/distributed2		(116	)		(33	)		125			(31	)		132			(291	)		225			(92	)		(81	)
Net change in intrinsic value	$	67		$	194		$	771		$	63		$	280		$	(296	)	$	250		$	(306	)	$	1,023

1. Net of non-controlling interests and excluding deferred income taxes

2. Total amount represents dividends on common equity

60 BROOKFIELD ASSET MANAGEMENT

Results from Operations	For the three months ended June 30, 2010
(MILLIONS)	Asset      Management/ Other			Renewable Power			Commercial Properties			Infrastructure			Development Activities			Private Equity and  Finance			Investment   Income  Gains			Unallocated			Consolidated Financial Statements
Asset management and other services	$	78		$	–		$	–		$	–		$	–		$	–		$	–		$	–		$	78
Revenues less direct operating costs
Renewable power generation		–			164			–			–			–			–			–			–			164
Commercial properties		–			–			291			–			–			9			–			–			300
Infrastructure		–			–			–			58			–			–			–			–			58
Development activities		–			–			–			–			111			1			–			–			112
Private equity and finance		–			–			–			–			–			104			–			–			104
Equity accounted income		–			5			67			51			(2	)		–			–			–			121
Investment and other income		–			–			35			–			–			75			67			–			177
		78			169			393			109			109			189			67			–			1,114
Expenses
Interest		–			93			174			32			18			37			5			78			437
Operating costs		–			–			29			5			–			–			–			75			109
Current income taxes		–			3			1			–			15			6			–			–			25
Non-controlling interests		–			26			87			38			39			108			20			–			318
		78			47			102			34			37			38			42			(153	)		225
Disposition gains		–			102			–			–			–			–			–			–			102
Cash flow from operations		78			149			102			34			37			38			42			(153	)		327
Less: disposition gains		–			(102	)		–			–			–			–			–			–			(102	)
Net income before the following		78			47			102			34			37			38			42			(153	)		225
Depreciation and amortization		–			(131	)		(14	)		(7	)		(5	)		(46	)		–			(5	)		(208	)
Fair value changes		–			2			8			(41	)		(3	)		75			–			(42	)		(1	)
Deferred income taxes		–			42			(23	)		4			6			(19	)		–			29			39
Non-controlling interests		–			3			8			25			(12	)		10			–			–			34
Net income (loss)	$	78		$	(37	)	$	81		$	15		$	23		$	58		$	42		$	(171	)	$	89
Total Return and Change in Intrinsic Value	For the three months ended June 30, 2010
(MILLIONS)	Asset Management/ Other			Renewable Power			Commercial Properties			Infrastructure			Development Activities			Private Equity and  Finance			Cash and Financial Assets			Unallocated			Total
Cash flow from operations	$	78		$	149		$	102		$	34		$	37		$	38		$	42		$	(153	)	$	327
Less: preferred share dividends		–			–			–			–			–			–			–			(19	)		(19	)
Cash flow for shares		78			149			102			34			37			38			42			(172	)		308
Fair value changes
Recorded in IFRS statements1
Revaluation gains/losses		15			(9	)		20			(8	)		2			59			(53	)		(13	)		13
Depreciation and amortization		(17	)		(130	)		(2	)		(2	)		(3	)		(28	)		(2	)		–			(184	)
Foreign currency		(18	)		(188	)		(103	)		(55	)		(56	)		(10	)		(2	)		98			(334	)
Other		–			(7	)		(35	)		(2	)		2			–			–			18			(24	)
Unrecognized values		–			200			–			200			–			400			–			–			800
Total fair value changes		(20	)		(134	)		(120	)		133			(55	)		421			(57	)		103			271
Less: gains not recorded in IFRS statements		–			(102	)		–			–			–			–			–			–			(102	)
Total return		58			(87	)		(18	)		167			(18	)		459			(15	)		(69	)		477
Capital invested/distributed2		(121	)		(63	)		12			(49	)		141			26			(82	)		62			(74	)
Net change in intrinsic value	$	(63	)	$	(150	)	$	(6	)	$	118		$	123		$	485		$	(97	)	$	(7	)	$	403

1. Net of non-controlling interests and excluding deferred income taxes

2. Total amount represents dividends on common equity

Q2 2011 INTERIM REPORT 61

Balance Sheet	As at December 31, 2010
(MILLIONS)	Renewable Power		Commercial Properties			Infrastructure			Development Activities			Private Equity and  Finance		Cash  and Financial Assets		Asset      Management and Other			Corporate Capitalization			Consolidated Financial Statements
Assets
Operating assets
Property, plant and equipment	$	12,443	$	8		$	3,138		$	1		$	2,497	$	–	$	61		$	–		$	18,148
Investment properties		–		19,709			222			1,071			1,161		–		–			–			22,163
Timber and agriculture		–		–			2,726			399			81		–		–			–			3,206
Inventory		8		2			46			5,333			460		–		–			–			5,849
Investments		267		4,811			1,271			188			45		26		21			–			6,629
Cash and cash equivalents		192		349			154			390			481		57		90			–			1,713
Financial assets		55		1,219			(4	)		(161	)		194		1,542		–			–			2,845
Loans and notes receivable		–		–			–			12			1,337		225		–			–			1,574
Accounts receivable and other		1,477		818			2,216			1,400			833		–		1,125			–			7,869
Intangible assets		125		62			2,904			23			314		–		377			–			3,805
Goodwill		17		347			591			474			42		–		1,075			–			2,546
		14,584		27,325			13,264			9,130			7,445		1,850		2,749			–			76,347
Deferred tax asset		154		329			431			263			109		–		498			–			1,784
Total assets	$	14,738	$	27,654		$	13,695		$	9,393		$	7,554	$	1,850	$	3,247		$	–		$	78,131
Liabilities
Corporate borrowings	$	–	$	–		$	–		$	–		$	–	$	–	$	–		$	2,905		$	2,905
Non-recourse borrowings
Property specific mortgages		3,834		10,689			4,463			2,626			1,712		130		–			–			23,454
Subsidiary borrowings		1,152		579			148			278			955		35		2			858			4,007
Accounts payable and other liabilities		838		1,191			2,530			2,149			1,168		4		897			1,557			10,334
Deferred tax liability		2,723		558			1,098			283			243		–		–			65			4,970
Interests of others in funds		1,355		–			207			–			–		–		–			–			1,562
Capital securities		–		1,038			–			–			–		–		–			669			1,707
Equity
Non-controlling interests		513		7,003			3,484			1,800			1,795		138		6			–			14,739
Preferred equity		–		–			–			–			–		–		–			1,658			1,658
Common equity		4,323		6,596			1,765			2,257			1,681		1,543		2,342			(7,712	)		12,795
Total liabilities and equity	$	14,738	$	27,654		$	13,695		$	9,393		$	7,554	$	1,850	$	3,247		$	–		$	78,131
Common equity	$	4,323	$	6,596		$	1,765		$	2,257		$	1,681	$	1,543	$	2,342		$	(7,712	)	$	12,795
Deferred income taxes1		2,569		(12	)		15			52			24		–		(498	)		66			2,216
Unrecognized values		600		325			125			875			450		–		875			–			3,250
Net tangible asset value		7,492		6,909			1,905			3,184			2,155		1,543		2,719			(7,646	)		18,261
Asset management franchise value		–		–			–			–			–		–		4,000			–			4,000
Intrinsic value	$	7,492	$	6,909		$	1,905		$	3,184		$	2,155	$	1,543	$	6,719		$	(7,646	)	$	22,261

1. Net of non-controlling interests

62 BROOKFIELD ASSET MANAGEMENT

Results from Operations	For the six months ended June 30, 2011
(MILLIONS)	Asset   Management/ Other			Renewable Power			Commercial Properties			Infrastructure			Development Activities			Private Equity and  Finance			Investment  Income  Gains			Unallocated			Consolidated Financial Statements
Asset management and other services	$	171		$	–		$	–		$	–		$	–		$	–		$	–		$	–		$	171
Revenues less direct operating costs
Renewable power generation		–			406			–			–			–			–			–			–			406
Commercial properties		–			–			661			–			–			32			–			–			693
Infrastructure		–			–			–			388			–			–			–			–			388
Development activities		–			–			–			–			135			–			–			–			135
Private equity and finance		–			–			–			–			–			220			–			–			220
Equity accounted income		4			14			236			90			6			–			–			–			350
Investment and other income		–			–			22			11			14			49			125			–			221
		175			420			919			489			155			301			125			–			2,584
Expenses
Interest		–			190			411			169			65			92			13			170			1,110
Operating costs		–			–			47			23			–			–			–			163			233
Current income taxes		–			15			5			–			12			7			14			1			54
Non-controlling interests		–			100			233			191			39			109			6			–			678
		175			115			223			106			39			93			92			(334	)		509
Disposition gains		–			–			3			–			–			61			–			–			64
Cash flow from operations		175			115			226			106			39			154			92			(334	)		573
Less: disposition gains		–			–			(3	)		–			–			(61	)		–			–			(64	)
Net income before the following		175			115			223			106			39			93			92			(334	)		509
Depreciation and amortization		–			(224	)		(30	)		(74	)		(6	)		(108	)		–			(10	)		(452	)
Fair value changes		–			(155	)		1,495			(41	)		(1	)		55			–			17			1,370
Deferred income taxes		–			(15	)		(190	)		(24	)		(16	)		(14	)		–			152			(107	)
Non-controlling interests		–			87			(400	)		93			4			(12	)		–			24			(204	)
Net income (loss)	$	175		$	(192	)	$	1,098		$	60		$	20		$	14		$	92		$	(151	)	$	1,116
Total Return and Change in Intrinsic Value	For the six months ended June 30, 2011
(MILLIONS)	Asset Management/ Other			Renewable Power			Commercial Properties			Infrastructure			Development Activities			Private Equity and  Finance			Cash and Financial Assets			Unallocated			Total
Cash flow from operations	$	175		$	115		$	226		$	106		$	39		$	154		$	92		$	(334	)	$	573
Less: preferred share dividends		–			–			–			–			–			–			–			(51	)		(51	)
Cash flow for shares		175			115			226			106			39			154			92			(385	)		522
Fair value changes
Recorded in IFRS statements1
Revaluation gains/losses		(6	)		(43	)		1,042			(36	)		27			15			(10	)		(9	)		980
Less: recorded in cash flow		–			–			(33	)		–			1			(36	)		–			–			(68	)
Depreciation and amortization		(22	)		(224	)		(8	)		(22	)		(5	)		(54	)		(3	)		–			(338	)
Foreign currency		74			135			76			15			136			8			7			(39	)		412
Other		–			–			17			_			14			–			–			16			47
Unrecognized values		(50	)		400			(300	)		50			–			–			–			–			100
Total fair value changes		(4	)		268			794			7			173			(67	)		(6	)		(32	)		1,133
Less: gains not recorded in IFRS statements		–			–			(3	)		–			–			(61	)		–			–			(64	)
Total return		171			383			1,017			113			212			26			86			(417	)		1,591
Capital invested/distributed2		(232	)		4			1,687			(35	)		198			(251	)		134			(1,664	)		(159	)
Class A Limited Voting Shares issuance		–			–			–			–			–			–			–			1,376			1,376
Net change in intrinsic value	$	(61	)	$	387		$	2,704		$	78		$	410		$	(225	)	$	220		$	(705	)	$	2,808

1. Net of non-controlling interests and excluding deferred income taxes

2. Total amount represents dividends on common equity

Q2 2011 INTERIM REPORT 63

Results from Operations							For the six months ended June 30, 2010
(MILLIONS)	Services			Renewable Power			Commercial Properties			Infrastructure			Development Activities			Special   Situations			Investment Income /  Gains			Corporate			Consolidated Financial Statements
Asset management and other services	$	149		$	–		$	–		$	–		$	–		$	–		$	–		$	–		$	149
Revenues less direct operating costs
Renewable power generation		–			403			–			–			–			–			–			–			403
Commercial properties		–			–			560			–			–			19			–			–			579
Infrastructure		–			–			–			104			–			1			–			–			105
Development activities		–			–			–			–			181			1			–			–			182
Special situations		–			–			–			–			–			178			–			–			178
Equity accounted investments		–			12			124			101			(1	)		–			–			–			236
Investment and other income		–			–			63			1			8			77			170			–			319
		149			415			747			206			188			276			170			–			2,151
Expenses
Interest		–			183			339			62			55			62			10			153			864
Operating costs		–			–			53			10			–			–			–			139			202
Current income taxes		–			9			4			1			21			6			–			5			46
Non-controlling interests		–			63			179			69			67			123			32			–			533
Operating cash flow		149			160			172			64			45			85			128			(297	)		506
Disposition gains		–			102			–			–			1			84			–			–			187
Cash flow from operations		149			262			172			64			46			169			128			(297	)		693
Less: disposition gains		–			(102	)		–			–			(1	)		(84	)		–			–			(187	)
Net income before the following		149			160			172			64			45			85			128			(297	)		506
Depreciation and amortization		–			(246	)		(29	)		(11	)		(5	)		(88	)		–			(8	)		(387	)
Fair value changes		–			57			126			(81	)		19			82			–			(76	)		127
Deferred income taxes		–			11			(51	)		1			10			(7	)		–			39			3
Non-controlling interests		–			8			(50	)		51			(25	)		18			–			2			4
Net income (loss)	$	149		$	(10	)	$	168		$	24		$	44		$	90		$	128		$	(340	)	$	253
Total Return and Change in Intrinsic Value	For the six months ended June 30, 2010
(MILLIONS)	Asset Management/ Other			Renewable Power			Commercial Properties			Infrastructure			Development Activities			Private Equity and Finance			Cash and Financial Assets			Unallocated			Total
Cash flow from operations	$	149		$	262		$	172		$	64		$	45		$	170		$	128		$	(297	)	$	693
Less: preferred share dividends		–			–			–			–			–			–			–			(35	)		(35	)
Cash flow for shares		149			262			172			64			45			170			128			(332	)		658
Fair value changes
Recorded in IFRS statements1
Revaluation gains/losses		16			11			49			27			14			54			(68	)		(54	)		49
Depreciation and amortization		(26	)		(245	)		(5	)		(3	)		(3	)		(57	)		(2	)		–			(341	)
Foreign currency		(6	)		(175	)		(45	)		(55	)		(40	)		(16	)		25			41			(271	)
Other		–			(7	)		(35	)		(2	)		2			85			–			26			69
Unrecognized values		–			350			–			200			–			400			–			–			950
Total fair value changes		(16	)		(66	)		(36	)		167			(27	)		466			(45	)		13			456
Less: gains not recorded IFRS statements		–			(102	)		–			–			–			(85	)		–			–			(187	)
Total return		133			94			136			231			18			551			83			(319	)		927
Capital invested/distributed2		(445	)		(217	)		149			(92	)		175			(66	)		18			329			(149	)
Net change in intrinsic value	$	(312	)	$	(123	)	$	285		$	139		$	193		$	485		$	101		$	10		$	778

1. Net of non-controlling interests and excluding deferred income taxes

2. Total amount represents dividends on common equity

64 BROOKFIELD ASSET MANAGEMENT

Change in Intrinsic Value

The following table provides an analysis of the change in our intrinsic value during the quarter and reconciles this amount to Net Income, Other Comprehensive Income and other items in our Consolidated Statement of Changes in Equity:

	Intrinsic Value			Financial Statement Allocation												Intrinsic Value
FOR THE THREE MONTHS ENDED JUNE 30, 2011 (MILLIONS, EXCEPT PER SHARE AMOUNTS)	Total			Net Income			Other Comprehensive Income			Shareholder Distributions			Other Items1			Per Share
Operating cash flow	$	342		$	281		$	–		$	–		$	61	2	$	0.50	3
Less: preferred share dividends		(26	)		–			–			(26	)		–			–
Operating cash flow for shares		316			281			–			(26	)		61			0.50
Fair value changes
Revaluation gains/(losses)		830			823			52			–			(45	)		1.26
Less: recorded in cash flow4		(55	)		(55	)		–			–			–			(0.08	)
		775			768			52			–			(45	)		1.18
Depreciation and amortization		(174	)		(174	)		–			–			–			(0.29	)
Foreign currency revaluation		294			–			274			–			20	5		0.45
Other		29			–			–			–			29			0.04
		924			594			326			–			4			1.38
Unrecognized values6		(75	)		n/a			n/a			n/a			n/a			(0.11	)
Asset management franchise6		–			n/a			n/a			n/a			n/a			–
Total fair value changes		849			594			326			–			4			1.27
Less: gains not recorded in IFRS statements2		(61	)		–			–			–			(61	)		(0.09	)
Total return – pre-tax7		1,104			875			326			(26	)		4			1.68
Dividends – common equity		(81	)		–			–			(81	)		–			(0.13	)
Deferred income taxes7		–			(37	)		(12	)		–			25			–
Total change in intrinsic value7	$	1,023		$	838		$	314		$	(107	)	$	29		$	1.55

1. Other items included in shareholders’ equity

2. Represents disposition gains not included under IFRS

3. Operating cash flow per share shown net of preferred share dividends

4. Fair value changes that have been recorded in operating cash flow upon disposition

5. Represents foreign exchange impact on deferred income taxes

6. Revaluation of items not reflected at fair value under IFRS

7. Values presented on a pre-tax basis

The components of changes in intrinsic value in the above table corresponds with pages 11 and 60 in the MD&A and the total change in intrinsic value for financial statements allocations correspond to the subtotals for the same categories in the consolidated statement of changes in equity within the interim financial statements.

Q2 2011 INTERIM REPORT 65

CONTRACTUAL OBLIGATIONS

Our 2010 Annual Report contains a table and description of our contractual obligations, which consist largely of long-term financial obligations, as well as commitments to provide bridge financing, capital subscriptions, and letters of credit and guarantees provided in respect of power sales contracts and reinsurance obligations in the normal course of business.

In addition, the company and its consolidated subsidiaries execute agreements that provide for indemnifications and guarantees to third parties in transactions or dealings such as business dispositions, business acquisitions, sales of assets, provision of services, securitization agreements, and underwriting and agency agreements. The company has also agreed to indemnify its directors and certain of its officers and employees. The nature of substantially all of the indemnification undertakings prevents the company from making a reasonable estimate of the maximum potential amount the company could be required to pay third parties, as in most cases the agreements do not specify a maximum amount, and the amounts are dependent upon the outcome of future contingent events, the nature and likelihood of which cannot be determined at this time. Neither the company nor its consolidated subsidiaries have made significant payments in the past nor do they expect at this time to make any significant payments under such indemnification agreements in the future.

The company periodically enters into joint venture, consortium or other arrangements that have contingent liquidity rights in favour of the company or its counterparties. These include buy-sell arrangements, registration rights and other customary arrangements. These agreements generally have embedded protective terms that mitigate the risk to us. The amount, timing and likelihood of any payments by the company under these arrangements is in most cases dependent on either future contingent events or circumstances applicable to the counterparty and therefore cannot be determined at this time.

ACCOUNTING POLICIES AND CRITICAL JUDGMENTS AND ESTIMATES

The preparation of financial statements in conformity with IFRS requires management to select appropriate accounting policies and to make judgements and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our 2010 Annual Report contains a description of the company’s accounting policies and the critical judgements and estimates utilized in the preparation of the consolidated financial statements.

In making critical judgements and estimates, management relies on external information and observable conditions where possible, supplemented by internal analysis as required. These estimates have been applied in a manner consistent with that in the prior year and there are no known trends, commitments, events or uncertainties that we believe will materially affect the methodology or assumptions utilized in this report. The estimates are impacted by, among other things, movements in interest rates and other factors, some of which are highly uncertain. For further reference on accounting policies and critical judgements and estimates, see our significant accounting policies contained in Note 2 to the December 31, 2010 Consolidated Financial Statements.

66 BROOKFIELD ASSET MANAGEMENT

FUTURE CHANGES IN ACCOUNTING POLICIES

I. Financial Instruments

IFRS 9 Financial Instruments (“IFRS 9”) was issued by the IASB on November 12, 2009 and will replace IAS 39, Financial Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2013. The company has not yet determined the impact of IFRS 9 on its financial statements.

II. Income Taxes

In December 2010, the IASB made amendments to IAS 12, Income Taxes (“IAS 12”) that are applicable to the measurement of deferred tax liabilities and deferred tax assets where investment property is measured using the fair value model in IAS 40, Investment Property. The amendments introduce a rebuttable presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. The amendments to IAS 12 are effective for annual periods beginning on or after January 1, 2012. The company has not yet determined the impact of the amendments to IAS 12 on its financial statements.

III. Employee Benefits

In June 2011, the IASB made amendments to IAS 19, Employee Benefits (“IAS 19”) that requires entities to provide their obligation resulting from the provision for defined benefit plans and how those obligations affect its financial position, financial performance and cash flow. The amendment provides several improvements, including; eliminating the option to defer the recognition of gains and losses, streamlining the presentation of changes to assets and liabilities with all changes from remeasurement to be recognized in other comprehensive income and enhancing the disclosure of the characteristics of defined benefit plans and the risks that entities are exposed to through participation in those plans. The amended version of IAS 19 is effective for financial years beginning on or after January 1, 2013, with earlier application permitted. The company has not yet determined the impact of these amendments on its financial statements.

IV. Consolidated Financial Statements, Joint Ventures and Disclosures

In May 2011, the IASB issued three standards: IFRS 10, Consolidated Financial Statements (“IFRS 10”), IFRS 11, Joint Ventures (“IFRS 11”), IFRS 12, Disclosures of Involvement with Other Entities (“IFRS 12”), and amended two standards: IAS 27, Separate Financial Statements (“IAS 27”), and IAS 28, Investments in Associates and Joint Ventures (“IAS 28”). Each of the new and amended standards has an effective date for annual periods beginning on or after January 1, 2013, with earlier application permitted if all the respective standards are also early applied.

IFRS 10 replaces IAS 27 and SIC-12, Consolidation Special Purpose Entities. The consolidation requirements previously included in IAS 27 have been included in IFRS 10, whereas the amended IAS 27 sets standards to be applied in accounting for investments in subsidiaries, joint ventures, and associates when an entity elects, or is required by local regulations, to present separate (non-consolidated) financial statements. IFRS 10 uses control as the single basis for consolidation, irrespective of the nature of the investee, eliminating the risks and rewards approach included in SIC-12. An investor must possess the following three elements to conclude it controls an investee; power over the investee, exposure or rights to variable returns from involvement with the investee, and the ability to use power over the investee to affect the amount of the investor’s returns. IFRS 10 requires continuous reassessment of changes in an investor’s power over the investee and changes in the investor’s exposure or rights to variable returns. The Company has not yet determined the impact of IFRS 10 and the amendments to IAS 27 on its consolidated financial statements.

Q2 2011 INTERIM REPORT 67

IFRS 11 supersedes IAS 31, Interest in Joint Ventures and SIC-31, Joint Controlled Entities – Non- Monetary Contributions by Venturers. IFRS 11 is applicable to all parties that have an interest in a joint arrangement. IFRS 11 establishes two types of joint arrangements: joint operations and joint ventures. In a joint operation, the parties to the joint arrangement have rights to the assets and obligations for the liabilities of the arrangement, and recognize their share of the assets, liabilities, revenues and expenses in accordance with applicable IFRSs. In a joint venture, the parties to the arrangement have rights to the net assets of the arrangement and account for their interest using the equity method of accounting under IAS 28, Investments in associates and Joint Venturers. IAS 28 prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. The Company has not yet determined the impact of IFRS 11 and the amendments to IAS 28 on its consolidated financial statements.

IFRS 12 integrates the disclosure requirements on interests in other entities and requires a parent company to disclose information about significant judgements and assumptions it has made in determining whether it has control, joint control, or significant influence over another entity and the type of joint arrangement when the arrangement has been structured through a separate vehicle. An entity should also provide these disclosures when changes in facts and circumstances affect the entity’s conclusion during the reporting period. Entities are permitted to incorporate the disclosure requirements in IFRS 12 into their financial statements without early adopting IFRS 12. The Company has not yet determined the impact of IFRS 12 on its consolidated financial statements.

INTERNAL CONTROL OVER FINANCIAL REPORTING

No changes were made in our internal control over financial reporting during the quarter ended June 30, 2011, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

68 BROOKFIELD ASSET MANAGEMENT

QUARTERLY RESULTS

Total revenues, net income (loss) for the eight recently completed quarters are as follows:

	2011						2010												2009
(MILLIONS)	Q2			Q1			Q4			Q3			Q2			Q1			Q4			Q3
Total revenues	$	4,136		$	3,583		$	3,666		$	3,550		$	3,376		$	3,031		$	3,792		$	2,844
Asset management and other services		95			76			126			90			78			71			123			65
Revenues less direct operating costs
Renewable power		220			186			188			157			164			239			217			141
Commercial properties		383			310			366			337			300			279			344			258
Infrastructure		200			188			76			40			58			47			21			25
Development		83			52			169			176			112			70			80			12
Private equity and finance		151			69			13			90			104			74			21			18
Equity accounted income		173			177			132			126			121			115			144			44
Investment and other income		72			149			81			193			177			142			159			190
		1,377			1,207			1,151			1,209			1,114			1,037			1,109			753
Expenses
Interest		564			546			513			452			437			427			395			383
Operating costs		118			115			121			94			109			93			122			87
Current income taxes		21			33			13			38			25			21			(44	)		(2	)
Non-controlling interest in net income before the following		393			285			315			271			318			215			292			136
Income prior to other items		281			228			189			354			225			281			344			149
Fair value changes		1,088			282			1,792			(54	)		(1	)		128			279			(873	)
Depreciation and amortization		(231	)		(221	)		(215	)		(193	)		(208	)		(179	)		(173	)		(161	)
Future income taxes		(103	)		(4	)		(10	)		(36	)		39			(36	)		(33	)		177
Non-controlling interest in the foregoing items		(197	)		(7	)		(667	)		41			34			(30	)		(202	)		291
Net income (loss)	$	838		$	278		$	1,089		$	112		$	89		$	164		$	215		$	(417	)
Cash flows from operations for the eight recently completed quarters are as follows:
	2011						2010												2009
(MILLIONS, EXCEPT PER SHARE AMOUNTS)	Q2			Q1			Q4			Q3			Q2			Q1			Q4			Q3
Income before the following	$	281		$	228		$	189		$	354		$	225		$	281		$	344		$	149
Disposition gains1		61			3			227			–			102			85			21			346
Cash flow from operations and gains		342			231			416			354			327			366			365			495
Preferred share dividends		26			25			22			18			19			16			14			12
Cash flow to Brookfield shareholders	$	316		$	206		$	394		$	336		$	308		$	350		$	351		$	483
Common equity – book value	$	15,765		$	14,691		$	12,795		$	12,164		$	11,637		$	11,997		$	11,809		$	11,789
Shares outstanding		621.5			621.1			577.7			576.1			574.9			574.0			572.9			572.1
Per share
Cash flow from operations	$	0.50		$	0.33		$	0.67		$	0.57		$	0.53		$	0.60		$	0.60		$	0.83
Net income (loss)		1.26			0.41			1.80			0.16			0.12			0.25			0.35			(0.75	)
Dividends		0.13			0.13			0.13			0.13			0.13			0.13			0.13			0.13
Book value2		25.22			23.60			22.09			21.06			20.19			20.84			20.47			20.43
Market trading price (NYSE)		33.17			32.46			33.29			28.37			22.62			25.42			22.18			22.71

1. Represents gains that are not recorded in net income for IFRS purposes

2. Excludes dilution from capital securities which the Company intends to redeem prior to conversion

Q2 2011 INTERIM REPORT 69

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Interim Report 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. The words, “potential,” “intend,” “grow,” “plan,” “seek,” “expect,” “believe,” “objective,” “continue,” “maintain,” “projected,” “enable,” “expand,” “likely,” and derivations thereof and other expressions, including conditional verbs such as “will,” “can,” “may,” “would,” “could” and “should” are predictions of or indicate future events, trends or prospects or identify forward-looking statements. Forward-looking statements in this Interim Report include statements with respect to: our primary financial objective to increase the intrinsic value of Brookfield, on a per share basis, at a rate of 12% when measured over the longer term; our strategy to use investment grade leverage at the asset level with no recourse to the corporation; improving cash flows; expansion of our operations on a value basis; progress toward higher occupancies and rental rates in leasing; our belief of strong returns from our investment in BankWest Tower; the spin-off by GGP of Rouse Properties, Inc. and our intentions expectations regarding this company; construction of our Texas transmission project; our expected returns from a portfolio of office properties on the U.S. west coast and a senior secured loan to an infrastructure manufacturer; our expectations regarding capital expenditures, stable cash flows and capital appreciation; our expectations for our Australian operations; our ability to add assets to our business; our objective to generate increased cash flows and net asset values on a per share basis; the fundraising for seven funds seeking total third party commitments of more than $4 billion over 2011 and 2012; our ability to close on commercial leases that are in serious discussions; our refinancing initiatives; our growth opportunities, including expansion of our existing operations, development opportunities and potential acquisitions; the spin-off of malls in our U.S. retail operations; the future realization of meaningful unrecognized gains in our private equity and finance business; our hedging activities; our business development activities and outlook expectations for each of our business units as described under “Review of Operations – Business Development” and “Review of Operations - utlook”; our estimate of projected cash flows and discount rates used in our fair value analysis; the development activities in our renewable power business, including installed capacity, expected annual generation and projected costs; our belief that we are in position to achieve long-term generation targets for the balance of the year should normal water conditions prevail; our ability to maintain or increase our net rental income; our expectation that cash flow growth will outpace interest expense in our Brazilian retail operations; our expectation of favorable market conditions in the short term for the timber industry; our rail expansion plans in Australia, including related customer contracts, expected capital investments and expected returns; our expectation to close delayed lot sales in our Canadian residential business; future determination of our legal proceedings with AIG Financial Products; and other statements with respect to our beliefs, outlooks, plans, expectations, and intentions. Although Brookfield Asset Management believes that its 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 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: economic and financial conditions in the countries in which we do business; rate of recovery of the current financial crisis; the behavior of financial markets, including fluctuations in interest and exchange rates; availability of equity and debt financing and refinancing; strategic actions including dispositions; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; adverse hydrology conditions; regulatory and political factors within the countries in which the company operates; tenant renewal rates; availability of new tenants to fill office property vacancies; tenant bankruptcies; acts of God, 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 the company’s form 40-F filed with the Securities and Exchange Commission as well as other documents filed by the company with the securities regulators in Canada and the United States, including Management’s Discussion and Analysis of Financial Results under the heading “Business Environment and Risks.”

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to Brookfield Asset Management, 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.

70 BROOKFIELD ASSET MANAGEMENT

Consolidated Financial Statements

CONSOLIDATED BALANCE SHEETS

		000000000		000000000
	(UNAUDITED)
(MILLIONS)	Jun. 30 2011		Dec. 31 2010
Assets
Cash and cash equivalents	$	1,997	$	1,713
Other financial assets		3,941		4,419
Accounts receivable and other		8,855		7,869
Inventory		6,548		5,849
Investments		9,692		6,629
Property, plant and equipment		19,258		18,148
Investment properties		23,918		22,163
Timber		3,276		3,206
Intangible assets		3,967		3,805
Goodwill		2,676		2,546
Deferred income tax asset		2,086		1,784
	$	86,214	$	78,131
Liabilities and Equity
Accounts payable and other	$	10,943	$	10,334
Corporate borrowings		3,330		2,905
Non-recourse borrowings
Property-specific mortgages		25,180		23,454
Subsidiary borrowings		4,504		4,007
Deferred income tax liability		5,109		4,970
Capital securities		1,745		1,707
Interests of others in funds		1,824		1,562
Equity
Preferred equity		1,893		1,658
Non-controlling interests		15,921		14,739
Common equity		15,765		12,795
		33,579		29,192
	$	86,214	$	78,131

Q2 2011 INTERIM REPORT 71

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended						Six Months Ended
(UNAUDITED) PERIOD ENDED JUNE 30 (MILLIONS, EXCEPT PER SHARE AMOUNTS)	2011			2010			2011			2010
Total revenues	$	4,136		$	3,376		$	7,719		$	6,407
Asset management and other services		95			78			171			149
Revenues less direct operating costs
Renewable power generation		220			164			406			403
Commercial properties		383			300			693			579
Infrastructure		200			58			388			105
Development activities		83			112			135			182
Private equity and finance		151			104			220			178
		1,132			816			2,013			1,596
Equity accounted income		173			121			350			236
Investment and other income		72			177			221			319
		1,377			1,114			2,584			2,151
Expenses
Interest		564			437			1,110			864
Operating costs		118			109			233			202
Current income taxes		21			25			54			46
		674			543			1,187			1,039
Other items
Fair value changes		1,088			(1	)		1,370			127
Depreciation and amortization		(231	)		(208	)		(452	)		(387	)
Deferred income tax		(103	)		39			(107	)		3
Net income	$	1,428		$	373		$	1,998		$	782
Net income attributable to:
Shareholders	$	838		$	89		$	1,116		$	253
Non-controlling interests		590			284			882			529
	$	1,428		$	373		$	1,998		$	782
Net income per share:
Diluted	$	1.26		$	0.12		$	1.67		$	0.37
Basic	$	1.32		$	0.12		$	1.74		$	0.38

72 BROOKFIELD ASSET MANAGEMENT

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended						Six Months Ended
(UNAUDITED) PERIOD ENDED JUNE 30 (MILLIONS)	2011			2010			2011			2010
Net income	$	1,428		$	373		$	1,998		$	782
Other comprehensive income
Foreign currency translation		466			(469	)		635			(468	)
Available-for-sale securities		(11	)		40			9			65
Derivative instruments designated as cash flow hedges		56			(39	)		62			(31	)
Revaluations of property, plant and equipment		21			6			25			51
Equity accounted investments		(11	)		7			(13	)		(23	)
Taxes on above items		(18	)		(16	)		183			(22	)
		503			(471	)		901			(428	)
Comprehensive income (loss)	$	1,931		$	(98	)	$	2,899		$	354
Attributable to:
Shareholders
Net income	$	838		$	89		$	1,116		$	253
Other comprehensive income (loss)		314			(332	)		633			(301	)
Comprehensive income (loss)	$	1,152		$	(243	)	$	1,749		$	(48	)
Non-controlling interests
Net income	$	590		$	284		$	882		$	529
Other comprehensive income (loss)		189			(139	)		268			(127	)
Comprehensive income	$	779		$	145		$	1,150		$	402

Q2 2011 INTERIM REPORT 73

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

											Accumulated Other Comprehensive Income
(UNAUDITED) THREE MONTHS ENDED JUNE 30, 2011 (MILLIONS)	Share Capital		Contributed Surplus		Retained Earnings			Ownership Changes1			Revaluation Surplus			Currency Translation			Other Reserves			Common Equity			Preferred Equity		Non- controlling Interests			Total Equity
Balance as at March 31, 2011	$	2,805	$	104	$	4,709		$	204		$	4,873		$	2,022		$	(26	)	$	14,691		$	1,893	$	15,080		$	31,664
Prior to: deferred income taxes		–		–		260			(286	)		1,723			187			46			1,930			–		1,038			2,968
		2,805		104		4,969			(82	)		6,596			2,209			20			16,621			1,893		16,118			34,632
Changes in period
Net income
Income and disposition gains prior to other items		–		–		281			61			–			–			–			342			–		487			829
Fair value changes		–		–		768			–			–			–			–			768			–		320			1,088
Depreciation and amortization		–		–		(174	)		–			–			–			–			(174	)		–		(57	)		(231	)
Less: disposition gains1		–		–		–			(61	)		–			–			–			(61	)		–		(94	)		(155	)
Associated deferred income taxes		–		–		(37	)		–			–			–			–			(37	)		–		(66	)		(103	)
		–		–		838			–			–			–			–			838			–		590			1,428
Other comprehensive income
Fair value changes		–		–		–			–			22			–			30			52			–		3			55
Currency translation		–		–		–			–			–			274			–			274			–		192			466
Associated deferred income taxes		–		–		–			–			2			3			(17	)		(12	)		–		(6	)		(18	)
		–		–		–			–			24			277			13			314			–		189			503
Shareholder distributions
Common equity		–		–		(81	)		–			–			–			–			(81	)		–		–			(81	)
Preferred equity		–		–		(26	)		–			–			–			–			(26	)		–		–			(26	)
Non-controlling interests		–		–		–			–			–			–			–			–			–		(199	)		(199	)
		–		–		(107	)		–			–			–			–			(107	)		–		(199	)		(306	)
Other items
Equity issuances, net of redemptions		8		–		(1	)		–			–			–			–			7			–		108			115
Share-based compensation		–		8		–			–			–			–			–			8			–		3			11
Ownership changes		–		–		–			(31	)		–			20			–			(11	)		–		109			98
Associated deferred income taxes		–		–		–			45			–			(20	)		–			25			–		41			66
		8		8		(1	)		14			–			–			–			29			–		261			290
Reversal of in-period income taxes		–		–		37			(45	)		(2	)		17			17			24			–		31			55
		2,813		112		5,736			(113	)		6,618			2,503			50			17,719			1,893		16,990			36,602
Less: deferred income taxes, net
Opening balances		–		–		(260	)		286			(1,723	)		(187	)		(46	)		(1,930	)		–		(1,038	)		(2,968	)
In-period amounts		–		–		(37	)		45			2			(17	)		(17	)		(24	)		–		(31	)		(55	)
Ending balances		–		–		(297	)		331			(1,721	)		(204	)		(63	)		(1,954	)		–		(1,069	)		(3,023	)
Balance as at June 30, 2011	$	2,813	$	112	$	5,439		$	218		$	4,897		$	2,299		$	(13	)	$	15,765		$	1,893	$	15,921		$	33,579

1. Disposition gains not recognized in net income under IFRS

74 BROOKFIELD ASSET MANAGEMENT

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

											Accumulated Other Comprehensive Income
(UNAUDITED) SIX MONTHS ENDED JUNE 30, 2011 (MILLIONS)	Share Capital		Contributed Surplus		Retained Earnings			Ownership Changes1			Revaluation Surplus			Currency Translation			Other Reserves			Common Equity			Preferred Equity		Non- controlling Interests			Total Equity
Balance as at December 31, 2010	$	1,334	$	97	$	4,627		$	187		$	4,680		$	1,930		$	(60	)	$	12,795		$	1,658	$	14,739		$	29,192
Prior to: deferred income taxes		–		–		326			(232	)		1,913			163			46			2,216			–		970			3,186
		1,334		97		4,953			(45	)		6,593			2,093			(14	)		15,011			1,658		15,709			32,378
Changes in period
Net income
Income and disposition gains prior to other items		–		–		509			64			–			–			–			573			–		772			1,345
Fair value changes		–		–		924			–			–			–			–			924			–		446			1,370
Depreciation and amortization		–		–		(338	)		–			–			–			–			(338	)		–		(114	)		(452	)
Less: disposition gains1		–		–		–			(64	)		–			–			–			(64	)		–		(94	)		(158	)
Associated deferred income taxes		–		–		21			–			–			–			–			21			–		(128	)		(107	)
		–		–		1,116			–			–			–			–			1,116			–		882			1,998
Other comprehensive income
Fair value changes		–		–		–			–			25			–			64			89			–		(6	)		83
Currency translation		–		–		–			–			–			355			–			355			–		280			635
Associated deferred income taxes		–		–		–			–			192			14			(17	)		189			–		(6	)		183
		–		–		–			–			217			369			47			633			–		268			901
Shareholder distributions
Common equity		–		–		(159	)		–			–			–			–			(159	)		–		–			(159	)
Preferred equity		–		–		(51	)		–			–			–			–			(51	)		–		–			(51	)
Non-controlling interests		–		–		–			–			–			–			–			–			–		(343	)		(343	)
		–		–		(210	)		–			–			–			–			(210	)		–		(343	)		(553	)
Other items
Equity issuances, net of redemptions		1,479		–		(102	)		–			–			–			–			1,377			235		211			1,823
Share-based compensation		–		15		–			–			–			–			–			15			–		6			21
Ownership changes		–		–		–			(68	)		–			55			–			(13	)		–		123			110
Associated deferred income taxes		–		–		8			99			–			(55	)		–			52			–		35			87
		1,479		15		(94	)		31			–			–			–			1,431			235		375			2,041
Reversal of in-period income taxes		–		–		(29	)		(99	)		(192	)		41			17			(262	)		–		99			(163	)
		2,813		112		5,736			(113	)		6,618			2,503			50			17,719			1,893		16,990			36,602
Less: deferred income taxes, net
Opening balances		–		–		(326	)		232			(1,913	)		(163	)		(46	)		(2,216	)		–		(970	)		(3,186	)
In-period amounts		–		–		29			99			192			(41	)		(17	)		262			–		(99	)		163
Ending balances		–		–		(297	)		331			(1,721	)		(204	)		(63	)		(1,954	)		–		(1,069	)		(3,023	)
Balance as at June 30, 2011	$	2,813	$	112	$	5,439		$	218		$	4,897		$	2,299		$	(13	)	$	15,765		$	1,893	$	15,921		$	33,579

1. Disposition gains not recognized in net income under IFRS

Q2 2011 INTERIM REPORT 75

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

											Accumulated Other Comprehensive Income
(UNAUDITED) THREE MONTHS ENDED JUNE 30, 2010 (MILLIONS)	Share Capital		Contributed Surplus		Retained Earnings			Ownership Changes1			Revaluation Surplus			Currency Translation			Other Reserves			Common Equity			Preferred Equity		Non- controlling Interests			Total Equity
Balance as at March 31, 2010	$	1,297	$	74	$	3,626		$	193		$	5,228		$	1,626		$	(47	)	$	11,997		$	1,413	$	10,886		$	24,296
Prior to: deferred income taxes		–		–		318			(51	)		2,357			179			29			2,832			–		1,093			3,925
		1,297		74		3,944			142			7,585			1,805			(18	)		14,829			1,413		11,979			28,221
Changes in period
Net income
Income and disposition gains prior to other items		–		–		225			102			–			–			–			327			–		318			645
Fair value changes		–		–		(5	)		–			–			–			–			(5	)		–		4			(1	)
Depreciation and amortization		–		–		(184	)		–			–			–			–			(184	)		–		(24	)		(208	)
Less: disposition gains1		–		–		–			(102	)		–			–			–			(102	)		–		–			(102	)
Associated deferred income taxes		–		–		53			–			–			–			–			53			–		(14	)		39
		–		–		89			–			–			–			–			89			–		284			373
Other comprehensive income
Fair value changes		–		–		–			–			12			–			(17	)		(5	)		–		19			14
Currency translation		–		–		–			–			–			(311	)		–			(311	)		–		(158	)		(469	)
Associated deferred income taxes		–		–		–			–			–			(18	)		2			(16	)		–		–			(16	)
		–		–		–			–			12			(329	)		(15	)		(332	)		–		(139	)		(471	)
Shareholder distributions
Common equity		–		–		(74	)		–			–			–			–			(74	)		–		–			(74	)
Preferred equity		–		–		(19	)		–			–			–			–			(19	)		–		–			(19	)
Non-controlling interests		–		–		–			–			–			–			–			–			–		(141	)		(141	)
		–		–		(93	)		–			–			–			–			(93	)		–		(141	)		(234	)
Other items
Equity issuances, net of redemptions		9		–		–			–			–			–			–			9			–		34			43
Share-based compensation		–		9		–			–			–			–			–			9			–		–			9
Ownership changes		–		–		–			(19	)		–			(23	)		–			(42	)		–		246			204
Associated deferred income taxes		–		–		–			(23	)		–			23			–			–			–		(112	)		(112	)
		9		9		–			(42	)		–			–			–			(24	)		–		168			144
Reversal of in-period income taxes		–		–		(53	)		23			–			(5	)		(2	)		(37	)		–		126			89
		1,306		83		3,887			123			7,597			1,471			(35	)		14,432			1,413		12,277			28,122
Less: deferred income taxes, net
Opening balances		–		–		(318	)		51			(2,357	)		(179	)		(29	)		(2,832	)		–		(1,093	)		(3,925	)
In-period amounts		–		–		53			(23	)		–			5			2			37			–		(126	)		(89	)
Ending balances		–		–		(265	)		28			(2,357	)		(174	)		(27	)		(2,795	)		–		(1,219	)		(4,014	)
Balance as at June 30, 2010	$	1,306	$	83	$	3,622		$	151		$	5,240		$	1,297		$	(62	)	$	11,637		$	1,413	$	11,058		$	24,108

1. Disposition gains not recognized in net income under IFRS

76 BROOKFIELD ASSET MANAGEMENT

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

											Accumulated Other Comprehensive Income
(UNAUDITED) SIX MONTHS ENDED JUNE 30, 2010 (MILLIONS)	Share Capital		Contributed Surplus		Retained Earnings			Ownership Changes1			Revaluation Surplus			Currency Translation			Other Reserves			Common Equity			Preferred Equity		Non- controlling Interests			Total Equity
Balance as at December 31, 2009	$	1,289	$	67	$	3,560		$	117		$	5,193		$	1,623		$	(40	)	$	11,809		$	1,144	$	10,186		$	23,139
Prior to: deferred income taxes		–		–		295			–			2,352			119			29			2,795			–		983			3,778
		1,289		67		3,855			117			7,545			1,742			(11	)		14,604			1,144		11,169			26,917
Changes in period
Net income
Income and disposition gains prior to other items		–		–		506			187			–			–			–			693			–		533			1,226
Fair value changes		–		–		58			–			–			–			–			58			–		69			127
Depreciation and amortization		–		–		(341	)		–			–			–			–			(341	)		–		(46	)		(387	)
Less: disposition gains1		–		–		–			(187	)		–			–			–			(187	)		–		–			(187	)
Associated deferred income taxes		–		–		30			–			–			–			–			30			–		(27	)		3
		–		–		253			–			–			–			–			253			–		529			782
Other comprehensive income
Fair value changes		–		–		–			–			52			–			(24	)		28			–		34			62
Currency translation		–		–		–			–			–			(308	)		–			(308	)		–		(160	)		(468	)
Associated deferred income taxes		–		–		–			–			(5	)		(18	)		2			(21	)		–		(1	)		(22	)
		–		–		–			–			47			(326	)		(22	)		(301	)		–		(127	)		(428	)
Shareholder distributions
Common equity		–		–		(149	)		–			–			–			–			(149	)		–		–			(149	)
Preferred equity		–		–		(35	)		–			–			–			–			(35	)		–		–			(35	)
Non-controlling interests		–		–		–			–			–			–			–			–			–		(227	)		(227	)
		–		–		(184	)		–			–			–			–			(184	)		–		(227	)		(411	)
Other items
Equity issuances, net of redemptions		17		–		(7	)		–			–			–			–			10			269		510			789
Share-based compensation		–		16		–			–			–			–			–			16			–		–			16
Ownership changes		–		–		–			6			–			37			–			43			–		395			438
Associated deferred income taxes		–		–		–			28			–			(37	)		–			(9	)		–		(208	)		(217	)
		17		16		(7	)		34			–			–			–			60			269		697			1,026
Reversal of in-period income taxes		–		–		(30	)		(28	)		5			55			(2	)		–			–		236			236
		1,306		83		3,887			123			7,597			1,471			(35	)		14,432			1,413		12,277			28,122
Less: deferred income taxes, net
Opening balances		–		–		(295	)		–			(2,352	)		(119	)		(29	)		(2,795	)		–		(983	)		(3,778	)
In-period amounts		–		–		30			28			(5	)		(55	)		2			–			–		(236	)		(236	)
Ending balances		–		–		(265	)		28			(2,357	)		(174	)		(27	)		(2,795	)		–		(1,219	)		(4,014	)
Balance as at June 30, 2010	$	1,306	$	83	$	3,622		$	151		$	5,240		$	1,297		$	(62	)	$	11,637		$	1,413	$	11,058		$	24,108

1. Disposition gains not recognized in net income under IFRS

Q2 2011 INTERIM REPORT 77

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended						Six Months Ended
(UNAUDITED) PERIOD ENDED JUNE 30 (MILLIONS)	2011			2010			2011			2010
Operating activities
Net income	$	1,428		$	373		$	1,998		$	782
Adjusted for the following items
Fair value changes		(1,088	)		1			(1,370	)		(127	)
Depreciation and amortization		231			208			452			387
Deferred income taxes		103			(39	)		107			(3	)
		674			543			1,187			1,039
Residential development		(115	)		(9	)		(466	)		(14	)
Net change in non-cash working capital balances and other		7			48			(36	)		(61	)
		566			582			685			964
Financing activities
Corporate borrowings, net of repayments		253			219			356			54
Property-specific mortgages, net of repayments		(40	)		(286	)		31			(148	)
Other debt of subsidiaries, net of repayments		237			(217	)		419			(439	)
Capital provided by non-controlling interests, net of repayments		29			33			123			4
Capital provided by fund partners, net of distributions		70			–			77			–
Corporate preferred equity issuances		–			–			229			262
Subsidiary preferred equity issuances		–			–			–			495
Shares issued, net of repurchases		8			9			477			17
Common shares of subsidiaries issued, net of repurchases		9			1			11			11
Shareholder distributions – subsidiaries		(199	)		(141	)		(343	)		(227	)
Shareholder distributions – corporate		(107	)		(93	)		(210	)		(184	)
		260			(475	)		1,170			(155	)
Investing activities
Investment in or sale of operating assets, net
Investment properties		(53	)		34			167			(314	)
Property, plant and equipment
Renewable power generation		(344	)		(78	)		(511	)		(115	)
Infrastructure		(141	)		(6	)		(235	)		62
Private equity and finance		(214	)		(34	)		(275	)		(88	)
Timber		(4	)		–			(12	)		–
Investments		(508	)		(18	)		(1,282	)		79
Other financial assets		275			16			408			(403	)
Restricted cash and deposits		120			118			163			95
Acquisition of subsidiaries, net of dispositions		6			–			6			(16	)
		(863	)		32			(1,571	)		(700	)
Cash and cash equivalents
Balance, beginning of period		2,034			1,279			1,713			1,309
(Decrease)/Increase		(37	)		139			284			109
Balance, end of period	$	1,997		$	1,418		$	1,997		$	1,418

78 BROOKFIELD ASSET MANAGEMENT

Notes to the Consolidated Financial Statements

1. CORPORATE INFORMATION

Brookfield Asset Management Inc. (the “company”) is a global asset management company. Focused on property, power and infrastructure assets, the company is listed on the New York, Toronto and Euronext stock exchanges under the symbols BAM, BAM.A and BAMA, respectively. The company was formed by articles of amalgamation under the Business Corporations Act (Ontario) and is registered in Ontario, Canada.

2. SIGNIFICANT ACCOUNTING POLICIES

a) Statement of Compliance

The interim consolidated financial statements have been prepared in accordance with International Accounting Standards (“IAS”) 34, Interim Financial Reporting on a basis consistent with the accounting policies disclosed in the audited consolidated financial statements for the fiscal year ended December 31, 2010.

The interim financial statements should be read in conjunction with the most recently issued Annual Report of Brookfield Asset Management Inc. which includes information necessary or useful to understanding the company’s businesses and financial statement presentation. In particular, the company’s significant accounting policies were presented as Note 2 to the Consolidated Financial Statements for the fiscal year ended December 31, 2010 included in that report, and have been consistently applied in the preparation of these interim financial statements, except as noted in 2(b) below.

The interim financial statements are unaudited. Financial information in this report reflects any adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to a fair statement of results for the interim periods in accordance with International Financial Reporting Standards (“IFRS”).

The results reported in these interim consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain prior period amounts have been reclassified to conform to the current period’s presentation.

These financial statements were authorized for issuance by the Board of Directors of the company on August 9, 2011.

b) Changes in Accounting Policies

Related party disclosures

On November 4, 2009, the International Accounting Standards Board (“IASB”) issued a revised version of International Accounting Standards 24, Related Party Disclosures (“IAS 24”). IAS 24 requires entities to disclose in their financial statements information about transactions with related parties. Generally, two parties are related to each other if one party controls, or significantly influences, the other party. IAS 24 has simplified the definition of a related party and removed certain of the disclosures required by the predecessor standard. The revised standard is effective for annual periods beginning on or after January 1, 2011. The implementation of IAS 24 did not have a material impact to the Company’s interim consolidated financial statements.

c) Future Changes in Accounting Policies

I. Financial Instruments

IFRS 9 Financial Instruments (“IFRS 9”) was issued by the IASB on November 12, 2009 and will replace IAS 39, Financial Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2013. The company has not yet determined the impact of IFRS 9 on its financial statements.

Q2 2011 INTERIM REPORT 79

II. Income Taxes

In December 2010, the IASB made amendments to IAS 12, Income Taxes (“IAS 12”) that are applicable to the measurement of deferred tax liabilities and deferred tax assets where investment property is measured using the fair value model in IAS 40, Investment Property. The amendments introduce a rebuttable presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. The amendments to IAS 12 are effective for annual periods beginning on or after January 1, 2012. The company has not yet determined the impact of the amendments to IAS 12 on its financial statements.

III. Employee Benefits

In June 2011, the IASB made amendments to IAS 19, Employee Benefits (“IAS 19”) that requires entities to provide their obligation resulting from the provision for defined benefit plans and how those obligations affect its financial position, financial performance and cash flow. The amendment provides several improvements, including; eliminating the option to defer the recognition of gains and losses, streamlining the presentation of changes to assets and liabilities with all changes from remeasurement to be recognized in other comprehensive income and enhancing the disclosure of the characteristics of defined benefit plans and the risks that entities are exposed to through participation in those plans. The amended version of IAS 19 is effective for financial years beginning on or after January 1, 2013, with earlier application permitted. The company has not yet determined the impact of these amendments on its financial statements.

IV. Consolidated Financial Statements, Joint Ventures and Disclosures

In May 2011, the IASB issued three standards: IFRS 10, Consolidated Financial Statements (“IFRS 10”), IFRS 11, Joint Ventures (“IFRS 11”), IFRS 12, Disclosures of Involvement with Other Entities (“IFRS 12”), and amended two standards: IAS 27, Separate Financial Statements (“IAS 27”), and IAS 28, Investments in Associates and Joint Ventures (“IAS 28”). Each of the new and amended standards has an effective date for annual periods beginning on or after January 1, 2013, with earlier application permitted if all the respective standards are also early applied.

IFRS 10 replaces IAS 27 and SIC-12, Consolidation Special Purpose Entities (“SIC-12”). The consolidation requirements previously included in IAS 27 have been included in IFRS 10, whereas the amended IAS 27 sets standards to be applied in accounting for investments in subsidiaries, joint ventures, and associates when an entity elects, or is required by local regulations, to present separate (non-consolidated) financial statements. IFRS 10 uses control as the single basis for consolidation, irrespective of the nature of the investee, eliminating the risks and rewards approach included in SIC-12. An investor must possess the following three elements to conclude it controls an investee: power over the investee, exposure or rights to variable returns from involvement with the investee, and the ability to use power over the investee to affect the amount of the investor’s returns. IFRS 10 requires continuous reassessment of changes in an investor’s power over the investee and changes in the investor’s exposure or rights to variable returns. The Company has not yet determined the impact of IFRS 10 and the amendments to IAS 27 on its consolidated financial statements.

IFRS 11 supersedes IAS 31, Interest in Joint Ventures and SIC-31, Joint Controlled Entities – Non- Monetary Contributions by Venturers. IFRS 11 is applicable to all parties that have an interest in a joint arrangement. IFRS 11 establishes two types of joint arrangements: joint operations and joint ventures. In a joint operation, the parties to the joint arrangement have rights to the assets and obligations for the liabilities of the arrangement, and recognize their share of the assets, liabilities, revenues and expenses in accordance with applicable IFRSs. In a joint venture, the parties to the arrangement have rights to the net assets of the arrangement and account for their interest using the equity method of accounting under IAS 28, Investments in Associates and Joint Venturers. IAS 28 prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. The Company has not yet determined the impact of IFRS 11 and the amendments to IAS 28 on its consolidated financial statements.

80 BROOKFIELD ASSET MANAGEMENT

IFRS 12 integrates the disclosure requirements on interests in other entities and requires a parent company to disclose information about significant judgements and assumptions it has made in determining whether it has control, joint control, or significant influence over another entity and the type of joint arrangement when the arrangement has been structured through a separate vehicle. An entity should also provide these disclosures when changes in facts and circumstances affect the entity’s conclusion during the reporting period. Entities are permitted to incorporate the disclosure requirements in IFRS 12 into their financial statements without early adopting IFRS 12. The Company has not yet determined the impact of IFRS 12 on its consolidated financial statements.

3. CURRENT AND NON-CURRENT PORTION OF ACCOUNT BALANCES

(a) Other Financial Assets

AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	2011		2010
Current portion	$	1,373	$	1,700
Non-current portion		2,568		2,719
	$	3,941	$	4,419

(b) Accounts Receivable and Other

AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	2011		2010
Current portion	$	6,308	$	5,504
Non-current portion		2,547		2,365
	$	8,855	$	7,869

(c) Inventory

AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	2011		2010
Current portion	$	3,620	$	3,156
Non-current portion		2,928		2,693
	$	6,548	$	5,849

(d) Accounts Payable and Other

AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	2011		2010
Current portion	$	6,730	$	6,482
Non-current portion		4,213		3,852
	$	10,943	$	10,334

(e) Property-Specific Mortgages

AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	2011		2010
Current portion	$	3,248	$	4,331
Non-current portion		21,932		19,123
	$	25,180	$	23,454

(f) Subsidiary Borrowings

AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	2011		2010
Current portion	$	539	$	620
Non-current portion		3,965		3,387
	$	4,504	$	4,007

Q2 2011 INTERIM REPORT 81

4. SEGMENTED INFORMATION

The company’s presentation of reportable segments is based on how management has organized the business in making operating and capital allocation decisions and assessing performance. The company has five reportable segments:

(a) renewable power generation operations, which are predominantly hydroelectric power generating facilities on river systems in North America and Brazil;

(b) commercial properties operations, which are principally commercial office properties, retail properties and commercial developments located primarily in major North American, Brazilian, and Australian and European cities;

(c) infrastructure operations, which are predominantly utilities, transport and energy and timber operations located in Australia, North America, the United Kingdom and South America;

(d) development activities operations, which are principally residential development and opportunistic investing, located primarily in major North American, Brazilian and Australian cities; and

(e) private equity and finance operations, which include the company’s restructuring funds, real estate finance, bridge lending and other investments.

Non-operating assets, liabilities and related revenues, cash flows and net income (loss) are presented as cash, financial assets, fee revenues and other.

The following table reconciles revenues, net income (loss), assets and liabilities by reportable segments:

	Three Months Ended										Six Months Ended
	2011					2010					2011					2010
FOR THE PERIOD ENDED JUNE 30 (MILLIONS)	Revenues		Net Income (Loss)			Revenues		Net Income (loss)			Revenues		Net Income (Loss)			Revenues		Net Income (loss)
Renewable power generation	$	337	$	(20	)	$	267	$	(14	)	$	635	$	(179	)	$	604	$	45
Commercial properties		606		1,265			554		148			1,195		1,731			1,093		385
Infrastructure		495		78			212		28			939		158			408		42
Development activities		718		30			683		74			1,212		55			1,163		136
Private equity and finance		1,062		36			988		156			2,103		135			1,813		195
Cash, financial assets, fee revenues and other		918		39			672		(19	)		1,635		98			1,326		(21	)
	$	4,136	$	1,428		$	3,376	$	373		$	7,719	$	1,998		$	6,407	$	782

	2011				2010
AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	Assets		Liabilities		Assets		Liabilities
Renewable power generation	$	15,504	$	10,307	$	14,738	$	9,902
Commercial properties		31,591		14,203		27,654		14,055
Infrastructure		14,516		9,202		13,695		8,446
Development activities		10,858		6,253		9,393		5,336
Private equity and finance		8,134		5,001		7,554		4,078
Cash, financial assets, fee revenues and other		5,611		7,669		5,097		7,122
	$	86,214	$	52,635	$	78,131	$	48,939

82 BROOKFIELD ASSET MANAGEMENT

Revenues, assets and liabilities by geographic segments are as follows:

	Three Months Ended June 30				Six Months Ended June 30				June  30 2011				December 31 2010
	2011		2010		2011		2010
(MILLIONS)	Revenues				Revenues				Assets		Liabilities		Assets		Liabilities
United States	$	1,228	$	1,374	$	2,507	$	2,509	$	32,243	$	18,937	$	28,504	$	18,100
Canada		663		570		1,360		1,179		18,643		13,457		17,441		12,053
Australia		846		597		1,480		1,155		16,966		10,175		15,594		9,454
Brazil		688		377		1,121		844		13,298		7,497		11,483		6,453
Europe		348		300		683		444		4,202		2,273		4,185		2,511
Other		363		158		568		276		862		296		924		368
	$	4,136	$	3,376	$	7,719	$	6,407	$	86,214	$	52,635	$	78,131	$	48,939

5. PROPERTY, PLANT AND EQUIPMENT

AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	2011		2010
Renewable power generation	$	12,978	$	12,443
Timber		704		688
Utilities		787		723
Transport and energy		1,967		1,727
Private equity and finance		2,757		2,497
Other property, plant and equipment		65		70
	$	19,258	$	18,148

6. COMMON EQUITY

The company’s shareholders’ equity is comprised of the following:

AS AT JUN. 30, 2011 AND DEC. 31, 2010 (MILLIONS)	2011		2010
Limited Voting Shares	$	2,813	$	1,334
Contributed surplus		112		97
Retained earnings		5,439		4,627
Ownership changes		218		187
Accumulated other comprehensive income		7,183		6,550
Common equity	$	15,765	$	12,795

The company is authorized to issue an unlimited number of Class A Limited Voting Shares and 85,120 Class B Limited Voting Shares, together referred to as Limited Voting shares. The company’s shares have no stated par value. The holders of Class A Limited Voting Shares and Class B Limited Voting Shares rank on parity with each other with respect to the payment of dividends and the return of capital on the liquidation, dissolution or winding up of the company or any other distribution of the assets of the company among its shareholders for the purpose of winding up its affairs. With respect to the shares, there are no dilutive factors, material or otherwise, that would result in different diluted earnings per share between the classes. This relationship holds true irrespective of the number of dilutive instruments issued in either one of the respective classes of common stock, as both classes of Limited Voting Shares participate equally, on a pro rata basis, in the dividends, earnings and net assets of the company, whether taken before or after dilutive instruments, regardless of which class of share is diluted.

Q2 2011 INTERIM REPORT 83

The number of Limited Voting Shares issued and outstanding and unexercised options at June 30, 2011 and December 31, 2010 are as follows:

AS AT JUN. 30, 2011 AND DEC. 31, 2010 NUMBER OF SHARES	2011		2010
Class A Limited Voting Shares		621,453,951		577,578,573
Class B Limited Voting Shares		85,120		85,120
		621,539,071		577,663,693
Unexercised options		38,871,849		38,401,076
Total diluted shares		660,410,920		616,064,769

Shares issued and outstanding changed during the three and six months ended as follows:

	Three Months Ended				Six Months Ended
FOR THE THREE AND SIX MONTHS ENDED JUNE 30	2011		2010		2011			2010
Outstanding at beginning of period		621,045,961		573,982,593		577,663,693			572,867,939
Shares issued (repurchased)
Dividend reinvestment plan		20,628		28,724		49,676			58,134
Management share option plan		472,482		925,138		1,930,702			2,010,362
Repurchases		–		–		(3,200,000	)		–
Issuances		–		–		45,095,000			–
Other		–		–		–			20
Outstanding at end of period		621,539,071		574,936,455		621,539,071			574,936,455

In January 2011, the company issued 27,500,000 Class A Limited Voting Shares in connection with the $1.7 billion acquisition of General Growth Properties’ common shares. In February 2011, the company issued 17,595,000 Class A Limited Voting Shares for cash proceeds of C$578 million pursuant to a public equity offering. In March 2011, the company acquired 3.2 million Class A Limited Voting Shares for $106 million, of which 2.4 million shares relate to grants of restricted stock to employees in lieu of share options.

Earnings Per Share

The components of basic and diluted earnings per share are summarized in the following table:

	Three Months Ended						Six Months Ended
FOR THE THREE AND SIX MONTHS ENDED JUNE 30 (MILLIONS)	2011			2010			2011			2010
Net income available to shareholders	$	838		$	89		$	1,116		$	253
Preferred share dividends		(26	)		(19	)		(51	)		(35	)
Net income available to shareholders – basic		812			70			1,065			218
Capital securities dividends1		12			–			18			–
Net income available for shareholders – diluted	$	824		$	70		$	1,083		$	218

AS AT JUN. 30, 2011 AND JUN. 30, 2010 (MILLIONS)
	2011		2010
Weighted average shares		613.2		573.8
Dilutive effect of the conversion of options using treasury stock method		12.4		9.7
Dilutive effect of the conversion of capital securities1,2		23.0		–
Shares and share equivalents		648.6		583.5

1. Subject to the approval of the Toronto Stock Exchange, the Series 10,11,12 and 21 shares, unless redeemed by the company for cash, are convertible into Class A Limited Voting Shares at a price equal to the greater of 95% at the market price at the time of conversion and C$2.00, at the option of either the company or the holder

2. The number of shares is based on 95% of the quoted market price at period-end

84 BROOKFIELD ASSET MANAGEMENT

Stock-based Compensation

The company and its consolidated subsidiaries account for stock options using the fair value method. Under the fair value method, compensation expense for stock options that are direct awards of stock is measured at fair value at the grant date using an option pricing model and recognized over the vesting period. Options issued under the company’s Management Share Option Plan (“MSOP”) vest proportionately over five years and expire ten years after the grant date. The exercise price is equal to the market price at the close of business on the day prior to the grant date, or under certain conditions, the volume-weighted average price for the five business days prior to the grant date.

During the six months ended June 30, 2011, the company granted 2.5 million stock options at a weighted average exercise price of $32.61 per share. The compensation expense was calculated using the Black-Scholes method of valuation, assuming an average 7.5 year term, 33.8% volatility, a weighted average expected dividend yield of 5.0% annually, a risk free rate of 2.8% and a liquidity discount of 25%.

In February 2011, the company established an Escrowed Stock Plan which allows executives to increase their ownership of Brookfield Class A Limited Voting Shares. Under the escrowed plan, a private company was capitalized with common shares (the “escrowed shares”) and preferred shares issued to Brookfield for cash proceeds. The proceeds were used to purchase 3.2 million Brookfield Class A Limited Voting Shares and 75% of the escrowed shares were granted to executives.

The escrowed shares vest on and must be held until the fifth anniversary of the grant date. At a date at least five years from and no more than ten years from the grant date, all escrowed shares held will be exchanged for a number of Class A Limited Voting Shares issued from treasury of the company, based on the market value of Class A Limited Voting Shares at the time of exchange.

7. FAIR VALUE CHANGES

Fair value changes consist of mark-to-market gains (losses) and are comprised of the following:

	Three Months Ended						Six Months Ended
FOR THE THREE AND SIX MONTHS ENDED JUNE 30 (MILLIONS)	2011			2010			2011			2010
Investment property	$	303		$	83		$	607		$	221
Timber		(7	)		(20	)		(14	)		(14	)
Equity accounted investments		844			37			878			28
Power contracts		15			(59	)		19			58
Redeemable units		(44	)		42			(160	)		(59	)
Interest rate contracts		(11	)		(36	)		(4	)		(73	)
Other		(12	)		(48	)		44			(34	)
	$	1,088		$	(1	)	$	1,370		$	127

Q2 2011 INTERIM REPORT 85

SHAREHOLDER INFORMATION

Shareholder Enquiries

Shareholder enquiries should be directed to our Investor Relations group at:

Brookfield Asset Management Inc.
Suite 300, Brookfield Place, Box 762, 181 Bay Street
Toronto, Ontario    M5J 2T3
Telephone:	416-363-9491
Facsimile:	416-363-2856
Web site:	www.brookfield.com
E-Mail:	inquiries@brookfield.com

Shareholder enquiries relating to dividends, address changes and share certificates should be directed to the company’s Transfer Agent:

CIBC Mellon Trust Company
P.O. Box 7010, Adelaide Street Postal Station
Toronto, Ontario    M5C 2W9
Telephone:	416-643-5500 or 1-800-387-0825
(toll free throughout North America)
Facsimile:	416-643-5501
Web site:	www.cibcmellon.com
E-Mail:	inquiries@cibcmellon.com

Stock Exchange Listings

	Symbol	Stock Exchange
Class A Limited Voting Shares	BAM	New York
	BAM.A	Toronto
	BAMA	Euronext – Amsterdam
Class A Preference Shares
Series 2	BAM.PR.B	Toronto
Series 4	BAM.PR.C	Toronto
Series 8	BAM.PR.E	Toronto
Series 9	BAM.PR.G	Toronto
Series 10	BAM.PR.H	Toronto
Series 11	BAM.PR.I	Toronto
Series 12	BAM.PR.J	Toronto
Series 13	BAM.PR.K	Toronto
Series 14	BAM.PR.L	Toronto
Series 17	BAM.PR.M	Toronto
Series 18	BAM.PR.N	Toronto
Series 21	BAM.PR.O	Toronto
Series 22	BAM.PR.P	Toronto
Series 24	BAM.PR.R	Toronto
Series 26	BAM.PR.T	Toronto
Series 28	BAM.PR.X	Toronto

Investor Relations and Communications

We are committed to informing our shareholders of our progress through our comprehensive communications program which includes publication of materials such as our annual report, quarterly interim reports and news releases. We also maintain a web site that provides ready access to these materials, as well as statutory filings, stock and dividend information and other presentations.

Meeting with shareholders is an integral part of our communications program. Directors and management meet with Brookfield’s shareholders at our annual meeting and are available to respond to questions. Management is also available to investment analysts, financial advisors and media.

The text of the company’s 2011 Second Quarter Interim is available in French on request from the company and is filed with and available through SEDAR at www.sedar.com.

Dividend Reinvestment Plan

Registered holders of Class A Limited Voting Shares who are resident in Canada may elect to receive their dividends in the form of newly issued Class A Limited Voting Shares at a price equal to the weighted average price at which the shares traded on the Toronto Stock Exchange during the five trading days immediately preceding the payment date of such dividends.

The Dividend Reinvestment Plan allows current shareholders to acquire additional Class A Limited Voting Shares in the company without payment of commissions. Further details on the Dividend Reinvestment Plan and a Participation Form can be obtained from our Toronto office, our transfer agent or from our web site.

Dividend Record and Payment Dates

	Record Date	Payment Date
Class A Limited Voting Shares 1	First day of February, May, August and November	Last day of February, May, August and November
Class A Preference Shares 1
Series 2, 4, 10, 11, 12, 13, 17, 18, 21, 22, 24, 26 and 28	15th day of March, June, September and December	Last day of March, June, September and December
Series 8 and 14	Last day of each month	12th day of following month
Series 9	15th day of January, April, July and October	First day of February, May, August and November

1. All dividend payments are subject to declaration by the Board of Directors

86 BROOKFIELD ASSET MANAGEMENT

BROOKFIELD ASSET MANAGEMENT INC.

CORPORATE OFFICES	REGIONAL OFFICES
New York – United States Three World Financial Center 200 Vesey Street, 11th Floor New York, New York 10281-0221 T    212.417.7000 F    212.417.7196	Sydney – Australia Level 22 135 King Street Sydney, NSW 2001 T  61.2.9322.2000 F  61.2.9322.2001	Hong Kong Lippo Centre, Tower One 13/F, 1306 89 Queensway, Hong Kong T    852.2143.3003 F    852.2537.6948	Dubai – UAE Level 1, Al Manara Building Sheikh Zayed Road Dubai, UAE T    971.4.3158.500 F    971.4.3158.600
Toronto – Canada Brookfield Place, Suite 300 Bay Wellington Tower 181 Bay Street, Box 762 Toronto, Ontario    M5J 2T3 T    416.363.9491 F    416.365.9642	London – United Kingdom 23 Hanover Square London    W1S 1JB United Kingdom T  44 (0) 20.7659.3500 F  44 (0) 20.7659.3501	Rio de Janeiro – Brazil Rua Lauro Müller 116, 21° andar, Botafogo - Rio de Janeiro - Brasil 22290 - 160 CEP: 71.635-250 T    55 (21) 3527.7800 F    55 (21) 3527.7799	Mumbai Suite 1201, Trident Nariman Point, Mumbai 400021, India T +91(22) 6630 6003 F +91(22) 6630 6011
www.brookfield.com           NYSE: BAM    TSX: BAM.A     EURONEXT: BAMA

EX-2

Exhibit 2

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, J. Bruce Flatt, Chief Executive Officer, Brookfield Asset Management Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Brookfield Asset Management Inc. (the “issuer”) for the interim period ended June 30, 2011.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

1. designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

1. material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

2. information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

2. designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control – Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2 N/A

5.3 N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning April 1, 2011 and ended on June 30, 2011 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: August 15, 2011

/s/ J. Bruce Flatt

J. Bruce Flatt

Chief Executive Officer

EX-3

Exhibit 3

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Brian D. Lawson, Chief Financial Officer, Brookfield Asset Management Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Brookfield Asset Management Inc. (the “issuer”) for the interim period ended June 30, 2011.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

1. designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

1. material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

2. information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

2. designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control – Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2 N/A

5.3 N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning April 1, 2011 and ended on June 30, 2011 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: August 15, 2011

/s/ Brian D. Lawson

Brian D. Lawson

Chief Financial Officer