July 31, 2002

Dear Shareholder:

    For the first six months of 2002, The First  Philippine Fund Inc.'s ("Fund")
net asset value ("NAV") per share appreciated by 3.90%, from $3.08 at the end of
December 2001 to $3.20 at the end of June 2002. In this same period,  the Fund's
share  price rose even more  significantly  -- by 10.51% -- to close at $2.84 on
June 28, 2002. These performances well surpass that of the Fund's benchmark, the
Philippine composite index ("Phisix"),  which rose by 1.25% in U.S. dollar terms
in the first half of the year.

    The Fund's  positive  results in the first half of 2002 allowed it to narrow
its slump in its fiscal  year ending June 2002.  In the 2002  fiscal  year,  the
Fund's  per  share  NAV  and  share   price   declined  by  15.79%  and  10.97%,
respectively.  Performance  improved from the first half of the fiscal year (the
last six months of 2001),  a period which saw global  markets plunge in response
to a slowing world economy and the war on terrorism.  In that period, the Fund's
per share NAV and share  price  were down by 18.95%  and  19.44%,  respectively.
Comparatively,  the Fund's  benchmark  declined  15.98% in the first half of the
fiscal year and 14.93% in the one-year period ending June 2002.

    On June 28,  2002,  the Fund traded at an 11.25%  discount  to NAV.  This is
substantially  lower than the 16.56%  discount at the end of December  2001. The
Fund's discount to NAV has in fact narrowed  significantly in 2002. In the first
six months of the year,  the  discount  has averaged  10.83%,  compared  with an
average  of  16.43% in the full year 2001 and  21.99% in 2000.  We  believe  the
Fund's share repurchase  program,  which began in May 2001, has had an impact on
the  narrowing  of the  Fund's  discount.  As of June  30,  2002,  the  Fund has
repurchased  over one million of its shares,  equivalent  to 9.24% of the Fund's
common stock.


FIRST HALF 2002 MARKET REVIEW

    The  Philippine  stock market  performed  strongly early in the year. In the
first  quarter of 2002,  the Phisix  rose by 21.56%  quarter-on-quarter  in U.S.
dollar  terms,  with the bulk of the  ascent  occurring  in  January  and  early
February.  Sentiment  on  the  Philippines  turned  decisively  positive  as the
government  unveiled a  better-than-expected  2001 economic report card,  credit
rating agencies upgraded the country's outlook, interest rates declined and U.S.
troops landed in the  Philippines  for military  exercises in Mindanao.  Trading
volumes  increased and liquidity  flowed back into the stock market,  making the
Philippines one of the best performing among the emerging markets.

    The rally,  however,  was not sustained in the second  quarter of 2002.  The
Phisix  declined  to its  year-low  at the end of  June  2002,  dropping  16.71%
quarter-on-quarter in U.S. dollar terms. This decline nearly erased the market's
early gains.  But,  with the help of the peso that  strengthened  by 2.3% in the
first six  months of 2002,  the  market was able to eke out a 1.25% gain in U.S.
dollar terms in the first half of the year.

    The market's drop was concentrated in June.  Investors'  confidence waned as
interim  budget  deficit  numbers  veered off targets,  raising the specter of a
significant  rise  in  interest  rates.  Domestic  political  developments  that
threatened to move  government's  focus away from its reform agenda,  weak first
quarter corporate  results,  concerns on the continued  economic weakness of the
United States, the Philippines' largest trading partner, and overall bearishness
on global equity markets, all weighed down on the Philippine stock market.

FOUNDATIONS BEING BUILT

    We  believe,  however,  that value has  emerged as a result of the  market's
second quarter  decline and that further  significant  downside at this point is
likely to be limited.  The  opportunity  exists to pick up  fundamentally  sound
Philippine companies that have been oversold.  We expect more positive news flow
to come out of the  market and the  economy in the second  half of the year that
should restore investors' confidence in the Philippines.




    This  view is  based  on our  observation  that the  foundations  for  sound
fundamentals  are clearly and surely,  albeit slowly,  being built. For example,
the  macroeconomy  remains on track. The country's first quarter GDP growth rate
of 3.8%,  driven by agriculture  and services on the supply side and consumption
on the demand  side,  was  generally  in line with  expectations  and showed the
continuation of the Philippine  economy's recovery that began in 2001.  Interest
rates hit  historic  lows in April.  While  there may have been a slight  uptick
since then,  interest  rates remain  substantially  lower now than last year and
should  provide a substantial  boost to economic  growth and corporate  profits.
Significant  progress on peace and order was achieved  with the victory  against
the Abu Sayyaf. A close  partnership has been formed between U.S. and Philippine
troops in the war against terrorism, and newly appointed police officials aim to
curb kidnapping in one year's time. Finally, reform momentum should pick up anew
as Congress reopens.

    The road may be bumpy, but we believe the country is fundamentally moving in
the right direction.  Given this, the Fund will remain substantially invested in
the stock  market  and  focused on the  largest,  most  liquid and  best-managed
companies.  The Fund will  continue to remain more stock  selective  rather than
sector  selective.  In the  near-term,  particular  attention  will be  given to
undervalued  situations  and  stocks  with the  greatest  potential  of  showing
corporate earnings growth in a recovering domestic and global economy.

ANNUAL MEETING SHAREHOLDER VOTE

    The Fund's Board of  Directors,  in response to its  commitment  made a year
earlier to take action to allow  shareholders  to realize net asset  value,  has
authorized  a vote  for  liquidation  to be put  forth  to  shareholders  at the
upcoming annual meeting on October 31, 2002. This action was precipitated by the
Fund's  exceeding a 12% average  discount  threshold in the  twenty-day  trading
period prior to July 19,  2002.  In its July 26, 2002 press  release  announcing
this decision,  the Board also stated its unanimous belief that such liquidation
would not be in  shareholders'  best long-term  interests and recommended a vote
against it. The Board's belief in the favorable  medium- to long-term  prospects
of the Philippine market and the Fund's share price appreciation potential was a
major consideration in forming its position.  A copy of the press release can be
found  at the  Fund's  website  --  http://www.clementecapital.com/fpf.html.  We
encourage your  participation  in this vote that will determine the direction of
the Fund.

    Once again, thank you for your continued support for the Philippines and The
First Philippine Fund.


                                      Sincerely yours,

                                      /S/LILIA C. CLEMENTE

                                      Lilia C. Clemente
                                      DIRECTOR, PRESIDENT & CEO


                                      /S/JOAQUIN G. HOFILENA

                                      Joaquin G. Hofilena
                                      VICE PRESIDENT AND PORTFOLIO MANAGER

                                       2



THE FIRST PHILIPPINE FUND INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2002



                                                                             Number of Shares        Value
-------------------------------------------------------------------------------------------------------------------
PHILIPPINE SECURITIES (98.0%)
-------------------------------------------------------------------------------------------------------------------
COMMON STOCK (96.1%)
CONGLOMERATES (13.1%)
                                                                                            
    Aboitiz Equity Ventures, Inc.                                               17,200,000        $  775,924
    Ayala Corp. - A                                                             36,464,323         3,064,008
    Benpres Holdings Corp. (c)                                                  29,109,700           201,587
    Metro Pacific Corp. (c)                                                     15,550,000            86,148
    Pryce Corp. (b)(c)                                                          19,490,000            26,030
    Uniwide Holdings, Inc. (c)                                                  20,687,000            32,745
-------------------------------------------------------------------------------------------------------------------
                                                                                                   4,186,442
-------------------------------------------------------------------------------------------------------------------
CONSTRUCTION/ENGINEERING (1.2%)
    DMCI Holdings, Inc. (c)                                                     25,604,000            75,990
    Union Cement Corp. (c)                                                      22,038,041           305,230
-------------------------------------------------------------------------------------------------------------------
                                                                                                     381,220
-------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES (12.6%)
    Bank of the Philippine Islands                                               2,014,881         1,913,581
    Bankard, Inc. (c)                                                            6,470,000           161,299
    Equitable PCI Bank, Inc. (c)                                                   836,000           521,042
    Metropolitan Bank & Trust Co. (c)                                            2,197,000         1,456,233
-------------------------------------------------------------------------------------------------------------------
                                                                                                   4,052,155
-------------------------------------------------------------------------------------------------------------------
FOOD AND BEVERAGE (23.8%)
    Del Monte Pacific Ltd. (f)                                                   2,400,000           631,472
    Jollibee Foods Corp.                                                         3,880,545         1,017,337
    La Tondena Distillers, Inc.                                                  1,567,800         1,023,672
    San Miguel Corp. - A                                                         4,545,086         4,361,541
    Universal Robina Corp.                                                       6,778,200           610,214
-------------------------------------------------------------------------------------------------------------------
                                                                                                   7,644,236
-------------------------------------------------------------------------------------------------------------------
MEDIA (3.7%)
    ABS-CBN Broadcasting Corp. PDR (c)(e)                                        2,649,900         1,179,691
-------------------------------------------------------------------------------------------------------------------
                                                                                                   1,179,691
-------------------------------------------------------------------------------------------------------------------
PORT OPERATIONS (1.2%)
    International Container Terminal Services, Inc.                              7,643,750           369,022
-------------------------------------------------------------------------------------------------------------------
                                                                                                     369,022
-------------------------------------------------------------------------------------------------------------------
REAL ESTATE DEVELOPMENT (22.0%)
    Ayala Land, Inc.                                                            26,589,585         2,946,156
    Belle Corp. (c)                                                              5,900,008            37,356
    Filinvest Land, Inc. (c)                                                    32,287,499         1,456,550
    SM Prime Holdings, Inc.                                                     24,100,000         2,622,623
-------------------------------------------------------------------------------------------------------------------
                                                                                                   7,062,685
-------------------------------------------------------------------------------------------------------------------
TECHNOLOGY (1.6%)
    Ionics, Inc.                                                                 2,475,000           298,718
    Music Corp. (c)                                                              1,900,000             7,425
    SPI Technologies, Inc. (c)                                                   1,400,500           221,681
-------------------------------------------------------------------------------------------------------------------
                                                                                                     527,824
-------------------------------------------------------------------------------------------------------------------



                 See Accompanying Notes to Financial Statements

                                        3

                                     

THE FIRST PHILIPPINE FUND INC.
SCHEDULE OF INVESTMENTS (CONT'D)
JUNE 30, 2002



                                                                             Number of Shares        Value
-------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (14.0%)
                                                                                          
    Digital Telecommunications Philippines, Inc. (c)                            20,200,000      $    279,773
    Globe Telecommunications, Inc. (c)                                              65,000           668,764
    Philippine Long Distance Telephone Co. ADR (c)(d)                              475,020         3,543,649
-------------------------------------------------------------------------------------------------------------------
                                                                                                   4,492,186
-------------------------------------------------------------------------------------------------------------------
UTILITIES (2.9%)
    Manila Electric Co. - A (c)                                                  2,257,600           926,875
-------------------------------------------------------------------------------------------------------------------
                                                                                                     926,875
-------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCK
    (Cost $62,731,958)                                                                            30,822,336
-------------------------------------------------------------------------------------------------------------------

                                                                                       Par
                                                                 Maturity             (000)
-------------------------------------------------------------------------------------------------------------------
BOND (1.9%)
    Bacnotan Consolidated Industries, Inc., 5.50%
     (Cost $1,750,000)                                           06/21/04           $1,750           621,250
-------------------------------------------------------------------------------------------------------------------
TOTAL PHILIPPINE SECURITIES
     (Cost $64,481,958)                                                                           31,443,586
-------------------------------------------------------------------------------------------------------------------
UNITED STATES SECURITIES (2.0%)
-------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (2.0%)
    American Express Credit Corp., 1.97%
     (Cost $627,000)                                             07/01/02              627           627,000
-------------------------------------------------------------------------------------------------------------------
TOTAL UNITED STATES SECURITIES                                                                       627,000
-------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (100%)
     (Cost $65,108,958) (a)                                                                     $ 32,070,586
                                                                                                ============

(a) Aggregate cost for Federal Income tax purposes is $65,108,958.
    Aggregate gross unrealized appreciation (depreciation) for all securities
    is as follows:
         Excess of market value over tax cost                                                   $  2,056,002
         Excess of tax cost over market value                                                    (35,094,374)
                                                                                                ------------
                                                                                                $(33,038,372)
                                                                                                ============
(b) At fair value as determined by the Board of Directors.
(c) Non-income producing security.
(d) ADR - American Depository Receipt.
(e) PDR - Philippine Depository Receipt.
(f) Singapore security - 2.0% of Total Investments.



                 See Accompanying Notes to Financial Statements

                                        4

                                     



THE FIRST PHILIPPINE FUND INC.
STATEMENT OF ASSETS AND LIABILITIES                                                                June  30, 2002
-------------------------------------------------------------------------------------------------------------------
ASSETS
                                                                                                
Investments at value (Cost $65,108,958) ......................................................... $ 32,070,586
Cash ............................................................................................          644
Foreign currency value (Cost $748,552) ..........................................................      761,288
Dividends receivable ............................................................................       18,025
Interest receivable .............................................................................        2,144
Prepaid expenses ................................................................................       17,956
-------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS ....................................................................................   32,870,643
-------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for treasury stock repurchased ..........................................................       30,334
Advisory fee payable ............................................................................       56,715
Accrued expenses payable ........................................................................      160,807
-------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES ...............................................................................      247,856
-------------------------------------------------------------------------------------------------------------------
NET ASSETS
   (applicable to 10,188,300 common shares outstanding) .........................................  $32,622,787
-------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
   ($32,622,787/10,188,300) .....................................................................        $3.20
-------------------------------------------------------------------------------------------------------------------
Net assets consist of:
   Capital Stock Issued .........................................................................  $   112,250
   Paid-in capital ..............................................................................  119,167,739
   Cost of 1,036,700 shares held in treasury ....................................................   (3,220,835)
   Accumulated net realized loss on investments .................................................  (50,410,749)
   Net unrealized depreciation on investments, foreign currency holdings
    and other assets and liabilities denominated in foreign currency ............................  (33,025,618)
-------------------------------------------------------------------------------------------------------------------
NET ASSETS ......................................................................................  $32,622,787
-------------------------------------------------------------------------------------------------------------------

                                                                                                       For the
                                                                                                    Year Ended
STATEMENT OF OPERATIONS                                                                          June 30, 2002
-------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
   Dividends (net of taxes withheld $139,210) ...................................................  $   450,716
   Interest (net of taxes withheld $3,423) ......................................................      133,032
-------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME .........................................................................      583,748
-------------------------------------------------------------------------------------------------------------------
EXPENSES
   Investment advisory fee ......................................................................      365,523
   Trustee fee ..................................................................................      150,000
   Administration fee ...........................................................................      124,800
   Legal fee ....................................................................................      128,414
   Custodian fee ................................................................................       74,836
   Audit fee ....................................................................................       54,602
   Directors fee ................................................................................       49,250
   NYSE Listing fee .............................................................................       34,688
   Printing .....................................................................................       27,998
   Insurance ....................................................................................       10,924
   Transfer agent fee ...........................................................................        8,229
   Miscellaneous ................................................................................       69,083
-------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES ..................................................................................    1,098,347
-------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS .............................................................................     (514,599)
-------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS, FOREIGN CURRENCY HOLDINGS
   AND OTHER  ASSETS AND  LIABILITIES  DENOMINATED  IN FOREIGN  CURRENCIES:
   Net realized gain (loss) on:
    Security transactions .......................................................................   (2,512,427)
    Foreign currency transactions ...............................................................        3,745
   Net change in unrealized appreciation (depreciation):
    Investments .................................................................................   (3,795,603)
    Foreign currency holding and other assets and liabilities denominated in foreign currency ...       45,367
-------------------------------------------------------------------------------------------------------------------
   Net realized and unrealized losses on investments,  foreign currency holdings
    and other assets and liabilities denominated in foreign currency ............................   (6,258,918)
-------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................................  $(6,773,517)
-------------------------------------------------------------------------------------------------------------------



                 See Accompanying Notes to Financial Statements

                                        5

                                     



                                                                                   For the             For the
THE FIRST PHILIPPINE FUND INC.                                                  Year Ended          Year Ended
STATEMENT OF CHANGES IN NET ASSETS                                           June 30, 2002       June 30, 2001
-------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
   Operations:
                                                                                             
    Net investment loss .................................................     $  (514,599)        $   (346,430)
    Net realized loss on security transactions ..........................      (2,512,427)         (15,229,320)
    Net realized gain (loss) on foreign currency transactions ...........           3,745             (627,460)
    Net change in unrealized appreciation (depreciation)
       on investments, foreign currency holdings and other
       assets and liabilities denominated in foreign currency ...........      (3,750,236)              21,840
-------------------------------------------------------------------------------------------------------------------
   Net decrease in net assets resulting from operations .................      (6,773,517)         (16,181,370)
-------------------------------------------------------------------------------------------------------------------
   Capital share transactions:
   Shares repurchased ...................................................      (2,930,465)            (290,370)
-------------------------------------------------------------------------------------------------------------------
   Total decrease in net assets .........................................      (9,703,982)         (16,471,740)
-------------------------------------------------------------------------------------------------------------------
   Net assets:
    Beginning of year ...................................................      42,326,769           58,798,509
-------------------------------------------------------------------------------------------------------------------
    End of year (including accumulated net investment loss of
       $0 and ($214,965), respectively) .................................     $32,622,787         $ 42,326,769
===================================================================================================================


                 See Accompanying Notes to Financial Statements

                                        6

                                     



THE FIRST PHILIPPINE FUND INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)


                                                                          For the Year Ended June 30,
-------------------------------------------------------------------------------------------------------------------
                                                                  2002      2001     2000     1999     1998
-------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
                                                                                          
Net asset value, beginning of period ...........................  $   3.80   $ 5.24    $ 9.73   $ 6.51   $16.61
-------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
   Net investment loss .........................................     (0.05)   (0.03)    (0.06)   (0.07)   (0.06)
   Net realized and unrealized gains (losses) on investments,
    foreign currency holdings and other assets and liabilities
    denominated in foreign currencies ..........................     (0.65)   (1.56)    (4.43)    3.29   (10.04)
-------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations .............     (0.70)   (1.59)    (4.49)    3.22   (10.10)
-------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS
   Distributions from net realized long-term gains .............        --       --        --       --       --
-------------------------------------------------------------------------------------------------------------------
TOTAL DIVIDENDS AND DISTRIBUTIONS ..............................        --       --        --       --       --
-------------------------------------------------------------------------------------------------------------------
SHARES REPURCHASED
   Effect of shares repurchased ................................      0.10     0.15        --       --       --
-------------------------------------------------------------------------------------------------------------------
   Increase (decrease) in net asset value ......................     (0.60)   (1.44)    (4.49)    3.22   (10.10)
-------------------------------------------------------------------------------------------------------------------
Net asset value, end of period .................................  $   3.20   $ 3.80    $ 5.24   $ 9.73   $ 6.51
-------------------------------------------------------------------------------------------------------------------
PER SHARE MARKET VALUE, END OF PERIOD ..........................  $   2.84   $ 3.19    $ 4.06   $ 8.63   $ 5.75
-------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN
   Based on market value* ......................................    (10.97)% (21.43)%  (52.90)%  50.00%  (58.18)%
-------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ...........................   $32,623  $42,327   $58,799 $109,256  $73,068
Ratios to average net assets:
    Operating expenses .........................................      3.00%    2.38%     1.88%    2.07%    1.91%
    Net investment loss ........................................     (1.41)%  (0.71)%   (0.86)%  (1.02)%  (0.68)%
Portfolio turnover .............................................      3.04%   34.71%    14.37%   16.26%   23.10%
-------------------------------------------------------------------------------------------------------------------


  * Total investment return is calculated assuming a purchase of common stock at the current market price on the
    first day and a sale at the current market price on the last day of each period reported.  Dividends and
    distributions,  if any, are  assumed,  for  purposes of this  calculation,  to be  reinvested  at prices
    obtained under the Fund's dividend  reinvestment  plan. Total investment  return does not reflect sales charges
    and brokerage commissions.



                 See Accompanying Notes to Financial Statements

                                        7

                                     

NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2002
------------

A.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The First  Philippine Fund Inc. (the "Fund") was  incorporated in the State
of Maryland on September 11, 1989.  The Fund is registered  under the Investment
Company Act of 1940, as amended,  as a  non-diversified,  closed-end  management
investment company.  The preparation of financial  statements in accordance with
generally accepted  accounting  principles requires management to make estimates
and  assumptions  that  affect  the  reported  amounts  and  disclosures  in the
financial statements. Actual results could differ from those estimates.

  1. PORTFOLIO VALUATION: Investments  are  stated at  value in the accompanying
     financial statements. All equity securities for which market quotations are
     readily  available are valued at the last sales price or lacking any recent
     sales,  at the mean  between the current bid and asked  prices.  Securities
     that are traded over-the-counter are valued at the mean between the current
     bid and asked  prices.  Securities  for which market values are not readily
     available are carried at fair value as determined in good faith by or under
     the supervision of the Board of Directors.  Short-term investments having a
     maturity of 60 days or less are valued on the basis of amortized cost.

  2. INVESTMENT  TRANSACTIONS AND  INVESTMENT  INCOME:  Investment  transactions
     are  accounted  for on the  trade  date.  The cost of  investments  sold is
     determined by use of the specific  identification method for both financial
     reporting  and income tax purposes.  Interest  income is accrued as earned;
     dividend income is recorded on the ex-dividend date. Dividends and interest
     income are subject to  withholding  tax at various  rates not exceeding 25%
     and such tax is recorded at the time when the related income is recorded.

  3. TAX STATUS: No  provision  is made for U.S. Federal income or excise  taxes
     as it is the  Fund's  intention  to  continue  to  qualify  as a  regulated
     investment  company  and  to  make  the  requisite   distributions  to  its
     shareholders   which  will  be   sufficient  to  relieve  it  from  all  or
     substantially  all U.S. Federal income and excise taxes. For the year ended
     June 30, 2002, no U.S. Federal income or excise tax provision was required.

     The Fund has a capital loss carry forward in the amount of $48,194,629,  of
     which  $466,990,  $7,894,664,  $8,691,344,  $26,411,868  and $4,729,763 are
     available as a reduction of future net capital gains to be distributed  and
     expire in the years ended 2005, 2007, 2008, 2009 and 2010 respectively.  It
     is  uncertain  whether the Fund will  realize  these  benefits  before they
     expire.

     Capital  and   foreign   currency   losses   incurred   after   October  31
     ("post-October  losses") within the taxable year are deemed to arise on the
     first  business day of the Fund's next taxable year. The Fund after October
     31, 2001 incurred and will elect to defer net capital  losses of $2,216,120
     during the year ended June 30, 2002.

     The tax character of net assets at June 30, 2002 was substantially the same
     as the book character.

  4. FOREIGN CURRENCY:  The books and records of the Fund are maintained in U.S.
     dollars.  Foreign  currency amounts are translated into U.S. dollars on the
     following basis:

     (I)  market value of investment securities and other assets and liabilities
          at the  Philippine  peso  exchange  rate as stated  on the  Philippine
          Dealing System at the valuation date; and

     (II) purchases  and sales of investment  securities,  income and expense at
          the  Philippine  peso rate of exchange  prevailing  on the  respective
          dates of such transactions. Exchange gains or losses are realized upon
          ultimate receipt or disbursement.

     The Fund does not generally  isolate the effect of  fluctuation  in foreign
     exchange  rates from the  effect of  fluctuations  in the market  prices of
     securities held whether realized or unrealized.

                                        8



NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2002 (CONT'D)
------------


     Realized  gains or losses on foreign  currency  transactions  represent net
     foreign   exchange  gains  or  losses  from  the   disposition  of  foreign
     currencies,  currency  gains or  losses  realized  between  the  trade  and
     settlement  dates  on  securities  transactions,  and  between  amounts  of
     interest,  dividends and foreign  withholding  taxes recorded on the Fund's
     books and the U.S. dollar equivalent amounts actually received or paid.

     The change in  unrealized  appreciation/depreciation  of  foreign  currency
     holding and other assets and liabilities  denominated in foreign currencies
     represents  the  change in the value of the  foreign  currencies  and other
     assets and liabilities  arising as a result of changes in foreign  exchange
     rates.

     Foreign security and currency  transactions may involve certain  conditions
     and risks not  typically  associated  with  those of  domestic  origin as a
     result of, among other  factors,  the level of government  supervision  and
     regulation of foreign securities markets and the possibilities of political
     or economic instability.

  5. DISTRIBUTION  OF INCOME  AND  GAINS:  The Fund  intends  to  distribute  to
     shareholders,  at least annually,  substantially  all of its net investment
     income and expects to  distribute  annually any net capital gains in excess
     of net capital losses. An additional distribution may be made to the extent
     necessary to avoid the payment of a 4% Federal excise tax.

     The amount of dividends and  distributions  from net investment  income and
     net realized capital gains are determined in accordance with Federal income
     tax  regulations  which  may  differ  from  generally  accepted  accounting
     principles. These "book/tax" differences are either considered temporary or
     permanent  in nature.  To the extent  these  differences  are  permanent in
     nature,  such amounts are reclassified within the capital accounts based on
     their Federal  tax-basis  treatment;  temporary  differences do not require
     reclassification.  To the extent they exceed net investment  income and net
     realized capital gains for tax purposes, they are reported as distributions
     of paid-in capital.

     As of June 30, 2002, the Fund had temporary book/tax differences  primarily
     attributable  to  post-October  losses and permanent  book/tax  differences
     primarily  attributable to foreign  currency losses and net operating loss.
     During the year ended June 30, 2002,  the Fund  decreased  accumulated  net
     investment loss by $725,819 with an offsetting  decrease to paid-in-capital
     of $725,819.  The Fund also decreased  accumulated  net investment  loss by
     $3,745 with an  offsetting  increase to  accumulated  net realized  loss on
     investments of $3,745. Net assets were not affected by these changes.

  6. REPURCHASE  AGREEMENTS:  The Fund may enter into repurchase agreements with
     respect to dollar-denominated debt securities of United States issuers. The
     Fund's custodian takes  possession of collateral  pledged for investment in
     the repurchase  agreements.  To the extent that any repurchase  transaction
     exceeds one business day, the value of the  collateral is  marked-to-market
     on a daily basis to maintain the adequacy of the collateral.  If the seller
     defaults, the value of the collateral declines or if bankruptcy proceedings
     are commenced  with respect to the seller of the security,  realization  of
     the collateral by the Fund may be delayed or limited.

                                        9



NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2002 (CONT'D)
------------


B.  MANAGEMENT AND INVESTMENT ADVISORY SERVICES

     The Fund has entered into an  Investment  Advisory  Agreement for portfolio
management services with Clemente Capital, Inc. (the "Investment Adviser") and a
Trust  Agreement with the Philippine  National Bank (the  "Trustee") for certain
services relating to the Philippine Trust. The Investment  Advisory Agreement is
approved on an annual basis and provides for the Investment Adviser to receive a
fee computed  weekly and payable  monthly at the annual rate of 1% of the Fund's
average  weekly net assets.  For the year ended June 30,  2002,  the  Investment
Adviser  earned  $365,523  from the Fund,  of which  $56,715  was payable to the
Investment Adviser at June 30, 2002.

     PNB  Investments  Limited  (the  "Philippine   Adviser"),   a  wholly-owned
subsidiary  of the Trustee,  provides  the  Investment  Adviser with  investment
advice,  research  and  assistance  pursuant  to a Research  Agreement  with the
Investment Adviser.  For its services,  the Philippine Adviser receives from the
Investment Adviser a fee at an annual rate of 0.35% of the Fund's average weekly
net  assets.  For the year ended June 30,  2002,  the  Investment  Adviser  paid
$127,933 to the Philippine Adviser.

     Substantially all of the Fund's assets are invested through and held in the
Philippine Trust. Under the Trust Agreement,  the Trustee receives a monthly fee
at the annual rate of 0.15% of the Fund's  average weekly net assets held in the
Philippine Trust, subject to a minimum fee of $150,000 for administration of the
Philippine Trust. The Trust Agreement remains in effect for the life of the Fund
unless  terminated  in  accordance  with its terms.  For the year ended June 30,
2002, the Trustee  earned fees of $150,000,  of which $37,396 was payable to the
Trustee at June 30, 2002.

     PFPC Inc. (the  "Administrator")  provides  administrative  and  accounting
assistance to the Fund. Under the  Administration  Agreement,  the Administrator
receives a fee payable  monthly at an annual rate of 0.10% of the Fund's average
weekly net assets,  subject to a minimum  annual fee of  $124,800.  For the year
ended June 30, 2002, the Administrator earned fees of $124,800, of which $20,515
was payable to the Administrator at June 30, 2002.

     The Fund pays  each of its  Directors  who is not a  director,  officer  or
employee of the Investment  Adviser,  the  Philippine  Adviser or the Trustee an
annual fee of $8,000  plus $750 for each  meeting of the Board or of a committee
of the Board attended in person plus certain out-of-pocket expenses.  Directors'
fees  payable at June 30,  2002 were  $11,000,  which were  included  in accrued
expenses.

C.  CAPITAL STOCK

     The  authorized  capital stock of the Fund is  25,000,000  shares of common
stock $.01 par value.  Of the  10,188,300  shares  outstanding at June 30, 2002,
Clemente Capital, Inc. owned 6,000 shares.

D.  SHARE REPURCHASE PROGRAM

     On May 4, 2001,  the Fund  commenced  a share  repurchase  program  for the
purpose of  enhancing  shareholder  value and reducing the discount at which the
Fund's shares traded from their net asset value. From that date through June 30,
2002, the Fund repurchased  1,036,700 shares or 9.24% of its Common Stock issued
at a weighted  average price per share of $3.07 and a weighted  average discount
of 10.51% from net asset value per share.  For the year ended June 30, 2002, the
Fund  repurchased  950,400  shares  or 8.47% of its  Common  Stock  issued  at a
weighted  average  price per share of $3.02 and a weighted  average  discount of
10.02%  from net  asset  value  per  share.  The Fund  expects  to  continue  to
repurchase  its  outstanding  shares  at such  time  and in such  amounts  as it
believes will further the accomplishment of the foregoing  objectives subject to
review by the Board of Directors.

E.  PORTFOLIO ACTIVITY

     Purchases  and sales of  securities,  other  than  short-term  obligations,
aggregated $1,048,644 and $2,013,669,  respectively, for the year ended June 30,
2002.

                                       10



NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2002 (CONT'D)
------------


F.  OTHER

     The Fund has obtained the approval of the Central Bank for the registration
and  conversion  into pesos of all  proceeds  of the Fund to be  invested in the
Philippine securities markets, which ensures repatriation of such investment and
the remittance of profits and dividends  accruing thereon.  Notwithstanding  the
foregoing,  the right of the Fund to repatriate  its  investments  in Philippine
securities  and to  receive  profits,  capital  gains and  dividends  in foreign
exchange is subject to the power of the Central  Bank,  with the approval of the
President of the  Philippines,  to restrict the availability of foreign exchange
in the  imminence  of or  during  an  exchange  crisis  or in times of  national
emergency.

     There are  nationality  restrictions  on the  ownership  of certain  equity
securities  of  Philippine  companies.  Based on  confirmations  which  the Fund
received from Philippine governmental authorities,  the Fund believes that it is
permitted  to make certain  investments  through the  Philippine  Trust that are
otherwise available only to Philippine nationals.

     At June 30, 2002, 94.4% of the Fund was invested in Philippine  securities.
Future  economic and  political  developments  in that country  could  adversely
affect the liquidity and/or value of the Philippine securities in which the Fund
is invested.

G.  SUBSEQUENT EVENT

     At the July 25, 2002 Board  Meeting,  the Board of  Directors  authorized a
shareholder vote on liquidation. Shareholders of record on August 21, 2002 shall
be  entitled  to vote at the Annual  Meeting,  which will be held on October 31,
2002.  Under the Fund's Amended  Articles of  Incorporation,  which have been in
effect  since  inception  in 1989,  the  affirmative  vote of 75% of the  Fund's
outstanding  shares of Common Stock will be required to approve the  dissolution
of the Fund.

     In the event that the requisite percentage is not achieved,  the Board will
consider various alternatives to address the discount.

                                       11



                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors and Shareholders of
The First Philippine Fund Inc.

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The First Philippine Fund Inc. (the
"Fund") at June 30, 2002, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended, in conformity with accounting principles generally accepted in the United
States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 2002 by
correspondence with the custodian, provide a reasonable basis for our opinion.

As  explained  in Note G, the Board of  Directors  of the Fund has  authorized a
shareholder vote on liquidation and dissolution of the Fund.

PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania
August 5, 2002

                                       12



TAX INFORMATION (UNAUDITED)
--------


     The Fund is required by Subchapter M of the Internal  Revenue Code of 1986,
as amended,  to advise its shareholders within 60 days of the Fund's fiscal year
end (June 30, 2002) as to the U.S. Federal tax status of distributions  received
by the Fund's shareholders during such fiscal year.

     Because  the  Fund's  fiscal  year  is  not  the  calendar  year,   another
notification  will be  sent  in  respect  of  calendar  year  2002.  The  second
notification,  which  will  reflect  the  amount  to be  used by  calendar  year
taxpayers on their Federal income tax returns,  will be made in conjunction with
Form  1099-DIV and will be mailed in January 2003.  Shareholders  are advised to
consult  their own tax advisers  with respect to the tax  consequences  of their
investment in the Fund.

     Foreign shareholders will generally be subject to U.S. withholding  tax  on
the amount of their dividend.

     Dividends  received by tax-exempt  recipients  (e.g. IRA's and Keoghs) need
not be reported as taxable income for U.S. Federal income tax purposes. However,
some retirement trusts (e.g. corporate, Keogh and 403(b)(7) plans) may need this
information for their annual information reporting.

     This  information  is given to meet  certain  requirements  of the Internal
Revenue Code.  Shareholders should refer to their Form 1099-DIV to determine the
amounts includable on their respective tax returns for 2002.


SUMMARY OF THE FUND'S DIVIDEND REINVESTMENT PLAN (UNAUDITED)
------

     The following is a summary of the Fund's  Dividend  Reinvestment  Plan (the
"Plan").  Shareholders  may  participate in the Plan by completing an enrollment
card  available from American Stock Transfer & Trust Company (the "Plan Agent"),
and forwarding it to the address below.

     The Fund intends to distribute to shareholders,  at lease annually, its net
investment income from dividends and interest and, to the extent necessary,  its
net realized capital gains. Pursuant to the Plan, shareholders may elect to have
all cash distributions automatically reinvested by the Plan Agent in Fund shares
pursuant to the Plan.

     If the directors of the Fund declare a dividend from net investment  income
or a capital gains distribution  payable either in the Fund's Common Stock or in
cash, participants in the Plan will receive shares of Common Stock, to be issued
by the Fund.  If the  market  price per share on the  valuation  date  equals or
exceeds net asset  value per share on that date,  the Fund will issue new shares
to  participants  at net asset value or, if the net asset value is less than 95%
of the market  price on the  valuation  date,  then the Fund will issue such new
shares at 95% of the market price.  The  valuation  date will be the dividend or
distribution payment date or, if that date is not a trading day on the NYSE, the
next preceeding  trading day. If the net asset value exceeds the market price of
the Fund  shares  at such  time or if the Fund  should  declare  a  dividend  or
distribution  payable only in cash,  participants  in the Plan will be deemed to
have elected to receive shares of stock from the Fund valued at the market price
on the  valuation  date.  The Fund may not issue  shares  below net asset value.
Accordingly, the Plan Agent, as agent for the participants,  will use the amount
of the distribution to purchase Fund shares in the open market,  on the New York
Stock Exchange or elsewhere,  for the participants' accounts on, or in any event
within 30 days after,  the payment date. If, before the Plan Agent has completed
its  purchases,  the market  price  exceeds the net asset  value per share,  the
average  per share  purchase  price  paid by the Plan Agent may exceed net asset
value per  share,  resulting  in the  acquisition  of fewer  shares  than if the
dividend or distribution had been paid in shares issued by the Fund.

     The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in the account,  including information
for  personal tax records.  The Plan Agent will  provide such  confirmations  to
banks, brokers or nominees which hold shares for others and who are certified by
the  shareholder as  representing  the total amount of shares  registered in the
shareholder's  name  and held  for the  account  of  beneficial  owners  who are
participating in the Plan.

                                       13




     There  is  no  charge  to  participants   for   reinvesting   dividends  or
distributions.  The Plan Agent's fees for the  handling of the  reinvestment  of
dividends  and  distributions   will  be  paid  by  the  Fund.   However,   each
participant's  account will be charged a pro rata share of brokerage commissions
incurred  with respect to the Plan Agent's open market  purchases in  connection
with the reinvestment of dividends or distributions.

     The automatic  reinvestment of dividends and distributions will not relieve
participants  of any income tax which may be payable or  required to be withheld
on such dividends or distributions.

     Experience  under  the  Plan  may  indicate  that  changes  are  desirable.
Accordingly,  the Fund  reserves  the  right to amend or  terminate  the Plan as
applied to any dividend or distribution  paid for such dividend or distribution.
The Plan also may be  amended or  terminated  by the Plan Agent upon at least 30
days  written   notice  to  all   shareholders.   Participants   may   terminate
participation  in the Plan at any time upon giving  written notice 30 days prior
to the applicable dividend or distribution payment date. Additional  information
about the Plan may be  obtained  by  writing  American  Stock  Transfer  & Trust
Company  (the Plan  Agent)  at 59 Maiden  Lane,  New York,  NY 10007.  Attention
Shareholder Services: The First Philippine Fund Inc.


REPORT OF THE FUND'S ANNUAL MEETING (UNAUDITED)
--------

     The Fund held its annual meeting on October 25, 2001. At the meeting,   the
shareholders  voted to elect  three  Class II  directors  for a three year term:
Leopoldo M. Clemente,  Jr., John Anthony B. Espiritu, and Benjamin P. Palma Gil.
The  shareholders  also voted to ratify the selection of  PricewaterhouseCoopers
LLP as the Fund's independent accountants for the year ending June 30, 2002. The
results of the voting were as follows:




                                                                                                                ABSTENTIONS
                                                                                                                AND BROKER
                                                             FOR              AGAINST          WITHHELD          NON-VOTES
----------------------------------------------------------------------------------------------------------------------------
                                                                                                         
Leopoldo M. Clemente, Jr.                                 8,743,389                             587,565
John Anthony B. Espiritu                                  8,743,889                             587,065
Benjamin P. Palma Gil                                     8,743,689                             587,265
Selection of PricewaterhouseCoopers LLP                   9,029,545           272,235                             29,174


                                       14



THE FIRST PHILIPPINE FUND INC.

FUND MANAGEMENT SUMMARY
---------
DIRECTORS AND OFFICERS




                                                                                                                         NUMBER OF
                                                                                                                         PORTFOLIOS
                                                                                                                         IN FUND
                                               TERM OF OFFICE*    PRINCIPAL OCCUPATION(S)                                COMPLEX
NAME, (AGE), ADDRESS AND                       AND LENGTH         DURING PAST 5 YEARS                                    OVERSEEN BY
POSITION(S) WITH COMPANY                       OF TIME SERVED     AND OTHER DIRECTORSHIPS HELD                           DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------

DISINTERESTED DIRECTORS

                                                                                                                   
Roberto de Ocampo1 (56)                        Class III          President, Asian Institute of Management, since             1
Director                                       2002               September 1999; Chairman, Philand Group of Companies,
   6760 SGV Building                           Since 1998         since June 1999; Chairman, Prime East Properties,
   Ayala Avenue                                                   Inc., since June 1999; Secretary of Finance, Republic
   Makati City,                                                   of the Philippines, 1993 to January 1998; Director of
   Metro Manila, Philippines                                      ABS-CBN Broadcasting Corp., Alaska Milk Corp. and PSi
                                                                  Technologies (a semiconductor  corporation).
------------------------------------------------------------------------------------------------------------------------------------
John Anthony B. Espiritu (39)                  Class II           Managing Director of SynEx Financial Management             1
Director                                       2004               Advisors, Inc., Manila, Philippines, since March 2001;
   Ritz Tower                                  Since 1998         Chairman and President of EBECOM Holdings Co., Inc.,
   Makati City                                                    Makati City, Metro Manila, Philippines since May 1995;
   Metro Manilla, Philippines                                     President and Chief Executive Officer of Westmont Bank,
                                                                  Manila, Philippines from July 1998 to December 1999 and
                                                                  other offices since 1994; President of Philippine Racing
                                                                  Club, Inc., Manila, Philippines from June 1998 to
                                                                  February 2001; Chairman/Executive Director, Western
                                                                  State Bank, Duarte, California since May 1992.
------------------------------------------------------------------------------------------------------------------------------------
Joseph A. O'Hare, S.J. (71)                   Class III           President of Fordham University since 1984; Chairman,       1
Director                                      2002                New York City Campaign Finance Board since 1988
   Fordham University                         Since 1989          (re-appointed in 1994 and 1999).
   Bronx, NY 10458
------------------------------------------------------------------------------------------------------------------------------------
Stephen J. Solarz (62)                        Class I             Member, United States House of Representatives              1
Director                                      2003                from 1975 to 1992; President, Solarz Associates,
   1120 Bellview Road                         Since 1994          (an international consulting firm) since 1992; Senior
   McLean, VA 22102                                               Counselor, Apco Associates, (a public affairs company)
                                                                  since 1995; Director of Santa Fe International
                                                                  (an oil drilling company) and Samsonite Corp.
                                                                  (a luggage manufacturer).
------------------------------------------------------------------------------------------------------------------------------------


                                       15



THE FIRST PHILIPPINE FUND INC.

FUND MANAGEMENT SUMMARY (CONT'D)
--------
DIRECTORS AND OFFICERS





                                                                                                                         NUMBER OF
                                                                                                                         PORTFOLIOS
                                                                                                                         IN FUND
                                               TERM OF OFFICE*    PRINCIPAL OCCUPATION(S)                                COMPLEX
NAME, (AGE), ADDRESS AND                       AND LENGTH         DURING PAST 5 YEARS                                    OVERSEEN BY
POSITION(S) WITH COMPANY                       OF TIME SERVED     AND OTHER DIRECTORSHIPS HELD                           DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------

INTERESTED DIRECTORS

                                                                                                                    
Lilia C. Clemente1,2 (61)                      Class III          Chairman and Chief Executive Officer of Clemente            1
Director, President and Chief Executive        2002               Capital, Inc. since 1986; Director of  Clemente
Officer                                        Since 1989         Capital, Inc.
   Clemente Capital, Inc.
   152 West 57th Street
   New York, NY 10019
------------------------------------------------------------------------------------------------------------------------------------
Leopoldo M. Clemente, Jr.1,2 (64)              Class II           President and Chief Investment Officer of Clemente          1
Director, Executive Vice President and         2004               Capital, Inc. since 1987; President of Clemente
Managing Director                              Since 1989         Strategic Value Fund, Inc. from 1987 to 2001
   Clemente Capital, Inc.                                         and Cornerstone Strategic Return Fund, Inc. from
   152 West 57th Street                                           April 2000 to April 2001; Director of Clemente
   New York, NY 10019                                             Capital, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Benjamin P. Palma Gil2 (50)                    Class II           President of Philippine National Bank and PNB               1
Director and Chairman                          2004               Investments Limited from July 1998 to January 2000;
   11 Helmcrest Street                         Since 1998         Executive Director of Capital Strategy Limited
   Aliso Viejo, CA 92656                                          (a financial advisory firm) from 1994 to July 1998
                                                                  and since January 2000.
------------------------------------------------------------------------------------------------------------------------------------

OFFICERS

Santiago S. Cua, Jr.  (54)                     Since 1998         Executive Vice President of Philippine National             N/A
Executive Vice President and                                      Bank since July 1998; Senior Executive Vice President,
Managing Director                                                 Westmont Bank, Manila, Philippines from June 1994 to
   Philippine National Bank                                       July 1998.
   Roxas Boulevard
   Metro Manila, Philippines
------------------------------------------------------------------------------------------------------------------------------------
Joaquin G. Hofilena  (35)                      Since 1996         Portfolio Manager and Investment Analyst of Clemente        N/A
Vice President and Treasurer                                      Capital, Inc. since April 1996.
   Clemente Capital, Inc.
   152 West 57th Street
   New York, NY 10019
------------------------------------------------------------------------------------------------------------------------------------
Imelda Singzon (53)                            Since 1998         Senior Vice President of Philippine National Bank since     N/A
Vice President                                                    August 1994.
    PNB Investments Limited
    Roxas Boulevard
    Metro Manila, Philippines
------------------------------------------------------------------------------------------------------------------------------------

*  Board members are elected at the annual shareholder meeting and serve three-year staggered terms: Class I
   expiring in 2003, Class II in 2004 and Class III in 2002.
1  Lilia C. Clemente and Leopoldo M. Clemente, Jr. are wife and husband.  Lilia C. Clemente and Roberto de Ocampo are
   first cousins.
2  Mr. and Mrs. Clemente and Mr. Palma Gil are deemed to be interested persons because: (a) of their affiliation
   with the Fund's investment adviser, Clemente Capital, Inc., the Fund's Philippine adviser, PNB Investments
   Limited or Philippine National Bank; (b) they are officers of the Fund; or (c) both (a) and (b).



                                       16




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                                          [This page intentionally left blank]



                                     


DIRECTORS AND OFFICERS
------------

Benjamin P. Palma Gil
DIRECTOR AND CHAIRMAN
Lilia C. Clemente
DIRECTOR, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Leopoldo M. Clemente, Jr.
DIRECTOR, EXECUTIVE VICE PRESIDENT AND MANAGING DIRECTOR
Roberto de Ocampo
DIRECTOR
John Anthony B. Espiritu
DIRECTOR
Joseph A. O'Hare, S.J.
DIRECTOR
Stephen J. Solarz
DIRECTOR
Santiago S. Cua, Jr.
EXECUTIVE VICE PRESIDENT AND MANAGING DIRECTOR
Joaquin G. Hofilena
VICE PRESIDENT AND TREASURER
Imelda Singzon
VICE PRESIDENT
Maria Distefano
ASSISTANT SECRETARY


EXECUTIVE OFFICES
------------

152 West 57th Street,  New York, NY 10019
(For latest net asset value and market
data,  please call  212-765-0700 or access
http://www.clementecapital.com.
For shareholder account inquiries,
call 1-800-937-5449.)


------------
INVESTMENT ADVISER
Clemente Capital, Inc.


------------
ADMINISTRATOR
PFPC Inc.


------------
TRANSFER AGENT AND REGISTRAR
American Stock Transfer & Trust Company


------------
CUSTODIAN
Brown Brothers Harriman & Co.


------------
LEGAL COUNSEL
Fulbright & Jaworski L.L.P.


------------
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP



                         SUMMARY OF GENERAL INFORMATION


--------
THE FUND
     The First  Philippine  Fund Inc. is a closed-end  investment  company whose
shares trade on the New York Stock Exchange.  The Fund seeks  long-term  capital
appreciation  primarily  through  investment in equity  securities of Philippine
companies. The Fund is managed by Clemente Capital, Inc.


--------
SHAREHOLDER INFORMATION
     Daily  market  prices for the Fund's  shares are  published in the New York
Stock Exchange  Composite  Transactions  section of most  news-papers  under the
designation "FtPhil".  The Fund's New York Stock Exchange trading symbol is FPF.
Net asset value (NAV) and market price  information  about The First  Philippine
Fund Inc. shares are published each Monday in The Wall Street  Journal,  The New
York Times and in other newspapers.  For general information visit us at our web
site  http://www.clementecapital.com.  For  shareholder  account  inquiries call
1-800-937-5449.


--------
DIVIDEND REINVESTMENT PLAN
     Through its voluntary Dividend Reinvestment Plan, shareholders of The First
Philippine  Fund  Inc.  may  elect  to  receive   dividends  and  capital  gains
distributions in the form of additional shares of the Fund.


This report,  including the financial  information herein, is transmitted to the
shareholders of the First  Philippine Fund Inc. for their  information.  This is
not a prospectus, circular or representation intended for use in the purchase of
shares of the Fund or any securities mentioned in this report.

Notice  is hereby  given in  accordance  with  Section  23(c) of the  Investment
Company  Act of 1940 that the Fund may  purchase  at market  prices from time to
time shares of its common stock in the open market.


                         [FIRST PHILIPPINE LOGO OMITTED]




                                  ANNUAL REPORT


                                  JUNE 30, 2002