Dear Shareholders

Financial strength, flexibility and discipline

Thanks to contributions from our outstanding team of employees, FPL Group delivered significant value to our shareholders in 2002, providing an 11% total shareholder return. FPL Group shares significantly out-performed the S&P 500 Index this year - and a key peer group, the S&P 500 Electric Utilities Index.

Our strong business franchises combined in 2002 to deliver record earnings.

We continued to emphasize the importance of financial strength, flexibility and discipline - hallmarks of this company for many years. We enhanced our already strong financial position by issuing $1.4 billion of equity and equity-linked securities by mid-year. In a year when liquidity was sometimes difficult to obtain, we successfully expanded the short-term credit resources available to us.

Credit rating agencies continued to recognize our financial strength and integrity. In June, Moody's reconfirmed FPL's senior secured credit rating at Aa3 and FPL Group Capital's senior unsecured credit rating at A2. Standard & Poor's reaffirmed its A corporate credit ratings on FPL Group and FPL in November.

Reflecting our confidence in the sustainability of our earnings power, our board continued our past practice of raising the dividend modestly each year.

Integrity and accountability

I believe you can tell a lot about a company by how it approaches "corporate governance" matters - those principles, policies and activities that determine how a company is led and managed.

We have long been committed to unquestioned integrity in all aspects of our business. For example, we were one of 14 companies given an A+ rating in the first national survey of corporate responsibility policies conducted by the California Public Employees Retirement System.

You have my personal commitment that FPL Group will continue to take tangible and meaningful actions to uphold and further strengthen our outstanding record of integrity and accountability. For example:

• As we did last year, our Chief Financial Officer Moray Dewhurst, our Controller and Chief Accounting Officer Mike Davis and I are voluntarily signing the management's report contained in this annual report. In addition, on a regular reporting basis since August and in accord with the Sarbanes-Oxley Act, Moray and I personally attest to the completeness and accuracy of our annual and quarterly reports.
• Our senior executive team stays close to the day-to-day operations of our business. We know where our revenues come from and how the company makes its money. We understand the risks the company is undertaking in the course of carrying out our business, and we have strong controls in place for managing those risks.
• Today, 11 of our 13 directors are independent. Our compensation and audit committees have been comprised solely of independent directors for many years, as has our corporate governance committee since its inception in 2001.
• Additionally, the agenda for every regularly scheduled board meeting includes an executive session where the independent directors, if they so choose, can meet without members of management.
• A Code of Conduct for our employees has been updated, and we're requiring our top 200+ officers and managers to certify annually, in writing, their compliance with this code.

Florida Power & Light: A premier integrated utility

Florida Power & Light Company, the largest investor-owned utility in Florida, is one of the nation's top-performing utilities. It produced strong average annual earnings growth of more than 4% over the past decade and is expected to provide 85% of FPL Group's earnings this year.

In 2002, FPL produced excellent results despite a 7% reduction in base rates approved by the Office of Public Counsel and Florida Public Service Commission in March that will remain in effect through 2005.

• Net income for Florida Power & Light increased to $717 million or $4.14 per share in 2002, from $695 million or $4.11 per share in 2001, excluding an after-tax non-recurring expense of $16 million in 2001.
• FPL added almost 94,000 new customer accounts during the year, a 2.4% increase over 2001. During the year we turned on power to our 4 millionth customer. Electricity usage per retail customer also grew - by 3.5% - reflecting warmer than normal weather.
• Our operational performance continues to place us near the very top among U.S. utilities. The amount of time our power plants are available to produce power is among the highest in the industry, and the reliability of our electric transmission and delivery systems is also among the best in the business.
• Our residential rates are 13% below national average.
• Our power plant emissions, on a per megawatt-hour basis, are among the lowest in the industry.
• Of special note, the Nuclear Regulatory Commission in 2002 granted 20-year license extensions to our two nuclear power generating units at Turkey Point, allowing FPL customers to continue to benefit from this clean, reliable and low-cost power source. We hope to receive similar license extensions for our two St. Lucie units this year.
• We continued to expand our electric system to meet growing customer demand, while remaining a low-cost provider. Both our operations and maintenance costs and our capital investment per customer are well below industry averages.

Florida Power & Light expects to see healthy earnings growth of 4-5% in 2003, which equates to $725 to $735 million in net income, adjusting the comparative 2002 results for normal weather. This assumes continued growth in customer accounts, normal weather and gains in productivity in 2003. Our strategy is to:

• Capitalize on growing demand for electricity in our service territory.
• Continue to improve our outstanding operating performance.
• Seek opportunities to profitably grow our core utility business.
• Work to maintain the collaborative and progressive regulatory environment that has resulted in incentive-based ratemaking that benefits both our shareholders and our customers.

FPL Energy: Disciplined wholesale power generation business

FPL Energy, our unregulated wholesale energy subsidiary operating outside the state of Florida, continued its growth in 2002 despite substantial turmoil in the wholesale generation market.

• Excluding the mark-to-market effect of non-managed hedges and non-recurring charges that totalled $295 million after-tax in 2002 (virtually all non-cash items and the majority of which is associated with a goodwill accounting change) and a net gain of $8 million in 2001, FPL Energy's net income was up 20% over 2001 to a record $126 million, and its contribution to earnings per share was up 18%. Factors contributing to this record performance included our commitment to efficient, low-cost operations, portfolio additions, and ongoing asset and contract restructuring activities.
• We increased our portfolio by more than 40%, to 7,250 net-megawatts, including leased capacity. Most notably, we acquired a controlling interest in the Seabrook Station nuclear power plant in New Hampshire, the premier nuclear power plant in the Northeast. This plant will complement our portfolio in the region and further diversify our fuel mix.
• We remained the U.S. leader in wind power by adding 324 megawatts to our wind portfolio, which now totals more than 1,700 megawatts - or more than one-third of the U.S. total. All of our wind plants have long-term power sales contracts.
• To reduce risk and lend stability to our earnings profile, approximately 80% of the power we generated in 2002 was sold under forward contracts.
• In response to soft market conditions, we took decisive actions - reducing overhead costs, renegotiating purchase agreements for fewer combustion turbines, and canceling and/or postponing new gas-fired power plant projects.

We expect the wholesale generation industry to be weak for the next several years. Nonetheless, we have built a solid, profitable portfolio of generating assets, and our outlook for continued profitable growth is strong. In 2003, we expect FPL Energy to produce healthy earnings growth of 30-50% as more than 90% of our expected gross margin for the year is already under contract.

Our strategy for achieving our 2003 and longer-term goals is multi-faceted:

• Remain a low-cost provider.
• Maintain a portfolio of assets diversified by region and by fuel source.
• Reduce risk by contracting to sell the majority of expected future output and correspondingly hedge our fuel requirements.
• Add 700 to 1,200 megawatts of wind energy in 2003 and sell the output under long-term sales contracts.
• Complete in 2003 four natural gas-fired power plants currently under construction that will add nearly 3,000 net-megawatts.
• Continue to search for opportunities to further optimize our portfolio, capturing additional value through asset sales, contract restructurings, and related strategies.

Given the financial pressures on other generation companies, and with a reported 20,000 megawatts of generation capacity for sale, we may purchase additional generation assets if attractive opportunities present themselves. However, we will be extremely selective in doing so, only pursuing accretive acquisitions that fit our strategy and are financeable in today's environment. Going forward, we are better positioned than most companies in this sector today, and we are well positioned to capitalize on market opportunities when business conditions improve.

FPL FiberNet: Adjusting to difficult market conditions

Given the ongoing difficulties in the telecommunications sector, the short-term growth prospects for FPL FiberNet are not good. We expect this to be roughly a break-even business over the next year or so. FPL FiberNet remains focused on its core mission of operating one of the leading metropolitan-area fiber-optic networks in the United States. However, we will be minimizing the amount of new investment in this business until market conditions improve.

In other important actions...

Frank G. Zarb and James L. Camaren were elected to serve as directors of FPL Group, and Jim Robo was named president of FPL Energy. Each has valuable expertise that will serve us well in our changing industry.

FPL Group again received the highest ranking in environmental performance among 28 electric utilities in the United States evaluated by Innovest Strategic Value Advisors, an internationally recognized investment research firm. It was the second straight time our company earned this #1 ranking.

Lighting the way

Amidst the turbulent seas that have characterized our industry in the recent past, FPL Group continues to hold steady as a reliable beacon and a solid investment.

We are a company built on solid fundamentals. We consistently experience healthy growth in demand for electricity in our utility service territory, we manage high quality assets, and we have a longstanding culture of operational excellence and financial discipline.

We have a proven track record. We have long been known for meeting our earnings expectations and enhancing shareholder value, we act proactively to meet challenges, and our actions often exceed the levels of performance required by law or regulation. With the interest of shareholders and customers in mind, we have avoided many industry fads that have proven later to be of questionable worth or value for many of the companies that have pursued them.

We continue to capitalize on attractive, realistic growth prospects, both at our regulated utility - especially due to customer and usage growth -and at our unregulated wholesale energy subsidiary.

As always, we at FPL Group appreciate the support of our shareholders. Please be assured that we'll continue to do our best each day to sustain that support and grow shareholder value.

Lewis Hay III
Chairman, President and Chief Executive Officer
March 28, 2003