The percentage a company earns on its shareholders' equity in a given year (Year 1, 2, etc.). The calculation is net income divided by end-of-year net worth. The resulting figure is multiplied by 100. For a mutual portfolio, ROE represents a weighted median figure such that approximately 50% of the domestic stocks in the portfolio will have a greater ROE and roughly 50% of these domestic stocks will have a lower ROE than the weighted median.