Carried interest is the private equity terminology for the performance fee accrued by fund managers as a result of the appreciation in the Net Asset Value of the Fund. Unlike a hedge fund performance fee however, carried interest is not charged on a periodic basis (i.e. monthly or quarterly). Instead, carried interest tends to be charged either on a deal-by-deal basis – when the private equity fund disposes of a particular asset – or when the Fund is ultimately wound up. The basis on which carried interest is distributed is usually referred to as the Fund’s ‘waterfall’.