Investors are aware that investing in a hedge fund comes at a cost and that certain expenses of the fund will be passed through. However, there is no set rule for what expenses are passed through and some funds have or are developing unique strategies to deal with expenses. Most hedge funds have implemented arrangements that permit the manager to pass certain expenses through to the fund and to investors, as add-ons to the management fee. Other funds have included some or all of these costs into the management fee itself. Still others have or are exploring the use of an expense pass-through in lieu of a fixed management fee. While the approaches may be different, the goal of most hedge funds is the same: to retain investors and cover expenses. In good times, investors tend to look less at the actual cost of fees and expenses, and focus more on the returns. But, after a year and change of generally poor performance, more focus has been placed on expenses and how expenses affect returns. We detail what expenses are and are not being passed through; soft dollar considerations; treatment and amortization of organizational expenses; tax implications of various approaches to expense pass-throughs; and the negotiability of management fees in the current investment environment.