On a full year basis, pre-tax DE of $126 million is down slightly from $138 million for full year 2011. This is largely attributable to lower incentive income distributions from our private-equity style funds and higher compensation related expenses, partially offset by higher incentive income from our hedge funds.
In our Credit Hedge funds, the Drawbridge Special Opportunities Funds continued to deliver strong investment performance in the fourth quarter. The onshore fund had a net return of 4.2% in the quarter, bringing full year net returns to 17.9% through December 31, 2012. Net annualized inception-to-date returns in this fund increased to 11.1%. The Credit Hedge Fund segment had a total of $4.6 billion of incentive eligible NAV above performance thresholds as of December 31, 2012.
Fortress’s Credit Private Equity Funds also delivered strong investment performance in the fourth quarter, which contributed to a further increase in unrealized, undistributed incentive income. The Credit Opportunities Fund and Credit Opportunities Fund II had net annualized inception-to-date IRRs of 26.9% and 18.5%, respectively, through December 31, 2012. Unrealized, undistributed incentive income increased $79 million, or 18%, to $509 million in the fourth quarter and has increased $264 million, or 108%, since December 31, 2011.
The Credit team deployed $0.9 billion of dry powder for investments and returned $0.4 billion of capital to our investors in the quarter. For the year ended December 31, 2012, Credit deployed over $2.8 billion of dry powder and returned $2.2 billion of capital to investors. Total Credit Private Equity dry powder – capital committed to the funds but not yet generating management fees – was $5.4 billion as of year end. Of that total, $1.1 billion is only available for follow-on investments, management fees and other fund expenses.Total capital raised during the fourth quarter and year ended December 31, 2012 was $0.9 billion and $4.6 billion, respectively. Capital raised in the fourth quarter was primarily for our second Japan real estate credit fund, FJOF II, which we successfully closed at its cap of ¥130 billion, or approximately $1.7 billion. FJOF II is a successor fund to the Fortress Japan Opportunity Domestic Fund (“FJOF”), which closed in June 2010 at its cap of approximately $800 million. FJOF had an inception-to-date net annualized IRR of 20.5% through December 31, 2012.