Prohibits investment by State of pension and annuity funds in hedge funds and derivative contracts.

New Jersey's S 259 prohibits state pension and annuity funds from investing in hedge funds or derivative contracts (like futures, options, and swaps). This directly affects all state pension funds managed by the Division of Investment, including those for police and firefighters. The bill requires these funds to sell existing holdings of such investments within three years of the law's effective date. It also mandates an annual report to the legislature detailing divestment progress, while allowing the state to sell investments prudently without forcing premature sales.