In General Ledger, Configuration, Funds, marking the option "Preserve Details During Closing" on the Fund record for projects closes the fund to a net asset account and distributes information by fund characteristic(s) when closing the fiscal year, meaning that projects will retain their balances.  However, if this checkbox is not marked, information for projects is not carried forward when you close the fiscal year.

For more information, refer to the Configuration Guide for General Ledger (PDF), particularly pages 22-23 about fund records.