Beat butter and cream cheese in large bowl with electric mixer at medium speed until smooth and fluffy. Gradually add flour; beat at low speed until mixture forms soft dough. Divide dough ball in half; wrap each half in plastic wrap. Refrigerate 1 hour or until firm.
Preheat oven to 375*F. Roll out dough, half at a time, on floured surface to 1/8-inch thickness. Cut into 2-1/2 inch squares. Spoon 1 tsp. preserves into center of each square. Bring up two opposite corners to center; pinch together tightly to seal.
Fold sealed tip to one side; pinch to seal. Place 1-inch apart on ungreased cookie sheets. Bake 10 to 13 minutes or until lightly browned. Remove to wire racks; cool completely.