Preheat oven to 375°.

Cream butter and cream cheese until smooth.

Add flour until dough pulls away from the sides of the bowl.

Refrigerate for 1 hour.

On a lightly floured surface, roll dough 3/4 inch thick.

Cut out 1 1/2 inch rounds with a cookie cutter.

Gather dough scraps, reroll and cut out a 2nd round of cookies.

Discard any left over dough (do not overwork dough).

Place cookies on an ungreased baking sheet, 2 inches apart.

Using the back of a 1/2 teaspoon, make a dent in the center of each cookie.

Scoop 1/2 teaspoon of preserves into each dent.

Bake for 7 to 10 minutes, or until cookie bottoms begin to brown.

Allow to cool completely.

Sprinkle with powdered sugar before serving.