Make the dough: In a large bowl, combine flour, salt, and sugar. Add cold butter and cream cheese cubes, and use a pastry cutter or your fingers to mix them until the dough resembles coarse crumbs. Add vanilla extract and mix gently until a dough forms. Wrap the dough in plastic wrap and refrigerate for at least 30 minutes.

Roll out the dough: Once chilled, remove the dough from the fridge and let it sit at room temperature for about 5 minutes. On a floured surface, roll the dough to about 1/8-inch thickness. Use a round cutter (about 2-3 inches in diameter) to cut out circles.

Add the filling: Place about 1 teaspoon of fruit preserves in the center of each dough circle. Be careful not to overfill.

Shape the Kolacky: Fold the edges of the dough over the filling to form a pinched or folded shape. Press gently to seal.

Bake: Place the shaped Kolacky on a parchment-lined baking sheet and bake in a preheated oven at 350°F (175°C) for 18-20 minutes or until golden brown.

Cool and Serve: Remove from the oven and allow to cool on a wire rack. Dust with powdered sugar before serving if desired.