Beat butter and cream cheese at medium speed with an electric mixer until creamy; add sugar, beating well. Add flour, mixing at low speed until well blended.
Divide dough into thirds; roll each portion to 1/8-inch thickness on a lightly floured surface, and cut with a 3-inch round cutter.
Spoon 1/2 tsp apricot filling in center of each round. Combine egg and water; brush on edges. Fold opposite sides to center, slightly overlapping edges; pinch to seal. Place on lightly greased baking sheets.
Bake at 350F for 12 minutes or until golden.
Remove to wire racks to cool. Sprinkle with powdered sugar.