Form N-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-Q


QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number         811-21153         

        Nuveen Maryland Dividend Advantage Municipal Fund 3         
(Exact name of registrant as specified in charter)


        333 West Wacker Drive, Chicago, Illinois 60606         
(Address of principal executive offices) (Zip code)


Jessica R. Droeger—Vice President and Secretary
        333 West Wacker Drive, Chicago, Illinois 60606         
(Name and address of agent for service)

Registrant's telephone number, including area code:         312-917-7700        

Date of fiscal year end:            5/31          

Date of reporting period:          2/28/06         

Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

Item 1. Schedule of Investments

  Portfolio of Investments (Unaudited)

Nuveen Maryland Dividend Advantage Municipal Fund 3 (NWI)
February 28, 2006

    Optional       
Principal    Call       
Amount (000)    Description (1)  Provisions (2)    Ratings (3)    Value 
  Consumer Discretionary – 2.1% (1.5% of Total Investments)         
$             220  Baltimore, Maryland, Pollution Control Revenue Bonds, General Motors Corporation, Series 1993,  No Opt. Call  B    $    206,081 
   5.350%, 4/01/08         
1,000  Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue Bonds, Series 2006A, 5.250%,  9/16 at 100.00  AAA    1,079,200 
   9/01/39 – XLCA Insured         
380  Baltimore, Maryland, Subordinate Lien Convention Center Hotel Revenue Bonds, Series 2006B,  9/16 at 100.00  Ba1    400,376 
   5.875%, 9/01/39         
1,600  Total Consumer Discretionary        1,685,657 
  Consumer Staples – 3.6% (2.4% of Total Investments)         
2,730  Puerto Rico, The Children’s Trust Fund, Tobacco Settlement Asset-Backed Refunding Bonds,  5/12 at 100.00  BBB    2,797,786 
   Series 2002, 5.375%, 5/15/33         
  Education and Civic Organizations – 13.3% (9.0% of Total Investments)         
225  Anne Arundel County, Maryland, Economic Development Revenue Bonds, Community College Project,  9/12 at 102.00  A3    237,454 
   Series 2002, 5.125%, 9/01/22         
625  Frederick County, Maryland, Educational Facilities Revenue Bonds, Mount Saint Mary’s College,  9/16 at 100.00  BBB–    654,388 
   Series 2006, 5.625%, 9/01/38         
  Frederick County, Maryland, Educational Facilities Revenue Bonds, Mount St. Mary’s College,         
  Series 2001A:         
100   5.750%, 9/01/25  3/10 at 101.00  BBB–    104,674 
100   5.800%, 9/01/30  3/10 at 101.00  BBB–    104,463 
690  Hartford County, Maryland, Economic Development Revenue Bonds, Battelle Memorial Institute,  4/14 at 100.00  A+    725,459 
   Series 2004, 5.250%, 4/01/34         
625  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Goucher College,  7/14 at 100.00  A–    649,894 
   Series 2004, 5.125%, 7/01/34         
1,000  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Johns Hopkins  7/12 at 100.00  AA    1,041,540 
   University, Series 2002A, 5.000%, 7/01/32         
525  Maryland Industrial Development Financing Authority, Revenue Bonds, Our Lady of Good Counsel  5/15 at 100.00  N/R    551,187 
   High School, Series 2005A, 6.000%, 5/01/35         
1,000  Morgan State University, Maryland, Student Tuition and Fee Revenue Bonds, Academic Fees and  7/13 at 100.00  AAA    1,054,240 
   Auxiliary Facilities, Series 2003A, 5.000%, 7/01/32 – FGIC Insured         
985  University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2001B, 4.625%,  4/11 at 100.00  AA    1,009,655 
   4/01/21         
2,000  University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2002A, 5.125%,  4/12 at 100.00  AA    2,131,080 
   4/01/22         
  University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2003A:         
1,000   5.000%, 4/01/15  4/13 at 100.00  AA    1,076,720 
1,000   5.000%, 4/01/19  4/13 at 100.00  AA    1,068,500 
9,875  Total Education and Civic Organizations        10,409,254 
  Health Care – 17.8% (12.1% of Total Investments)         
1,000  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Anne Arundel  7/08 at 101.00  AAA    1,039,900 
   Medical Center, Series 1998, 5.125%, 7/01/33 – FSA Insured         
775  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Calvert Memorial  7/14 at 100.00  A2    826,964 
   Hospital, Series 2004, 5.500%, 7/01/36         
1,250  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Carroll County  7/12 at 100.00  Baa1    1,322,525 
   General Hospital, Series 2002, 5.800%, 7/01/32         
870  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Civista Medical  7/14 at 100.00  AA    897,179 
   Center, Series 2005, 5.000%, 7/01/37 – RAAI Insured         
700  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Frederick Memorial  7/12 at 100.00  Baa1    722,106 
   Hospital, Series 2002, 5.125%, 7/01/35         
800  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Greater Baltimore  7/11 at 100.00  A+  817,040 
   Medical Center, Series 2001, 5.000%, 7/01/34       
1,000  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Johns Hopkins  5/11 at 100.00  AA–  1,040,140 
   Hospital, Series 2001, 5.000%, 5/15/21       
1,000  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Kennedy Krieger  7/13 at 100.00  Baa2  1,042,500 
   Institute, Series 2003, 5.500%, 7/01/33       
725  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, LifeBridge Health  7/14 at 100.00  A  753,877 
   System, Series 2004A, 5.125%, 7/01/34       
900  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, MedStar Health,  8/14 at 100.00  BBB+  954,909 
   Series 2004, 5.375%, 8/15/24       
650  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Mercy Medical  7/11 at 100.00  A–  676,046 
   Center, Series 2001, 5.625%, 7/01/31       
1,845  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Union Hospital of  7/12 at 100.00  A3  1,968,246 
   Cecil County, Series 2002, 5.625%, 7/01/32       
775  Maryland Health and Higher Educational Facilities Authority, Revenue Refunding Bonds,  1/13 at 101.00  Baa2  832,668 
   Adventist Healthcare, Series 2003A, 5.750%, 1/01/25       
  Prince George’s County, Maryland, Revenue Bonds, Dimensions Health Corporation, Series 1994:       
350   5.375%, 7/01/14  7/06 at 100.00  B3  316,743 
900   5.300%, 7/01/24  7/06 at 100.00  B3  752,175 
13,540  Total Health Care      13,963,018 
  Housing/Multifamily – 14.0% (9.5% of Total Investments)       
980  Maryland Community Development Administration, Housing Revenue Bonds, Series 2002B, 4.950%,  7/12 at 100.00  Aa2  987,624 
   7/01/32 (Alternative Minimum Tax)       
1,250  Maryland Economic Development Corporation, Senior Lien Student Housing Revenue Bonds,  10/13 at 100.00  Ba2  1,285,275 
   University of Maryland – Baltimore, Series 2003A, 5.625%, 10/01/23       
  Maryland Economic Development Corporation, Student Housing Revenue Bonds, Sheppard Pratt       
  University Village, Series 2001:       
20   5.875%, 7/01/21 –  ACA Insured  7/11 at 101.00  A  21,593 
150   6.000%, 7/01/33 –  ACA Insured  7/11 at 101.00  A  161,714 
  Montgomery County Housing Opportunities Commission, Maryland, Multifamily Housing Development       
  Bonds, Series 2002B:       
515   5.100%, 7/01/33 (Alternative Minimum Tax)  7/12 at 100.00  Aaa  523,075 
3,000   5.200%, 7/01/44 (Alternative Minimum Tax)  7/12 at 100.00  Aaa  3,047,220 
4,860  Prince George’s County Housing Authority, Maryland, GNMA Collateralized Mortgage Revenue  11/12 at 100.00  AAA  4,972,217 
   Bonds, Fairview and Hillside Projects, Series 2002A, 4.700%, 11/20/22       
10,775  Total Housing/Multifamily      10,998,718 
  Industrials – 1.3% (0.9% of Total Investments)       
1,000  Northeast Maryland Waste Disposal Authority, Baltimore, Resource Recovery Revenue Bonds, RESCO  1/09 at 101.00  BBB  1,011,490 
   Retrofit Project, Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax)       
  Long-Term Care – 0.6% (0.4% of Total Investments)       
280  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Collington  4/11 at 101.00  N/R  255,517 
   Episcopal Life Care Community Inc., Series 2001A, 6.750%, 4/01/23       
  Prince George’s County, Maryland, Revenue Bonds, Collington Episcopal Life Care Community       
  Inc., Series 1994A:       
40   5.625%, 4/01/09  4/06 at 100.00  N/R  36,761 
140   6.000%, 4/01/13  4/06 at 100.00  N/R  127,910 
38  Prince George’s County, Maryland, Revenue Bonds, Collington Episcopal Life Care Community  4/16 at 100.00  N/R  38,003 
   Inc., Series 1994B, 8.000%, 4/01/16       
498  Total Long-Term Care      458,191 
  Tax Obligation/General – 22.8% (15.5% of Total Investments)       
1,000  Annapolis, Maryland, General Obligation Public Improvement Refunding Bonds, Series 2002,  4/12 at 101.00  AA  1,034,270 
   4.375%, 4/01/17       
1,000  Anne Arundel County, Maryland, General Obligation Bonds, Series 2003, 5.000%, 3/01/13  No Opt. Call  AA+  1,084,420 
1,000  Calvert County, Maryland, General Obligation Public Improvement Bonds, Series 2002, 4.500%,  1/12 at 101.00  AA  1,044,610 
   1/01/16       
380  Carroll County, Maryland, Consolidated Public Improvement Bonds, Series 2005A, 5.000%, 12/01/16  12/15 at 100.00  AA  416,123 
1,260  Charles County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series  1/12 at 101.00  AA  1,310,098 
   2002, 4.400%, 1/15/16       
500  Frederick County, Maryland, General Obligation Public Facilities Bonds, Series 2006, 5.000%,  No Opt. Call  AA  560,095 
   11/01/20       
245  Frederick County, Maryland, Special Obligation Bonds, Villages of Lake Linganore Community  7/10 at 102.00  AA  265,360 
   Development Authority, Series 2001A, 5.600%, 7/01/20 – RAAI Insured       
  Frederick, Maryland, General Obligation Bonds, Series 2005:       
710   5.000%, 8/01/16 –  MBIA Insured  8/15 at 100.00  AAA  776,534 
535   5.000%, 8/01/17 –  MBIA Insured  8/15 at 100.00  AAA  583,632 
1,000  Maryland National Capital Park Planning Commission, Prince George’s County, General Obligation  1/14 at 100.00  AA  1,079,250 
   Bonds, Park Acquisition and Development, Series 2004EE-2, 5.000%, 1/15/17       
1,500  Maryland, General Obligation Bonds, Series 2005, 5.000%, 8/01/17  8/15 at 100.00  AAA  1,642,560 
1,440  Montgomery County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series  No Opt. Call  AAA  1,584,864 
   2005A, 5.000%, 7/01/15       
1,000  Prince George’s County, Maryland, General Obligation Consolidated Public Improvement Bonds,  10/13 at 100.00  AA  1,072,660 
   Series 2003A, 5.000%, 10/01/17       
1,000  Prince George’s County, Maryland, General Obligation Consolidated Public Improvement Bonds,  No Opt. Call  AA  1,076,370 
   Series 2004C, 5.000%, 12/01/11       
1,000  St. Mary’s County, Maryland, General Obligation Hospital Bonds, Series 2002, 5.000%, 10/01/12  No Opt. Call  AA–  1,080,860 
25  Washington Suburban Sanitary District, Montgomery and Prince George’s Counties, Maryland,  6/11 at 101.00  AAA  26,700 
   General Obligation Construction Bonds, Second Series 2001, 5.000%, 6/01/17       
1,000  Washington Suburban Sanitary District, Montgomery and Prince George’s Counties, Maryland,  No Opt. Call  AAA  1,088,010 
   Sewerage Disposal Bonds, Series 2004, 5.000%, 6/01/13       
1,000  Washington Suburban Sanitary District, Montgomery and Prince George’s Counties, Maryland,  6/15 at 100.00  AAA  1,096,710 
   Sewerage Disposal Bonds, Series 2005, 5.000%, 6/01/16       
1,000  Washington Suburban Sanitary District, Montgomery and Prince George’s Counties, Maryland,  6/15 at 100.00  AAA  1,096,710 
   Water Supply Bonds, Series 2005, 5.000%, 6/01/16       
16,595  Total Tax Obligation/General      17,919,836 
  Tax Obligation/Limited – 33.1% (22.5% of Total Investments)       
750  Annapolis, Maryland, Special Obligation Bonds, Park Place Project, Series 2005A, 5.350%,  1/15 at 101.00  N/R  763,905 
   7/01/34       
1,000  Baltimore Board of School Commissioners, Maryland, Revenue Bonds, City Public School System,  5/13 at 100.00  AA+  1,077,230 
   Series 2003A, 5.000%, 5/01/15       
450  Hyattsville, Maryland, Special Obligation Bonds, University Town Center Project, Series 2004,  7/14 at 102.00  N/R  467,199 
   5.750%, 7/01/34       
5,000  Maryland Department of Transportation, Consolidated Transportation Revenue Bonds, Series 2002,  No Opt. Call  AA  5,689,200 
   5.500%, 2/01/16       
1,000  Maryland Department of Transportation, Consolidated Transportation Revenue Bonds, Series 2004,  No Opt. Call  AA  1,084,820 
   5.000%, 5/01/13       
2,200  Maryland Economic Development Corporation, Lease Revenue Bonds, Department of Transportation  6/12 at 100.50  AA+  2,278,628 
   Headquarters Building, Series 2002, 4.750%, 6/01/22       
450  Maryland Economic Development Corporation, Lease Revenue Bonds, Montgomery County Town Square  9/12 at 100.00  AA+  484,353 
   Parking Garage, Series 2002A, 5.000%, 9/15/13       
2,935  Maryland Economic Development Corporation, Lease Revenue Bonds, Montgomery County Wayne Avenue  9/12 at 100.00  AA+  3,187,381 
   Parking Project, Series 2002A, 5.250%, 9/15/16       
  Maryland Stadium Authority, Lease Revenue Bonds, Montgomery County Conference Center       
  Facilities, Series 2003:       
1,465   5.000%, 6/15/21  6/13 at 100.00  AA+  1,557,031 
1,620   5.000%, 6/15/23  6/13 at 100.00  AA+  1,721,768 
710  Montgomery County, Maryland, Lease Revenue Bonds, College of Arts Center Project, Series  5/15 at 100.00  A1  761,049 
   2005A, 5.000%, 5/01/18       
460  Prince George’s County, Maryland, Special Obligation Bonds, National Harbor Project, Series  7/15 at 100.00  N/R  467,972 
   2005, 5.200%, 7/01/34       
575  Prince George’s County, Maryland, Special Tax District Bonds, Victoria Falls Project, Series  7/13 at 100.00  N/R  585,293 
   2005, 5.250%, 7/01/35       
  Puerto Rico Public Buildings Authority, Guaranteed Government Facilities Revenue Bonds, Series       
  2002G:       
1,000   5.250%, 7/01/17  7/12 at 100.00  BBB  1,058,150 
1,205   5.250%, 7/01/20  7/12 at 100.00  BBB  1,276,794 
1,275   5.250%, 7/01/21  7/12 at 100.00  BBB  1,350,965 
1,000  Puerto Rico Public Finance Corporation, Commonwealth Appropriation Bonds, Series 1998A,  No Opt. Call  AAA  1,124,580 
   5.125%, 6/01/24 –  AMBAC Insured       
235  Puerto Rico Public Finance Corporation, Commonwealth Appropriation Bonds, Series 2002E,  2/12 at 100.00  BBB–    250,362 
   5.500%, 8/01/29         
700  Puerto Rico, Highway Revenue Bonds, Highway and Transportation Authority, Series 2003AA,  No Opt. Call  AAA    811,244 
   5.500%, 7/01/19 –  MBIA Insured         
24,030  Total Tax Obligation/Limited        25,997,924 
  Transportation – 0.6% (0.5% of Total Investments)         
  Maryland Health and Higher Educational Facilities Authority, Parking Facilities Revenue Bonds,         
  Johns Hopkins Medical Institution, Series 2004B:         
190   5.000%, 7/01/13 –  AMBAC Insured  No Opt. Call  AAA    205,426 
175   5.000%, 7/01/14 –  AMBAC Insured  No Opt. Call  AAA    190,080 
365  Total Transportation        395,506 
  U.S. Guaranteed – 26.7% (18.2% of Total Investments) (4)         
10  Anne Arundel County, Maryland, General Obligation Bonds, Consolidated General Improvements,  5/09 at 101.00  AA+ (4)    10,572 
   Series 1999, 5.000%, 5/15/19 (Pre-refunded 5/15/09)         
2,115  Baltimore County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series  8/12 at 100.00  AAA    2,321,403 
   2002, 5.250%, 8/01/17 (Pre-refunded 8/01/12)         
100  Frederick County, Maryland, General Obligation Public Facilities Bonds, Series 1999, 5.250%,  7/09 at 101.00  AAA    106,670 
   7/01/17 (Pre-refunded 7/01/09)         
  Frederick County, Maryland, General Obligation Public Facilities Bonds, Series 2002:         
1,830   5.000%, 11/01/20 (Pre-refunded 11/01/12)  11/12 at 101.00  AA (4)    1,998,799 
2,035   5.000%, 11/01/21 (Pre-refunded 11/01/12)  11/12 at 101.00  AA (4)    2,222,708 
2,500   5.000%, 11/01/22 (Pre-refunded 11/01/12)  11/12 at 101.00  AA (4)    2,730,600 
1,210  Howard County, Maryland, Consolidated Public Improvement Bonds, Series 2001A, 4.750%, 2/15/19  2/09 at 101.00  AAA    1,267,669 
   (Pre-refunded 2/15/09)         
1,215  Howard County, Maryland, Consolidated Public Improvement Refunding Bonds, Series 2003A,  8/12 at 100.00  AAA    1,316,671 
   5.000%, 8/15/15 (Pre-refunded 8/15/12)         
50  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Helix Health,  No Opt. Call  AAA    53,830 
   Series 1997, 5.000%, 7/01/17 – AMBAC Insured (ETM)         
1,080  Maryland Transportation Authority, Revenue Refunding Bonds, Transportation Facilities  No Opt. Call  AAA    1,250,932 
   Projects, First Series 1978, 6.800%, 7/01/16 (ETM)         
2,000  Montgomery County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series  2/12 at 101.00  AAA    2,173,500 
   2002A, 5.000%, 2/01/20 (Pre-refunded 2/01/12)         
3,500  Puerto Rico Infrastructure Financing Authority, Special Obligation Bonds, Series 2000A,  10/10 at 101.00  AAA    3,794,035 
   5.500%, 10/01/40 (ETM)         
700  Puerto Rico Public Finance Corporation, Commonwealth Appropriation Bonds, Series 2002E,  2/12 at 100.00  Aaa    769,279 
   5.500%, 8/01/29 (Pre-refunded 2/01/12)         
880  Puerto Rico, General Obligation and Public Improvement Bonds, Series 2001, 5.125%, 7/01/30  7/11 at 100.00  AAA    947,971 
   (Pre-refunded 7/01/11) – FSA Insured         
19,225  Total U.S. Guaranteed        20,964,639 
  Utilities – 7.1% (4.8% of Total Investments)         
1,250  Maryland Energy Financing Administration, Revenue Bonds, AES Warrior Run Project, Series 1995,  9/07 at 100.00  N/R    1,267,288 
   7.400%, 9/01/19 (Alternative Minimum Tax)         
4,025  Puerto Rico Electric Power Authority, Power Revenue Bonds, Series 2000HH, 5.250%, 7/01/29 –  7/10 at 101.00  AAA    4,298,056 
   FSA Insured         
5,275  Total Utilities        5,565,344 
  Water and Sewer –  4.0% (2.7% of Total Investments)         
2,570  Baltimore, Maryland, Revenue Refunding Bonds, Wastewater Projects, Series 2002A, 5.125%,  7/12 at 100.00  AAA    2,684,259 
   7/01/42 – FGIC Insured         
430  Maryland Water Quality Financing Administration, Revolving Loan Fund Revenue Bonds, Series  No Opt. Call  AAA    473,302 
   2005A, 5.000%, 9/01/15         
3,000  Total Water and Sewer        3,157,567 
$      108,508  Total Investments (cost $112,298,475) – 147.0%        115,324,924 
  Other Assets Less Liabilities – 2.7%        2,151,354 
  Preferred Shares, at Liquidation Value – (49.7)%        (39,000,000) 
  Net Assets Applicable to Common Shares – 100%        $   78,476,278 

Forward Swaps outstanding at February 28, 2006:             
Floating Rate 
    Fixed Rate  Fixed Rate  Received  Floating Rate      Unrealized 
  Notional  Paid by the Fund  Payment   by the Fund  Payment  Effective  Terminiation  Appreciation 
Counterparty  Amount  (annualized)  Frequency   Based On  Frequency  Date (5)  Date  (Depreciation) 
Goldman Sachs  $  1,600,000  4.013%  Quarterly  BMA  Quarterly  9/14/06  9/14/26  $  (1,242) 
Merrill Lynch  2,900,000  4.021     Quarterly  BMA  Quarterly  9/21/06  9/21/26  (4,851) 
                $  (6,093) 
             BMA - The daily arithmetic average of the weekly BMA (Bond Market Association) Municipal Swap Index.       

(1)  All percentages shown in the Portfolio of Investments are based on net assets applicable to Common 
  shares unless otherwise noted. 
(2)  Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. 
  There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities 
  may be subject to periodic principal paydowns. 
(3)  Ratings: Using the higher of Standard & Poor’s or Moody’s rating. Ratings below BBB by Standard & Poor’s 
  Group or Baa by Moody’s Investor Service, Inc. are considered to be below investment grade. 
(4)  Investment is backed by an escrow or trust containing sufficient U.S. Government or U.S. Government 
  agency securities which ensure the timely payment of principal and interest. Such investments are normally 
  considered to be equivalent to AAA rated securities. 
(5)  Effective date represents the date on which both the Fund and counterparty commence interest payment 
  accruals on each forward swap contract. 
N/R  Investment is not rated. 
(ETM)  Investment is escrowed to maturity. 

Income Tax Information

The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to the treatment of paydown gains and losses, timing differences in recognizing taxable market discount and timing differences in recognizing certain gains and losses on investment transactions.

At February 28, 2006, the cost of investments was $112,519,201.

Gross unrealized appreciation and gross unrealized depreciation of investments at February 28, 2006, were as follows:

Gross unrealized:   
  Appreciation  $3,345,183 
  Depreciation  (539,460) 
Net unrealized appreciation (depreciation) of investments  $2,805,723 

Item 2. Controls and Procedures.

  1. The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rule 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 (17 CFR 240.13a-15(b) or 240.15d-15(b)).
  2. There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.

Item 3. Exhibits.

File as exhibits as part of this Form a separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)), exactly as set forth below: EX-99 CERT Attached hereto.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant)         Nuveen Maryland Dividend Advantage Municipal Fund 3        

By (Signature and Title)*          /s/ Jessica R. Droeger                     
                                                    Jessica R. Droeger
                                                    Vice President and Secretary

Date         April 28, 2006        

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)*         /s/ Gifford R. Zimmerman                    
                                                   Gifford R. Zimmerman
                                                   Chief Administrative Officer (principal executive officer) 

Date         April 28, 2006        

By (Signature and Title)*         /s/ Stephen D. Foy                              
                                                   Stephen D. Foy
                                                   Vice President and Controller (principal financial officer) 

Date        April 28, 2006        

* Print the name and title of each signing officer under his or her signature.