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)

Nuveen Investments
        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:         2/28/07         

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)             
    Ferbruary 28, 2007             
Principal        Optional Call         
Amount (000)    Description (1)    Provisions (2)    Ratings (3)    Value 
    Consumer Discretionary – 3.1% (2.0% of Total Investments)             
$             220    Baltimore, Maryland, Pollution Control Revenue Bonds, General Motors Corporation, Series 1993,    No Opt. Call    B–   $   219,866 
     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    1,096,810 
     9/01/39 – XLCA Insured             
380    Baltimore, Maryland, Subordinate Lien Convention Center Hotel Revenue Bonds, Series 2006B,    9/16 at 100.00    Ba1    406,076 
     5.875%, 9/01/39             
700    Maryland Economic Development Corporation, Revenue Bonds, Chesapeake Bay Hyatt Conference    12/16 at 100.00    N/R    709,940 
     Center, Series 2006A, 5.000%, 12/01/31             
2,300    Total Consumer Discretionary            2,432,692 
    Consumer Staples – 3.5% (2.3% of Total Investments)             
2,680    Puerto Rico, The Children’s Trust Fund, Tobacco Settlement Asset-Backed Refunding Bonds,    5/12 at 100.00    BBB    2,799,608 
     Series 2002, 5.375%, 5/15/33             
    Education and Civic Organizations – 15.6% (10.3% of Total Investments)             
225    Anne Arundel County, Maryland, Economic Development Revenue Bonds, Community College Project,    9/12 at 102.00    A3    239,400 
     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–    673,888 
     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–    104,757 
100     5.800%, 9/01/30    3/10 at 101.00    BBB–    104,810 
690    Hartford County, Maryland, Economic Development Revenue Bonds, Battelle Memorial Institute,    4/14 at 100.00    A+    738,376 
     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–    660,356 
     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    1,047,130 
     University, Series 2002A, 5.000%, 7/01/32             
625    Maryland Industrial Development Financing Authority, Revenue Bonds, Our Lady of Good Counsel    5/15 at 100.00    N/R    674,075 
     High School, Series 2005A, 6.000%, 5/01/35             
710    Montgomery County Revenue Authority, Maryland, Lease Revenue Bonds, Montgomery College Arts    5/15 at 100.00    A1    766,353 
     Center Project, Series 2005A, 5.000%, 5/01/18             
1,000    Morgan State University, Maryland, Student Tuition and Fee Revenue Bonds, Academic Fees and    7/13 at 100.00    AAA    1,059,780 
     Auxiliary Facilities, Series 2003A, 5.000%, 7/01/32 – FGIC Insured             
985    University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2001B,    4/11 at 100.00    AA    1,010,797 
     4.625%, 4/01/21             
2,000    University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2002A,    4/12 at 100.00    AA    2,111,140 
     5.125%, 4/01/22             
1,000    University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2003A,    4/13 at 100.00    AA    1,066,080 
     5.000%, 4/01/19             
800    University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2006A,    10/16 at 100.00    AA    874,856 
     5.000%, 10/01/22             
1,150    Westminster, Maryland, Educational Facilities Revenue Bonds, McDaniel College, Series 2006,    11/16 at 100.00    BBB+    1,217,770 
     5.000%, 11/01/31             
11,635    Total Education and Civic Organizations            12,349,568 
    Health Care – 22.7% (15.1% of Total Investments)             
700    Maryland Health and Higher Education Facilities Authority, Revenue Bonds, University of    7/16 at 100.00    A    742,868 
     Maryland Medical System, Series 2006, 5.000%, 7/01/31             
1,000    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Anne Arundel    7/08 at 101.00    AAA    1,025,170 
     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    839,565 
     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    1,342,438 
     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    909,898 
     Center, Series 2005, 5.000%, 7/01/37 – RAAI Insured             
885    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Doctors Community    7/17 at 100.00    Baa1    927,188 
     Hospital, Series 2007A, 5.000%, 7/01/29             
700    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Frederick Memorial    7/12 at 100.00    Baa1    728,280 
     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+    824,792 
     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–    1,039,740 
     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    Baa3    1,054,290 
     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    766,485 
     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    A3    967,437 
     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–    684,132 
     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    1,977,729 
     Cecil County, Series 2002, 5.625%, 7/01/32             
2,100    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Western Maryland    7/16 at 100.00    AAA    2,246,202 
     Health, Series 2006A, 5.000%, 7/01/34 – MBIA Insured (UB)             
775    Maryland Health and Higher Educational Facilities Authority, Revenue Refunding Bonds,    1/13 at 101.00    Baa2    834,133 
     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    7/07 at 100.00    B3    324,758 
900     5.300%, 7/01/24    7/07 at 100.00    B3    777,627 
17,225    Total Health Care            18,012,732 
    Housing/Multifamily – 14.6% (9.7% of Total Investments)             
980    Maryland Community Development Administration, Housing Revenue Bonds, Series 2002B, 4.950%,    7/12 at 100.00    Aa2    998,483 
     7/01/32 (Alternative Minimum Tax)             
1,250    Maryland Economic Development Corporation, Senior Lien Student Housing Revenue Bonds,    10/13 at 100.00    B1    1,259,500 
     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    21,574 
150     6.000%, 7/01/33 – ACA Insured    7/11 at 101.00    A    162,230 
475    Maryland Economic Development Corporation, Student Housing Revenue Refunding Bonds, University    6/16 at 100.00    AAA    508,573 
     of Maryland College Park Projects, Series 2006, 5.000%, 6/01/33 – CIFG Insured             
    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    529,621 
3,000     5.200%, 7/01/44 (Alternative Minimum Tax)    7/12 at 100.00    Aaa    3,093,960 
4,860    Prince George’s County Housing Authority, Maryland, GNMA Collateralized Mortgage Revenue    11/12 at 100.00    AAA    5,003,466 
     Bonds, Fairview and Hillside Projects, Series 2002A, 4.700%, 11/20/22             
11,250    Total Housing/Multifamily            11,577,407 
    Housing/Single Family – 3.4% (2.3% of Total Investments)             
595    Maryland Community Development Administration, Department of Housing and Community    9/15 at 100.00    Aa2    614,855 
     Development, Residential Revenue Bonds, Series 2006F, 4.900%, 9/01/26 (Alternative Minimum Tax)             
1,200    Maryland Community Development Administration, Department of Housing and Community    3/16 at 100.00    Aa2    1,239,756 
     Development, Residential Revenue Bonds, Series 2006I, 4.875%, 9/01/26 (Mandatory put 9/13/24)             
     (Alternative Minimum Tax)             
815    Maryland Community Development Administration, Department of Housing and Community    9/16 at 100.00    Aa2    840,689 
     Development, Residential Revenue Bonds, Series 2006L, 4.900%, 9/01/31 (Alternative Minimum Tax)             
2,610    Total Housing/Single Family            2,695,300 
    Industrials – 1.3% (0.8% of Total Investments)             
1,000    Northeast Maryland Waste Disposal Authority, Baltimore, Resource Recovery Revenue Bonds, RESCO    1/09 at 101.00    BBB    1,013,730 
     Retrofit Project, Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax)             
    Long-Term Care – 1.6% (1.0% of Total Investments)             
400    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Edenwald, Series    7/16 at 100.00    N/R    421,536 
     2006A, 5.400%, 1/01/31             
    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, King Farm             
    Presbyterian Community, Series 2007A:             
280     5.000%, 1/01/17    No Opt. Call    N/R    284,992 
520     5.250%, 1/01/27    1/17 at 100.00    N/R    532,002 
1,200    Total Long-Term Care            1,238,530 
    Tax Obligation/General – 23.2% (15.4% of Total Investments)             
1,000    Annapolis, Maryland, General Obligation Public Improvement Refunding Bonds, Series 2002,    4/12 at 101.00    AA    1,037,580 
     4.375%, 4/01/17             
    Anne Arundel County, Maryland, General Obligation Bonds, Series 2006:             
845     5.000%, 3/01/21    3/16 at 100.00    AA+    924,100 
650     5.000%, 3/01/21    3/16 at 100.00    AA+    710,847 
1,000    Calvert County, Maryland, General Obligation Public Improvement Bonds, Series 2002,    1/12 at 101.00    AA    1,044,170 
     4.500%, 1/01/16             
380    Carroll County, Maryland, Consolidated Public Improvement Bonds, Series 2005A, 5.000%, 12/01/16    12/15 at 100.00    AA    418,049 
1,260    Charles County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series    1/12 at 101.00    AA    1,310,917 
     2002, 4.400%, 1/15/16             
500    Frederick County, Maryland, General Obligation Public Facilities Bonds, Series 2006,    No Opt. Call    AA    563,220 
     5.000%, 11/01/20             
245    Frederick County, Maryland, Special Obligation Bonds, Villages of Lake Linganore Community    7/10 at 102.00    AA    262,344 
     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    776,428 
535     5.000%, 8/01/17 – MBIA Insured    8/15 at 100.00    AAA    584,086 
1,000    Maryland National Capital Park Planning Commission, Prince George’s County, General Obligation    1/14 at 100.00    AA    1,077,920 
     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    1,643,295 
1,440    Montgomery County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series    No Opt. Call    AAA    1,581,365 
     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+    1,066,950 
     Series 2003A, 5.000%, 10/01/17             
1,000    Prince George’s County, Maryland, General Obligation Consolidated Public Improvement Bonds,    No Opt. Call    AA+    1,060,440 
     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    1,069,520 
1,000    Washington Suburban Sanitary District, Montgomery and Prince George’s Counties, Maryland,    No Opt. Call    AAA    1,078,060 
     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    1,095,970 
     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    1,095,970 
     Water Supply Bonds, Series 2005, 5.000%, 6/01/16             
17,065    Total Tax Obligation/General            18,401,231 
    Tax Obligation/Limited – 33.2% (22.1% of Total Investments)             
750    Annapolis, Maryland, Special Obligation Bonds, Park Place Project, Series 2005A,    1/15 at 101.00    N/R    776,925 
     5.350%, 7/01/34             
1,000    Baltimore Board of School Commissioners, Maryland, Revenue Bonds, City Public School System,    5/13 at 100.00    AA+    1,070,560 
     Series 2003A, 5.000%, 5/01/15             
600    Baltimore, Maryland, Project Revenue Bonds, Series 2006, 5.000%, 7/01/31 – AMBAC Insured    7/16 at 100.00    AAA    646,116 
450    Hyattsville, Maryland, Special Obligation Bonds, University Town Center Project, Series 2004,    7/14 at 102.00    N/R    479,579 
     5.750%, 7/01/34             
5,000    Maryland Department of Transportation, Consolidated Transportation Revenue Bonds, Series 2002,    No Opt. Call    AA    5,679,846 
     5.500%, 2/01/16             
2,200    Maryland Economic Development Corporation, Lease Revenue Bonds, Department of Transportation    6/12 at 100.50    AA+    2,286,878 
     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+    480,366 
     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+    3,149,019 
     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+    1,564,664 
1,620     5.000%, 6/15/23    6/13 at 100.00    AA+    1,713,928 
460    Prince George’s County, Maryland, Special Obligation Bonds, National Harbor Project, Series    7/15 at 100.00    N/R    472,655 
     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    587,230 
     2005, 5.250%, 7/01/35             
1,200    Puerto Rico Highway and Transportation Authority, Highway Revenue Bonds, Series 2007N, 5.250%,    No Opt. Call    AAA    1,422,540 
     7/01/31 (WI/DD, Settling 3/06/07) – AMBAC Insured             
    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    1,060,760 
1,205     5.250%, 7/01/20    7/12 at 100.00    BBB    1,280,602 
1,275     5.250%, 7/01/21    7/12 at 100.00    BBB    1,354,369 
1,000    Puerto Rico Public Finance Corporation, Commonwealth Appropriation Bonds, Series 1998A,    No Opt. Call    AAA    1,135,840 
     5.125%, 6/01/24 – AMBAC Insured             
235    Puerto Rico Public Finance Corporation, Commonwealth Appropriation Bonds, Series 2002E,    2/12 at 100.00    BBB–    248,886 
     5.500%, 8/01/29             
700    Puerto Rico, Highway Revenue Bonds, Highway and Transportation Authority, Series 2003AA,    No Opt. Call    AAA    815,955 
     5.500%, 7/01/19 – MBIA Insured             
24,120    Total Tax Obligation/Limited            26,226,718 
    U.S. Guaranteed – 17.0% (11.3% of Total Investments) (4)             
10    Anne Arundel County, Maryland, General Obligation Bonds, Consolidated General Improvements,    5/09 at 101.00    AA+  (4)    10,395 
     Series 1999, 5.000%, 5/15/19 (Pre-refunded 5/15/09)             
100    Frederick County, Maryland, General Obligation Public Facilities Bonds, Series 1999, 5.250%,    7/09 at 101.00    AAA    104,669 
     7/01/17 (Pre-refunded 7/01/09)             
    Frederick County, Maryland, General Obligation Public Facilities Bonds, Series 2002:             
2,035     5.000%, 11/01/21 (Pre-refunded 11/01/12)    11/12 at 101.00     AA  (4)    2,193,852 
2,500     5.000%, 11/01/22 (Pre-refunded 11/01/12)    11/12 at 101.00     AA  (4)    2,695,150 
1,210    Howard County, Maryland, Consolidated Public Improvement Bonds, Series 2001A, 4.750%, 2/15/19    2/09 at 101.00    AAA    1,248,708 
     (Pre-refunded 2/15/09)             
280    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Collington    4/11 at 101.00    N/R  (4)    311,447 
     Episcopal Life Care Community Inc., Series 2001A, 6.750%, 4/01/23 (Pre-refunded 4/01/11)             
285    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Helix Health,    No Opt. Call    AAA    306,703 
     Series 1997, 5.000%, 7/01/17 – AMBAC Insured (ETM)             
1,010    Maryland Transportation Authority, Revenue Refunding Bonds, Transportation Facilities    No Opt. Call    AAA    1,152,784 
     Projects, First Series 1978, 6.800%, 7/01/16 (ETM)             
3,500    Puerto Rico Infrastructure Financing Authority, Special Obligation Bonds, Series 2000A,    10/10 at 101.00    AAA    3,751,019 
     5.500%, 10/01/40             
700    Puerto Rico Public Finance Corporation, Commonwealth Appropriation Bonds, Series 2002E,    2/12 at 100.00    Aaa    758,366 
     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    933,997 
     (Pre-refunded 7/01/11) – FSA Insured             
25    Washington Suburban Sanitary District, Montgomery and Prince George’s Counties, Maryland,    6/11 at 101.00    AAA    26,579 
     General Obligation Construction Bonds, Second Series 2001, 5.000%, 6/01/17             
     (Pre-refunded 6/01/11)             
12,535    Total U.S. Guaranteed            13,493,669 
    Utilities – 6.9% (4.6% of Total Investments)             
1,250    Maryland Energy Financing Administration, Revenue Bonds, AES Warrior Run Project, Series 1995,    9/07 at 100.00    N/R    1,256,763 
     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    4,239,210 
     FSA Insured             
5,275    Total Utilities            5,495,973 
    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    2,707,675 
     7/01/42 – FGIC Insured             
430    Maryland Water Quality Financing Administration, Revolving Loan Fund Revenue Bonds, Series    No Opt. Call    AAA    472,527 
     2005A, 5.000%, 9/01/15             
3,000    Total Water and Sewer            3,180,202 
$      111,895    Total Long-Term Investments (cost $115,138,950) – 150.1%            118,917,360 
    Short-Term Investments – 0.6% (0.4% of Total Investments)             
500    Puerto Rico Government Development Bank, Adjustable Refunding Bonds, Variable Rate Demand        A-1+    500,000 
     Obligations, Series 1985, 3.340%, 12/01/15 – MBIA Insured (5)             
$             500    Total Short-Term Investments (cost $500,000)            500,000 
    Total Investments (cost $115,638,950) – 150.7%            119,417,360 
    Floating Rate Obligations – (1.8)%            (1,400,000) 
    Other Assets Less Liabilities – 0.3%            225,028 
    Preferred Shares, at Liquidation Value – (49.2)%            (39,000,000) 
    Net Assets Applicable to Common Shares – 100%           $   79,242,388 

(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)    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)    Investment has a maturity of more than one year, but has variable rate and demand features which 
    qualify it as a short-term investment. The rate disclosed is that in effect at the end of the reporting 
    period. This rate changes periodically based on market conditions or a specified market index. 
N/R    Not rated. 
WI/DD    Purchased on a when-issued or delayed delivery basis. 
(ETM)    Escrowed to maturity. 
(UB)    Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the 
    provisions of SFAS No. 140. 

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, timing differences in recognizing certain gains and losses on investment transactions and the treatment of investments in inverse floating rate transactions subject to SFAS No.140.

At February 28, 2007, the cost of investments was $114,323,998.

Gross unrealized appreciation and gross unrealized depreciation of investments at February 28, 2007, were as follows:

Gross unrealized:     
  Appreciation    $3,953,015 
  Depreciation    (259,660) 
Net unrealized appreciation (depreciation) of investments    $3,693,355 

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 27, 2007        

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 27, 2007        

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

Date        April 27, 2007        

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