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)


Kevin J. McCarthy 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:         2/28/09         

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, 2009             
Principal        Optional Call         
Amount (000)    Description (1)    Provisions (2)    Ratings (3)    Value 
    Consumer Discretionary – 3.0% (1.9% of Total Investments)             
$       2,385    Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue Bonds, Series 2006A, 5.250%,    9/16 at 100.00    Baa3   $   1,434,721 
     9/01/39 – SYNCORA GTY Insured             
380    Baltimore, Maryland, Subordinate Lien Convention Center Hotel Revenue Bonds, Series 2006B,    9/16 at 100.00    Ba1    211,383 
     5.875%, 9/01/39             
700    Maryland Economic Development Corporation, Revenue Bonds, Chesapeake Bay Hyatt Conference    12/16 at 100.00    N/R    357,504 
     Center, Series 2006A, 5.000%, 12/01/31             
3,465    Total Consumer Discretionary            2,003,608 
    Consumer Staples – 2.7% (1.7% of Total Investments)             
2,500    Puerto Rico, The Children’s Trust Fund, Tobacco Settlement Asset-Backed Refunding Bonds,    5/12 at 100.00    BBB    1,791,800 
     Series 2002, 5.375%, 5/15/33             
    Education and Civic Organizations – 12.2% (7.9% of Total Investments)             
225    Anne Arundel County, Maryland, Economic Development Revenue Bonds, Community College Project,    9/12 at 102.00    A3    225,747 
     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–    417,956 
     Series 2006, 5.625%, 9/01/38             
690    Hartford County, Maryland, Economic Development Revenue Bonds, Battelle Memorial Institute,    4/14 at 100.00    A+    611,464 
     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–    543,581 
     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    995,840 
     University, Series 2002A, 5.000%, 7/01/32             
925    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Maryland Institute    6/16 at 100.00    Baa1    712,962 
     College of Art, Series 2006, 5.000%, 6/01/30             
625    Maryland Industrial Development Financing Authority, Revenue Bonds, Our Lady of Good Counsel    5/15 at 100.00    N/R    411,713 
     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    750,875 
     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    AA–    962,610 
     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+    1,004,523 
     4.625%, 4/01/21             
800    University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2006A,    10/16 at 100.00    AA+    861,800 
     5.000%, 10/01/22             
890    Westminster, Maryland, Educational Facilities Revenue Bonds, McDaniel College, Series 2006,    11/16 at 100.00    BBB+    729,497 
     5.000%, 11/01/31             
9,100    Total Education and Civic Organizations            8,228,568 
    Health Care – 27.1% (17.5% of Total Investments)             
700    Maryland Health and Higher Education Facilities Authority, Revenue Bonds, University of    7/16 at 100.00    A    583,198 
     Maryland Medical System, Series 2006, 5.000%, 7/01/31             
1,000    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Anne Arundel    7/09 at 100.50    AAA    943,550 
     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    684,953 
     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    A3    1,111,963 
     General Hospital, Series 2002, 5.800%, 7/01/32             
1,750    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Carroll Hospital    7/16 at 100.00    A3    1,326,325 
     Center, Series 2006, 5.000%, 7/01/40             
870    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Civista Medical    7/14 at 100.00    A3    577,219 
     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    Baa3    598,039 
     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    503,608 
     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+    656,936 
     Medical Center, Series 2001, 5.000%, 7/01/34 – MBIA Insured             
1,000    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Johns Hopkins    5/11 at 100.00    A+    1,005,780 
     Hospital, Series 2001, 5.000%, 5/15/21             
735    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Johns Hopkins    7/14 at 100.00    AA    710,414 
     Hospital, Series 2004, Inverse 1003, 13.498%, 7/01/33 (IF)             
1,000    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Kennedy Krieger    7/13 at 100.00    Baa3    770,790 
     Institute, Series 2003, 5.500%, 7/01/33             
595    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, LifeBridge Health    7/17 at 100.00    AAA    565,922 
     System, Series 2008, 5.000%, 7/01/28 – AGC Insured             
900    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, MedStar Health,    8/14 at 100.00    A–    848,556 
     Series 2004, 5.375%, 8/15/24             
1,690    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, MedStar Health,    5/16 at 100.00    AAA    1,667,540 
     Series 2007, 5.250%, 5/15/46 – BHAC Insured             
    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Mercy Medical             
    Center Project, Series 2007A:             
525     5.000%, 7/01/37    7/17 at 100.00    BBB    376,152 
340     5.500%, 7/01/42    7/17 at 100.00    BBB    262,606 
650    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Mercy Medical    7/11 at 100.00    BBB    535,464 
     Center, Series 2001, 5.625%, 7/01/31             
850    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Peninsula Regional    7/16 at 100.00    A    704,310 
     Medical Center, Series 2006, 5.000%, 7/01/36             
1,845    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Union Hospital of    7/12 at 100.00    A3    1,675,850 
     Cecil County, Series 2002, 5.625%, 7/01/32             
1,220    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Washington County    1/18 at 100.00    BBB–    938,436 
     Hospital, Series 2008, 5.750%, 1/01/38             
775    Maryland Health and Higher Educational Facilities Authority, Revenue Refunding Bonds,    1/13 at 101.00    Baa2    643,808 
     Adventist Healthcare, Series 2003A, 5.750%, 1/01/25             
900    Prince George’s County, Maryland, Revenue Bonds, Dimensions Health Corporation, Series 1994,    7/09 at 100.00    B3    558,252 
     5.300%, 7/01/24             
21,755    Total Health Care            18,249,671 
    Housing/Multifamily – 7.7% (5.0% of Total Investments)             
980    Maryland Community Development Administration, Housing Revenue Bonds, Series 2002B, 4.950%,    7/12 at 100.00    Aa2    862,733 
     7/01/32 (Alternative Minimum Tax)             
1,250    Maryland Economic Development Corporation, Senior Lien Student Housing Revenue Bonds,    10/13 at 100.00    B2    801,188 
     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    N/R    14,728 
150     6.000%, 7/01/33 – ACA Insured    7/11 at 101.00    N/R    96,846 
475    Maryland Economic Development Corporation, Student Housing Revenue Refunding Bonds, University    6/16 at 100.00    Baa2    323,565 
     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    459,952 
3,000     5.200%, 7/01/44 (Alternative Minimum Tax)    7/12 at 100.00    Aaa    2,645,279 
6,390    Total Housing/Multifamily            5,204,291 
    Housing/Single Family – 8.2% (5.3% of Total Investments)             
350    Maryland Community Development Administration Department of Housing and Community    3/17 at 100.00    Aa2    322,956 
     Development, Residential Revenue Bonds, Series 2007H, 5.000%, 9/01/27             
     (Alternative Minimum Tax)             
1,280    Maryland Community Development Administration Department of Housing and Community    9/18 at 100.00    Aa2    1,265,792 
     Development, Residential Revenue Bonds, Series 2008C, 5.375%, 9/01/39             
595    Maryland Community Development Administration, Department of Housing and Community    9/15 at 100.00    Aa2    551,398 
     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    1,108,740 
     Development, Residential Revenue Bonds, Series 2006I, 4.875%, 9/01/26             
     (Alternative Minimum Tax)             
815    Maryland Community Development Administration, Department of Housing and Community    9/16 at 100.00    Aa2    712,978 
     Development, Residential Revenue Bonds, Series 2006L, 4.900%, 9/01/31             
     (Alternative Minimum Tax)             
620    Maryland Community Development Administration, Department of Housing and Community    3/17 at 100.00    Aa2    526,163 
     Development, Residential Revenue Bonds, Series 2007D, 4.850%, 9/01/37             
     (Alternative Minimum Tax)             
1,160    Maryland Community Development Administration, Residential Revenue Bonds, Series 2005E,    9/14 at 100.00    Aa2    1,042,237 
     4.900%, 9/01/36 (Alternative Minimum Tax)             
6,020    Total Housing/Single Family            5,530,264 
    Industrials – 2.0% (1.3% of Total Investments)             
510    Maryland Economic Development Corporation, Solid Waste Disposal Revenue Bonds, Waste    4/12 at 101.00    BBB    441,788 
     Management Inc., Series 2002, 4.600%, 4/01/16 (Alternative Minimum Tax)             
1,000    Northeast Maryland Waste Disposal Authority, Baltimore, Resource Recovery Revenue Bonds,    7/09 at 101.00    BBB    940,940 
     RESCO Retrofit Project, Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax)             
1,510    Total Industrials            1,382,728 
    Long-Term Care – 2.8% (1.8% of Total Investments)             
1,050    Baltimore County, Maryland, Revenue Bonds, Oak Crest Village, Series 2007A, 5.000%, 1/01/37    1/17 at 100.00    BBB+    746,351 
400    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Edenwald, Series    7/16 at 100.00    N/R    263,472 
     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    210,414 
520     5.250%, 1/01/27    1/17 at 100.00    N/R    305,594 
540    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Mercy Ridge    7/17 at 100.00    A–    349,153 
     Retirement Community, Series 2007, 4.750%, 7/01/34             
2,790    Total Long-Term Care            1,874,984 
    Tax Obligation/General – 19.3% (12.5% of Total Investments)             
1,000    Annapolis, Maryland, General Obligation Public Improvement Refunding Bonds, Series 2002,    4/12 at 101.00    AA    1,057,060 
     4.375%, 4/01/17             
380    Carroll County, Maryland, Consolidated Public Improvement Bonds, Series 2005A, 5.000%, 12/01/16    12/15 at 100.00    AA+    436,628 
1,260    Charles County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series    1/12 at 101.00    AA    1,334,857 
     2002, 4.400%, 1/15/16             
710    Frederick, Maryland, General Obligation Bonds, Series 2005, 5.000%, 8/01/16 – MBIA Insured    8/15 at 100.00    AA    809,940 
1,000    Maryland National Capital Park Planning Commission, Prince George’s County, General Obligation    1/14 at 100.00    AAA    1,094,470 
     Bonds, Park Acquisition and Development, Series 2004EE-2, 5.000%, 1/15/17             
1,850    Montgomery County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series    No Opt. Call    AAA    2,138,526 
     2005A, 5.000%, 7/01/15             
1,440    Montgomery County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series    No Opt. Call    AAA    1,671,768 
     2006, 5.000%, 5/01/16             
1,000    Prince George’s County, Maryland, General Obligation Consolidated Public Improvement Bonds,    No Opt. Call    AAA    1,097,810 
     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    1,117,730 
1,000    Washington Suburban Sanitary District, Montgomery and Prince George’s Counties, Maryland,    6/15 at 100.00    AAA    1,141,410 
     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    1,141,410 
     Water Supply Bonds, Series 2005, 5.000%, 6/01/16             
11,640    Total Tax Obligation/General            13,041,609 
    Tax Obligation/Limited – 33.2% (21.4% of Total Investments)             
1,000    Baltimore Board of School Commissioners, Maryland, Revenue Bonds, City Public School System,    5/13 at 100.00    AA+    1,096,350 
     Series 2003A, 5.000%, 5/01/15             
135    Frederick County, Maryland, Lake Linganore Village Community Development Special Obligation    7/10 at 102.00    BBB+    118,290 
     Bonds, Series 2001A, 5.600%, 7/01/20 – RAAI Insured             
450    Hyattsville, Maryland, Special Obligation Bonds, University Town Center Project, Series 2004,    7/14 at 102.00    N/R    287,267 
     5.750%, 7/01/34             
5,000    Maryland Department of Transportation, Consolidated Transportation Revenue Bonds, Series 2002,    No Opt. Call    AAA    5,882,898 
     5.500%, 2/01/16             
2,200    Maryland Economic Development Corporation, Lease Revenue Bonds, Department of Transportation    6/12 at 100.50    AA+    2,246,596 
     Headquarters Building, Series 2002, 4.750%, 6/01/22             
450    Maryland Economic Development Corporation, Lease Revenue Bonds, Montgomery County    9/12 at 100.00    AA+    497,813 
     Town Square Parking Garage, Series 2002A, 5.000%, 9/15/13             
2,935    Maryland Economic Development Corporation, Lease Revenue Bonds, Montgomery County    9/12 at 100.00    AA+    3,206,663 
     Wayne Avenue 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+    1,522,618 
1,620     5.000%, 6/15/23    6/13 at 100.00    AA+    1,667,191 
1,210    Prince George’s County, Maryland, Special Obligation Bonds, National Harbor Project, Series    7/15 at 100.00    N/R    666,710 
     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    298,649 
     2005, 5.250%, 7/01/35             
1,200    Puerto Rico Highway and Transportation Authority, Highway Revenue Bonds, Series 2007N,    No Opt. Call    A    1,016,904 
     5.250%, 7/01/31 – 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–    954,400 
1,205     5.250%, 7/01/20    7/12 at 100.00    BBB–    1,103,431 
1,275     5.250%, 7/01/21    7/12 at 100.00    BBB–    1,159,166 
700    Puerto Rico, Highway Revenue Bonds, Highway and Transportation Authority, Series 2003AA,    No Opt. Call    AA–    665,490 
     5.500%, 7/01/19 – MBIA Insured             
22,420    Total Tax Obligation/Limited            22,390,436 
    Transportation – 3.4% (2.2% of Total Investments)             
2,210    Maryland Transportation Authority, Revenue Bonds, Transportation Facilities Projects, Series    7/17 at 100.00    AAA    2,261,338 
     2007, 5.000%, 7/01/30 – FSA Insured (UB)             
    U.S. Guaranteed – 25.9% (16.7% of Total Investments) (4)             
10    Anne Arundel County, Maryland, General Obligation Bonds, Consolidated General Improvements,    5/09 at 101.00    AAA    10,198 
     Series 1999, 5.000%, 5/15/19 (Pre-refunded 5/15/09)             
255    Baltimore, Maryland, Wastewater Project Revenue Bonds, Series 2006C, 5.000%, 7/01/31    7/16 at 100.00    AA (4)    297,060 
     (Pre-refunded 7/01/16) – AMBAC Insured             
    Frederick County, Maryland, Educational Facilities Revenue Bonds, Mount St. Mary’s College,             
    Series 2001A:             
100     5.750%, 9/01/25 (Pre-refunded 3/01/10)    3/10 at 101.00    BBB– (4)    105,987 
100     5.800%, 9/01/30 (Pre-refunded 3/01/10)    3/10 at 101.00    BBB– (4)    106,037 
100    Frederick County, Maryland, General Obligation Public Facilities Bonds, Series 1999, 5.250%,    7/09 at 101.00    AAA    102,646 
     7/01/17 (Pre-refunded 7/01/09)             
110    Frederick County, Maryland, Lake Linganore Village Community Development Special Obligation    7/10 at 102.00    BBB+ (4)    119,011 
     Bonds, Series 2001A, 5.600%, 7/01/20 (Pre-refunded 7/01/10) – RAAI Insured             
280    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Collington    4/11 at 101.00    N/R (4)    312,813 
     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    A (4)    323,390 
     Series 1997, 5.000%, 7/01/17 – AMBAC Insured (ETM)             
725    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, LifeBridge Health    7/14 at 100.00    A2 (4)    825,275 
     System, Series 2004A, 5.125%, 7/01/34 (Pre-refunded 7/01/14)             
855    Maryland Transportation Authority, Revenue Refunding Bonds, Transportation Facilities    No Opt. Call    AAA    1,004,274 
     Projects, First Series 1978, 6.800%, 7/01/16 (ETM)             
4,860    Prince George’s County Housing Authority, Maryland, GNMA Collateralized Mortgage Revenue    11/12 at 100.00    AAA    5,340,896 
     Bonds, Fairview and Hillside Projects, Series 2002A, 4.700%, 11/20/22 (Pre-refunded 11/20/12)             
1,525    Puerto Rico Electric Power Authority, Power Revenue Bonds, Series 2000HH, 5.250%, 7/01/29    7/10 at 101.00    AAA    1,630,103 
     (Pre-refunded 7/01/10) – FSA Insured             
3,500    Puerto Rico Infrastructure Financing Authority, Special Obligation Bonds, Series 2000A,    10/10 at 101.00    AAA    3,727,429 
     5.500%, 10/01/40             
1,000    Puerto Rico Public Finance Corporation, Commonwealth Appropriation Bonds, Series 1998A,    No Opt. Call    AAA    1,075,390 
     5.125%, 6/01/24 – AMBAC Insured (ETM)             
235    Puerto Rico Public Finance Corporation, Commonwealth Appropriation Bonds, Series 2002E,    2/12 at 100.00    AAA    259,276 
     5.500%, 8/01/29 (Pre-refunded 2/01/12)             
2,000    University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2002A, 5.125%,    4/12 at 100.00    AA+ (4)    2,218,720 
     4/01/22 (Pre-refunded 4/01/12)             
25    Washington Suburban Sanitary District, Montgomery and Prince George’s Counties, Maryland,    6/11 at 101.00    AAA    27,303 
     General Obligation Construction Bonds, Second Series 2001, 5.000%, 6/01/17             
     (Pre-refunded 6/01/11)             
15,965    Total U.S. Guaranteed            17,485,808 
    Utilities – 1.4% (0.9% of Total Investments)             
1,250    Maryland Energy Financing Administration, Revenue Bonds, AES Warrior Run Project, Series 1995,    5/09 at 100.00    N/R    941,900 
     7.400%, 9/01/19 (Alternative Minimum Tax)             
    Water and Sewer – 6.0% (3.9% of Total Investments)             
2,570    Baltimore, Maryland, Revenue Refunding Bonds, Wastewater Projects, Series 2002A, 5.125%,    7/12 at 100.00    AA    2,527,441 
     7/01/42 – FGIC Insured             
345    Baltimore, Maryland, Wastewater Project Revenue Bonds, Series 2006C, 5.000%, 7/01/31 –    7/16 at 100.00    AA    348,995 
     AMBAC Insured             
660    Baltimore, Maryland, Wastewater Project Revenue Bonds, Series 2007D, 5.000%, 7/01/32 –    7/17 at 100.00    AA    651,011 
     AMBAC Insured             
430    Maryland Water Quality Financing Administration, Revolving Loan Fund Revenue Bonds, Series    No Opt. Call    AAA    497,863 
     2005A, 5.000%, 9/01/15             
4,005    Total Water and Sewer            4,025,310 
$     111,020    Total Investments (cost $112,190,544) – 154.9%            104,412,315 
    Floating Rate Obligations – (1.6)%            (1,105,000)
    Other Assets Less Liabilities – 3.2%            2,240,968 
    Preferred Shares, at Liquidation Value – (56.5)% (5)            (38,125,000)
    Net Assets Applicable to Common Shares – 100%           $   67,423,283 

Fair Value Measurements

During the current fiscal period, the Fund adopted the provisions of Statement of Financial Accounting Standards No. 157 (SFAS No.157) “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosure about fair value measurements. In determining the value of the Fund's investments various inputs are used. These inputs are summarized in the three broad levels listed below:

Level 1 – Quoted prices in active markets for identical securities. 
Level 2 – Other significant observable inputs (including quoted prices for similar securities, interest rates, 
              prepayment speeds, credit risk, etc.). 
Level 3 – Significant unobservable inputs (including management's assumptions in determining the fair 
              value of investments). 

The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.

The following is a summary of the Fund's fair value measurements as of February 28, 2009:

    Level 1    Level 2    Level 3    Total 
Investments    $ —    $104,412,315    $ —    $104,412,315 

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 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 Statement of Financial Accounting Standards No. 140 (SFAS No. 140), if any. To the extent that differences arise that are permanent in nature, such amounts are reclassified within the capital accounts on the Statement of Assets and Liabilities presented in the annual report, based on their federal tax basis treatment; temporary differences do not require reclassification.Temporary and permanent differences do not impact the net asset value of the Fund.

At February 28, 2009, the cost of investments was $111,079,992.

Gross unrealized appreciation and gross unrealized depreciation of investments at February 28, 2009, were as follows:

Gross unrealized:     
  Appreciation    $  3,139,316 
  Depreciation    (10,912,004)
Net unrealized appreciation (depreciation) of investments    $ (7,772,688)

(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 Group ("Standard & Poor's") or Moody's Investor Service, 
    Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to 
    be below investment grade. 
    The Portfolio of Investments may reflect the ratings on certain bonds insured by ACA, AGC, AMBAC, CIFG, 
    FGIC, FSA, MBIA, RAAI and SYNCORA as of February 28, 2009. Subsequent to February 28, 2009, and 
    during the period this Portfolio of Investments was prepared, there may have been reductions to the 
    ratings of certain bonds resulting from changes to the ratings of the underlying insurers both during the 
    period and after period end. Such reductions would likely reduce the effective rating of many of the bonds 
    insured by that insurer or insurers presented at period end. 
(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)    Preferred Shares, at Liquidation Value as a percentage of Total Investments is 36.5%. 
N/R    Not rated. 
(ETM)    Escrowed to maturity. 
(IF)    Inverse floating rate investment. 
(UB)    Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the 
    provisions of SFAS No. 140. 

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: See 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/ Kevin J. McCarthy                    
                                                  Kevin J. McCarthy
                                                  Vice President and Secretary

Date         April 29, 2009        

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 29, 2009        

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

Date        April 29, 2009