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:         8/31/09         

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)       
      August 31, 2009       
Principal    Optional Call     
Amount (000)  Description (1)  Provisions (2)  Ratings (3)  Value 
  Consumer Discretionary – 3.2% (2.2% of Total Investments)       
$       2,385  Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue Bonds, Series 2006A, 5.250%,  9/16 at 100.00  Baa3  $    1,720,825 
  9/01/39 – SYNCORA GTY Insured       
380  Baltimore, Maryland, Subordinate Lien Convention Center Hotel Revenue Bonds, Series 2006B,  9/16 at 100.00  Ba1  289,518 
  5.875%, 9/01/39       
700  Maryland Economic Development Corporation, Revenue Bonds, Chesapeake Bay Hyatt Conference  12/16 at 100.00  N/R  371,056 
  Center, Series 2006A, 5.000%, 12/01/31       
3,465  Total Consumer Discretionary      2,381,399 
  Consumer Staples – 3.0% (2.1% of Total Investments)       
2,360  Puerto Rico, The Children’s Trust Fund, Tobacco Settlement Asset-Backed Refunding Bonds,  5/12 at 100.00  BBB  2,260,738 
  Series 2002, 5.375%, 5/15/33       
  Education and Civic Organizations – 13.0% (8.8% of Total Investments)       
225  Anne Arundel County, Maryland, Economic Development Revenue Bonds, Community College Project,  9/12 at 102.00  A3  230,222 
  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–  521,938 
  Series 2006, 5.625%, 9/01/38       
690  Hartford County, Maryland, Economic Development Revenue Bonds, Battelle Memorial Institute,  4/14 at 100.00  A+  665,063 
  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–  599,950 
  Series 2004, 5.125%, 7/01/34       
735  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Johns Hopkins  7/14 at 100.00  AA  799,651 
  Hospital, Series 2004A, Inverse 1003, 13.718%, 7/01/33 (IF)       
1,000  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Johns Hopkins  7/12 at 100.00  AA  1,006,230 
  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  830,114 
  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  529,075 
  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  758,521 
  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  A+  1,003,390 
  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%, 4/01/21  4/11 at 100.00  AA+  1,005,330 
800  University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2006A, 5.000%, 10/01/22  10/16 at 100.00  AA+  881,808 
890  Westminster, Maryland, Educational Facilities Revenue Bonds, McDaniel College, Series 2006,  11/16 at 100.00  BBB+  824,736 
  5.000%, 11/01/31       
9,835  Total Education and Civic Organizations      9,656,028 
  Health Care – 26.4% (17.7% of Total Investments)       
700  Maryland Health and Higher Education Facilities Authority, Revenue Bonds, University of  7/16 at 100.00  A  661,724 
  Maryland Medical System, Series 2006, 5.000%, 7/01/31       
1,000  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Anne Arundel  1/10 at 100.50  AAA  1,002,560 
  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  779,828 
  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  1,259,613 
  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  1,575,280 
  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  BBB–  669,239 
  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  679,061 
  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  571,242 
  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+  741,016 
  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  A+  1,011,920 
  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  877,360 
  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  616,408 
  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  A2  905,220 
  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  1,720,234 
  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  443,746 
340  5.500%, 7/01/42  7/17 at 100.00  BBB  304,575 
650  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Mercy Medical  7/11 at 100.00  BBB  609,980 
  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  829,099 
  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  1,846,513 
  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–  1,143,945 
  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  735,591 
  Adventist Healthcare, Series 2003A, 5.750%, 1/01/25       
900  Prince George’s County, Maryland, Revenue Bonds, Dimensions Health Corporation, Series 1994,  1/10 at 100.00  B3  579,645 
  5.300%, 7/01/24       
21,020  Total Health Care      19,563,799 
  Housing/Multifamily – 7.6% (5.1% of Total Investments)       
980  Maryland Community Development Administration, Housing Revenue Bonds, Series 2002B, 4.950%,  7/12 at 100.00  Aa2  927,374 
  7/01/32 (Alternative Minimum Tax)       
1,250  Maryland Economic Development Corporation, Senior Lien Student Housing Revenue Bonds,  10/13 at 100.00  B2  909,263 
  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  15,497 
150  6.000%, 7/01/33 – ACA Insured  7/11 at 101.00  N/R  103,436 
475  Maryland Economic Development Corporation, Student Housing Revenue Refunding Bonds, University  6/16 at 100.00  Baa2  398,891 
  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  493,056 
3,000  5.200%, 7/01/44 (Alternative Minimum Tax)  7/12 at 100.00  Aaa  2,825,489 
6,390  Total Housing/Multifamily      5,673,006 
  Housing/Single Family – 7.8% (5.2% of Total Investments)       
1,280  Maryland Community Development Administration Department of Housing and Community Development,  9/18 at 100.00  Aa2  1,321,946 
  Residential Revenue Bonds, Series 2008C, 5.375%, 9/01/39       
  Maryland Community Development Administration, Department of Housing and Community       
  Development, Residential Revenue Bonds, Series 2006:       
595  4.900%, 9/01/26 (Alternative Minimum Tax) (UB)  9/15 at 100.00  Aa2  573,259 
1,200  4.875%, 9/01/26 (Alternative Minimum Tax) (UB)  3/16 at 100.00  Aa2  1,153,716 
815  4.900%, 9/01/31 (Alternative Minimum Tax) (UB)  9/16 at 100.00  Aa2  751,088 
  Maryland Community Development Administration, Department of Housing and Community       
  Development, Residential Revenue Bonds, Series 2007:       
350  5.000%, 9/01/27 (Alternative Minimum Tax) (UB)  3/17 at 100.00  Aa2  343,890 
620  4.850%, 9/01/37 (Alternative Minimum Tax) (UB)  3/17 at 100.00  Aa2  560,642 
1,160  Maryland Community Development Administration, Department of Housing and  9/14 at 100.00  Aa2  1,064,682 
  Community Development, Residential Revenue Bonds, Series 2005, 4.900%, 9/01/36 (Alternative       
  Minimum Tax) (UB)       
6,020  Total Housing/Single Family      5,769,223 
  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  474,897 
  Management Inc., Series 2002, 4.600%, 4/01/16 (Alternative Minimum Tax)       
1,000  Northeast Maryland Waste Disposal Authority, Baltimore, Resource Recovery Revenue Bonds, RESCO  1/10 at 100.00  BBB  982,110 
  Retrofit Project, Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax)       
1,510  Total Industrials      1,457,007 
  Long-Term Care – 3.1% (2.1% 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+  940,716 
400  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Edenwald, Series  7/16 at 100.00  N/R  341,172 
  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  224,983 
520  5.250%, 1/01/27  1/17 at 100.00  N/R  342,800 
540  Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Mercy Ridge  7/17 at 100.00  A–  442,568 
  Retirement Community, Series 2007, 4.750%, 7/01/34       
2,790  Total Long-Term Care      2,292,239 
  Tax Obligation/General – 17.6% (11.9% of Total Investments)       
1,000  Annapolis, Maryland, General Obligation Public Improvement Refunding Bonds, Series 2002,  4/12 at 101.00  AA  1,054,130 
  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+  438,227 
1,260  Charles County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series  1/12 at 101.00  AA  1,332,803 
  2002, 4.400%, 1/15/16       
710  Frederick, Maryland, General Obligation Bonds, Series 2005, 5.000%, 8/01/16 – NPFG Insured  8/15 at 100.00  AA  814,107 
1,000  Maryland National Capital Park Planning Commission, Prince George’s County, General Obligation  1/14 at 100.00  AAA  1,105,920 
  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  2,150,773 
  2005A, 5.000%, 7/01/15       
1,440  Montgomery County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series  No Opt. Call  AAA  1,681,891 
  2006, 5.000%, 5/01/16       
1,000  Prince George’s County, Maryland, General Obligation Consolidated Public Improvement Bonds,  No Opt. Call  AAA  1,094,800 
  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  1,118,070 
1,000  Washington Suburban Sanitary District, Montgomery and Prince George’s Counties, Maryland,  6/15 at 100.00  AAA  1,145,770 
  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  1,145,770 
  Water Supply Bonds, Series 2005, 5.000%, 6/01/16       
11,640  Total Tax Obligation/General      13,082,261 
  Tax Obligation/Limited – 31.2% (21.0% of Total Investments)       
1,000  Baltimore Board of School Commissioners, Maryland, Revenue Bonds, City Public School System,  5/13 at 100.00  AA+  1,103,440 
  Series 2003A, 5.000%, 5/01/15       
135  Frederick County, Maryland, Lake Linganore Village Community Development Special Obligation  7/10 at 102.00  BBB–  130,418 
  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  300,375 
  5.750%, 7/01/34       
5,000  Maryland Department of Transportation, Consolidated Transportation Revenue Bonds, Series 2002,  No Opt. Call  AAA  5,913,349 
  5.500%, 2/01/16       
2,200  Maryland Economic Development Corporation, Lease Revenue Bonds, Department of Transportation  6/12 at 100.50  AA+  2,261,270 
  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+  496,656 
  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+  3,217,962 
  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+  1,585,965 
1,620  5.000%, 6/15/23  6/13 at 100.00  AA+  1,717,249 
1,210  Prince George’s County, Maryland, Special Obligation Bonds, National Harbor Project, Series  7/15 at 100.00  N/R  875,617 
  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  311,081 
  2005, 5.250%, 7/01/35       
1,200  Puerto Rico Highway and Transportation Authority, Highway Revenue Bonds, Series 2007N, 5.250%,  No Opt. Call  BBB  1,131,504 
  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–  1,004,750 
1,205  5.250%, 7/01/20  7/12 at 100.00  BBB–  1,166,247 
1,275  5.250%, 7/01/21  7/12 at 100.00  BBB–  1,219,652 
700  Puerto Rico, Highway Revenue Bonds, Highway and Transportation Authority, Series 2003AA,  No Opt. Call  A  712,712 
  5.500%, 7/01/19 – NPFG Insured       
22,420  Total Tax Obligation/Limited      23,148,247 
  Transportation – 3.1% (2.1% of Total Investments)       
2,210  Maryland Transportation Authority, Revenue Bonds, Transportation Facilities Projects, Series  7/17 at 100.00  AAA  2,335,926 
  2007, 5.000%, 7/01/30 – FSA Insured (UB)       
  U.S. Guaranteed – 23.3% (15.7% of Total Investments) (4)       
255  Baltimore, Maryland, Wastewater Project Revenue Bonds, Series 2006C, 5.000%, 7/01/31  7/16 at 100.00  AA (4)  298,386 
  (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)  103,660 
100  5.800%, 9/01/30 (Pre-refunded 3/01/10)  3/10 at 101.00  BBB– (4)  103,685 
110  Frederick County, Maryland, Lake Linganore Village Community Development Special Obligation  7/10 at 102.00  BBB– (4)  117,009 
  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)  308,241 
  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  N/R (4)  324,113 
  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)  827,247 
  System, Series 2004A, 5.125%, 7/01/34 (Pre-refunded 7/01/14)       
770  Maryland Transportation Authority, Revenue Refunding Bonds, Transportation Facilities  No Opt. Call  AAA  911,280 
  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  5,341,917 
  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  1,602,653 
  (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  3,725,399 
  5.500%, 10/01/40 (Pre-refunded 10/01/10)       
1,000  Puerto Rico Public Finance Corporation, Commonwealth Appropriation Bonds, Series 1998A,  No Opt. Call  AAA  1,134,070 
  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  258,079 
  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)  2,206,880 
  4/01/22 (Pre-refunded 4/01/12)       
25  Washington Suburban Sanitary District, Montgomery and Prince George’s Counties,  6/11 at 101.00  AAA  27,105 
  Maryland, General Obligation Construction Bonds, Second Series 2001, 5.000%,       
  6/01/17 (Pre-refunded 6/01/11)       
15,770  Total U.S. Guaranteed      17,289,724 
  Utilities – 1.7% (1.1% of Total Investments)       
1,250  Maryland Energy Financing Administration, Revenue Bonds, AES Warrior Run Project, Series 1995,  9/09 at 100.00  N/R  1,249,988 
  7.400%, 9/01/19 (Alternative Minimum Tax)       
  Water and Sewer – 5.5% (3.7% of Total Investments)       
2,570  Baltimore, Maryland, Revenue Refunding Bonds, Wastewater Projects, Series 2002A, 5.125%,  7/12 at 100.00  AA  2,584,341 
  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  360,604 
  AMBAC Insured       
660  Baltimore, Maryland, Wastewater Project Revenue Bonds, Series 2007D, 5.000%, 7/01/32 –  7/17 at 100.00  AA  673,240 
  AMBAC Insured       
430  Maryland Water Quality Financing Administration, Revolving Loan Fund Revenue Bonds, Series  No Opt. Call  AAA  500,903 
  2005A, 5.000%, 9/01/15       
4,005  Total Water and Sewer      4,119,088 
$        110,685  Total Investments (cost $111,435,844) – 148.5%      110,278,673 
  Floating Rate Obligations – (5.7)%      (4,255,000)
  Other Assets Less Liabilities – 4.3%      3,225,116 
  Preferred Shares, at Liquidation Value – (47.1)% (5)      (35,000,000)
  Net Assets Applicable to Common Shares – 100%      $ 74,248,789 


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 August 31, 2009:

  Level 1  Level 2  Level 3  Total 
Investments:         
Municipal Bonds  $ —  $110,278,673  $ —  $110,278,673 

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 August 31, 2009, the cost of investments was $107,526,693.

Gross unrealized appreciation and gross unrealized depreciation of investments at August 31, 2009, were as follows:

Gross unrealized:   
  Appreciation  $  3,893,873 
  Depreciation  (5,397,088)
Net unrealized appreciation (depreciation) of investments  $(1,503,215)

(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. 
(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 31.7%. 
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         October 30, 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         October 30, 2009        

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

Date        October 30, 2009