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:         8/31/07         

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)             
    August 31, 2007             
Principal        Optional Call         
Amount (000)    Description (1)    Provisions (2)    Ratings (3)    Value 
    Consumer Discretionary – 3.0% (2.0% of Total Investments)             
$             220    Baltimore, Maryland, Pollution Control Revenue Bonds, General Motors Corporation, Series 1993,    No Opt. Call    B–   $   219,052 
     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    1,032,940 
     9/01/39 – XLCA Insured             
380    Baltimore, Maryland, Subordinate Lien Convention Center Hotel Revenue Bonds, Series 2006B,    9/16 at 100.00    Ba1    389,333 
     5.875%, 9/01/39             
700    Maryland Economic Development Corporation, Revenue Bonds, Chesapeake Bay Hyatt Conference    12/16 at 100.00    N/R    619,633 
     Center, Series 2006A, 5.000%, 12/01/31             
2,300    Total Consumer Discretionary            2,260,958 
    Consumer Staples – 3.3% (2.2% of Total Investments)             
2,620    Puerto Rico, The Children’s Trust Fund, Tobacco Settlement Asset-Backed Refunding Bonds,    5/12 at 100.00    BBB    2,456,984 
     Series 2002, 5.375%, 5/15/33             
    Education and Civic Organizations – 13.6% (9.0% of Total Investments)             
225    Anne Arundel County, Maryland, Economic Development Revenue Bonds, Community College Project,    9/12 at 102.00    A3    230,380 
     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–    640,288 
     Series 2006, 5.625%, 9/01/38             
690    Hartford County, Maryland, Economic Development Revenue Bonds, Battelle Memorial Institute,    4/14 at 100.00    A+    705,760 
     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–    627,994 
     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    1,010,190 
     University, Series 2002A, 5.000%, 7/01/32             
665    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Maryland Institute    6/17 at 100.00    Baa1    632,847 
     College of Art, Series 2007, 5.000%, 6/01/36             
625    Maryland Industrial Development Financing Authority, Revenue Bonds, Our Lady of Good Counsel    5/15 at 100.00    N/R    636,263 
     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    744,250 
     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    1,026,120 
     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    992,722 
     4.625%, 4/01/21             
1,000    University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2003A,    4/13 at 100.00    AA    1,044,170 
     5.000%, 4/01/19             
800    University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2006A,    10/16 at 100.00    AA    837,728 
     5.000%, 10/01/22             
1,150    Westminster, Maryland, Educational Facilities Revenue Bonds, McDaniel College, Series 2006,    11/16 at 100.00    BBB+    1,106,243 
     5.000%, 11/01/31             
10,100    Total Education and Civic Organizations            10,234,955 
    Health Care – 21.5% (14.3% of Total Investments)             
700    Maryland Health and Higher Education Facilities Authority, Revenue Bonds, University of    7/16 at 100.00    A    680,946 
     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    1,008,970 
     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    789,508 
     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    1,275,763 
     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    811,336 
     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    846,972 
     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    671,902 
     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+    780,328 
     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–    1,013,930 
     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    778,946 
     Hospital, Series 2004, Inverse 1003, 6.490%, 7/01/33 (IF)             
1,000    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Kennedy Krieger    7/13 at 100.00    Baa3    1,001,150 
     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    720,244 
     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    909,855 
     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–    656,630 
     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    818,550 
     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    1,880,350 
     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    791,608 
     Adventist Healthcare, Series 2003A, 5.750%, 1/01/25             
900    Prince George’s County, Maryland, Revenue Bonds, Dimensions Health Corporation, Series 1994,    1/08 at 100.00    B3    728,352 
     5.300%, 7/01/24             
16,360    Total Health Care            16,165,340 
    Housing/Multifamily – 14.8% (9.8% of Total Investments)             
980    Maryland Community Development Administration, Housing Revenue Bonds, Series 2002B, 4.950%,    7/12 at 100.00    Aa2    947,974 
     7/01/32 (Alternative Minimum Tax)             
1,250    Maryland Economic Development Corporation, Senior Lien Student Housing Revenue Bonds,    10/13 at 100.00    B2    1,211,388 
     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    20,693 
150     6.000%, 7/01/33 – ACA Insured    7/11 at 101.00    A    154,106 
475    Maryland Economic Development Corporation, Student Housing Revenue Refunding Bonds, University    6/16 at 100.00    AAA    483,897 
     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    508,769 
3,000     5.200%, 7/01/44 (Alternative Minimum Tax)    7/12 at 100.00    Aaa    2,941,890 
4,860    Prince George’s County Housing Authority, Maryland, GNMA Collateralized Mortgage Revenue    11/12 at 100.00    AAA    4,869,719 
     Bonds, Fairview and Hillside Projects, Series 2002A, 4.700%, 11/20/22             
11,250    Total Housing/Multifamily            11,138,436 
    Housing/Single Family – 4.1% (2.7% of Total Investments)             
595    Maryland Community Development Administration, Department of Housing and Community    9/15 at 100.00    Aa2    580,274 
     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    1,166,688 
     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    784,397 
     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    581,678 
     Development, Residential Revenue Bonds, Series 2007D, 4.850%, 9/01/37 (Alternative Minimum Tax)             
3,230    Total Housing/Single Family            3,113,037 
    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    485,444 
     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    1/09 at 101.00    BBB    1,000,920 
     Retrofit Project, Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax)             
1,510    Total Industrials            1,486,364 
    Long-Term Care – 3.1% (2.1% of Total Investments)             
790    Baltimore County, Maryland, Revenue Bonds, Oak Crest Village, Series 2007A, 5.000%, 1/01/37    1/17 at 100.00    BBB+    740,925 
400    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Edenwald, Series    7/16 at 100.00    N/R    389,872 
     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    271,552 
520     5.250%, 1/01/27    1/17 at 100.00    N/R    490,142 
540    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Mercy Ridge    7/17 at 100.00    BBB+    471,550 
     Retirement Community, Series 2007, 4.750%, 7/01/34             
2,530    Total Long-Term Care            2,364,041 
    Tax Obligation/General – 21.7% (14.4% of Total Investments)             
1,000    Annapolis, Maryland, General Obligation Public Improvement Refunding Bonds, Series 2002,    4/12 at 101.00    AA    1,018,590 
     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    AAA    887,664 
650     5.000%, 3/01/21    3/16 at 100.00    AAA    682,819 
380    Carroll County, Maryland, Consolidated Public Improvement Bonds, Series 2005A, 5.000%, 12/01/16    12/15 at 100.00    AA    408,861 
1,260    Charles County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series    1/12 at 101.00    AA    1,292,621 
     2002, 4.400%, 1/15/16             
500    Frederick County, Maryland, General Obligation Public Facilities Bonds, Series 2006,    No Opt. Call    AA    537,225 
     5.000%, 11/01/20             
245    Frederick County, Maryland, Special Obligation Bonds, Villages of Lake Linganore Community    7/10 at 102.00    AA    258,446 
     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    759,885 
535     5.000%, 8/01/17 – MBIA Insured    8/15 at 100.00    AAA    572,627 
1,000    Maryland National Capital Park Planning Commission, Prince George’s County, General Obligation    1/14 at 100.00    AA+    1,058,600 
     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    1,995,854 
     2005A, 5.000%, 7/01/15             
1,440    Montgomery County, Maryland, Consolidated General Obligation Public Improvement Bonds, Series    No Opt. Call    AAA    1,555,243 
     2006, 5.000%, 5/01/16             
1,000    Prince George’s County, Maryland, General Obligation Consolidated Public Improvement Bonds,    10/13 at 100.00    AA+    1,054,150 
     Series 2003A, 5.000%, 10/01/17             
1,000    Prince George’s County, Maryland, General Obligation Consolidated Public Improvement Bonds,    No Opt. Call    AA+    1,054,860 
     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    1,062,090 
1,000    Washington Suburban Sanitary District, Montgomery and Prince George’s Counties, Maryland,    6/15 at 100.00    AAA    1,072,700 
     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    1,072,700 
     Water Supply Bonds, Series 2005, 5.000%, 6/01/16             
15,415    Total Tax Obligation/General            16,344,935 
    Tax Obligation/Limited – 31.1% (20.6% of Total Investments)             
750    Annapolis, Maryland, Special Obligation Bonds, Park Place Project, Series 2005A,    1/15 at 101.00    N/R    706,725 
     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+    1,057,840 
     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    444,204 
     5.750%, 7/01/34             
5,000    Maryland Department of Transportation, Consolidated Transportation Revenue Bonds, Series 2002,    No Opt. Call    AAA    5,543,746 
     5.500%, 2/01/16             
2,200    Maryland Economic Development Corporation, Lease Revenue Bonds, Department of Transportation    6/12 at 100.50    AA+    2,224,662 
     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+    475,835 
     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+    3,119,170 
     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+    1,521,608 
1,620     5.000%, 6/15/23    6/13 at 100.00    AA+    1,664,096 
460    Prince George’s County, Maryland, Special Obligation Bonds, National Harbor Project, Series    7/15 at 100.00    N/R    418,287 
     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    525,257 
     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    1,303,896 
     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–    1,033,730 
1,205     5.250%, 7/01/20    7/12 at 100.00    BBB–    1,242,994 
1,275     5.250%, 7/01/21    7/12 at 100.00    BBB–    1,312,421 
700    Puerto Rico, Highway Revenue Bonds, Highway and Transportation Authority, Series 2003AA,    No Opt. Call    AAA    781,361 
     5.500%, 7/01/19 – MBIA Insured             
22,285    Total Tax Obligation/Limited            23,375,832 
    U.S. Guaranteed – 25.1% (16.6% of Total Investments) (4)             
10    Anne Arundel County, Maryland, General Obligation Bonds, Consolidated General Improvements,    5/09 at 101.00    AAA    10,316 
     Series 1999, 5.000%, 5/15/19 (Pre-refunded 5/15/09)             
    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)    105,753 
100     5.800%, 9/01/30 (Pre-refunded 3/01/10)    3/10 at 101.00    BBB– (4)    105,871 
100    Frederick County, Maryland, General Obligation Public Facilities Bonds, Series 1999, 5.250%,    7/09 at 101.00    AAA    103,752 
     7/01/17 (Pre-refunded 7/01/09)             
    Frederick County, Maryland, General Obligation Public Facilities Bonds, Series 2002:             
1,035     5.000%, 11/01/21 (Pre-refunded 11/01/12)    11/12 at 101.00    Aaa    1,108,030 
2,500     5.000%, 11/01/22 (Pre-refunded 11/01/12)    11/12 at 101.00    Aaa    2,676,400 
280    Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Collington    4/11 at 101.00    N/R (4)    307,639 
     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    301,008 
     Series 1997, 5.000%, 7/01/17 – AMBAC Insured (ETM)             
935    Maryland Transportation Authority, Revenue Refunding Bonds, Transportation Facilities    No Opt. Call    AAA    1,059,411 
     Projects, First Series 1978, 6.800%, 7/01/16 (ETM)             
4,025    Puerto Rico Electric Power Authority, Power Revenue Bonds, Series 2000HH, 5.250%, 7/01/29    7/10 at 101.00    AAA    4,240,216 
     (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    3,672,864 
     5.500%, 10/01/40             
1,000    Puerto Rico Public Finance Corporation, Commonwealth Appropriation Bonds, Series 1998A,    No Opt. Call    AAA    1,069,370 
     5.125%, 6/01/24 – AMBAC Insured (ETM)             
    Puerto Rico Public Finance Corporation, Commonwealth Appropriation Bonds, Series 2002E:             
700     5.500%, 8/01/29 (Pre-refunded 2/01/12)    2/12 at 100.00    Aaa    752,801 
235     5.500%, 8/01/29 (Pre-refunded 2/01/12)    2/12 at 100.00    BBB– (4)    252,033 
880    Puerto Rico, General Obligation and Public Improvement Bonds, Series 2001, 5.125%, 7/01/30    7/11 at 100.00    AAA    926,482 
     (Pre-refunded 7/01/11) – FSA Insured             
2,000    University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2002A, 5.125%,    4/12 at 100.00    AA (4)    2,122,100 
     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    26,379 
     General Obligation Construction Bonds, Second Series 2001, 5.000%, 6/01/17             
     (Pre-refunded 6/01/11)             
17,710    Total U.S. Guaranteed            18,840,425 
    Utilities – 1.8% (1.2% of Total Investments)             
1,250    Maryland Energy Financing Administration, Revenue Bonds, AES Warrior Run Project, Series 1995,    9/07 at 100.00    N/R    1,253,200 
     7.400%, 9/01/19 (Alternative Minimum Tax)             
    Water and Sewer – 5.8% (3.8% of Total Investments)             
2,570    Baltimore, Maryland, Revenue Refunding Bonds, Wastewater Projects, Series 2002A, 5.125%,    7/12 at 100.00    AAA    2,600,943 
     7/01/42 – FGIC Insured             
600    Baltimore, Maryland, Wastewater Project Revenue Bonds, Series 2006C, 5.000%, 7/01/31 –    7/16 at 100.00    AAA    619,200 
     AMBAC Insured             
660    Baltimore, Maryland, Wastewater Project Revenue Bonds, Series 2007D, 5.000%, 7/01/32 –    7/17 at 100.00    AAA    680,915 
     AMBAC Insured             
430    Maryland Water Quality Financing Administration, Revolving Loan Fund Revenue Bonds, Series    No Opt. Call    AAA    464,142 
     2005A, 5.000%, 9/01/15             
4,260    Total Water and Sewer            4,365,200 
$      110,820    Total Investments (cost $113,633,953) – 150.9%            113,399,707 
    Other Assets Less Liabilities – 1.0%            757,964 
    Preferred Shares, at Liquidation Value – (51.9)%            (39,000,000) 
    Net Assets Applicable to Common Shares – 100%           $   75,157,671 

(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. 
N/R    Not rated. 
(ETM)    Escrowed to maturity. 
(IF)    Inverse floating rate investment. 

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 August 31, 2007, the cost of investments was $113,713,638.

Gross unrealized appreciation and gross unrealized depreciation of investments at August 31, 2007, were as follows:

Gross unrealized:     
  Appreciation    $ 1,364,358 
  Depreciation    (1,678,289) 
Net unrealized appreciation (depreciation) of investments    $  (313,931) 

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

Date         October 30, 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         October 30, 2007        

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

Date        October 30, 2007        

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