Shader Model 3

Shader Model 3 added additional capabilities to shader model 2.

Feature	Capability
Instruction Set	HLSL functions Assembly instructions (see ps_3_0 Instructions, Instructions - vs_3_0)
Register Set	Pixel shader registers (see ps_3_0 Registers) Vertex shader registers (see Registers - vs_3_0)
Pixel Shader Max	512 minimum, and up to the number of slots in D3DCAPS9.MaxPixelShader30InstructionSlots (see D3DPSHADERCAPS2_0).
Vertex Shader Max	512 minimum, and up to the number of slots in D3DCAPS9.MaxVertexShader30InstructionSlots (see D3DCAPS9).
Shader Profiles	ps_3_0, vs_3_0

For more details on model 3 shaders, see:

Community Additions