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 811-10525
 
Nuveen North Carolina Dividend Advantage Municipal Fund 2
(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:          8/31/11         
 
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 North Carolina Dividend Advantage Municipal Fund 2 (NNO)  
     
   
August 31, 2011  
     
Principal  
   
Optional Call  
   
Amount (000)  
 
Description (1)  
Provisions (2)  
Ratings (3)  
Value  
   
Education and Civic Organizations – 11.2% (7.0% of Total Investments)  
     
   
Appalachian State University, North Carolina, Housing and Student Center System Revenue  
     
   
Refunding Bonds, Series 2002:  
     
$    1,040  
 
5.000%, 7/15/14 – NPFG Insured  
7/12 at 100.00  
Aa3  
$   1,079,915  
1,000  
 
5.000%, 7/15/15 – NPFG Insured  
7/12 at 100.00  
Aa3  
1,034,020  
   
North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, Series 2001A:  
     
715  
 
5.125%, 10/01/26  
10/11 at 100.00  
AA+  
716,123  
380  
 
5.125%, 10/01/41  
10/11 at 100.00  
AA+  
381,121  
800  
 
North Carolina Capital Facilities Financing Agency, Revenue Bonds, Johnson and Wales  
4/13 at 100.00  
N/R  
786,488  
   
University, Series 2003A, 5.000%, 4/01/33 – SYNCORA GTY Insured  
     
130  
 
University of North Carolina System, Pooled Revenue Bonds, Series 2002B, 5.375%, 4/01/19 –  
10/12 at 100.00  
A+  
135,248  
   
AMBAC Insured  
     
1,000  
 
University of North Carolina System, Pooled Revenue Bonds, Series 2005A, 5.000%, 4/01/22 –  
4/15 at 100.00  
A+  
1,064,050  
   
AMBAC Insured  
     
500  
 
University of North Carolina Wilmington, Certificates of Participation, Student Housing  
6/16 at 100.00  
A–  
537,835  
   
Project Revenue Bonds, Series 2006, 5.000%, 6/01/21 – FGIC Insured  
     
250  
 
University of North Carolina, Chapel Hill, System Net Revenue Bonds, Series 2002B, 5.000%, 12/01/11  
No Opt. Call  
Aaa  
253,035  
250  
 
University of North Carolina, Charlotte, Certificates of Participation, Student Housing  
3/15 at 100.00  
A  
267,243  
   
Project, Series 2005, 5.000%, 3/01/21 – AMBAC Insured  
     
6,065  
 
Total Education and Civic Organizations  
   
6,255,078  
   
Energy – 1.8% (1.1% of Total Investments)  
     
1,000  
 
Virgin Islands Public Finance Authority, Refinery Facilities Revenue Bonds, Hovensa Coker  
1/13 at 100.00  
Ba2  
994,800  
   
Project, Senior Lien Series 2002, 6.500%, 7/01/21 (Alternative Minimum Tax)  
     
   
Health Care – 36.4% (22.9% of Total Investments)  
     
1,065  
 
Albemarle Hospital Authority, North Carolina, Health Care Facilities Revenue Bonds, Series  
10/17 at 100.00  
N/R  
857,421  
   
2007, 5.250%, 10/01/38  
     
1,000  
 
Charlotte-Mecklenberg Hospital Authority, North Carolina, Carolinas HealthCare System Revenue  
1/18 at 100.00  
AA–  
979,620  
   
Bonds, Series 2008A, 5.000%, 1/15/47  
     
750  
 
Charlotte-Mecklenberg Hospital Authority, North Carolina, Health Care Refunding Revenue Bonds,  
1/19 at 100.00  
AA–  
759,555  
   
Carolinas HealthCare System, Series 2009A, 5.250%, 1/15/39  
     
1,000  
 
Charlotte-Mecklenberg Hospital Authority, North Carolina, Health Care Revenue Bonds, Carolinas  
1/21 at 100.00  
AA–  
1,012,490  
   
HealthCare System, Series 2011A, 5.250%, 1/15/42  
     
1,640  
 
Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds,  
1/12 at 100.00  
AA–  
1,642,230  
   
Carolinas Healthcare System, Series 2001A, 5.000%, 1/15/31  
     
500  
 
Johnston Memorial Hospital Authority, North Carolina, Mortgage Revenue Bonds, Johnston  
4/18 at 100.00  
AA+  
515,255  
   
Memorial Hospital Project, Series 2008A, 5.250%, 10/01/36 – AGM Insured  
     
120  
 
New Hanover County, North Carolina, Hospital Revenue Bonds, New Hanover Regional Medical  
10/19 at 100.00  
AA+  
125,155  
   
Center, Series 2006B, 5.125%, 10/01/31 – AGM Insured  
     
   
North Carolina Medical Care Commission Health Care Facilities Revenue Bonds Novant Health  
     
   
Inc., Series 2010A:  
     
1,250  
 
5.250%, 11/01/40  
11/20 at 100.00  
A+  
1,244,350  
1,000  
 
5.000%, 11/01/43  
11/20 at 100.00  
A+  
962,800  
1,000  
 
North Carolina Medical Care Commission, Health Care Facilities Refunding Revenue Bonds, Blue  
1/20 at 100.00  
A  
932,030  
   
Ridge HealthCare, Series 2010A, 5.000%, 1/01/36  
     
500  
 
North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, Appalachian  
7/21 at 100.00  
BBB+  
529,360  
   
Regional HealthCare System, Series 2011A, 6.500%, 7/01/31  
     
680  
 
North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, Cleveland County  
1/21 at 100.00  
A  
692,220  
   
Healthcare System, Refunding Series 2011A, 5.750%, 1/01/35  
     
455  
 
North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, WakeMed, Series  
10/14 at 100.00  
AA+  
466,994  
   
2009A, 5.625%, 10/01/38 – AGC Insured  
     
2,000  
 
North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Novant Health  
11/13 at 100.00  
A+  
2,051,040  
   
Obligated Group, Series 2003A, 5.000%, 11/01/20  
     
1,005  
 
North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Union Regional  
1/12 at 100.00  
A+  
1,017,392  
   
Medical Center, Series 2002A, 5.250%, 1/01/13  
     
   
North Carolina Medical Care Commission, Hospital Revenue Bonds, Southeastern Regional Medical  
     
   
Center, Series 2002:  
     
1,000  
 
5.500%, 6/01/15  
6/12 at 101.00  
A  
1,034,540  
2,100  
 
5.250%, 6/01/22  
6/12 at 101.00  
A  
2,134,734  
925  
 
North Carolina Medical Care Commission, Hospital Revenue Bonds, Wilson Medical Center, Series  
11/17 at 100.00  
A–  
925,426  
   
2007, 5.000%, 11/01/27  
     
1,250  
 
North Carolina Medical Care Commission, Revenue Bonds, Blue Ridge Healthcare System, Series  
1/15 at 100.00  
A  
1,191,588  
   
2005, 5.000%, 1/01/33 – FGIC Insured  
     
   
North Carolina Medical Care Commission, Revenue Bonds, Cleveland County Healthcare System,  
     
   
Series 2004A:  
     
595  
 
5.250%, 7/01/20 – AMBAC Insured  
7/14 at 100.00  
A  
620,210  
500  
 
5.250%, 7/01/22 – AMBAC Insured  
7/14 at 100.00  
A  
516,965  
150  
 
Northern Hospital District of Surry County, North Carolina, Health Care Facilities Revenue  
4/18 at 100.00  
BBB  
150,551  
   
Bonds, Series 2008, 6.250%, 10/01/38  
     
20,485  
 
Total Health Care  
   
20,361,926  
   
Housing/Single Family – 3.5% (2.2% of Total Investments)  
     
290  
 
North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, 1998 Trust Agreement,  
1/12 at 100.00  
AA  
290,084  
   
Series 10A, 5.400%, 7/01/32 – AMBAC Insured (Alternative Minimum Tax)  
     
   
North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 13A:  
     
540  
 
4.700%, 7/01/12 (Alternative Minimum Tax)  
11/11 at 100.00  
AA  
541,237  
545  
 
4.850%, 7/01/13 (Alternative Minimum Tax)  
11/11 at 100.00  
AA  
546,019  
100  
 
North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 2011-1,  
1/21 at 100.00  
AA  
100,906  
   
4.500%, 1/01/28  
     
500  
 
North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 25-A, 4.900%,  
7/16 at 100.00  
AA  
493,830  
   
7/01/37 (Alternative Minimum Tax)  
     
1,975  
 
Total Housing/Single Family  
   
1,972,076  
   
Long-Term Care – 1.7% (1.0% of Total Investments)  
     
   
North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Presbyterian  
     
   
Homes, Series 2006:  
     
250  
 
5.400%, 10/01/27  
10/16 at 100.00  
N/R  
225,105  
600  
 
5.500%, 10/01/31  
10/16 at 100.00  
N/R  
530,142  
185  
 
North Carolina Medical Care Commission, Revenue Bonds, Pines at Davidson, Series 2006A,  
1/16 at 100.00  
N/R  
170,335  
   
5.000%, 1/01/36  
     
1,035  
 
Total Long-Term Care  
   
925,582  
   
Materials – 0.4% (0.3% of Total Investments)  
     
300  
 
Columbus County Industrial Facilities and Pollution Control Financing Authority, North  
3/17 at 100.00  
BBB  
265,965  
   
Carolina, Environmental Improvement Revenue Bonds, International Paper Company Project,  
     
   
Series 2007A, 4.625%, 3/01/27  
     
   
Tax Obligation/General – 9.8% (6.1% of Total Investments)  
     
1,475  
 
Durham, North Carolina, General Obligation Bonds, Series 2007, 5.000%, 4/01/22  
4/17 at 100.00  
AAA  
1,677,134  
1,050  
 
Forsyth County, North Carolina, General Obligation Bonds, Limited Obligation Series 2009,  
4/20 at 100.00  
AA+  
1,138,715  
   
5.000%, 4/01/30  
     
500  
 
North Carolina, General Obligation Bonds, Series 2004A, 5.000%, 3/01/22  
3/14 at 100.00  
AAA  
542,335  
2,000  
 
Wake County, North Carolina, Limited Obligation Bonds, Series 2010, 5.000%, 1/01/37  
1/20 at 100.00  
AA+  
2,117,900  
5,025  
 
Total Tax Obligation/General  
   
5,476,084  
   
Tax Obligation/Limited – 34.9% (21.9% of Total Investments)  
     
30  
 
Cabarrus County, North Carolina, Certificates of Participation, Series 2002, 5.250%, 2/01/16  
2/13 at 100.00  
AA  
31,720  
1,750  
 
Charlotte, North Carolina, Certificates of Participation, Governmental Facilities Projects,  
6/13 at 100.00  
AA+  
1,787,660  
   
Series 2003G, 5.000%, 6/01/28  
     
575  
 
Charlotte, North Carolina, Certificates of Participation, Transit Projects Phase 2, Series  
6/18 at 100.00  
AA+  
593,803  
   
2008A, 5.000%, 6/01/33  
     
1,850  
 
Charlotte, North Carolina, Storm Water Fee Revenue Bonds, Series 2002, 5.250%, 6/01/18  
6/12 at 101.00  
AAA  
1,931,308  
800  
 
Craven County, North Carolina, Certificates of Participation, Series 2007, 5.000%, 6/01/27 –  
6/17 at 100.00  
AA–  
847,216  
   
NPFG Insured  
     
500  
 
Harnett County, North Carolina, Certificates of Participation, Series 2009, 5.000%, 6/01/29 –  
6/19 at 100.00  
AA+  
525,350  
   
AGC Insured  
     
   
Hartnett County, North Carolina, Certificates of Participation, Series 2002:  
     
1,000  
 
5.250%, 12/01/15 – AGM Insured  
12/12 at 101.00  
AA+  
1,066,210  
2,025  
 
5.375%, 12/01/16 – AGM Insured  
12/12 at 101.00  
AA+  
2,159,845  
715  
 
Lee County, North Carolina, Certificates of Participation, Public Schools and Community  
4/14 at 100.00  
AA+  
762,119  
   
College, Series 2004, 5.250%, 4/01/20 – AGM Insured  
     
1,380  
 
Pasquotank County, North Carolina, Certificates of Participation, Series 2004, 5.000%, 6/01/25 –  
6/14 at 100.00  
A  
1,412,264  
   
NPFG Insured  
     
2,070  
 
Pitt County, North Carolina, Certificates of Participation, School Facilities Project, Series  
4/14 at 100.00  
AA–  
2,106,763  
   
2004B, 5.000%, 4/01/29 – AMBAC Insured  
     
2,625  
 
Puerto Rico Sales Tax Financing Corporation, Sales Tax Revenue Bonds, Series 2010A,  
No Opt. Call  
A+  
569,809  
   
0.000%, 8/01/35  
     
   
Raleigh, North Carolina, Certificates of Participation, Downtown Improvement Project,  
     
   
Series 2004B:  
     
805  
 
5.000%, 6/01/20  
6/14 at 100.00  
AA+  
858,468  
1,310  
 
5.000%, 6/01/21  
6/14 at 100.00  
AA+  
1,390,290  
115  
 
Raleigh, North Carolina, Certificates of Participation, Series 2007, 5.000%, 2/01/27  
2/17 at 100.00  
AA+  
122,535  
1,000  
 
Randolph County, North Carolina, Certificates of Participation, Series 2004, 5.000%, 6/01/20 –  
6/14 at 102.00  
AA+  
1,078,680  
   
AGM Insured  
     
100  
 
Rutherford County, North Carolina, Certificates of Participation, Series 2007, 5.000%,  
12/17 at 100.00  
AA+  
106,586  
   
12/01/27 – AGM Insured  
     
1,150  
 
Sampson County, North Carolina, Certificates of Participation, Series 2006, 5.000%, 6/01/34 –  
6/17 at 100.00  
AA+  
1,180,234  
   
AGM Insured (UB)  
     
500  
 
Wilmington, North Carolina, Certificates of Participation, Series 2008A, 5.000%, 6/01/29  
6/18 at 100.00  
AA  
533,100  
400  
 
Wilson County, North Carolina, Certificates of Participation, School Facilities Project,  
4/17 at 100.00  
Aa3  
420,948  
   
Series 2007, 5.000%, 4/01/25 – AMBAC Insured  
     
20,700  
 
Total Tax Obligation/Limited  
   
19,484,908  
   
Transportation – 13.5% (8.5% of Total Investments)  
     
1,000  
 
Charlotte, North Carolina, Airport Revenue Bonds, Charlotte Douglas International Refunding  
7/20 at 100.00  
A+  
1,018,880  
   
Series 2010A, 5.000%, 7/01/39  
     
1,935  
 
Charlotte, North Carolina, Airport Revenue Bonds, Series 2004A, 5.000%, 7/01/34 – NPFG Insured  
7/14 at 100.00  
A+  
1,954,969  
660  
 
North Carolina State Ports Authority, Port Facilities Revenue Bonds, Senior Lien Series 2010A,  
2/20 at 100.00  
A3  
677,992  
   
5.250%, 2/01/40  
     
   
North Carolina Turnpike Authority, Triangle Expressway System Revenue Bonds, Series 2009A:  
     
90  
 
5.375%, 1/01/26 – AGC Insured  
1/19 at 100.00  
AA+  
98,091  
220  
 
5.500%, 1/01/29 – AGC Insured  
1/19 at 100.00  
AA+  
237,301  
430  
 
5.750%, 1/01/39 – AGC Insured  
1/19 at 100.00  
AA+  
457,705  
   
North Carolina Turnpike Authority, Triangle Expressway System Senior Lien Revenue Bonds,  
     
   
Series 2009B:  
     
150  
 
0.000%, 1/01/31 – AGC Insured  
No Opt. Call  
AA+  
50,700  
125  
 
0.000%, 1/01/33 – AGC Insured  
No Opt. Call  
AA+  
37,376  
50  
 
0.000%, 1/01/35 – AGC Insured  
No Opt. Call  
AA+  
13,260  
5,600  
 
0.000%, 1/01/37 – AGC Insured  
No Opt. Call  
AA+  
1,325,408  
350  
 
0.000%, 1/01/38 – AGC Insured  
No Opt. Call  
AA+  
78,057  
435  
 
Piedmont Triad Airport Authority, North Carolina, Airport Revenue Bonds, Series 2005A, 5.000%,  
7/15 at 100.00  
A2  
469,047  
   
7/01/20 – SYNCORA GTY Insured  
     
1,100  
 
Raleigh Durham Airport Authority, North Carolina, Airport Revenue Bonds, Refunding Series  
No Opt. Call  
Aa3  
1,149,082  
   
2010A, 5.000%, 5/01/36  
     
12,145  
 
Total Transportation  
   
7,567,868  
   
U.S. Guaranteed – 7.4% (4.6% of Total Investments) (4)  
     
200  
 
Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds, DBA  
1/15 at 100.00  
AA+ (4)  
230,712  
   
Carolinas Healthcare System, Series 2005A, 5.000%, 1/15/45 (Pre-refunded 1/15/15)  
     
500  
 
North Carolina Medical Care Commission, Revenue Bonds, Northeast Medical Center, Series 2004,  
11/14 at 100.00  
Aa3 (4)  
572,265  
   
5.000%, 11/01/24 (Pre-refunded 11/01/14)  
     
   
Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2004:  
     
1,000  
 
5.000%, 3/01/21 (Pre-refunded 3/01/14)  
3/14 at 100.00  
AAA  
1,115,960  
1,250  
 
5.000%, 3/01/22 (Pre-refunded 3/01/14)  
3/14 at 100.00  
AAA  
1,392,300  
505  
 
University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A, 5.375%,  
10/12 at 100.00  
N/R (4)  
532,841  
   
4/01/19 (Pre-refunded 10/01/12) – AMBAC Insured  
     
270  
 
University of North Carolina, Charlotte, Parking System Revenue Bonds, Series 2002, 5.000%,  
1/12 at 101.00  
A1 (4)  
276,982  
   
1/01/20 (Pre-refunded 1/01/12) – NPFG Insured  
     
3,725  
 
Total U.S. Guaranteed  
   
4,121,060  
   
Utilities – 7.6% (4.8% of Total Investments)  
     
500  
 
North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series 2005,  
1/16 at 100.00  
A–  
564,895  
   
5.250%, 1/01/20 – AMBAC Insured  
     
   
North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding Bonds,  
     
   
Series 1993B:  
     
745  
 
5.500%, 1/01/17 – FGIC Insured  
11/11 at 100.00  
Baa1  
747,064  
15  
 
5.500%, 1/01/21  
11/11 at 100.00  
A–  
15,029  
225  
 
North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Refunding Series  
1/19 at 100.00  
A  
234,731  
   
2009A, 5.000%, 1/01/30  
     
2,600  
 
Wake County Industrial Facilities and Pollution Control Financing Authority, North Carolina,  
2/12 at 101.00  
A1  
2,674,672  
   
Revenue Refunding Bonds, Carolina Power and Light Company, Series 2002, 5.375%, 2/01/17  
     
4,085  
 
Total Utilities  
   
4,236,391  
   
Water and Sewer – 31.1% (19.6% of Total Investments)  
     
500  
 
Brunswick County, North Carolina, Enterprise System Revenue Bonds, Series 2008A, 5.000%,  
4/18 at 100.00  
AA+  
524,395  
   
4/01/31 – AGM Insured  
     
500  
 
Cape Fear Public Utility Authority, North Carolina, Water & Sewer System Revenue Bonds, Series  
8/18 at 100.00  
AA  
526,690  
   
2008, 5.000%, 8/01/35  
     
1,520  
 
Charlotte, North Carolina, Water and Sewerage System Revenue Bonds, Series 2002A,  
No Opt. Call  
AAA  
1,658,487  
   
5.250%, 7/01/13  
     
500  
 
Dare County, North Carolina, Utilities System Revenue Bonds, Series 2011, 5.000%, 2/01/41  
2/21 at 100.00  
AA  
530,630  
1,000  
 
Durham County, North Carolina, Enterprise System Revenue Bonds, Series 2002, 5.000%, 6/01/23 –  
6/13 at 100.00  
AA  
1,054,770  
   
NPFG Insured  
     
3,050  
 
Durham, North Carolina, Utility System Revenue Bonds, Refunding Series 2011, 5.000%, 6/01/41  
6/21 at 100.00  
AAA  
3,287,687  
610  
 
Oak Island, North Carolina, Enterprise System Revenue Bonds, Series 2008A, 5.000%, 6/01/23 -  
6/18 at 100.00  
A2  
652,511  
   
NPFG Insured  
     
700  
 
Oak Island, North Carolina, Enterprise System Revenue Bonds, Series 2009A, 6.000%, 6/01/34 -  
6/19 at 100.00  
AA+  
762,986  
   
AGC Insured  
     
500  
 
Oak Island, North Carolina, Enterprise System Revenue Bonds, Series 2011, 5.750%, 6/01/36 –  
6/21 at 100.00  
AA+  
539,630  
   
AGC Insured  
     
   
Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2006A:  
     
3,095  
 
5.000%, 3/01/31 (UB)  
3/16 at 100.00  
AAA  
3,302,025  
975  
 
5.000%, 3/01/36 (UB)  
3/16 at 100.00  
AAA  
1,025,612  
40  
 
Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2006A,  
No Opt. Call  
AAA  
48,027  
   
Residuals Series 11-R-645-2, 13.404%, 3/01/14 (IF)  
     
1,000  
 
Wilmington, North Carolina, Water and Sewer Revenue Bonds, Series 2005, 5.000%, 6/01/25 –  
6/15 at 100.00  
AA+  
1,082,687  
   
AGM Insured  
     
2,275  
 
Winston-Salem, North Carolina, Water and Sewer System Revenue Bonds, Series 2007A, 5.000%,  
6/17 at 100.00  
AAA  
2,420,120  
   
6/01/37 (UB)  
     
16,265  
 
Total Water and Sewer  
   
17,416,257  
$ 92,805  
 
Total Investments (cost $86,055,877) – 159.3%  
   
89,077,995  
   
Floating Rate Obligations – (8.6)%  
   
(4,805,000)
   
MuniFund Term Preferred Shares, at Liquidation Value – (53.1)% (5)  
   
(29,700,000)
   
Other Assets Less Liabilities – 2.4%  
   
1,332,262  
   
Net Assets Applicable to Common Shares – 100%  
   
$ 55,905,257  
 
 
 
 
 

 
Fair Value Measurements
 
Fair value is defined as the price that the Fund would receive upon selling an investment or transferring a liability in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. A three-tier hierarchy is used to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability. Observable inputs are based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Unobservable inputs are based on the best information available in the circumstances. The three-tier hierarchy of inputs is 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 methodologies 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, 2011:
 
         
 
Level 1  
Level 2  
Level 3  
Total  
Investments:  
       
Municipal Bonds  
$ —  
$89,077,995  
$ —  
$89,077,995  
 
 
During the period ended August 31, 2011, the Fund recognized no significant transfers to or from Level 1, Level 2 or Level 3.
 
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 securities reflected as financing transactions, 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, 2011, the cost of investments was $81,230,617.
 
Gross unrealized appreciation and gross unrealized depreciation of investments at August 31, 2011, were as follows:
 
   
Gross unrealized:  
 
Appreciation  
$3,437,703  
Depreciation  
(395,341)
Net unrealized appreciation (depreciation) of investments  
$3,042,362  
 
 
     
(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 highest of Standard & Poor’s Group (“Standard & Poor’s”), Moody’s Investor Service,  
   
Inc. (“Moody’s”) or Fitch, Inc. (“Fitch”) rating. Ratings below BBB by Standard & Poor’s, Baa by Moody’s  
   
or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by  
   
any of these national rating agencies.  
(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. Bonds backed by U.S. Government or agency  
   
securities are given an implied rating equal to the rating of such securities.  
(5)  
 
MuniFund Term Preferred Shares, at Liquidation Value as a percentage of Total Investments is 33.3%.  
N/R  
 
Not rated.  
(IF)  
 
Inverse floating rate investment.  
(UB)  
 
Underlying bond of an inverse floating rate trust reflected as a financing transaction.  
 
 
 
 
 
Item 2. Controls and Procedures.

a.  
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)).
 
 
b.  
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 North Carolina Dividend Advantage Municipal Fund 2 
 
By (Signature and Title)     /s/ Kevin J. McCarthy                    
                                                   Kevin J. McCarthy
                                                   Vice President and Secretary
 
Date          October 28, 2011        
 
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 28, 2011        
 
By (Signature and Title)     /s/ Stephen D. Foy                              
                                                   Stephen D. Foy
                                                  Vice President and Controller (principal financial officer) 
 
Date          October 28, 2011        
 

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