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         811-10525         

        Nuveen North Carolina Dividend Advantage Municipal Fund 2         
(Exact name of registrant as specified in charter)


        333 West Wacker Drive, Chicago, Illinois 60606         
(Address of principal executive offices) (Zip code)


Jessica R. Droeger—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:            05/31          

Date of reporting period:          08/31/05         

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, 2005

  Principal               
  Amount   (000)    Description(1)   Optional  Call Provisions*   Ratings**      Market Value 
      Education and Civic Organizations - 28.1% (19.3% of Total Investments)              
      Appalachian State University, North Carolina, Housing and Student Center System Revenue Refunding              
      Bonds, Series 2001:              
$   600    5.125%, 7/15/24 - MBIA Insured   1/11 at 101.00    Aaa    $   647,310 
  200    5.125%, 7/15/27 - MBIA Insured   1/11 at 101.00    Aaa      212,268 
      Appalachian State University, North Carolina, Housing and Student Center System Revenue Refunding              
      Bonds, Series 2002:              
  1,040    5.000%, 7/15/14 - MBIA Insured   7/12 at 100.00    Aaa      1,138,374 
  1,000    5.000%, 7/15/15 - MBIA Insured   7/12 at 100.00    Aaa      1,079,660 
  500    East Carolina University, General Revenue Bonds, Series 2003A, 5.000%, 5/01/19 - AMBAC Insured   5/13 at 100.00    Aaa      545,110 
      North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, Series 2001A:              
  3,750    5.125%, 10/01/26   10/11 at 100.00    AA+      3,973,200 
  2,000    5.125%, 10/01/41   10/11 at 100.00    AA+      2,093,860 
  1,000    University of North Carolina, Charlotte, Certificates of Participation, Student Housing Project,   3/15 at 100.00    AAA      1,064,150 
      Series 2005, 5.000%, 3/01/31 - AMBAC Insured              
  1,840    University of North Carolina, Chapel Hill, System Net Revenue Bonds, Series 2002B, 5.000%,   No Opt. Call    AA+      2,020,706 
      12/01/11              
  400    University of North Carolina, Greensboro, General Revenue Refunding Bonds, Series 2002B, 5.375%,   4/11 at 101.00    AAA      442,200 
      4/01/17 - FSA Insured              
  1,100    University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A, 5.375%,   10/12 at 100.00    AAA      1,223,629 
      4/01/19 - AMBAC Insured              
      University of North Carolina System, Pooled Revenue Bonds, Series 2004C:              
  250    5.000%, 4/01/21 - AMBAC Insured   4/14 at 100.00    Aaa      270,363 
  500    5.000%, 4/01/24 - AMBAC Insured   4/14 at 100.00    Aaa      537,325 
  1,000    University of North Carolina System, Pooled Revenue Bonds, Series 2005A, 5.000%, 4/01/22 - AMBAC   4/15 at 100.00    AAA      1,085,970 
      Insured              
 
      Healthcare - 22.3% (15.4% of Total Investments)              
  2,130    Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds,   1/11 at 101.00    AA      2,215,839 
      Carolinas Healthcare System, Series 2001A, 5.000%, 1/15/31              
  1,000    New Hanover County, North Carolina, Hospital Revenue Bonds, New Hanover Regional Medical Center,   10/05 at 100.00    AAA      1,000,780 
      Series 1993, 4.750%, 10/01/23 - AMBAC Insured              
  1,005    North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Union Regional Medical   1/12 at 100.00    A      1,084,827 
      Center, Series 2002A, 5.250%, 1/01/13              
  2,000    North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Novant Health   11/13 at 100.00    AA-      2,126,600 
      Obligated Group, Series 2003A, 5.000%, 11/01/20              
      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    AAA      654,036 
  500    5.250%, 7/01/22 - AMBAC Insured   7/14 at 100.00    AAA      547,265 
  500    North Carolina Medical Care Commission, Revenue Bonds, Blue Ridge Healthcare System, Series 2005,   1/15 at 100.00    AAA      529,800 
      5.000%, 1/01/33 - FGIC Insured              
      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        1,097,240 
  2,000    5.250%, 6/01/22    6/12 at 101.00    A      2,112,500 
  500    North Carolina Medical Care Commission, Revenue Bonds, Northeast Medical Center, Series 2004,    11/14 at 100.00    AA      530,930 
      5.000%, 11/01/24               
  1,000    North Carolina Medical Care Commission, Health System Revenue Bonds, Mission St. Joseph's Health    10/11 at 101.00    AA      1,059,950 
      System, Series 2001, 5.250%, 10/01/31               
 
      Housing/Single Family - 3.9% (2.7% of Total Investments)               
  410    North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, 1998 Trust Agreement, Series    7/10 at 100.00    AAA      422,054 
      10A, 5.400%, 7/01/32 (Alternative Minimum Tax) - AMBAC Insured               
      North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 13A:               
  885    4.700%, 7/01/12 (Alternative Minimum Tax)    7/11 at 100.00    AA      918,444 
  885    4.850%, 7/01/13 (Alternative Minimum Tax)    7/11 at 100.00    AA      917,595 
 
      Industrials - 1.4% (1.0% of Total Investments)               
  800    North Carolina Capital Facilities Financing Agency, Exempt Facilities Revenue Bonds, Waste    No Opt. Call    BBB      802,080 
      Management Inc., Series 2001, 3.750%, 8/01/14 (Alternative Minimum Tax) (Mandatory put 8/01/07)               
 
      Long-Term Care - 1.2% (0.8% of Total Investments)               
  400    North Carolina Medical Care Commission, Revenue Bonds, United Methodist Retirement Homes Inc.,    10/14 at 100.00    N/R      410,796 
      Series 2005A, 5.500%, 10/01/35               
  250    North Carolina Medical Care Commission, Revenue Bonds, United Church Homes and Services, Series    9/15 at 100.00    N/R      259,557 
      2005A, 5.250%, 9/01/21               
 
      Materials - 3.6% (2.5% of Total Investments)               
  865    Gaston County Industrial Facilities and Pollution Control Financing Authority, North Carolina,    8/15 at 100.00    N/R      906,131 
      National Gypsum Company Project Exempt Facilities Revenue Bonds, Series 2005, 5.750%, 8/01/35               
      (Alternative Minimum Tax)               
  1,100    Northampton County Industrial Facilities and Pollution Control Financing Authority, North Carolina,    2/11 at 101.00    BBB      1,179,519 
      Environmental Improvement Revenue Bonds, International Paper Company, Series 2001A, 6.200%,               
      2/01/25 (Alternative Minimum Tax)               
 
      Tax Obligation/General - 2.4% (1.6% of Total Investments)               
  250    Durham County, North Carolina, General Obligation Bonds, Series 2000, 5.600%, 5/01/15    5/10 at 102.00    AAA      280,257 
  1,000    North Carolina, General Obligation Bonds, Series 2004A, 5.000%, 3/01/22    3/14 at 100.00    AAA      1,086,090 
 
      Tax Obligation/Limited - 31.7% (21.8% of Total Investments)               
  30    Cabarrus County, North Carolina, Certificates of Participation, Series 2002, 5.250%, 2/01/16    2/13 at 100.00    AA-      32,960 
  1,650    Charlotte, North Carolina, Certificates of Participation, Governmental Facilities Projects, Series    6/13 at 100.00    AA+      1,742,598 
      2003G, 5.000%, 6/01/28               
      Charlotte, North Carolina, Storm Water Fee Revenue Bonds, Series 2002:               
  1,850    5.250%, 6/01/18    6/12 at 101.00    AA+      2,047,673 
  400    5.250%, 6/01/19    6/12 at 101.00    AA+      442,740 
  1,325    Dare County, North Carolina, Certificates of Participation, Series 2002, 5.250%, 6/01/17 - AMBAC    12/12 at 100.00    AAA      1,462,893 
      Insured               
      Hartnett County, North Carolina, Certificates of Participation, Series 2002:               
  1,000    5.250%, 12/01/15 - FSA Insured    12/12 at 101.00    AAA      1,107,670 
  2,025    5.375%, 12/01/16 - FSA Insured    12/12 at 101.00    AAA      2,262,998 
  715    Lee County, North Carolina, Certificates of Participation, Public Schools and Community College,    4/14 at 100.00    AAA      788,380 
      Series 2004, 5.250%, 4/01/20 - FSA Insured               
  1,380    Pasquotank County, North Carolina, Certificates of Participation, Series 2004, 5.000%, 6/01/25 -    6/14 at 100.00    AAA      1,477,276 
      MBIA Insured               

  2,070    Pitt County, North Carolina, Certificates of Participation, School Facilities Project, Series    4/14 at 100.00    AAA        2,205,896
      2004B, 5.000%, 4/01/29 - AMBAC Insured             
  1,270    Puerto Rico Infrastructure Financing Authority, Special Tax Revenue Bonds, Series 2005C, 5.500%,    No Opt. Call    AAA      1,481,709
      7/01/16 - AMBAC Insured             
      Raleigh, North Carolina, Certificates of Participation, Downtown Improvement Project, Series 2004B:             
  805    5.000%, 6/01/20    6/14 at 100.00    AA+      867,895
  1,310    5.000%, 6/01/21    6/14 at 100.00    AA+      1,408,342
  1,000    Randolph County, North Carolina, Certificates of Participation, Series 2004, 5.000%, 6/01/20 - FSA    6/14 at 102.00    AAA      1,094,700
      Insured             
      Transportation - 15.6% (10.7% of Total Investments)             
  2,035    Charlotte, North Carolina, Airport Revenue Bonds, Series 2004A, 5.000%, 7/01/34 - MBIA Insured    7/14 at 100.00    AAA      2,151,687
      Raleigh Durham Airport Authority, North Carolina, Airport Revenue Bonds, Series 2001A:             
  1,000    5.250%, 11/01/15 - FGIC Insured    5/11 at 101.00    Aaa      1,094,010
  2,320    5.250%, 11/01/16 - FGIC Insured    5/11 at 101.00    Aaa      2,536,595
  2,230    5.250%, 11/01/17 - FGIC Insured    5/11 at 101.00    Aaa      2,436,766
      University of North Carolina, Charlotte, Parking System Revenue Bonds, Series 2002:             
  270    5.000%, 1/01/20 - MBIA Insured    1/12 at 101.00    Aaa      292,788
  500    5.125%, 1/01/27 - MBIA Insured    1/12 at 101.00    Aaa      534,710
      U.S. Guaranteed *** - 8.8% (6.1% of Total Investments)             
  1,465    Orange Water and Sewerage Authority, North Carolina, Water and Sewerage System Revenue Bonds,    7/11 at 101.00    AA+***      1,611,075
      Series 2001, 5.000%, 7/01/20 (Pre-refunded to 7/01/11)             
  3,200    Wake County, North Carolina, General Obligation School Bonds, Series 2000, 5.400%, 2/01/13    2/10 at 101.50    AAA      3,538,944
      (Pre-refunded to 2/01/10)             
      Utilities - 12.4% (8.6% of Total Investments)             
  2,500    North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding Bonds, Series 1993B,    1/06 at 100.00    AAA      2,505,175
      5.500%, 1/01/17 - FGIC Insured             
  1,500    North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Series 1999B, 6.500%,    1/10 at 101.00    A3      1,665,120
      1/01/20             
  250    Puerto Rico Electric Power Authority, Power Revenue Bonds, Series 2005RR, 5.000%, 7/01/24 - FGIC    7/15 at 100.00    AAA      273,017
      Insured             
  2,600    Wake County Industrial Facilities and Pollution Control Financing Authority, North Carolina,    2/12 at 101.00    A3      2,806,076
      Revenue Refunding Bonds, Carolina Power and Light Company, Series 2002, 5.375%, 2/01/17             
      Water and Sewer - 13.8% (9.5% of Total Investments)             
  2,520    Charlotte, North Carolina, Water and Sewerage System Revenue Bonds, Series 2002A, 5.250%, 7/01/13    No Opt. Call    AAA      2,839,057
  1,000    Durham County, North Carolina, Enterprise System Revenue Bonds, Series 2002, 5.000%, 6/01/23 -    6/13 at 100.00    AAA      1,081,170
      MBIA Insured             
  1,085    Greensboro, North Carolina, Combined Enterprise System Revenue Bonds, Series 2005A, 5.000%,    6/15 at 100.00    AA+      1,170,455
      6/01/24             
      Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2004:             
  1,000    5.000%, 3/01/21    3/14 at 100.00    AAA      1,084,580
  1,750    5.000%, 3/01/22    3/14 at 100.00    AAA      1,892,747
$   78,310    Total Long-Term Investments (cost $79,940,406) - 145.2%              84,414,117
      Other Assets Less Liabilities - 3.0%              1,720,786
      Preferred Shares, at Liquidation Value - (48.2)%              (28,000,000)
      Net Assets Applicable to Common Shares - 100%            $   58,134,903

Forward Swap Contracts outstanding at August 31, 2005:                   
                  Unrealized  
      Notional    Effective   Termination      Appreciation  
      Amount    Date(2)   Date      (Depreciation)  
 
Agreement with JPMorgan dated June 21, 2005, to pay semi-annually the                   
notional amount multiplied by 4.833% (annualized) and receive quarterly                   
the notional amount multiplied by the three-month USD-LIBOR (United                   
States Dollar-London Inter-Bank Offered Rates).    $   800,000    2/09/06   2/09/36    $   (14,225 ) 
 
Agreement with Morgan Stanley dated June 21, 2005, to pay semi-annually                   
the notional amount multiplied by 4.816% (annualized) and receive quarterly                   
the notional amount multiplied by the three-month USD-LIBOR (United                   
States Dollar-London Inter-Bank Offered Rates).      800,000    2/15/06   2/15/36      (12,025 ) 
 
                $   (26,250 ) 

(1)        All percentages shown in the Portfolio of Investments are based on net assets applicable
             to Common shares unless otherwise noted.

(2)        Effective date represents the date on which both the Fund and counterparty commence
             interest payment accruals on each forward swap contract.

  *         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.

**          Ratings: Using the higher of Standard & Poor's or Moody's rating.

***        Securities are backed by an escrow or trust containing sufficient U.S. Government or U.S.
             Government agency securities which ensures the timely payment of principal and interest.
             Such securities are normally considered to be equivalent to AAA rated securities.

N/R Investment is not rated.

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 income on
taxable market discount securities and timing differences in recognizing certain gains and losses on investment
transactions.

At August 31, 2005, the cost of investments was $79,935,683.

Gross unrealized appreciation and gross unrealized depreciation of investments at August 31, 2005, were as follows:

Gross unrealized:       
   Appreciation    $   4,478,460  
   Depreciation      (26 ) 
 
Net unrealized appreciation of investments    $   4,478,434  

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 North Carolina Dividend Advantage Municipal Fund 2        

By (Signature and Title)*          /s/ Jessica R. Droeger--Vice President and Secretary        

Date         10/28/05        

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--Chief Administrative Officer (principal executive officer)        

Date         10/28/05        

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

Date         10/28/05        

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