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)

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 North Carolina Dividend Advantage Municipal Fund 2 (NNO)             
    August 31, 2007             
Principal        Optional Call         
Amount (000)    Description (1)    Provisions (2)    Ratings (3)    Value 
    Education and Civic Organizations – 16.3% (10.3% 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   $   615,828 
200     5.125%, 7/15/27 – MBIA Insured    1/11 at 101.00    Aaa    204,796 
    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    1,095,224 
1,000     5.000%, 7/15/15 – MBIA Insured    7/12 at 100.00    Aaa    1,044,010 
    North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, Series 2001A:             
715     5.125%, 10/01/26    10/11 at 100.00    AA+    734,398 
380     5.125%, 10/01/41    10/11 at 100.00    AA+    384,009 
1,000    University of North Carolina System, Pooled Revenue Bonds, Series 2005A, 5.000%, 4/01/22 –    4/15 at 100.00    AAA    1,036,990 
     AMBAC Insured             
635    University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A, 5.375%,    10/12 at 100.00    AAA    675,532 
     4/01/19 – AMBAC Insured             
    University of North Carolina Wilmington, Certificates of Participation, Student Housing             
    Project Revenue Bonds, Series 2006:             
500     5.000%, 6/01/21 – FGIC Insured    6/16 at 100.00    AAA    518,435 
250     5.000%, 6/01/37 – FGIC Insured    6/16 at 100.00    AAA    253,610 
1,500    University of North Carolina, Chapel Hill, System Net Revenue Bonds, Series 2002B,    No Opt. Call    AA+    1,578,675 
     5.000%, 12/01/11             
250    University of North Carolina, Charlotte, Certificates of Participation, Student Housing Project,    3/15 at 100.00    AAA    259,413 
     Series 2005, 5.000%, 3/01/21 – AMBAC Insured             
400    University of North Carolina, Greensboro, General Revenue Refunding Bonds, Series 2002B,    4/11 at 101.00    AAA    424,512 
     5.375%, 4/01/17 – FSA Insured             
8,470    Total Education and Civic Organizations            8,825,432 
    Health Care – 26.5% (16.7% of Total Investments)             
945    Albemarle Hospital Authority, North Carolina, Health Care Facilities Revenue Bonds, Series    10/17 at 100.00    BBB    897,561 
     2007, 5.250%, 10/01/38             
2,130    Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds,    1/11 at 101.00    AA–    2,134,430 
     Carolinas Healthcare System, Series 2001A, 5.000%, 1/15/31             
2,000    North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Novant Health    11/13 at 100.00    AA–    2,032,200 
     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    1,044,135 
     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    1,053,740 
2,000     5.250%, 6/01/22    6/12 at 101.00    A    2,034,060 
925    North Carolina Medical Care Commission, Hospital Revenue Bonds, Wilson Medical Center, Series    11/17 at 100.00    A–    911,079 
     2007, 5.000%, 11/01/27             
2,000    North Carolina Medical Care Commission, Revenue Bonds, Blue Ridge Healthcare System, Series    1/15 at 100.00    AAA    2,016,360 
     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    AAA    620,787 
500     5.250%, 7/01/22 – AMBAC Insured    7/14 at 100.00    AAA    518,690 
500    North Carolina Medical Care Commission, Revenue Bonds, Northeast Medical Center, Series 2004,    11/14 at 100.00    AA    504,310 
     5.000%, 11/01/24             
185    North Carolina Medical Care Commission, Revenue Bonds, Pines at Davidson, Series 2006A,    1/16 at 100.00    N/R    172,411 
     5.000%, 1/01/36             
430    Onslow County Hospital Authority, North Carolina, FHA Insured Mortgage Revenue Bonds, Onslow    10/16 at 100.00    AAA    434,833 
     Memorial Hospital Project, Series 2006, 5.000%, 4/01/31 – MBIA Insured             
14,215    Total Health Care            14,374,596 
    Housing/Single Family – 6.2% (3.9% of Total Investments)             
375    North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, 1998 Trust Agreement,    7/10 at 100.00    AAA    376,583 
     Series 10A, 5.400%, 7/01/32 – AMBAC Insured (Alternative Minimum Tax)             
    North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 13A:             
830     4.700%, 7/01/12 (Alternative Minimum Tax)    7/11 at 100.00    AA    842,832 
835     4.850%, 7/01/13 (Alternative Minimum Tax)    7/11 at 100.00    AA    848,277 
850    North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 2007-29A, 4.800%,    1/17 at 100.00    AA    800,190 
     7/01/33 (Alternative Minimum Tax)             
510    North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 25-A, 4.900%,    7/16 at 100.00    AA    482,843 
     7/01/37 (Alternative Minimum Tax)             
3,400    Total Housing/Single Family            3,350,725 
    Long-Term Care – 1.9% (1.2% of Total Investments)             
600    North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, Presbyterian    10/16 at 100.00    N/R    569,016 
     Homes, Series 2006B, 5.200%, 10/01/21             
250    North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Presbyterian    10/16 at 100.00    N/R    243,855 
     Homes, Series 2006, 5.400%, 10/01/27             
250    North Carolina Medical Care Commission, Revenue Bonds, United Church Homes and Services,    9/15 at 100.00    N/R    236,208 
     Series 2005A, 5.250%, 9/01/21             
1,100    Total Long-Term Care            1,049,079 
    Materials – 3.7% (2.4% of Total Investments)             
865    Gaston County Industrial Facilities and Pollution Control Financing Authority, North Carolina,    8/15 at 100.00    N/R    876,902 
     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    1,138,214 
     Environmental Improvement Revenue Bonds, International Paper Company, Series 2001A,             
     6.200%, 2/01/25 (Alternative Minimum Tax)             
1,965    Total Materials            2,015,116 
    Tax Obligation/General – 5.3% (3.3% of Total Investments)             
250    Durham County, North Carolina, General Obligation Bonds, Series 2000, 5.600%, 5/01/15    5/10 at 102.00    AAA    266,193 
1,475    Durham, North Carolina, General Obligation Bonds, Series 2007, 5.000%, 4/01/22    4/17 at 100.00    AAA    1,557,128 
1,000    North Carolina, General Obligation Bonds, Series 2004A, 5.000%, 3/01/22    3/14 at 100.00    AAA    1,036,690 
2,725    Total Tax Obligation/General            2,860,011 
    Tax Obligation/Limited – 33.6% (21.2% of Total Investments)             
30    Cabarrus County, North Carolina, Certificates of Participation, Series 2002, 5.250%, 2/01/16    2/13 at 100.00    AA–    31,694 
1,750    Charlotte, North Carolina, Certificates of Participation, Governmental Facilities Projects,    6/13 at 100.00    AA+    1,780,030 
     Series 2003G, 5.000%, 6/01/28             
1,850    Charlotte, North Carolina, Storm Water Fee Revenue Bonds, Series 2002, 5.250%, 6/01/18    6/12 at 101.00    AAA    1,965,755 
800    Craven County, North Carolina, Certificates of Participation, Series 2007, 5.000%, 6/01/27 –    6/17 at 100.00    AAA    818,856 
     MBIA 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    1,065,500 
2,025     5.375%, 12/01/16 – FSA Insured    12/12 at 101.00    AAA    2,188,883 
715    Lee County, North Carolina, Certificates of Participation, Public Schools and Community    4/14 at 100.00    AAA    749,592 
     College, 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    1,408,814 
     MBIA Insured             
2,070    Pitt County, North Carolina, Certificates of Participation, School Facilities Project, Series    4/14 at 100.00    AAA    2,104,155 
     2004B, 5.000%, 4/01/29 – AMBAC Insured             
1,270    Puerto Rico Infrastructure Financing Authority, Special Tax Revenue Bonds, Series 2005C,    No Opt. Call    AAA    1,415,009 
     5.500%, 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+    830,752 
1,310     5.000%, 6/01/21    6/14 at 100.00    AA+    1,347,296 
1,000    Randolph County, North Carolina, Certificates of Participation, Series 2004, 5.000%, 6/01/20 –    6/14 at 102.00    AAA    1,040,540 
     FSA Insured             
1,150    Sampson County, North Carolina, Certificates of Participation, Series 2006, 5.000%, 6/01/34 (UB)    6/17 at 100.00    AAA    1,171,701 
325    Wilson, North Carolina, Certificates of Particiation, Public Facilities, Series 2007A, 5.000%,    5/17 at 100.00    AAA    332,358 
     5/01/29 – AGC Insured             
17,480    Total Tax Obligation/Limited            18,250,935 
    Transportation – 16.2% (10.2% 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    2,063,673 
590    Piedmont Triad Airport Authority, North Carolina, Airport Revenue Bonds, Series 2005A, 5.000%,    7/15 at 100.00    AAA    611,824 
     7/01/20 – XLCA Insured             
    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    1,052,120 
2,320     5.250%, 11/01/16 – FGIC Insured    5/11 at 101.00    Aaa    2,438,506 
2,230     5.250%, 11/01/17 – FGIC Insured    5/11 at 101.00    Aaa    2,350,152 
270    University of North Carolina, Charlotte, Parking System Revenue Bonds, Series 2002, 5.000%,    1/12 at 101.00    Aaa    279,871 
     1/01/20 – MBIA Insured             
8,445    Total Transportation            8,796,146 
    U.S. Guaranteed – 13.7% (8.7% of Total Investments) (4)             
200    Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds, DBA    1/15 at 100.00    AA– (4)    213,374 
     Carolinas Healthcare System, Series 2005A, 5.000%, 1/15/45 (Pre-refunded 1/15/15)             
500    North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, Series    10/11 at 100.00    Aaa    527,630 
     2001A, 5.125%, 10/01/26 (Pre-refunded 10/01/11)             
370    North Carolina Medical Care Commission, Health System Revenue Bonds, Mission St. Joseph’s    10/11 at 101.00    AA (4)    394,942 
     Health System, Series 2001, 5.250%, 10/01/31 (Pre-refunded 10/01/11)             
    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    1,068,240 
1,750     5.000%, 3/01/22 (Pre-refunded 3/01/14)    3/14 at 100.00    AAA    1,869,420 
3,200    Wake County, North Carolina, General Obligation School Bonds, Series 2000, 5.400%, 2/01/13    2/10 at 101.50    AAA    3,372,669 
     (Pre-refunded 2/01/10)             
7,020    Total U.S. Guaranteed            7,446,275 
    Utilities – 14.0% (8.9% of Total Investments)             
500    North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series 2005,    1/16 at 100.00    AAA    529,170 
     5.250%, 1/01/20 – AMBAC Insured             
2,500    North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding Bonds, Series    1/08 at 100.00    AAA    2,503,125 
     1993B, 5.500%, 1/01/17 – FGIC Insured             
1,500    North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Series 1999B,    1/10 at 101.00    A3    1,589,940 
     6.500%, 1/01/20             
250    Puerto Rico Electric Power Authority, Power Revenue Bonds, Series 2005RR, 5.000%, 7/01/24 –    7/15 at 100.00    AAA    259,918 
     FGIC Insured             
2,600    Wake County Industrial Facilities and Pollution Control Financing Authority, North Carolina,    2/12 at 101.00    A2    2,714,660 
     Revenue Refunding Bonds, Carolina Power and Light Company, Series 2002, 5.375%, 2/01/17             
7,350    Total Utilities            7,596,813 
    Water and Sewer – 20.9% (13.2% of Total Investments)             
2,520    Charlotte, North Carolina, Water and Sewerage System Revenue Bonds, Series 2002A,    No Opt. Call    AAA    2,715,577 
     5.250%, 7/01/13             
1,000    Durham County, North Carolina, Enterprise System Revenue Bonds, Series 2002, 5.000%, 6/01/23 –    6/13 at 100.00    AAA    1,027,050 
     MBIA 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    3,186,767 
975     5.000%, 3/01/36 (UB)    3/16 at 100.00    AAA    1,000,457 
40    Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2006A, Residuals    3/16 at 100.00    AAA    43,559 
     Series II-R-645-1, 6.386%, 3/01/31 (IF)             
1,000    Wilmington, North Carolina, Water and Sewer Revenue Bonds, Series 2005, 5.000%, 6/01/25 –    6/15 at 100.00    AAA    1,033,990 
     FSA Insured             
2,275    Winston-Salem, North Carolina, Water and Sewer System Revenue Bonds, Series 2007A,    6/17 at 100.00    AAA    2,341,202 
     5.000%, 6/01/37 (UB)             
10,905    Total Water and Sewer            11,348,602 
$        83,075    Total Investments (cost $84,983,362) – 158.3%            85,913,730 
    Floating Rate Obligations – (9.2)%            (4,995,000) 
    Other Assets Less Liabilities – 2.5%            1,364,141 
    Preferred Shares, at Liquidation Value – (51.6)%            (28,000,000) 
    Net Assets Applicable to Common Shares – 100%           $   54,282,871 

(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. 
(IF)    Inverse floating rate investment. 
(UB)    Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the 
    provision of SFAS No. 140. 

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, timing differences in recognizing certain gains and losses on investment transactions and the treatment of investments in inverse floating rate transactions subject to SFAS No. 140.

At August 31, 2007, the cost of investments was $79,983,302.

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

Gross unrealized:     
  Appreciation    $1,572,769 
  Depreciation    (637,241) 
Net unrealized appreciation (depreciation) of investments    $   935,528 

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/ 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.