Unassociated Document



 
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:         8/31/10         
 
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, 2010
      
Principal
    
Optional Call
    
Amount (000)
  
Description (1)
Provisions (2)
Ratings (3)
Value 
   
Education and Civic Organizations – 12.0% (7.6% 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 
$  1,116,794 
1,000 
  
5.000%, 7/15/15 – NPFG Insured 
7/12 at 100.00 
Aa3 
1,062,540 
   
North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, 
      
   
Series 2001A: 
      
715 
  
5.125%, 10/01/26 
10/11 at 100.00 
AA+ 
731,338 
380 
  
5.125%, 10/01/41 
10/11 at 100.00 
AA+ 
394,619 
800 
  
North Carolina Capital Facilities Financing Agency, Revenue Bonds, Johnson and Wales 
4/13 at 100.00 
N/R 
801,024 
   
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 
N/R 
139,078 
   
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+ 
1,076,360 
   
AMBAC Insured 
      
500 
  
University of North Carolina Wilmington, Certificates of Participation, Student Housing 
6/16 at 100.00 
A 
550,380 
   
Project Revenue Bonds, Series 2006, 5.000%, 6/01/21 – FGIC Insured 
      
400 
  
University of North Carolina, Chapel Hill, System Net Revenue Bonds, Series 2002B, 
No Opt. Call 
Aaa 
423,636 
   
5.000%, 12/01/11 
      
250 
  
University of North Carolina, Charlotte, Certificates of Participation, Student Housing 
3/15 at 100.00 
A 
271,110 
   
Project, 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 
415,900 
   
5.375%, 4/01/17 – AGM Insured 
      
6,615 
  
Total Education and Civic Organizations 
    
6,982,779 
   
Health Care – 26.4% (16.8% of Total Investments)
      
1,015 
  
Albemarle Hospital Authority, North Carolina, Health Care Facilities Revenue Bonds, Series 
10/17 at 100.00 
N/R 
820,029 
   
2007, 5.250%, 10/01/38 
      
1,000 
  
Charlotte-Mecklenberg Hospital Authority, North Carolina, Carolinas HealthCare System Revenue 
1/18 at 100.00 
AA– 
1,030,390 
   
Bonds, Series 2008A, 5.000%, 1/15/47 
      
750 
  
Charlotte-Mecklenberg Hospital Authority, North Carolina, Carolinas HealthCare System, Health 
1/19 at 100.00 
AA– 
800,700 
   
Care Refunding Revenue Bonds, Series 2009A, 5.250%, 1/15/39 
      
1,640 
  
Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds, 
1/11 at 101.00 
AA– 
1,655,268 
   
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 
AAA 
529,280 
   
Memorial Hospital Project, Series 2008, 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 
AAA 
128,353 
   
Center, Series 2006B, 5.125%, 10/01/31 – AGM Insured 
      
455 
  
North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, WakeMed, Series 
10/14 at 100.00 
AAA 
477,077 
   
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+ 
2,108,740 
   
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+ 
1,046,647 
   
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 
1,051,460 
2,100 
  
5.250%, 6/01/22 
6/12 at 101.00 
A 
2,150,085 
925 
  
North Carolina Medical Care Commission, Hospital Revenue Bonds, Wilson Medical Center, Series 
11/17 at 100.00 
A– 
938,283 
   
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 
1,271,325 
   
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 
623,096 
500 
  
5.250%, 7/01/22 – AMBAC Insured 
7/14 at 100.00 
A 
519,995 
150 
  
Northern Hospital District of Surry County, North Carolina, Health Care Facilities Revenue 
4/18 at 100.00 
BBB 
156,042 
   
Bonds, Series 2008, 6.250%, 10/01/38 
      
15,005 
  
Total Health Care 
    
15,306,770 
   
Housing/Single Family – 3.6% (2.3% of Total Investments)
      
325 
  
North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, 1998 Trust Agreement, 
1/11 at 100.00 
AA 
325,143 
   
Series 10A, 5.400%, 7/01/32 – AMBAC Insured (Alternative Minimum Tax) 
      
   
North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 13A: 
      
615 
  
4.700%, 7/01/12 (Alternative Minimum Tax) 
7/11 at 100.00 
AA 
625,867 
620 
  
4.850%, 7/01/13 (Alternative Minimum Tax) 
7/11 at 100.00 
AA 
630,528 
510 
  
North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 25-A, 4.900%, 
7/16 at 100.00 
AA 
512,535 
   
7/01/37 (Alternative Minimum Tax) 
      
2,070 
  
Total Housing/Single Family 
    
2,094,073 
   
Long-Term Care – 1.7% (1.1% 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 
248,060 
600 
  
5.500%, 10/01/31 
10/16 at 100.00 
N/R 
577,524 
185 
  
North Carolina Medical Care Commission, Revenue Bonds, Pines at Davidson, Series 2006A, 
1/16 at 100.00 
N/R 
181,341 
   
5.000%, 1/01/36 
      
1,035 
  
Total Long-Term Care 
    
1,006,925 
   
Materials – 2.4% (1.5% of Total Investments)
      
300 
  
Columbus County Industrial Facilities and Pollution Control Financing Authority, North 
3/17 at 100.00 
BBB 
275,433 
   
Carolina, Environmental Improvement Revenue Bonds, International Paper Company Project, 
      
   
Series 2007A, 4.625%, 3/01/27 
      
1,100 
  
Northampton County Industrial Facilities and Pollution Control Financing Authority, North 
2/11 at 101.00 
BBB 
1,116,368 
   
Carolina, Environmental Improvement Revenue Bonds, International Paper Company, Series 2001A, 
      
   
6.200%, 2/01/25 (Alternative Minimum Tax) 
      
1,400 
  
Total Materials 
    
1,391,801 
   
Tax Obligation/General – 9.7% (6.2% of Total Investments)
      
1,475 
  
Durham, North Carolina, General Obligation Bonds, Series 2007, 5.000%, 4/01/22 
4/17 at 100.00 
AAA 
1,711,118 
1,050 
  
Forsyth County, North Carolina, General Obligation Bonds, Limited Obligation Series 2009, 
4/20 at 100.00 
AA+ 
1,178,625 
   
5.000%, 4/01/30 
      
500 
  
North Carolina, General Obligation Bonds, Series 2004A, 5.000%, 3/01/22 
3/14 at 100.00 
AAA 
559,270 
2,000 
  
Wake County, North Carolina, Limited Obligation Bonds, Series 2010, 5.000%, 1/01/37 
1/20 at 100.00 
AA+ 
2,181,260 
5,025 
  
Total Tax Obligation/General 
    
5,630,273 
   
Tax Obligation/Limited – 35.2% (22.4% of Total Investments)
      
30 
  
Cabarrus County, North Carolina, Certificates of Participation, Series 2002, 5.250%, 2/01/16 
2/13 at 100.00 
AA 
32,556 
1,750 
  
Charlotte, North Carolina, Certificates of Participation, Governmental Facilities Projects, 
6/13 at 100.00 
AA+ 
1,830,570 
   
Series 2003G, 5.000%, 6/01/28 
      
400 
  
Charlotte, North Carolina, Certificates of Participation, Nascar Hall of Fame, Series 2009C, 
6/19 at 100.00 
AA+ 
428,500 
   
5.000%, 6/01/39 
      
575 
  
Charlotte, North Carolina, Certificates of Participation, Transit Projects Phase 2, Series 
6/18 at 100.00 
AA+ 
616,325 
   
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 
2,012,467 
800 
  
Craven County, North Carolina, Certificates of Participation, Series 2007, 5.000%, 6/01/27 – 
6/17 at 100.00 
AA– 
864,056 
   
NPFG Insured 
      
500 
  
Harnett County, North Carolina, Certificates of Participation, Series 2009, 5.000%, 6/01/29 – 
6/19 at 100.00 
AAA 
545,255 
   
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 
AAA 
1,100,230 
2,025 
  
5.375%, 12/01/16 – AGM Insured 
12/12 at 101.00 
AAA 
2,233,575 
715 
  
Lee County, North Carolina, Certificates of Participation, Public Schools and Community 
4/14 at 100.00 
AAA 
778,900 
   
College, Series 2004, 5.250%, 4/01/20 – AGM Insured 
      
1,380 
  
Pasquotank County, North Carolina, Certificates of Participation, Series 2004, 5.000%, 
6/14 at 100.00 
A 
1,432,150 
   
6/01/25 – NPFG Insured 
      
2,070 
  
Pitt County, North Carolina, Certificates of Participation, School Facilities Project, Series 
4/14 at 100.00 
AA– 
2,132,121 
   
2004B, 5.000%, 4/01/29 – AMBAC Insured 
      
2,625 
  
Puerto Rico Sales Tax Financing Corporation, Sales Tax Revenue Bonds, First Subordinate Series 
No Opt. Call 
A+ 
590,205 
   
2010A, 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+ 
876,581 
1,310 
  
5.000%, 6/01/21 
6/14 at 100.00 
AA+ 
1,419,293 
115 
  
Raleigh, North Carolina, Certificates of Participation, Series 2007, 5.000%, 2/01/27 
2/17 at 100.00 
AA+ 
125,697 
1,000 
  
Randolph County, North Carolina, Certificates of Participation, Series 2004, 5.000%, 6/01/20 – 
6/14 at 102.00 
AAA 
1,098,040 
   
AGM Insured 
      
100 
  
Rutherford County, North Carolina, Certificates of Participation, Series 2007, 5.000%, 
12/17 at 100.00 
AAA 
109,426 
   
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 
AAA 
1,210,766 
   
AGM Insured (UB) 
      
500 
  
Wilmington, North Carolina, Certificates of Participation, Series 2008A, 5.000%, 6/01/29 
6/18 at 100.00 
AA 
547,830 
400 
  
Wilson County, North Carolina, Certificates of Participation, School Facilities Project, 
4/17 at 100.00 
Aa3 
428,910 
   
Series 2007, 5.000%, 4/01/25 – AMBAC Insured 
      
21,100 
  
Total Tax Obligation/Limited 
    
20,413,453 
   
Transportation – 23.6% (15.0% of Total Investments)
      
1,000 
  
Charlotte, North Carolina, Airport Revenue Bonds, Charlotte Douglas International Refunding 
7/20 at 100.00 
A+ 
1,049,050 
   
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+ 
1,981,595 
660 
  
North Carolina State Ports Authority, Port Facilities Revenue Bonds, Senior Lien Series 2010A, 
2/20 at 100.00 
A3 
691,126 
   
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 
AAA 
100,618 
105 
  
5.500%, 1/01/29 – AGC Insured 
1/19 at 100.00 
AAA 
116,258 
430 
  
5.750%, 1/01/39 – AGC Insured 
1/19 at 100.00 
AAA 
472,463 
   
North Carolina Turnpike Authority, Triangle Expressway System Senior Lien Revenue Bonds, 
      
   
Series 2009B: 
      
150 
  
0.000%, 1/01/31 – AGC Insured 
No Opt. Call 
AAA 
52,503 
100 
  
0.000%, 1/01/33 – AGC Insured 
No Opt. Call 
AAA 
31,091 
50 
  
0.000%, 1/01/35 – AGC Insured 
No Opt. Call 
AAA 
13,804 
5,600 
  
0.000%, 1/01/37 – AGC Insured 
No Opt. Call 
AAA 
1,366,064 
350 
  
0.000%, 1/01/38 – AGC Insured 
No Opt. Call 
AAA 
80,283 
435 
  
Piedmont Triad Airport Authority, North Carolina, Airport Revenue Bonds, Series 2005A, 5.000%, 
7/15 at 100.00 
A2 
475,699 
   
7/01/20 – SYNCORA GTY Insured 
      
1,100 
  
Raleigh Durham Airport Authority, North Carolina, Airport Revenue Bonds, Refunding Series 
No Opt. Call 
Aa3 
1,186,493 
   
2010A, 5.000%, 5/01/36 (WI/DD, Settling 9/02/10) 
      
   
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 
Aa3 
1,043,420 
2,320 
  
5.250%, 11/01/16 – FGIC Insured 
5/11 at 101.00 
Aa3 
2,420,734 
2,230 
  
5.250%, 11/01/17 – FGIC Insured 
5/11 at 101.00 
Aa3 
2,326,827 
270 
  
University of North Carolina, Charlotte, Parking System Revenue Bonds, Series 2002, 5.000%, 
1/12 at 101.00 
A1 
289,316 
   
1/01/20 – NPFG Insured 
      
17,825 
  
Total Transportation 
    
13,697,344 
   
U.S. Guaranteed – 8.4% (5.3% of Total Investments) (4)
      
490 
  
Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds, 
1/11 at 101.00 
Aa3 (4) 
503,617 
   
Carolinas Healthcare System, Series 2001A, 5.000%, 1/15/31 (Pre-refunded 1/15/11) 
      
200 
  
Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds, DBA 
1/15 at 100.00 
AAA 
233,970 
   
Carolinas Healthcare System, Series 2005A, 5.000%, 1/15/45 (Pre-refunded 1/15/15) 
      
370 
  
North Carolina Medical Care Commission, Health System Revenue Bonds, Mission St. Joseph’s 
10/11 at 101.00 
AA (4) 
393,965 
   
Health System, Series 2001, 5.250%, 10/01/31 (Pre-refunded 10/01/11) 
      
500 
  
North Carolina Medical Care Commission, Revenue Bonds, Northeast Medical Center, Series 2004, 
11/14 at 100.00 
Aa3 (4) 
585,525 
   
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 
1,148,490 
1,250 
  
5.000%, 3/01/22 (Pre-refunded 3/01/14) 
3/14 at 100.00 
AAA 
1,435,613 
505 
  
University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A, 5.375%, 
10/12 at 100.00 
N/R (4) 
556,571 
   
4/01/19 (Pre-refunded 10/01/12) – AMBAC Insured 
      
4,315 
  
Total U.S. Guaranteed 
    
4,857,751 
   
Utilities – 10.5% (6.7% of Total Investments)
      
500 
  
North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series 2005, 
1/16 at 100.00 
A– 
551,675 
   
5.250%, 1/01/20 – AMBAC Insured 
      
   
North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding Bonds, 
      
   
Series 1993B: 
      
2,500 
  
5.500%, 1/01/17 – FGIC Insured 
1/11 at 100.00 
Baa1 
2,506,000 
25 
  
5.500%, 1/01/21 
1/21 at 100.00 
A– 
25,044 
225 
  
North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Refunding Series 
1/19 at 100.00 
A 
239,814 
   
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 
2,777,372 
   
Revenue Refunding Bonds, Carolina Power and Light Company, Series 2002, 5.375%, 2/01/17 
      
5,850 
  
Total Utilities 
    
6,099,905 
   
Water and Sewer – 23.8% (15.1% of Total Investments)
      
500 
  
Brunswick County, North Carolina, Enterprise System Revenue Bonds, Series 2008A, 5.000%, 
4/18 at 100.00 
AAA 
538,000 
   
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 
541,205 
   
2008, 5.000%, 8/01/35 
      
2,520 
  
Charlotte, North Carolina, Water and Sewerage System Revenue Bonds, Series 2002A, 
No Opt. Call 
AAA 
2,860,528 
   
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 
AA 
1,083,180 
   
NPFG Insured 
      
700 
  
Oak Island, North Carolina, Enterprise System Revenue Bonds, Series 2009A, 6.000%, 6/01/34 – 
6/19 at 100.00 
AAA 
782,712 
   
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 
3,345,540 
975 
  
5.000%, 3/01/36 (UB) 
3/16 at 100.00 
AAA 
1,042,314 
40 
  
Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2006A, Residuals 
No Opt. Call 
AAA 
49,714 
   
Series 11-R-645-2, 13.254%, 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 
AAA 
1,131,100 
   
AGM Insured 
      
2,275 
  
Winston-Salem, North Carolina, Water and Sewer System Revenue Bonds, Series 2007A, 5.000%, 
6/17 at 100.00 
AAA 
2,445,170 
   
6/01/37 (UB) 
      
12,605 
  
Total Water and Sewer 
    
13,819,463 
$ 92,845 
  
Total Investments (cost $86,472,372) – 157.3% 
    
91,300,537 
   
Floating Rate Obligations – (8.3)% 
    
(4,805,000)
   
MuniFund Term Preferred Shares, at Liquidation Value – (51.2)% (5) 
    
(29,700,000)
   
Other Assets Less Liabilities – 2.2% 
    
1,254,278 
   
Net Assets Applicable to Common Shares – 100% 
    
$ 58,049,815 
 
 
 
 
 
 
 
 
 

 
Fair Value Measurements
 
 
In determining the value of the Fund’s investments, various inputs are used. These inputs are 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, 2010:
 
         
 
Level 1
Level 2
Level 3
Total
Investments: 
        
Municipal Bonds 
$ — 
$91,300,537 
$ — 
$91,300,537 
 
 
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, 2010, the cost of investments was $81,655,575.
 
 
Gross unrealized appreciation and gross unrealized depreciation of investments at August 31, 2010, were as follows:
 
   
Gross unrealized: 
  
  Appreciation 
$5,041,642 
  Depreciation 
(201,710)
Net unrealized appreciation (depreciation) of investments 
$4,839,932 
 
   
(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. Such investments are normally considered to 
 
be equivalent to AAA rated securities. 
(5)   
MuniFund Term Preferred Shares, at Liquidation Value as a percentage of Total Investments is 32.5%. 
N/R   
Not rated. 
WI/DD   
Purchased on a when-issued or delayed delivery basis. 
(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 29, 2010        
 
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 29, 2010        
 
By (Signature and Title)     /s/ Stephen D. Foy                              
                                                   Stephen D. Foy
                                                  Vice President and Controller (principal financial officer) 
 
Date         October 29, 2010