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)


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:            5/31          

Date of reporting period:         2/28/07         

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)             
    February 28, 2007             
Principal        Optional Call         
Amount (000)    Description (1)    Provisions (2)    Ratings (3)    Value 
    Education and Civic Organizations – 15.9% (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   $   631,590 
200     5.125%, 7/15/27 – MBIA Insured    1/11 at 101.00    Aaa    209,866 
    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    1,105,374 
1,000     5.000%, 7/15/15 – MBIA Insured    7/12 at 100.00    Aaa    1,059,050 
    North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, Series 2001A:             
715     5.125%, 10/01/26    10/11 at 100.00    AA+    747,497 
380     5.125%, 10/01/41    10/11 at 100.00    AA+    397,271 
1,000    University of North Carolina System, Pooled Revenue Bonds, Series 2005A, 5.000%, 4/01/22 –    4/15 at 100.00    AAA    1,078,190 
     AMBAC Insured             
635    University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A, 5.375%,    10/12 at 100.00    AAA    687,095 
     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    541,360 
250     5.000%, 6/01/37 – FGIC Insured    6/16 at 100.00    AAA    266,480 
1,500    University of North Carolina, Chapel Hill, System Net Revenue Bonds, Series 2002B,    No Opt. Call    AA+    1,588,650 
     5.000%, 12/01/11             
250    University of North Carolina, Charlotte, Certificates of Participation, Student Housing    3/15 at 100.00    AAA    268,670 
     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    427,236 
     5.375%, 4/01/17 – FSA Insured             
8,470    Total Education and Civic Organizations            9,008,329 
    Health Care – 23.7% (15.4% of Total Investments)             
2,130    Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds,    1/11 at 101.00    AA    2,204,870 
     Carolinas Healthcare System, Series 2001A, 5.000%, 1/15/31             
200    Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds, DBA    1/15 at 100.00    AA    209,332 
     Carolinas Healthcare System, Series 2005A, 5.000%, 1/15/45             
150    North Carolina Medical Care Commission, Health System Revenue Bonds, Mission St. Joseph’s    10/17 at 100.00    AA    151,191 
     Health System, Series 2007, 4.500%, 10/01/31             
2,000    North Carolina Medical Care Commission, Healthcare Facilities Revenue Bonds, Novant Health    11/13 at 100.00    AA–    2,107,060 
     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    1,059,069 
     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    1,074,960 
2,000     5.250%, 6/01/22    6/12 at 101.00    A    2,105,400 
2,000    North Carolina Medical Care Commission, Revenue Bonds, Blue Ridge Healthcare System, Series    1/15 at 100.00    AAA    2,118,880 
     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    645,623 
500     5.250%, 7/01/22 – AMBAC Insured    7/14 at 100.00    AAA    541,545 
500    North Carolina Medical Care Commission, Revenue Bonds, Northeast Medical Center, Series 2004,    11/14 at 100.00    AA    527,830 
     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    193,184 
     5.000%, 1/01/36             
430    Onslow County Hospital Authority, North Carolina, FHA Insured Mortgage Revenue Bonds, Onslow    10/16 at 100.00    AAA    458,135 
     Memorial Hospital Project, Series 2006, 5.000%, 4/01/31 – MBIA Insured             
12,695    Total Health Care            13,397,079 
    Housing/Single Family – 4.6% (3.0% of Total Investments)             
375    North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, 1998 Trust Agreement,    7/10 at 100.00    AAA    384,533 
     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    848,584 
835     4.850%, 7/01/13 (Alternative Minimum Tax)    7/11 at 100.00    AA    856,192 
510    North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 25-A, 4.900%,    7/16 at 100.00    AA    520,353 
     7/01/37 (Alternative Minimum Tax)             
2,550    Total Housing/Single Family            2,609,662 
    Industrials – 1.4% (0.9% of Total Investments)             
800    North Carolina Capital Facilities Financing Agency, Exempt Facilities Revenue Bonds, Waste    No Opt. Call    BBB    798,368 
     Management Inc., Series 2001, 3.750%, 8/01/14 (Mandatory put 8/01/07) (Alternative Minimum Tax)             
    Long-Term Care – 2.0% (1.3% of Total Investments)             
600    North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, Presbyterian    10/16 at 100.00    N/R    621,798 
     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    260,630 
     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    259,285 
     Series 2005A, 5.250%, 9/01/21             
1,100    Total Long-Term Care            1,141,713 
    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    933,742 
     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    2/11 at 101.00    BBB    1,173,623 
     Carolina, Environmental Improvement Revenue Bonds, International Paper Company, Series 2001A,             
     6.200%, 2/01/25 (Alternative Minimum Tax)             
1,965    Total Materials            2,107,365 
    Tax Obligation/General – 2.4% (1.5% of Total Investments)             
250    Durham County, North Carolina, General Obligation Bonds, Series 2000, 5.600%, 5/01/15    5/10 at 102.00    AAA    268,700 
1,000    North Carolina, General Obligation Bonds, Series 2004A, 5.000%, 3/01/22    3/14 at 100.00    AAA    1,075,450 
1,250    Total Tax Obligation/General            1,344,150 
    Tax Obligation/Limited – 31.1% (20.2% of Total Investments)             
30    Cabarrus County, North Carolina, Certificates of Participation, Series 2002, 5.250%, 2/01/16    2/13 at 100.00    AA–    32,260 
1,750    Charlotte, North Carolina, Certificates of Participation, Governmental Facilities Projects,    6/13 at 100.00    AA+    1,833,598 
     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    2,001,497 
    Hartnett County, North Carolina, Certificates of Participation, Series 2002:             
1,000     5.250%, 12/01/15 – FSA Insured    12/12 at 101.00    AAA    1,077,510 
2,025     5.375%, 12/01/16 – FSA Insured    12/12 at 101.00    AAA    2,206,926 
715    Lee County, North Carolina, Certificates of Participation, Public Schools and Community    4/14 at 100.00    AAA    775,425 
     College, Series 2004, 5.250%, 4/01/20 – FSA Insured             
1,380    Pasquotank County, North Carolina, Certificates of Participation, Series 2004, 5.000%,    6/14 at 100.00    AAA    1,464,773 
     6/01/25 – MBIA Insured             
2,070    Pitt County, North Carolina, Certificates of Participation, School Facilities Project, Series    4/14 at 100.00    AAA    2,184,223 
     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    1,449,642 
     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+    854,451 
1,310     5.000%, 6/01/21    6/14 at 100.00    AA+    1,390,473 
1,000    Randolph County, North Carolina, Certificates of Participation, Series 2004, 5.000%, 6/01/20 –    6/14 at 102.00    AAA    1,082,350 
     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    1,232,409 
16,355    Total Tax Obligation/Limited            17,585,537 
    Transportation – 16.8% (10.9% 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    2,148,004 
590    Piedmont Triad Airport Authority, North Carolina, Airport Revenue Bonds, Series 2005A, 5.000%,    7/15 at 100.00    AAA    635,589 
     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    1,060,000 
2,320     5.250%, 11/01/16 – FGIC Insured    5/11 at 101.00    Aaa    2,455,534 
2,230     5.250%, 11/01/17 – FGIC Insured    5/11 at 101.00    Aaa    2,368,238 
    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    286,505 
500     5.125%, 1/01/27 – MBIA Insured    1/12 at 101.00    Aaa    529,090 
8,945    Total Transportation            9,482,960 
    U.S. Guaranteed – 22.2% (14.4% of Total Investments) (4)             
    North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, Series 2001A:             
3,035     5.125%, 10/01/26 (Pre-refunded 10/01/11)    10/11 at 100.00    Aaa    3,224,566 
1,620     5.125%, 10/01/41 (Pre-refunded 10/01/11)    10/11 at 100.00    Aaa    1,721,185 
700    North Carolina Medical Care Commission, Health System Revenue Bonds, Mission St. Joseph’s    10/11 at 101.00    AA (4)    752,094 
     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    1,082,490 
1,750     5.000%, 3/01/22 (Pre-refunded 3/01/14)    3/14 at 100.00    AAA    1,894,358 
465    University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A, 5.375%,    10/12 at 100.00    Aaa    505,348 
     4/01/19 (Pre-refunded 10/01/12) – AMBAC Insured             
3,200    Wake County, North Carolina, General Obligation School Bonds, Series 2000, 5.400%, 2/01/13    2/10 at 101.50    AAA    3,401,245 
     (Pre-refunded 2/01/10)             
11,770    Total U.S. Guaranteed            12,581,286 
    Utilities – 13.6% (8.9% of Total Investments)             
500    North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series 2005,    1/16 at 100.00    AAA    551,815 
     5.250%, 1/01/20 – AMBAC Insured             
2,500    North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding Bonds, Series    7/07 at 100.00    AAA    2,503,500 
     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    1,616,655 
     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    270,428 
     FGIC Insured             
2,600    Wake County Industrial Facilities and Pollution Control Financing Authority, North Carolina,    2/12 at 101.00    A3    2,774,746 
     Revenue Refunding Bonds, Carolina Power and Light Company, Series 2002, 5.375%, 2/01/17             
7,350    Total Utilities            7,717,144 
    Water and Sewer – 16.5% (10.8% of Total Investments)             
2,520    Charlotte, North Carolina, Water and Sewerage System Revenue Bonds, Series 2002A,    No Opt. Call    AAA    2,745,565 
     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    1,057,660 
     MBIA Insured             
    Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2006A:             
3,210     5.000%, 3/01/31 (UB)    3/16 at 100.00    AAA    3,447,026 
975     5.000%, 3/01/36 (UB)    3/16 at 100.00    AAA    1,044,713 
1,000    Wilmington, North Carolina, Water and Sewer Revenue Bonds, Series 2005, 5.000%, 6/01/25 –    6/15 at 100.00    AAA    1,075,870 
     FSA Insured             
8,705    Total Water and Sewer            9,370,834 
$        81,955    Total Investments (cost $83,622,415) – 153.9%            87,144,427 
    Floating Rate Obligations – (6.3)%            (3,555,000) 
    Other Assets Less Liabilities – 1.9%            1,017,495 
    Preferred Shares, at Liquidation Value – (49.5)%            (28,000,000) 
    Net Assets Applicable to Common Shares – 100%           $   56,606,922 

(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. 
(UB)    Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the 
    provisions 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 treatment of investments in inverse floating rate transactions subject to SFAS No. 140.

At February 28, 2007, the cost of investments was $80,063,212.

Gross unrealized appreciation and gross unrealized depreciation of investments at February 28, 2007, were as follows:

Gross unrealized:     
  Appreciation    $3,534,096 
  Depreciation    (7,523) 
Net unrealized appreciation (depreciation) of investments    $3,526,573 

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                     
                                                    Jessica R. Droeger
                                                    Vice President and Secretary

Date         April 27, 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         April 27, 2007        

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

Date        April 27, 2007        

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