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 811-21158
 
Nuveen North Carolina Dividend Advantage Municipal Fund 3
(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 3 (NII)
     
   
August 31, 2010
     
Principal
   
Optional Call
   
Amount (000)
 
Description (1)
Provisions (2)
Ratings (3)
Value 
   
Consumer Staples – 2.9% (1.9% of Total Investments)
     
$      2,000 
 
Puerto Rico, The Children’s Trust Fund, Tobacco Settlement Asset-Backed Refunding Bonds, 
5/12 at 100.00 
BBB 
$    1,750,480 
   
Series 2002, 5.500%, 5/15/39 
     
   
Education and Civic Organizations – 3.2% (2.0% of Total Investments)
     
   
North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, 
     
   
Series 2001A: 
     
330 
 
5.125%, 10/01/26 
10/11 at 100.00 
AA+ 
337,541 
95 
 
5.125%, 10/01/41 
10/11 at 100.00 
AA+ 
98,655 
200 
 
North Carolina Capital Facilities Financing Agency, Revenue Bonds, Johnson and Wales 
4/13 at 100.00 
N/R 
200,256 
   
University, Series 2003A, 5.000%, 4/01/33 – SYNCORA GTY Insured 
     
705 
 
University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A, 5.000%, 
10/12 at 100.00 
A 
721,483 
   
4/01/27 – 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 
     
1,830 
 
Total Education and Civic Organizations 
   
1,908,315 
   
Health Care – 13.5% (8.5% of Total Investments)
     
695 
 
Albemarle Hospital Authority, North Carolina, Health Care Facilities Revenue Bonds, Series 
10/17 at 100.00 
N/R 
656,754 
   
2007, 5.250%, 10/01/27 
     
1,200 
 
Charlotte-Mecklenberg Hospital Authority, North Carolina, Carolinas HealthCare System Revenue 
1/18 at 100.00 
AA– 
1,236,468 
   
Bonds, Series 2008A, 5.000%, 1/15/47 
     
500 
 
Charlotte-Mecklenberg Hospital Authority, North Carolina, Carolinas HealthCare System, Health 
1/19 at 100.00 
AA– 
533,800 
   
Care Refunding Revenue Bonds, Series 2009A, 5.250%, 1/15/39 
     
580 
 
Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds, 
1/11 at 101.00 
AA– 
585,400 
   
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 
     
180 
 
New Hanover County, North Carolina, Hospital Revenue Bonds, New Hanover Regional Medical 
10/19 at 100.00 
AAA 
192,530 
   
Center, Series 2006B, 5.125%, 10/01/31 – AGM Insured 
     
545 
 
North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds, WakeMed, Series 
10/14 at 100.00 
AAA 
571,443 
   
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+ 
2,133,620 
   
Obligated Group, Series 2003A, 5.000%, 11/01/18 
     
1,000 
 
North Carolina Medical Care Commission, Hospital Revenue Bonds, Wilson Medical Center, Series 
11/17 at 100.00 
A– 
1,014,360 
   
2007, 5.000%, 11/01/27 
     
400 
 
North Carolina Medical Care Commission, Revenue Bonds, Blue Ridge Healthcare System, Series 
1/15 at 100.00 
A 
406,824 
   
2005, 5.000%, 1/01/33 – FGIC Insured 
     
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 
     
7,750 
 
Total Health Care 
   
8,016,521 
   
Housing/Multifamily – 1.8% (1.1% of Total Investments)
     
1,000 
 
Mecklenburg County, North Carolina, FNMA Multifamily Housing Revenue Bonds, Little Rock 
7/13 at 105.00 
AAA 
1,065,550 
   
Apartments, Series 2003, 5.150%, 1/01/22 (Alternative Minimum Tax) 
     
   
Housing/Single Family – 2.7% (1.7% of Total Investments)
     
590 
 
North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, 1998 Trust Agreement, 
1/11 at 100.00 
AA 
590,395 
   
Series 5A, 5.625%, 7/01/30 (Alternative Minimum Tax) 
     
500 
 
North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 2007-29A, 4.800%, 
1/17 at 100.00 
AA 
501,050 
   
7/01/33 (Alternative Minimum Tax) 
     
505 
 
North Carolina Housing Finance Agency, Home Ownership Revenue Bonds, Series 25-A, 4.900%, 
7/16 at 100.00 
AA 
507,510 
   
7/01/37 (Alternative Minimum Tax) 
     
1,595 
 
Total Housing/Single Family 
   
1,598,955 
   
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 
190 
 
North Carolina Medical Care Commission, Revenue Bonds, Pines at Davidson, Series 2006A, 
1/16 at 100.00 
N/R 
186,242 
   
5.000%, 1/01/36 
     
1,040 
 
Total Long-Term Care 
   
1,011,826 
   
Materials – 0.3% (0.2% of Total Investments)
     
200 
 
Columbus County Industrial Facilities and Pollution Control Financing Authority, North 
3/17 at 100.00 
BBB 
183,622 
   
Carolina, Environmental Improvement Revenue Bonds, International Paper Company Project, 
     
   
Series 2007A, 4.625%, 3/01/27 
     
   
Tax Obligation/General – 14.2% (8.9% of Total Investments)
     
3,900 
 
Cary, North Carolina, General Obligation Water and Sewer Bonds, Series 2001, 5.000%, 3/01/20 
3/11 at 102.00 
AAA 
4,072,068 
   
Lincoln County, North Carolina, General Obligation Bonds, Series 2002A: 
     
850 
 
5.000%, 6/01/19 – FGIC Insured 
6/12 at 101.00 
AA– 
912,118 
900 
 
5.000%, 6/01/20 – FGIC Insured 
6/12 at 101.00 
AA– 
965,772 
1,050 
 
5.000%, 6/01/21 – FGIC Insured 
6/12 at 101.00 
AA– 
1,132,845 
300 
 
North Carolina, General Obligation Bonds, Series 2004A, 5.000%, 3/01/22 
3/14 at 100.00 
AAA 
335,562 
400 
 
Raleigh, North Carolina, General Obligation Bonds, Series 2002, 5.000%, 6/01/21 
6/12 at 100.00 
AAA 
432,700 
550 
 
Wake County, North Carolina, Limited Obligation Bonds, Series 2010, 5.000%, 1/01/37 
1/20 at 100.00 
AA+ 
599,847 
7,950 
 
Total Tax Obligation/General 
   
8,450,912 
   
Tax Obligation/Limited – 35.1% (22.1% of Total Investments)
     
1,800 
 
Catawba County, North Carolina, Certificates of Participation, Series 2004, 5.250%, 6/01/22 – 
6/14 at 100.00 
Aa2 
1,929,006 
   
NPFG Insured 
     
2,750 
 
Charlotte, North Carolina, Certificates of Participation, Governmental Facilities Projects, 
6/13 at 100.00 
AA+ 
2,842,153 
   
Series 2003G, 5.000%, 6/01/33 
     
600 
 
Charlotte, North Carolina, Certificates of Participation, Nascar Hall of Fame, Series 2009C, 
6/19 at 100.00 
AA+ 
642,750 
   
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 
     
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 
     
3,000 
 
Dare County, North Carolina, Certificates of Participation, Series 2002, 5.000%, 6/01/23 – 
12/12 at 100.00 
AA– 
3,216,390 
   
AMBAC Insured 
     
200 
 
Harnett County, North Carolina, Certificates of Participation, Series 2009, 5.000%, 6/01/28 – 
6/19 at 100.00 
AAA 
219,822 
   
AGC Insured 
     
500 
 
Lee County, North Carolina, Certificates of Participation, Public Schools and Community 
4/14 at 100.00 
AAA 
544,685 
   
College, Series 2004, 5.250%, 4/01/20 – AGM Insured 
     
200 
 
Mecklenburg County, North Carolina, Certificates of Participation, Series 2009A, 
No Opt. Call 
AA+ 
221,932 
   
5.000%, 2/01/27 
     
1,000 
 
North Carolina, Certificates of Participation, Repair and Renovation Project, Series 2004B, 
6/14 at 100.00 
AA+ 
1,088,920 
   
5.000%, 6/01/20 
     
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 
     
565 
 
Raleigh, North Carolina, Certificates of Participation, Series 2007, 5.000%, 2/01/27 
2/17 at 100.00 
AA+ 
617,556 
2,000 
 
Rutherford County, North Carolina, Certificates of Participation, Series 2002, 5.000%, 
9/12 at 101.00 
A1 
2,153,640 
   
9/01/21 – AMBAC Insured 
     
1,000 
 
Rutherford County, North Carolina, Certificates of Participation, Series 2007, 5.000%, 
12/17 at 100.00 
AAA 
1,094,260 
   
12/01/27 – AGM Insured 
     
1,200 
 
Sampson County, North Carolina, Certificates of Participation, Series 2006, 5.000%, 6/01/34 – 
6/17 at 100.00 
AAA 
1,263,408 
   
AGM Insured (UB) 
     
1,785 
 
Union County, North Carolina, Certificates of Participation, Series 2003, 5.000%, 6/01/20 – 
6/13 at 101.00 
Aa2 
1,972,300 
   
AMBAC Insured 
     
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 
428,916 
   
Series 2007, 5.000%, 4/01/25 – AMBAC Insured 
     
21,500 
 
Total Tax Obligation/Limited 
   
20,854,154 
   
Transportation – 15.6% (9.8% of Total Investments)
     
500 
 
Charlotte, North Carolina, Airport Revenue Bonds, Charlotte Douglas International Refunding 
7/20 at 100.00 
A+ 
524,525 
   
Series 2010A, 5.000%, 7/01/39 
     
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: 
     
50 
 
5.500%, 1/01/29 – AGC Insured 
1/19 at 100.00 
AAA 
55,361 
955 
 
5.750%, 1/01/39 – AGC Insured 
1/19 at 100.00 
AAA 
1,049,306 
   
North Carolina Turnpike Authority, Triangle Expressway System Senior Lien Revenue Bonds, 
     
   
Series 2009B: 
     
2,195 
 
0.000%, 1/01/35 – AGC Insured 
No Opt. Call 
AAA 
605,974 
100 
 
0.000%, 1/01/37 – AGC Insured 
No Opt. Call 
AAA 
24,394 
300 
 
0.000%, 1/01/38 – AGC Insured 
No Opt. Call 
AAA 
68,814 
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: 
     
1,780 
 
5.250%, 11/01/15 – FGIC Insured 
5/11 at 101.00 
Aa3 
1,857,288 
3,100 
 
5.000%, 11/01/20 – FGIC Insured 
5/11 at 101.00 
Aa3 
3,229,425 
10,740 
 
Total Transportation 
   
9,292,706 
   
U.S. Guaranteed – 13.7% (8.6% of Total Investments) (4)
     
170 
 
Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare System Revenue Bonds, 
1/11 at 101.00 
Aa3 (4) 
174,724 
   
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) 
     
   
Forsyth County, North Carolina, Certificates of Participation, Public Facilities and Equipment 
     
   
Project, Series 2002: 
     
1,325 
 
5.125%, 1/01/16 (Pre-refunded 1/01/13) 
1/13 at 101.00 
AA+ (4) 
1,476,607 
770 
 
5.250%, 1/01/19 (Pre-refunded 1/01/13) 
1/13 at 101.00 
AA+ (4) 
860,329 
   
North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, 
     
   
Series 2001A: 
     
920 
 
5.125%, 10/01/26 (Pre-refunded 10/01/11) 
10/11 at 100.00 
AAA 
969,468 
205 
 
5.125%, 10/01/41 (Pre-refunded 10/01/11) 
10/11 at 100.00 
AAA 
216,023 
1,600 
 
North Carolina Capital Facilities Financing Agency, Revenue Bonds, Duke University, Series 
10/12 at 100.00 
AAA 
1,757,568 
   
2002A, 5.125%, 7/01/42 (Pre-refunded 10/01/12) 
     
500 
 
North Carolina Medical Care Commission, Health System Revenue Bonds, Mission St. Joseph’s 
10/11 at 101.00 
AA (4) 
532,385 
   
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) 
     
   
University of North Carolina System, Pooled Revenue Refunding Bonds, Series 2002A: 
     
610 
 
5.000%, 4/01/27 (Pre-refunded 10/01/12) – AMBAC Insured 
10/12 at 100.00 
N/R (4) 
668,493 
585 
 
5.000%, 4/01/27 (Pre-refunded 10/01/12) – AMBAC Insured 
10/12 at 100.00 
N/R (4) 
640,195 
7,385 
 
Total U.S. Guaranteed 
   
8,115,287 
   
Utilities – 19.0% (12.0% of Total Investments)
     
150 
 
North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series 2003F, 
1/13 at 100.00 
A– 
163,740 
   
5.500%, 1/01/16 
     
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 
     
1,400 
 
North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds, Series 2009B, 
1/19 at 100.00 
A– 
1,516,886 
   
5.000%, 1/01/26 
     
4,060 
 
North Carolina Eastern Municipal Power Agency, Power System Revenue Refunding Bonds, Series 
1/11 at 100.00 
Baa1 
4,069,744 
   
1993B, 5.500%, 1/01/17 – FGIC Insured 
     
275 
 
North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Refunding Series 
1/19 at 100.00 
A 
293,106 
   
2009A, 5.000%, 1/01/30 
     
2,665 
 
North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Series 2003A, 5.250%, 
1/13 at 100.00 
A 
2,901,599 
   
1/01/15 – AMBAC Insured 
     
250 
 
North Carolina Municipal Power Agency 1, Catawba Electric Revenue Bonds, Series 2008A, 
1/18 at 100.00 
A 
291,423 
   
5.250%, 1/01/20 
     
1,400 
 
Wake County Industrial Facilities and Pollution Control Financing Authority, North Carolina, 
2/12 at 101.00 
A1 
1,495,508 
   
Revenue Refunding Bonds, Carolina Power and Light Company, Series 2002, 5.375%, 2/01/17 
     
10,700 
 
Total Utilities 
   
11,283,681 
   
Water and Sewer – 35.1% (22.1% of Total Investments)
     
2,000 
 
Brunswick County, North Carolina, Enterprise System Revenue Bonds, Series 2008A, 5.000%, 
4/18 at 100.00 
AAA 
2,152,000 
   
4/01/31 – AGM Insured 
     
425 
 
Cape Fear Public Utility Authority, North Carolina, Water & Sewer System Revenue Bonds, Series 
8/18 at 100.00 
AA 
475,120 
   
2008, 5.000%, 8/01/28 
     
   
Charlotte, North Carolina, Water and Sewerage System Revenue Bonds, Series 2001: 
     
750 
 
5.125%, 6/01/26 
6/11 at 101.00 
AAA 
779,445 
1,780 
 
5.125%, 6/01/26 – FGIC Insured 
6/11 at 101.00 
Aaa 
1,841,535 
300 
 
Durham County, North Carolina, Enterprise System Revenue Bonds, Series 2002, 5.000%, 6/01/18 – 
6/13 at 100.00 
AA 
328,593 
   
NPFG Insured 
     
2,500 
 
Kannapolis, North Carolina, Water and Sewerage System Revenue Bonds, Series 2001B, 5.250%, 
2/12 at 101.00 
AAA 
2,545,521 
   
2/01/26 – AGM Insured (Alternative Minimum Tax) 
     
   
Oak Island, North Carolina, Enterprise System Revenue Bonds, Series 2009A: 
     
50 
 
6.000%, 6/01/34 – AGC Insured 
6/19 at 100.00 
AAA 
55,908 
20 
 
6.000%, 6/01/36 – AGC Insured 
6/19 at 100.00 
AAA 
22,332 
500 
 
Onslow County, North Carolina, Combined Enterprise System Revenue Bonds, Series 2004B, 5.000%, 
6/14 at 100.00 
A 
550,625 
   
6/01/23 – SYNCORA GTY Insured 
     
1,000 
 
Orange Water and Sewerage Authority, North Carolina, Water and Sewerage System Revenue Bonds, 
7/11 at 101.00 
AA+ 
1,025,930 
   
Series 2001, 5.000%, 7/01/26 
     
   
Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2006A: 
     
4,950 
 
5.000%, 3/01/31 (UB) 
3/16 at 100.00 
AAA 
5,350,703 
3,000 
 
5.000%, 3/01/36 (UB) 
3/16 at 100.00 
AAA 
3,207,120 
5 
 
Raleigh, North Carolina, Combined Enterprise System Revenue Bonds, Series 2006A, Residuals 
No Opt. Call 
AAA 
6,036 
   
Series 11-R-645-2, 13.544%, 3/01/14 (IF) 
     
2,375 
 
Winston-Salem, North Carolina, Water and Sewer System Revenue Bonds, Series 2007A, 5.000%, 
6/17 at 100.00 
AAA 
2,552,650 
   
6/01/37 (UB) 
     
19,655 
 
Total Water and Sewer 
   
20,893,518 
$    93,345 
 
Total Investments (cost $90,204,197) – 158.8% 
   
94,425,527 
   
Floating Rate Obligations – (12.6)% 
   
(7,480,000)
   
MuniFund Term Preferred Shares, at Liquidation Value – (48.3)% (5) 
   
(28,725,000)
   
Other Assets Less Liabilities – 2.1% 
   
1,229,613 
   
Net Assets Applicable to Common Shares – 100% 
   
$ 59,450,140 
 
 
 
 
 
 
 

 
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 
$ — 
$94,425,527 
$ — 
$94,425,527 
 
 
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 $82,720,570.
 
 
Gross unrealized appreciation and gross unrealized depreciation of investments at August 31, 2010, were as follows:
 
   
Gross unrealized: 
 
  Appreciation 
$4,474,075 
  Depreciation 
(248,370)
Net unrealized appreciation (depreciation) of investments 
$4,225,705 
 
   
(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 30.4%. 
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 3 
 
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        
 

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