<PAGE>   1
================================================================================

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

(Mark One)

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED      MARCH 31, 1999                 
                               --------------------

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM        N/A                         
                               ----------------------
COMMISSION FILE NUMBER     0-17664                                  
                       ------------------------------

             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
             ------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<CAPTION>
<S>                                          <C>

         MASSACHUSETTS                                 04-2969061   
-------------------------------             ------------------------------------
(STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER IDENTIFICATION NO.)
 INCORPORATION OR ORGANIZATION)
</TABLE>

                     200 CLARENDON STREET, BOSTON, MA 02116
                    ----------------------------------------
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                   (ZIP CODE)

                                 (800) 722-5457
               --------------------------------------------------
               REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:

                                       N/A
              ----------------------------------------------------
              (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
                         IF CHANGED SINCE LAST REPORT)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
                                      Yes  [X]    No [ ]         


================================================================================


<PAGE>   2
             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

                                      INDEX

PART I:   FINANCIAL INFORMATION                                            PAGE

          Item 1  -   Financial Statements:

                      Balance Sheets at March 31, 1999 and
                      December 31, 1998                                       3

                      Statements of Operations for the Three
                      Months Ended March 31, 1999 and 1998                    4

                      Statements of Partners' Equity for the
                      Three Months Ended March 31, 1999 and
                      for the Year Ended December 31, 1998                    5

                      Statements of Cash Flows for the Three
                      Months Ended March 31, 1999 and 1998                    6

                      Notes to Financial Statements                        7-14

          Item 2  -   Management's Discussion and Analysis of
                      Financial Condition and Results of Operations       15-18


PART II:  OTHER INFORMATION                                                  19


                                       2
<PAGE>   3

             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

                          PART I: FINANCIAL INFORMATION

                          ITEM 1: FINANCIAL STATEMENTS

                                 BALANCE SHEETS
                                   (UNAUDITED)

                                     ASSETS
<TABLE>
<CAPTION>
                                                                    MARCH 31,          DECEMBER 31, 
                                                                      1999                 1998
                                                                   -----------         ------------

<S>                                                               <C>                  <C>        
Cash and cash equivalents                                         $ 3,419,503          $ 3,261,458
Restricted cash                                                       122,978              122,222
Other assets                                                          106,769               56,769

Deferred expenses, net of accumulated
     amortization of $1,422,482 in 1999 and
     $1,365,302 in 1998                                               674,914              732,094

Investment in joint venture                                         6,919,762            6,971,992

Investment in property:
     Land                                                           5,040,000            5,040,000
     Buildings and improvements                                    14,218,208           14,218,208
                                                                  -----------          -----------
                                                                   19,258,208           19,258,208
     Less:     accumulated depreciation                             4,941,451            4,822,969
                                                                  -----------          -----------
                                                                   14,316,757           14,435,239
                                                                  -----------          -----------

         Total assets                                             $25,560,683          $25,579,774
                                                                  ===========          ===========

                        LIABILITIES AND PARTNERS' EQUITY

Accounts payable and accrued expenses                                 363,386          $   171,824
Accounts payable to affiliates                                        222,623              211,644
                                                                  -----------          -----------
         Total liabilities                                            586,009              383,468

Partners' equity/(deficit):
     General Partner's deficit                                       (187,505)            (185,981)
     Limited Partners' equity                                      25,162,179           25,382,287
                                                                 ------------          -----------

         Total partners' equity                                    24,974,674           25,196,306
                                                                 ------------          -----------

         Total liabilities and partners' equity                   $25,560,683          $25,579,774
                                                                  ===========          ===========
</TABLE>

                        See Notes to Financial Statements

                                       3

<PAGE>   4
             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED
                                                                  MARCH 31,
                                                           1999             1998
                                                         --------        ---------
<S>                                                      <C>             <C>
Income:

     Rental income                                       $584,719         $533,719
     Income from joint venture                            201,401          191,122
     Interest income                                       38,379           85,085
                                                         --------         --------

         Total income                                     824,499          809,926

Expenses:

     Depreciation                                         118,482          118,482
     General and administrative expenses                   87,862           55,763
     Property operating expenses                          126,348           90,674
     Amortization of deferred expenses                     57,181           55,342
                                                         --------         --------

         Total expenses                                   389,873          320,261
                                                         --------         --------

         Net income                                      $434,626         $489,665
                                                         ========         ========
Allocation of net income:

     General Partner                                     $  4,346         $  4,897
     John Hancock Limited Partner                              --               --
     Investors                                            430,280          484,768
                                                         --------         --------
                                                         $434,626         $489,665
                                                         ========         ========
Net income per Unit                                      $    .17         $    .19
                                                         ========         ========
</TABLE>

                        See Notes to Financial Statements

                                       4
                                               

<PAGE>   5
             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

                         STATEMENTS OF PARTNERS' EQUITY
                                   (UNAUDITED)

                      THREE MONTHS ENDED MARCH 31, 1999 AND
                          YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>


                                                         GENERAL          LIMITED
                                                         PARTNER         PARTNERS            TOTAL
                                                         -------         --------            -----
<S>                                                      <C>             <C>              <C>
Partners' equity/(deficit) at January 1, 1998
    (2,601,552 Units outstanding)                       ($175,225)      $28,223,477       $28,048,252

Less:     Cash distributions                              (25,364)       (4,287,359)       (4,312,723)

Add:      Net income                                       14,608         1,446,169         1,460,777
                                                        ---------       -----------       -----------

Partner's equity/(deficit) at December 31, 1998          (185,981)       25,382,287        25,196,306
   (2,601,552 Units outstanding)

Less:     Cash distributions                               (5,870)         (650,388)         (656,258)

Add:      Net income                                        4,346           430,280           434,626
                                                        ---------       -----------       -----------

Partners' equity/(deficit) at March 31, 1999
   (2,601,552 Units outstanding)                        ($187,505)      $25,162,179       $24,974,674
                                                        =========       ===========       ===========
</TABLE>

                        See Notes to Financial Statements

                                       5
<PAGE>   6
             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED
                                                                                 MARCH 31,
                                                                         1999               1998
                                                                         ----               ----
<S>                                                                   <C>                 <C>    
Operating activities:
     Net income                                                       $  434,626          $  489,665

     Adjustments to reconcile net income to 
      net cash provided by operating activities:

         Depreciation                                                    118,482             118,482
         Amortization of deferred expenses                                57,181              55,342
         Cash distributions over equity in
           income from joint venture                                      52,230              68,117
                                                                       ---------          ----------
                                                                         662,519             731,606
     Changes in operating assets and liabilities:
         Decrease/(increase) in restricted cash                             (756)                 --
         Increase in other assets                                        (50,000)            (50,000)
         Increase in accounts payable and accrued expenses               191,562             178,750
         Increase in accounts payable to Affiliates                       10,978               3,115
                                                                      ----------          ----------
              Net cash provided by operating activities                  814,303             863,471

Financing activities:
     Cash distributed to Partners                                       (656,258)           (656,960)
                                                                      ----------          ----------
              Net cash used in financing activities                     (656,258)           (656,960)
                                                                      ----------          ----------
              Net increase in cash and cash
                equivalents                                              158,045             206,511

              Cash and cash equivalents at beginning
                of year                                                3,261,458           3,393,737
                                                                      ----------          ----------
              Cash and cash equivalents at end
                of period                                             $3,419,503          $3,600,248
                                                                      ==========          ==========
</TABLE>

                        See Notes to Financial Statements

                                       6
<PAGE>   7

             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.     ORGANIZATION OF PARTNERSHIP

         John Hancock Realty Income Fund-II Limited Partnership (the
         "Partnership") was formed under the Massachusetts Uniform Limited
         Partnership Act on June 30, 1987. As of March 31, 1999, the partners in
         the Partnership consisted of John Hancock Realty Equities, Inc. (the
         "General Partner"), a wholly-owned, indirect subsidiary of John Hancock
         Mutual Life Insurance Company; John Hancock Realty Funding, Inc. (the
         "John Hancock Limited Partner"); John Hancock Income Fund-II Assignor,
         Inc. (the "Assignor Limited Partner"); and 4,154 Unitholders (the
         "Investors"). The Assignor Limited Partner holds 2,601,552 Assignee
         Units (the "Units"), representing economic and certain other rights
         attributable to Investor Limited Partnership Interests in the
         Partnership, for the benefit of the Investors. The John Hancock Limited
         Partner, the Assignor Limited Partner and the Investors are
         collectively referred to as the Limited Partners. The General Partner
         and the Limited Partners are collectively referred to as the Partners.
         The initial capital of the Partnership was $2,000, representing capital
         contributions of $1,000 by the General Partner and $1,000 from the John
         Hancock Limited Partner. The Amended Agreement of Limited Partnership
         of the Partnership (the "Partnership Agreement") authorized the
         issuance of up to 5,000,000 Assignee Units at $20 per Unit. During the
         offering period, which terminated on January 2, 1989, 2,601,552 Units
         were sold and the John Hancock Limited Partner made additional capital
         contributions of $4,161,483. There were no changes in the number of
         Units outstanding subsequent to the termination of the offering period.

         The Partnership is engaged solely in the business of (i) acquiring,
         improving, holding for investment and disposing of existing
         income-producing retail, industrial and office properties on an
         all-cash basis, free and clear of mortgage indebtedness, and (ii)
         making mortgage loans consisting of conventional first mortgage loans
         and participating mortgage loans secured by income-producing retail,
         industrial and office properties. Although the Partnership's properties
         were acquired and are held free and clear of mortgage indebtedness, the
         Partnership may incur mortgage indebtedness on its properties under
         certain circumstances as specified in the Partnership Agreement.

         The latest date on which the Partnership is due to terminate is
         December 31, 2017, unless it is sooner terminated in accordance with
         the terms of the Partnership Agreement. It is expected that, in the
         ordinary course of the Partnership's business, the investments of the
         Partnership will be disposed of, and the Partnership terminated, before
         December 31, 2017.

2.     SIGNIFICANT ACCOUNTING POLICIES

         The accompanying unaudited financial statements have been prepared in
         accordance with generally accepted accounting principles for interim
         financial information and with the instructions for Form 10-Q and Rule
         10-01 of Regulation S-X. Accordingly, they do not include all of the
         information and footnotes required by generally accepted accounting
         principles for complete financial statements. In the opinion of
         management, all adjustments (consisting of normal recurring accruals)
         considered necessary for a fair representation have been included.
         Operating results for the three-month period ended March 31, 1999 are
         not necessarily indicative of the results that may be expected for the
         year ending December 31, 1999. For further information, refer to the
         financial statements and footnotes thereto included in the
         Partnership's Annual Report on Form 10-K for the year ended December
         31, 1998.

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of revenue
         and expenses during the reporting period. Actual results may differ
         from those estimates.

                                       7
<PAGE>   8

             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

2.     SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Cash equivalents are highly liquid investments with maturities of three
         months or less when purchased. These investments are recorded at cost
         plus accrued interest, which approximates market value. Restricted cash
         represents funds restricted for tenant security deposits.

         Investments in property are recorded at cost less any property
         write-downs for impairment in value. Cost includes the initial purchase
         price of the property plus acquisition and legal fees, other
         miscellaneous acquisition costs and the cost of significant
         improvements.

         Depreciation has been provided on a straight-line basis over the
         estimated useful lives of the various assets: thirty years for the
         buildings and five years for related improvements. Maintenance and
         repairs are charged to operations as incurred.

         The Partnership measures impairment in value in accordance with
         Financial Accounting Standards Board Statement No. 121, "Accounting for
         the Impairment of Long-Lived Assets to Be Disposed Of" ("Statement
         121"). Statement 121 requires impairment losses to be recorded on
         long-lived assets used in operations where indicators of impairment are
         present and the undiscounted cash flows estimated to be generated by
         those assets are less than the assets' carrying amounts.

         Investment in joint venture is recorded using the equity method.

         Fees paid to the General Partner for the acquisition of joint venture
         and mortgage loan investments have been deferred and are being
         amortized over the life of the investments to which they apply. During
         1993, the Partnership reduced the period over which its remaining
         deferred acquisition fees are amortized from thirty years, the
         estimated useful life of the buildings owned by the Partnership, to
         eight and one-half years, the then estimated remaining life of the
         Partnership. Capitalized tenant improvements and lease commissions are
         being amortized on a straight-line basis over the terms of the leases
         to which they relate.

         The net income per Unit for the periods hereof was calculated by
         dividing the Investors' share of net income by the number of Units
         outstanding at the end of such period.

         No provision for income taxes has been made in the Financial Statements
         since such taxes are the responsibility of the individual Partners and
         Investors and not of the Partnership.

3.     THE PARTNERSHIP AGREEMENT

         Distributable Cash from Operations (defined in the Partnership
         Agreement) is distributed 1% to the General Partner and the remaining
         99% in the following order of priority: first, to the Investors until
         they receive a 7% non-cumulative, non-compounded annual cash return on
         their Invested Capital (defined in the Partnership Agreement); second,
         to the General Partner to pay the Subordinated Allocation (defined in
         the Partnership Agreement) equal to 3 1/2% of Distributable Cash from
         Operations for managing the Partnership's activities; third, to the
         John Hancock Limited Partner until it receives a 7% non-cumulative,
         non-compounded annual cash return on its Invested Capital; fourth, to
         the Investors and the John Hancock Limited Partner in proportion to
         their respective Capital Contributions (defined in the Partnership
         Agreement), until they have received a 10% non-cumulative,
         non-compounded annual cash return on their Invested Capital; fifth, to
         the General Partner to pay the Incentive Allocation (defined in the
         Partnership Agreement) equal to 2 1/2% of Distributable Cash from
         Operations; and sixth, to the Investors and the John Hancock Limited
         Partner in proportion to their respective Capital Contributions. Any
         Distributable Cash from Operations which is available as a result of a
         reduction of working capital reserves funded by Capital Contributions
         of the Investors, will be distributed 100% to the Investors.


                                       8
<PAGE>   9
             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

3.     THE PARTNERSHIP AGREEMENT (CONTINUED)

         Cash from a Sale, Financing or Repayment (defined in the Partnership
         Agreement) of a Partnership Investment, is first used to pay all debts
         and liabilities of the Partnership then due and then to fund any
         reserves for contingent liabilities. Cash from Sales, Financings or
         Repayments is then distributed and paid in the following order of
         priority: first, to the Investors and the John Hancock Limited Partner,
         with the distribution made between the Investors and the John Hancock
         Limited Partner in proportion to their respective Capital
         Contributions, until the Investors and the John Hancock Limited Partner
         have received an amount equal to their Invested Capital; second, to the
         Investors until they have received, after giving effect to all previous
         distributions of Distributable Cash from Operations and any previous
         distributions of Cash from Sales, Financings or Repayments after the
         return of their Invested Capital, the Cumulative Return on Investment
         (defined in the Partnership Agreement); third, to the John Hancock
         Limited Partner until it has received, after giving effect to all
         previous distributions of Distributable Cash from Operations and any
         previous distributions of Cash from Sales, Financings or Repayments
         after the return of its Invested Capital, the Cumulative Return on
         Investment; fourth, to the General Partner to pay any Subordinated
         Disposition Fees then payable pursuant to Section 6.4(c) of the
         Partnership Agreement; and fifth, 99% to the Investors and the John
         Hancock Limited Partner and 1% to the General Partner, with the
         distribution made between the Investors and the John Hancock Limited
         Partner in proportion to their respective Capital Contributions.

         Cash from the sale or repayment of the last of the Partnership's
         properties or mortgage loans is distributed in the same manner as Cash
         from Sales, Financings or Repayments, except that before any other
         distribution is made to the Partners, each Partner shall first receive
         from such cash, an amount equal to the then positive balance, if any,
         in such Partner's Capital Account after crediting or charging to such
         account the profits or losses for tax purposes from such sale. To the
         extent, if any, that a Partner is entitled to receive a distribution of
         cash based upon a positive balance in its capital account prior to such
         distribution, such distribution will be credited against the amount of
         such cash the Partner would have been entitled to receive based upon
         the manner of distribution of Cash from Sales, Financings or
         Repayments, as specified in the previous paragraph.

         Profits for tax purposes from the normal operations of the Partnership
         for each fiscal year are allocated to the Partners in the same amounts
         as Distributable Cash from Operations for that year. If such profits
         are less than Distributable Cash from Operations for any year, then
         they are allocated in proportion to the amounts of Distributable Cash
         from Operations allocated for that year. If such profits are greater
         than Distributable Cash from Operations for any year, they are
         allocated 1% to the General Partner and 99% to the John Hancock Limited
         Partner and the Investors, with the allocation made between the John
         Hancock Limited Partner and the Investors in proportion to their
         respective Capital Contributions. Losses for tax purposes from the
         normal operations of the Partnership are allocated 1% to the General
         Partner and 99% to the John Hancock Limited Partner and the Investors,
         with the allocation made between the John Hancock Limited Partner and
         the Investors in proportion to their respective Capital Contributions.

         Profits and Losses from Sales, Financings or Repayments are generally
         allocated 99% to the Limited Partners and 1% to the General Partners.


                                       9
<PAGE>   10
             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

3.     THE PARTNERSHIP AGREEMENT (CONTINUED)

         Neither the General Partner nor any Affiliate (as defined in the
         Partnership Agreement) of the General Partner shall be liable,
         responsible or accountable in damages to any of the Partners or the
         Partnership for any act or omission of the General Partner or such
         affiliate in good faith on behalf of the Partnership within the scope
         of the authority granted to the General Partner by the Partnership
         Agreement and in the best interest of the Partnership, except for acts
         or omissions constituting fraud, negligence, misconduct or breach of
         fiduciary duty. The General Partner and its Affiliates performing
         services on behalf of the Partnership shall be entitled to indemnity
         from the Partnership for any loss, damage, or claim by reason of any
         act performed or omitted to be performed by the General Partner or such
         Affiliates in good faith on behalf of the Partnership and in a manner
         within the scope of the authority granted to the General Partner by the
         Partnership Agreement and in the best interest of the Partnership,
         except that they shall not be entitled to be indemnified in respect of
         any loss, damage, or claim incurred by reason of fraud, negligence,
         misconduct, or breach of fiduciary duty. Any indemnity shall be
         provided out of and to the extent of Partnership assets only. The
         Partnership shall not advance any funds to the General Partner or its
         Affiliates for legal expenses and other costs incurred as a result of
         any legal action initiated against the General Partner or its
         Affiliates by a Limited Partner in the Partnership, except under
         certain specified circumstances.

4.     TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES

         Fees and expenses incurred and/or paid by the General Partner or its
         Affiliates on behalf of the Partnership during the three months ended
         March 31, 1999 and 1998 and to which the General Partner or its
         affiliates are entitled to reimbursement from the Partnership were
         $32,119 and $34,066, respectively. These expenses are included in
         expenses on the Statements of Operations.

         The Partnership provides indemnification to the General Partner and its
         Affiliates for any acts or omissions of the General Partner or an
         Affiliate in good faith on behalf of the Partnership, except for acts
         or omissions constituting fraud, negligence, misconduct or breach of
         fiduciary duty. The General Partner believes that this indemnification
         applies to the class action complaint described in Note 10.
         Accordingly, included in the Statements of Operations for the three
         months ended March 31, 1999 and 1998 are $12,191 and $3,462,
         respectively, representing the Partnership's share of costs incurred by
         the General Partner and its Affiliates relating to the class action
         complaint. Through March 31, 1999, the Partnership has accrued a total
         of $190,502 as its share of the costs incurred by the General Partner
         and its Affiliates resulting from this matter.

         The General Partner also believes that this indemnification applies to
         the complaint filed in the Superior Court of the State of California
         for the County of Los Angeles described in Note 10. Accordingly, the
         Partnership incurred and paid $35,138 representing the Partnership's
         share of costs incurred by the General Partner and its Affiliates
         relating to this complaint.

         Accounts payable to affiliates represents amounts due to the General
         Partner or its Affiliates for various services provided to the
         Partnership, including amounts to indemnify the General Partner or its
         Affiliates for claims incurred by them in connection with their actions
         with respect to the Partnership. All amounts accrued by the Partnership
         to indemnify the General Partner or its Affiliates for legal fees
         incurred by them, shall not be paid unless or until all conditions set
         forth in the Partnership Agreement for such payment have been
         fulfilled.

         The General Partner serves in a similar capacity for two other
         affiliated real estate limited partnerships.

5.     INVESTMENT IN PROPERTY

         Investment in property at cost consists of managed, fully-operating, 
         commercial real estate as follows:
<TABLE>
<CAPTION>

                                                          March 31,           December 31,
                                                            1999                 1998
                                                            ----                 ----
<S>                                                      <C>                  <C>
           Park Square Shopping Center                   $12,886,230          $12,886,230
           Miami International Distribution Center         6,371,978            6,371,978
                                                         -----------          -----------
                                                         $19,258,208          $19,258,208
                                                         ===========          ===========
</TABLE>
                                       10

<PAGE>   11
             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

5.     INVESTMENT IN PROPERTY (CONTINUED)

         The real estate market is cyclical in nature and is materially affected
         by general economic trends and economic conditions in the market where
         a property is located. As a result, determination of real estate values
         involves subjective judgments. These judgments are based on current
         market conditions and assumptions related to future market conditions.
         These assumptions involve, among other things, the availability of
         capital, occupancy rates, rental rates, interest rates and inflation
         rates. Amounts ultimately realized from each property may vary
         significantly from the values presented and the differences could be
         material. Actual market values of real estate can be determined only by
         negotiation between the parties in a sales transaction.

         The Partnership leases its properties to non-affiliated tenants
         primarily under long-term operating leases.

6.     REAL ESTATE LOANS

         On March 10, 1988, the Partnership made a $1,700,000 participating
         non-recourse mortgage loan to a non-affiliated borrower, secured by a
         first mortgage on commercial real estate known as 205 Newbury Street,
         located in Boston, Massachusetts. Under the terms of the loan
         agreement, the borrower wa obligated to pay interest only monthly at an
         annual rate of 9.5% with the entire outstanding principal balance of
         the loan due on April 1, 1998. In addition to these amounts, the
         borrower was obligated to pay the Partnership 25% of the net cash flow
         derived from the operations of the property during the term of the loan
         and 25% of the Net Appreciated Value of the property (defined in the
         Contingent Interest Agreement) upon its sale, refinancing or mortgage
         maturity date.

         Contingent interest payments, based on the net cash flow from the
         property, were not received from 1990 through 1995 because the property
         did not generate any cash flow in excess of the required minimum debt
         service payments. From 1996 until the loan matured, the Partnership
         received contingent interest payments, the sum of which is not
         material.

         On April 1, 1998, the loan matured and the borrower repaid the entire
         outstanding principal balance of the loan. At that time, the Net
         Appreciated Value of the property was not sufficient to provide the
         Partnership with any additional amounts.

7.     INVESTMENT IN JOINT VENTURE

         On December 28, 1988, the Partnership acquired a 99.5% interest in JH
         Quince Orchard Partners (the "Affiliated Joint Venture"), a joint
         venture between the Partnership and John Hancock Realty Income Fund-III
         Limited Partnership ("Income Fund-III"). The Partnership had an initial
         99.5% interest and Income Fund-III had an initial 0.5% interest in the
         Affiliated Joint Venture. Pursuant to the partnership agreement of the
         Affiliated Joint Venture, Income Fund-III had the option, exercisable
         prior to December 31, 1990, to increase its investment and interest in
         the Affiliated Joint Venture to 50%. During the second quarter of 1989,
         Income Fund-III exercised its option and the Partnership sold a 49.5%
         interest in the Affiliated Joint Venture to Income Fund-III. The
         Partnership has held a 50% interest in the Affiliated Joint Venture
         since the second quarter of 1989.

         On December 28, 1988, the Affiliated Joint Venture contributed 98% of
         the invested capital of, and acquired a 75% interest in, QOCC-1
         Associates, an existing partnership which owns and operates the Quince
         Orchard Corporate Center, a three-story office building and related
         land and improvements located in Gaithersburg, Maryland. The
         partnership agreement of QOCC-1 Associates provides that the Affiliated
         Joint Venture shall contribute 95% of any required additional capital
         contributions. Of the cumulative total invested capital in QOCC-1
         Associates at March 31, 1999, 97.55% has been contributed by the
         Affiliated Joint Venture. The Affiliated Joint Venture continues to
         hold a 75% interest in QOCC-1 Associates.

         Net cash flow from QOCC-1 Associates is distributed in the following
         order of priority: first, to the payment of all debts and liabilities
         of QOCC-1 Associates and to fund reserves deemed reasonably necessary;
         second, to the partners in proportion to their respective invested
         capital until each has received a 9% return on invested capital; third,
         the balance, if any, to the partners in proportion to their interests.
         Prior to 1996, QOCC-1 Associates had not provided the partners with a
         return in excess of 9% on their invested capital. During 1998, 1997 and
         1996, the partners received returns on invested capital of
         approximately 12%.

                                       11
<PAGE>   12
             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

7.     INVESTMENT IN JOINT VENTURE (CONTINUED)

         Income and gains of QOCC-1 Associates, other than the gains allocated
         arising from a sale other similar event with respect to the Quince
         Orchard Corporate Center, are allocated in the following order of
         priority: i) to the partners who are entitled to receive a distribution
         of net cash flow, pro rata in the same order and amounts as such
         distributions are made and ii) the balance, if any, to the partners,
         pro rata in accordance with their interests.

8.     DEFERRED EXPENSES

         Deferred expenses consist of the following:
<TABLE>
<CAPTION>

                                                                       Unamortized         Unamortized
                                                                       Balance at          Balance at
                        Description                                  March 31, 1999     December 31, 1998
                        -----------                                  --------------     -----------------
<S>                                                                    <C>                    <C>
           $152,880 acquisition fee for investment in
           the Affiliated Joint Venture.  This amount
           is amortized over a period of 31.5 years.                      103,336            104,549

           $1,203,097 acquisition fees paid to the
           General Partner.   Prior to June 30, 1993, this
           amount was amortized over a period of 30 years.
           Subsequent to June 30, 1993, the unamortized
           balance is amortized over a period of 8.5 years.               333,448            363,761

           $169,770 of tenant improvements.  These amounts
           are amortized over the terms of the leases
           to which they relate.                                           33,330             38,235

           $571,649 of lease commissions.  These amounts
           are amortized over the terms of the leases
           to which they relate.                                          204,800            225,549
                                                                         --------           --------
                                                                         $674,914           $732,094
                                                                         ========           ========
</TABLE>

9.     FEDERAL INCOME TAXES

         A reconciliation of the net income reported in the Statements of
         Operations to the net income reported for federal income tax purposes 
         is as follows:

<TABLE>
<CAPTION>

                                                                        Three Months Ended March 31,
                                                                          1999              1998
                                                                          ----              -----          
<S>                                                                      <C>               <C>

           Net income per Statements of Operations                       $434,626          $489,665


           Add/(deduct):     Excess of book depreciation
                             over tax depreciation                         19,351            19,138
                             Excess of book amortization
                               over tax amortization                       16,772            20,185
                             Other income and expense                          --             3,847
                                                                         --------          --------

           Net income for federal income tax purposes                    $470,749          $532,835
                                                                         ========          ========
</TABLE>

                                       12
<PAGE>   13

             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

10.    CONTINGENCIES

         In February 1996, a putative class action complaint was filed in the
         Superior Court in Essex County, New Jersey by a single investor in the
         Partnership. The complaint named as defendants the Partnership, the
         General Partner, certain other Affiliates of the General Partner, two
         limited partnerships affiliated with the Partnership, and certain
         unnamed officers, directors, employees and agents of the named
         defendants. The plaintiff sought unspecified damages stemming from
         alleged misrepresentations and omissions in the marketing and offering
         materials associated with the Partnership and two limited partnerships
         affiliated with the Partnership. On March 18, 1997, the court certified
         a class of investors who were original purchasers in the Partnership.

         The Partnership and the other defendants have answered the complaint,
         denying the material allegations and raising numerous affirmative
         defenses. Discovery has commenced, and the Partnership and other
         defendants have produced documents relating to the plaintiff's claims.
         No depositions are scheduled. The court has heard the defendants'
         motion to dismiss certain claims on grounds of the expiration of the
         statutes of limitations and has stated it intends to hold a further
         hearing on that matter to determine whether the case can be resolved by
         the disposition of certain claims. The Partnership and the other
         defendants intend to move to decertify the class and for summary
         judgment dismissing the breach of contract claims.

         The Partnership provides indemnification to the General Partner and its
         Affiliates for acts or omissions of the General Partner in good faith
         on behalf of the Partnership, except for acts or omissions constituting
         fraud, negligence, misconduct or breach of fiduciary duty. The General
         Partner believes that this indemnification applies to the class action
         complaint described above.

         The Partnership has incurred approximately $477,000 in legal expenses
         in connection with the class action lawsuit (see Part II, Item 1 of
         this Report). Of this amount, approximately $286,000 relates to the
         Partnership's own defense and approximately $191,000 relates to the
         indemnification of the General Partner and its Affiliates for their
         defense. These expenses are funded from the operations of the
         Partnership.

         In September 1997, a complaint for damages was filed in the Superior
         Court of the State of California for the County of Los Angeles by an
         investor in the Partnership. The complaint named the General Partner as
         a defendant.

         The plaintiff sought unspecified damages which allegedly arose from the
         General Partner's refusal to provide, without reasonable precautions on
         plaintiff's use of, a list of investors in the Partnership and in John
         Hancock Realty Income Fund Limited Partnership ("RIF"), a limited
         partnership affiliated with the Partnership. Plaintiff alleges that the
         General Partner's refusal unconditionally to provide a list was a
         breach of contract and a breach of the General Partner's fiduciary
         duty.

         In 1998, the plaintiff amended the complaint to name the Partnership
         and RIF as defendants. As a result of the defendants' demurrer (motion
         to dismiss), in May 1998 plaintiff's additional claims for tortuous
         interference with prospective economic advantage and intentional
         interference with contract, were dismissed. In addition, as a result of
         a motion for summary judgment, in August 1998, the court dismissed all
         claims involving the Partnership, leaving only the breach of contract
         and breach of fiduciary duty claims involving RIF. On the eve of trial,
         plaintiffs dismissed without prejudice those claims not previously
         dismissed by the court, and subsequently filed a notice of appeal from
         the dismissal of the claims that the court had dismissed on motion.

         The Partnership has incurred approximately $105,000 in legal expenses
         in connection with the above described lawsuit (see Part II, Item 1 of
         this Report). Of this amount, approximately $70,000 relates to the
         Partnership's own defense and approximately $35,000 relates to the
         indemnification of the General Partner and its Affiliates for their
         defense. These expenses were funded from the operations of the
         Partnership.

         At the present time, the General Partner can not estimate the aggregate
         amount of legal expenses and potential indemnification claims to be
         incurred and their impact on the Partnership's Financial Statements,
         taken as a whole. Accordingly, no provision for any liability that
         could result from the eventual outcome of these matters has been made
         in the accompanying financial statements. However, while it is still
         too early to estimate potential damages, they could possibly be
         material.

                                       13
<PAGE>   14

             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS

GENERAL

During the offering period, from October 2, 1987 to January 2, 1989, the
Partnership sold 2,601,552 Units representing gross proceeds (exclusive of the
John Hancock Limited Partners' contribution, which was used to pay sales
commissions) of $52,031,040. The proceeds of the offering were used to acquire
investments, fund reserves, and pay acquisition fees and organizational and
offering expenses. These investments are described more fully in Notes 5, 6 and
7 to the Financial Statements included in Item 1 of this Report.

IMPACT OF YEAR 2000

The General Partner and John Hancock Mutual Life Insurance Company, the General
Partner's ultimate parent (together, "John Hancock") along with the Partnership,
have developed a plan to modify or replace significant portions of the
Partnership's computer information and automated technologies so that its
systems will function properly with respect to the dates in the year 2000 and
thereafter. The Partnership presently believes that with modifications to
existing systems and conversions to new technologies, the year 2000 will not
pose significant operational problems for its computer systems. However, if
certain modifications and conversions are not made, or are not completed timely,
the year 2000 issue could have an adverse impact on the operations of the
Partnership.

John Hancock as early as 1994 had begun assessing, modifying and converting the
software related to its significant systems and has initiated formal
communications with its significant business partners and customers to determine
the extent to which John Hancock's interface systems are vulnerable to those
third parties' failure to remediate their own year 2000 issues. While John
Hancock is developing alternative third party processing arrangements as it
deems appropriate, there is no guarantee that the systems of other companies on
which the Partnership's systems rely will be converted timely or will not have
an adverse effect on the Partnership's systems.

The Partnership expects the project to be substantially complete by early 1999.
This completion target was derived utilizing numerous assumptions of future
events, including availability of certain resources and other factors. However,
there can be no guarantee that this completion target will be achieved.

FORWARD-LOOKING STATEMENTS

In addition to historical information, certain statements contained herein
contain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Those statements appear in a number of places in this
Report and include statements regarding the intent, belief or expectations of
the General Partner with respect to, among other things, the prospective sale of
Partnership properties, repayment of mortgage loans, actions that would be taken
in the event of lack of liquidity, unanticipated leasing costs, repair and
maintenance expenses, distributions to the General Partner and to Investors, the
possible effects of tenants vacating space at Partnership properties, the
absorption of existing retail space in certain geographical areas, and the
impact of inflation.

Forward-looking statements involve numerous known and unknown risks and
uncertainties, and they are not guarantees of future performance. The following
factors, among others, could cause actual results or performance of the
Partnership and future events to differ materially from those expressed or
implied in the forward-looking statements: general economic and business
conditions; any and all general risks of real estate ownership, including
without limitation adverse changes in general economic conditions and adverse
local conditions, the fluctuation of rental income from properties, changes in
property taxes, utility costs or maintenance costs and insurance, fluctuations
of real estate values, competition for tenants, uncertainties about whether real
estate sales under contract will close; the ability of the Partnership to sell
its properties; and other factors detailed from time to time in the filings with
the Securities and Exchange Commission.

Readers are cautioned not to place undue reliance on forward-looking statements,
which reflect the General Partner's analysis only as of the date hereof. The
Partnership assumes no obligation to update forward-looking statements. See also
the Partnership's reports to be filed from time to time with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.

                                       14
<PAGE>   15

             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 1999 the Partnership had $3,419,503 in cash and cash equivalents,
$122,978 in restricted cash.

The Partnership has a working capital reserve with a current balance of
approximately $2,400,000, which represents approximately 5.9% of the Investors'
Invested Capital (as defined in the Partnership Agreement). The General Partner
anticipates that such amount should be sufficient to satisfy the Partnership's
general liquidity requirements. The Partnership's liquidity would, however, be
materially adversely affected if there were a significant reduction in revenues
or significant unanticipated operating costs (including but not limited to
litigation expenses), unanticipated leasing costs or unanticipated capital
expenditures. If any or all of these events were to occur, to the extent that
the working capital reserve would be insufficient to satisfy the cash
requirements of the Partnership, it is anticipated that additional funds would
be obtained through a reduction of cash distributions to Investors, bank loans,
short-term loans from the General Partner or its Affiliates, or the sale or
financing of Partnership investments.

The General Partner anticipates that the Partnership will incur an aggregate
amount of approximately $168,000 of leasing costs at the Park Square Shopping
Center and Miami International Distribution Center properties during the
remainder of 1999. The current balance in the working capital reserve should be
sufficient to pay such costs.

The General Partner anticipates that the Partnership will incur approximately
$61,000 of non-recurring repair and maintenance expenses at the Park Square
Shopping Center and Miami International Distribution Center properties during
the remainder of 1999. These expenses will be funded from the operations of the
Partnership's properties and are not expected to have a significant impact on
the Partnership's liquidity.

The Partnership has incurred a total of approximately $477,000 in legal expenses
in connection with the class action lawsuit (see Part II, Item 1 of this
Report). Of this amount, approximately $286,000 relates to the Partnership's own
defense and approximately $191,000 relates to the indemnification of the General
Partner and its Affiliates for their defense.

In addition, the Partnership incurred approximately $105,000 in legal expenses
in connection with the lawsuit filed in the Superior Court of the State of
California for the County of Los Angeles by an investor in the Partnership (see
Part II, Item 1 of this Report). Of this amount, approximately $70,000 relates
to the Partnership's own defense and approximately $35,000 relates to the
indemnification of the General Partner and its Affiliates for their defense.
These expenses are funded from the operations of the Partnership.

At the present time, the General Partner cannot estimate the aggregate amount of
legal expenses and indemnification claims to be incurred and their impact on the
Partnership's future operations. Liquidity would, however, be materially
adversely affected by a significant increase in such legal expenses and related
indemnification costs. If such increases were to occur, to the extent that cash
from operations and the working capital reserve would be insufficient to satisfy
the cash requirements of the Partnership, it is anticipated that additional
funds would be obtained through a reduction of cash distributions to investors,
bank loans, short-term loans from the General Partner or its Affiliates, or the
sale or financing of Partnership properties.

Cash in the aggregate amount of $656,258 generated from the Partnership's
operations, was distributed to the General Partner and the Investors during the
first quarter of 1999. The amount distributed to the Investors from
Distributable Cash from Operations during the three months ended March 31, 1999
represented an annualized return on Investors' Invested Capital of approximately
6%. The General Partner anticipates that the Partnership will be able to make
comparable cash distributions from Distributable Cash from Operations during the
remaining three quarters of 1999.

                                       15
<PAGE>   16

             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)


ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)


The following table summarizes the leasing activity and occupancy status at the
Partnership's remaining equity investments during the three months ended March
31, 1999 and scheduled leasing activity for each investment during the remainder
of 1999:

<TABLE>
<CAPTION>

                                        MIAMI INTERNATIONAL        PARK SQUARE          QUINCE ORCHARD
                                         DISTRIBUTION CTR.        SHOPPING CTR.         CORPORATE CTR.
                                         -----------------        -------------         --------------
<S>                                           <C>                    <C>                    <C>   
Square Footage                                215,019                137,108                 99,782

Occupancy January 1, 1999                        100%                    88%                   100%

New Leases                                         0%                     0%                     0%

Lease Renewals                                     0%                     0%                     0%

Leases Expired                                     0%                     0%                     0%

Occupancy March 31, 1999                         100%                    88%                   100%

Leases Scheduled to Expire,
   Balance of 1999                                44%                     6%                     0%

Leases Scheduled to Commence,
   Balance of 1999                                44%                     1%                     0%
</TABLE>

The Miami International Distribution Center is located in an area that the Miami
Airport Authority has targeted for future expansion of the airport. During May
1996, the Miami Airport Authority made an offer to purchase this property at an
amount in excess of its carrying value. Since that time, the Miami Airport has
continued to show interest in possibly acquiring the property. The General
Partner will continue its efforts to negotiate with the Miami Airport Authority
to agree on a mutually acceptable sale of the property. It is possible that,
under certain circumstances, the Miami Airport Authority could obtain this
property through its powers of eminent domain, although at this time no such
plans have been announced or otherwise communicated to the General Partner. The
General Partner believes that the Miami Airport Authority's possible acquisition
of the Miami International Distribution Center i) has hampered and will hamper
the General Partner's ability to retain existing tenants and secure new tenants
and ii) will negatively impact the General Partner's ability to list the
property for sale and consummate a sale of the property.

The Brooklyn Park, Minnesota real estate market, where the Park Square Shopping
Center is located, continues to experience increasing demand for tenants as the
development of more retail space continues. The General Partner expects market
conditions in Brooklyn Park to remain competitive during the remainder 1999 and,
therefore, no increase in market rental rates is anticipated.

The Quince Orchard Corporate Center is leased to Boehringer Mannheim
Pharmaceuticals, Inc. under a ten-year lease which expires in February 2004. The
tenant has two options under the lease agreement, one, to terminate the lease at
the end of its seventy-sixth month of the lease, or June 2000, and, two, to
extend the term of the lease for an additional five- year period. During the
first quarter of 1998, Hoffman-LaRoche, Inc. received approval from the Federal
Trade Commission to acquire Boehringer Mannheim Pharmaceuticals, Inc.
Subsequently, Hoffman-LaRoche vacated and subleased the space. Hoffman-LaRoche
has informed the General Partner that it intends to exercise its right to
terminate the lease in June 2000.

                                       16
<PAGE>   17

             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)


ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  
         RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

Real estate market conditions in the Washington D.C. area for office space
similar to the Quince Orchard Corporate Center continue to improve. The supply
of such office space has been unable to keep pace with the demand, resulting in
a slight increase in market rents. Further, this condition has given rise to new
real estate development in the area. The General Partner does not anticipate
that this new development will negatively impact the market and therefore
expects market conditions to remain favorable through 1999.

The General Partner evaluated the carrying value of each of the Partnership's
properties and its joint venture investment as of December 31, 1998 by comparing
each such carrying value to the related property's future undiscounted cash
flows and the then most recent internal appraisal in order to determine whether
any permanent impairment in values existed. Based upon such evaluations, the
General Partner determined that no permanent impairment in values existed and,
therefore, no write-downs were recorded.

The General Partner will continue to conduct periodic property and investment
valuations, using internal or independent appraisals, in order to assist in its
evaluation of whether an impairment in value exists on any of the Partnership's
investments.

RESULTS OF OPERATIONS

Net income for the period ended March 31, 1999 was $434,626, as compared to net
income of $489,665 for the same period in 1998, representing a decrease of
$55,039, or 11%. This decrease is primarily due to a decrease in interest income
resulting from the repayment of the 205 Newbury Associates mortgage loan and to
an increase in general and administrative expenses.

Average occupancy for the Partnership's equity real estate investments was as
follows:

<TABLE>
<CAPTION>
                                                                       Three Months Ended March 31,
                                                                         1999                1998
                                                                         ----                ----  
<S>                                                                      <C>                 <C>
     Miami International Distribution Center                             100%                 87%
     Park Square Shopping Center                                          88%                 88%
     Quince Orchard Corporate Center (Affiliated Joint Venture)          100%                100%
</TABLE>

Rental income for the period ended March 31, 1999 increased by $51,000, or 10%,
as compared to the same period during 1998 primarily due to increased rental
income at the Miami International Distribution Center which secured a 29,000
square foot tenant in October of 1998 to bring the property's occupancy rate
from 87% to 100%. Rental income at the Partnership's other properties was
consistent between periods.

Interest income for the three months ended March 31, 1999 decreased by $46,706,
or 41%, as compared to the same period in 1998. This decrease was primarily due
to the repayment of the 205 Newbury Associates mortgage loan which was repaid in
its entirety on April 1, 1998. Interest earned during the 1998 period was
$40,375.

General and administrative expenses for the quarter ended March 31, 1999
increased by $32,100, or 56%, primarily due to higher legal fees incurred by the
Partnership in connection with the class action complaint (see Part II, Item 1
of this Report). Excluding such legal fees, general and administrative expenses
were consistent between periods.

The General Partner believes that inflation has had no significant impact on the
Partnership's operations during the three months ended March 31, 1999, and the
General Partner anticipates that inflation will not have a significant impact
during the remainder of 1999.

                                       17
<PAGE>   18
             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)


ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS (CONTINUED)

CASH FLOW

The following table provides the calculations of Cash from Operations and
Distributable Cash from Operations which are calculated in accordance with
Section 17 of the Partnership Agreement:

<TABLE>
<CAPTION>
                                                                  Three Months Ended March 31,
                                                                    1999               1998
                                                                    ----               ----     
<S>                                                               <C>                <C>   
Net cash provided by operating activities (a)                     $814,303           $ 863,471
Net change in operating assets and liabilities (a)                (151,784)           (131,865)
                                                                  --------           ---------
Net cash provided by operations (a)                                662,519             731,606
Increase in working capital reserves                                (5,561)            (74,648)
                                                                  --------           ---------
Cash from operations (b)                                           656,958             656,958
Decrease in working capital reserves                                    --                  --
                                                                  --------           ---------
Distributable cash from operations (b)                            $656,958           $ 656,958
                                                                  ========           =========

Allocation to General Partner                                     $  6,570           $   6,570
Allocation to Investors                                            650,388             650,388
Allocation to John Hancock Limited Partner                              --                  --
                                                                  --------           ---------
                                                                  $656,958           $ 656,958
                                                                  ========           =========
</TABLE>

       (a)    Net cash provided by operating activities, net change in operating
              assets and liabilities, and net cash provided by operations are as
              calculated in the Statements of Cash Flows included in Item 1 of
              this Report.

       (b)    As defined in the Partnership Agreement. Distributable Cash from
              Operations should not be considered as an alternative to net
              income (i.e., not an indicator of performance) or to reflect cash
              flows or availability of discretionary funds.

During the second quarter of 1999, the Partnership will make a distribution of
Distributable Cash from Operations to the General Partner and Investors in the
amount of $656,958. This amount represents a 6% annualized return on the
remaining Investors' Invested Capital (as defined in the Partnership Agreement).
This amount is allocated 1% to the General Partner and a 99% to the Investors,
in accordance with the Partnership Agreement:

The source of future cash distributions from operations is dependent upon cash
generated by the Partnership's properties and the use of working capital
reserves. The General Partner currently anticipates that the Partnership's
Distributable Cash from Operations during each of the remaining three quarters
of 1999 will be comparable to that generated during the first quarter of 1999.

                                       18
<PAGE>   19

             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

                           PART II: OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

           In February 1996, a putative class action complaint was filed in the
           Superior Court in Essex County, New Jersey by a single investor in
           the Partnership. The complaint named as defendants the Partnership,
           the General Partner, certain other Affiliates of the General Partner,
           and certain unnamed officers, directors, employees and agents of the
           named defendants.

           The plaintiff sought unspecified damages stemming from alleged
           misrepresentations and omissions in the marketing and offering
           materials associated with the Partnership and two limited
           partnerships affiliated with the Partnership. The complaint alleged,
           among other things, that the marketing materials for the Partnership
           and the affiliated limited partnerships did not contain adequate risk
           disclosures.

           On March 18, 1997, the court certified a class of investors who were
           original purchasers in the Partnership. The certification order
           should not be construed as suggesting that any member of the class is
           entitled to recover, or will recover, any amount in the action.

           The Partnership and the other defendants have answered the complaint,
           denying the material allegations and raising numerous affirmative
           defenses. Discovery has commenced, and the Partnership and other
           defendants have produced documents relating to the plaintiff's
           claims. No depositions are scheduled. The court has heard the
           defendants' motion to dismiss certain claims on grounds of the
           expiration of the statues of limitations and has stated it intends to
           hold a further hearing on that matter to determine whether the case
           can be resolved by the disposition of certain claims. The Partnership
           and the other defendants intend to move to decertify the class and
           for summary judgment dismissing the breach of contract claims.

           The General Partner believes the allegations are totally without
           merit and will continue to vigorously contest the action.

           In September 1997, a complaint for damages was filed in the Superior
           Court of the State of California for the County of Los Angeles by an
           investor in the Partnership. The complaint named the General Partner
           as a defendant.

           The plaintiff sought unspecified damages which allegedly arose from
           the General Partner's refusal to provide, without reasonable
           precautions on plaintiff's use of, a list of investors in the
           Partnership and in John Hancock Realty Income Fund Limited
           Partnership ("RIF"), a limited partnership affiliated with the
           Partnership. Plaintiff alleges that the General Partner's refusal
           unconditionally to provide a list was a breach of contract and a
           breach of the General Partner's fiduciary duty.

           In 1998, the plaintiff amended the complaint to name the Partnership
           and RIF as defendants. As a result of the defendant's demurer (motion
           to dismiss), in May 1998 plaintiff's additional claims for tortious
           interference with prospective economic advantage and intentional
           interference with contract, were dismissed. In addition, as a result
           of a motion for summary judgment, in August 1998, the court dismissed
           all claims involving the Partnership, leaving only the breach of
           contract and breach of fiduciary duty claims involving RIF. On the
           eve of trail, plaintiffs dismissed without prejudice those claims not
           previously dismissed by the court, and subsequently filed a notice of
           appeal from the dismissal of the claims that the court had dismissed
           on motion.

           There are no other material pending legal proceedings, other than
           ordinary routine litigation incidental to the business of the
           Partnership, to which the Partnership is a party or to which any of
           its properties is subject.

                                       19
<PAGE>   20
             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)

                           PART II: OTHER INFORMATION
                                   (CONTINUED)


ITEM 2.    CHANGES IN SECURITIES

           There were no changes in securities during the first quarter of 1999.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

           There were no defaults upon senior securities during the first
           quarter of 1999.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

           There were no matters submitted to a vote of security holders of the
           Partnership during the first quarter of 1999.

ITEM 5.    OTHER INFORMATION

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a) There are no exhibits to this report
           (b) There were no Reports on Form 8-K filed during the first quarter
               of 1999.

                                       20
<PAGE>   21


             JOHN HANCOCK REALTY INCOME FUND-II LIMITED PARTNERSHIP
                      (A MASSACHUSETTS LIMITED PARTNERSHIP)


                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 14th day of May, 1999.


                                        John Hancock Realty Income Fund-II
                                        Limited Partnership


                                        By:  John Hancock Realty Equities, Inc.,
                                                   General Partner



                                        By: /s/ William M. Fitzgerald
                                            ------------------------------------
                                              William M. Fitzgerald, President



                                        By: /s/ Virginia H. Lomasney    
                                            ------------------------------------
                                              Virginia H. Lomasney, Treasurer
                                                (Chief Accounting Officer)