<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, 1998
                               ------------------------------------------------

                                       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)


         Massachusetts                                   04-2969061
-------------------------------            ------------------------------------
(STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)


                     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, 1998 and
                   December 31, 1997                                          3

                   Statements of Operations for the Three
                   Months Ended March 31, 1998 and 1997                       4

                   Statements of Partners' Equity for the
                   Three Months Ended March 31, 1998 and
                   for the Year Ended December 31, 1997                       5

                   Statements of Cash Flows for the Three
                   Months Ended March 31, 1998 and 1997                       6

                   Notes to Financial Statements                           7-14

          Item 2 - Management's Discussion and Analysis of
                   Financial Condition and Results of Operations          15-19


PART II:  OTHER INFORMATION                                                  20





                                       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,
                                                         1998             1997
                                                      -----------       -----------
<S>                                                   <C>               <C>

Cash and cash equivalents                             $ 3,600,248       $ 3,393,737
Restricted cash                                           100,987           100,987
Other assets                                              134,802            84,802

Deferred expenses, net of accumulated
     amortization of $1,236,761 in 1998 and
     $1,181,419 in 1997                                   792,295           847,637

Real estate loans                                       1,700,000         1,700,000

Investment in joint venture                             7,216,644         7,284,761

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                     4,467,524         4,349,042
                                                      -----------       -----------
                                                       14,790,684        14,909,166
                                                      -----------       -----------

         Total assets                                 $28,335,660       $28,321,090
                                                      ===========       ===========


              LIABILITIES AND PARTNERS' EQUITY

Accounts payable and accrued expenses                     325,683       $   146,933
Accounts payable to affiliates                            129,020           125,905
                                                      -----------       -----------
         Total liabilities                                454,703           272,838

Partners' equity/(deficit):
     General Partner's deficit                           (176,898)         (175,225)
     Limited Partners' equity                          28,057,855        28,223,477
                                                      -----------       -----------

         Total partners' equity                        27,880,957        28,048,252
                                                      -----------       -----------

         Total liabilities and partners' equity       $28,335,660       $28,321,090
                                                      ===========       ===========

</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,
                                                1998          1997
                                              --------      --------
<S>                                           <C>           <C>     

Income:

     Rental income                            $533,719      $541,374
     Income from joint venture                 191,122       188,537
     Interest income                            85,085       144,361
                                              --------      --------

         Total income                          809,926       874,272

Expenses:

     Depreciation                              118,482       118,482
     General and administrative expenses        55,763       112,063
     Property operating expenses                90,674        92,017
     Amortization of deferred expenses          55,342        54,560
                                              --------      --------

         Total expenses                        320,261       377,122
                                              --------      --------

         Net income                           $489,665      $497,150
                                              ========      ========

Allocation of net income:

     General Partner                          $  4,897      $  4,972
     John Hancock Limited Partner                   --            --
     Investors                                 484,768       492,178
                                              --------      --------
                                              $489,665      $497,150
                                              ========      ========

Net income per Unit                           $    .19      $   0.19
                                              ========      ========

</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, 1998 AND
                          YEAR ENDED DECEMBER 31, 1997


<TABLE>
<CAPTION>

                                                      GENERAL          LIMITED
                                                      PARTNER          PARTNERS            TOTAL
                                                      -------          --------            -----
<S>                                                  <C>             <C>                <C>        

Partners' equity/(deficit) at January 1, 1997
    (2,601,552 Units outstanding)                    $(166,057)      $ 37,925,372       $37,759,315

Less: Cash distributions                               (27,855)       (11,551,932)       (1,868,724)

Add: Net income                                         18,687          1,850,032         1,848,724
                                                     ---------       ------------       -----------

Partner's equity/(deficit) at December 31, 1997       (175,225)        28,223,477        28,048,252
   (2,601,552 Units outstanding)

Less: Cash distributions                                (6,570)          (650,390)         (656,960)

Add: Net income                                          4,897            484,768           489,665
                                                     ---------       ------------       -----------

Partners' equity/(deficit) at March 31, 1998
   (2,601,552 Units outstanding)                      (176,898)        28,057,855        27,880,957
                                                     =========       ============       ===========

</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,
                                                                1998             1997
                                                             ----------       -----------
<S>                                                          <C>              <C>        

Operating activities:
  Net income                                                 $  489,665       $   497,150

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

      Depreciation                                              118,482           118,482
      Amortization of deferred expenses                          55,342            54,560
      Cash distributions over equity in
        income from joint venture                                68,117            55,339
                                                             ----------       -----------
                                                                731,606           725,531

  Changes in operating assets and liabilities:
      Decrease/(increase) in restricted cash                         --            12,060
      Increase in other assets                                  (50,000)         (115,133)
      Increase in accounts payable and accrued expenses         178,750            88,054
      Increase in accounts payable to Affiliates                  3,115            34,235
                                                             ----------       -----------
        Net cash provided by operating activities               863,471           744,747

Investing activities:
  Principal payments on real estate loans                            --         3,545,361
  Increase in deferred expenses                                      --           (20,000)
                                                             ----------       -----------
        Net cash provided by investing activities                    --         3,525,361

Financing activities:
  Cash distributed to Partners                                 (656,960)       (9,556,357)
                                                             ----------       -----------

        Net cash used in financing activities                  (656,960)       (9,556,357)
                                                             ----------       -----------

        Net (decrease)/increase in cash and cash
           equivalents                                          206,511        (5,286,249)

        Cash and cash equivalents at beginning
           of year                                            3,393,737         8,669,990
                                                             ----------       -----------

        Cash and cash equivalents at end
           of period                                         $3,600,248       $ 3,383,741
                                                             ==========       ===========

</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, 1998, 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 4,454 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, 1998 are not
       necessarily indicative of the results that may be expected for the year
       ending December 31, 1998. 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, 1997.

       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.

       Real estate loans are recorded at amortized cost unless the General
       Partner determines that in economic substance the loan represents an
       investment in property or joint venture. In such instances, these
       investments are accounted for using the equity method.

       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, 1998 and 1997 and to which the General Partner or its
       affiliates are entitled to reimbursement from the Partnership were
       $34,066 and $112,386, 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, 1998 and 1997 are $3,462 and $31,579, 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,
       1997, the Partnership has accrued a total of $99,029 as its share of the
       costs incurred by the General Partner and its Affiliates resulting from
       this matter.

       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,
                                                          1998            1997
                                                       -----------     -----------
<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 is obligated to pay: i) 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 is
       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. Since 1996, the Partnership has 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, 1997,
       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 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, 1998   December 31, 1997
                        -----------                              --------------   -----------------
           <S>                                                       <C>               <C>

           $35,072 acquisition fee for 205 Newbury St.
           loan. This amount is amortized
           over the term of the loan.                                $      0          $    948

           $152,880 acquisition fee for investment in
           the Affiliated Joint Venture. This amount
           is amortized over a period of 31.5 years.                  108,189           109,402

           $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.           454,702           485,015

           $146,277 of tenant improvements. These amounts
           are amortized over the terms of the leases
           to which they relate.                                       28,315            33,788

           $491,730 of lease commissions. These amounts
           are amortized over the terms of the leases
           to which they relate.                                      201,089           218,484
                                                                     --------          --------
                                                                     $792,295          $847,637
                                                                     ========          ========
</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,
                                                                  1998                1997
                                                                --------           --------
           <S>                                                  <C>                <C>

           Net income per Statements of Operations              $489,665           $497,150


           Add/(deduct): Excess of book depreciation
                         over tax depreciation                    19,138             19,439
                         Excess of book amortization
                           over tax amortization                  20,185             19,397
                         Other income and expense                  3,847             (4,252)
                                                                --------           --------

           Net income for federal income tax purposes           $532,835           $531,734
                                                                ========           ========
</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 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 $248,000 in legal expenses in
       connection with the class action lawsuit (see Part I, Item 3 of this
       Report). Of this amount, approximately $149,000 relates to the
       Partnership's own defense and approximately $99,000 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 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, 1998 the Partnership had $3,600,248 in cash and cash equivalents,
$100,987 in restricted cash.

The Partnership has a working capital reserve with a current balance of
approximately 6.4% of the Investors' Invested Capital (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 of
approximately $154,000 of leasing costs at the Park Square Shopping Center and
Miami International Distribution Center properties during the remainder of 1998.
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
$96,000 of non-recurring repair and maintenance expenses at the Park Square
Shopping Center and Miami International Distribution Center properties during
the remainder of 1998. 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 approximately $248,000 in legal expenses in
connection with the class action lawsuit (see Part II, Item 1 of this Report).
Of this amount, approximately $149,000 relates to the Partnership's own defense
and approximately $99,000 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 $656,960 generated from the Partnerships
operations, was distributed to the General Partner and the Investors during the
first quarter of 1998. 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 1998.




                                       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, 1998 and scheduled leasing activity for each investment during the remainder
of 1997:

<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, 1998                  87%                 88%              100%

New Leases                                  0%                  0%                0%

Lease Renewals                              0%                  2%                0%

Leases Expired                              0%                  0%                0%

Occupancy March 31, 1998                   87%                 88%              100%

Leases Scheduled to Expire,
   Balance of 1998                          0%                 16%                0%

Leases Scheduled to Commence,
   Balance of 1998                          0%                  0%                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 General Partner has
continued to negotiate with the Miami Airport Authority towards 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 desire to acquire the Miami
International Distribution Center has negatively impacted the General Partner's
ability to: i) lease the available space at the property and ii) consider
listing the property for sale.

The Brooklyn Park, Minnesota real estate market, including the Park Square
Shopping Center, has experienced increasing vacancy rates as development of new
retail space continues. This condition has made it increasingly difficult for
property owners to secure new tenants for their locations. The General Partner
expects market conditions in Brooklyn Park to remain competitive during the
remainder 1998 and, therefore, no increase in market rental rates is
anticipated. The General Partner will continue to offer aggressive rental
packages in an effort to retain existing tenants as well as to secure new
tenants for the vacant space at the property.

The Quince Orchard Corporate Center is occupied by 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. As a
result, Hoffman-LaRoche has informed the General Partner that it intends to
terminate operations at the Quince Orchard Corporate Center and 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 conditions in the Washington D.C. area for office space similar to
the Quince Orchard Corporate Center have improved recently. The supply of such
office space has been unable to keep pace with the demand, resulting in a slight
increase in market rents. Although this condition gives 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 believes market conditions are
likely to remain favorable through 1998.

On April 1, 1998, the mortgage loan to 205 Newbury Associates matured and the
borrower repaid the entire outstanding principal balance in the amount of
$1,700,000. During the second quarter of 1998, the Partnership will distribute
$1,685,806, of which $1,560,931 will be distributed to the Investors and
$124,875 will be distributed to the John Hancock Limited Partner, in accordance
with the Partnership Agreement. The Partnership will retain $14,194 in working
capital reserves.

The General Partner evaluated the carrying value of each of the Partnership's
properties and its joint venture investment as of December 31, 1997 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. In addition, the General Partner
evaluated the status of its mortgage investment and its ultimate collectibility
as of December 31, 1997. 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 property valuations, using internal
or independent appraisals, in order to determine whether a permanent impairment
in value exists on any of the Partnership's properties.

RESULTS OF OPERATIONS

Net income for the three months ended March 31, 1998 was $489,665, as compared
to net income of $497,150 for the same period in 1997.

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

<TABLE>
<CAPTION>
                                                     Three Months Ended March 31,
                                                        1998             1997
                                                      ---------       ----------
     <S>                                                <C>            <C>
     Miami International Distribution Center              87%            87%
     Park Square Shopping Center                          88%            86%
     Quince Orchard Corporate Center 
        (Affiliated Joint Venture)                       100%           100%

</TABLE>


Interest income for the three months ended March 31, 1998 decreased by $59,276,
or 41%, as compared to the same period in 1997. This decrease was primarily due
to a decline in the interest earned on the net sales proceeds received from the
sale of the Fulton Business Park property (sold in December 1996) and the
proceeds from the repayment of the General Camera Corporation mortgage loan
(repaid in January 1997). The Partnership distributed such amounts in February
1997.

General and administrative expenses for the quarter ended March 31, 1998
decreased by $56,300, or 50%, primarily due to lower 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, 1998, and the
General Partner anticipates that inflation will not have a significant impact
during the remainder of 1998.




                                       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,
                                                          1998             1997
                                                       ----------       ----------
<S>                                                     <C>             <C>      

Net cash provided by operating activities (a)           $ 863,471       $ 744,747
Net change in operating assets and liabilities (a)       (131,865)        (19,216)
                                                        ---------       ---------
Net cash provided by operations (a)                       731,606         725,531
Increase in working capital reserves                       74,648         (16,017)
                                                        ---------       ---------
Cash from operations (b)                                  686,958         709,514
Decrease in working capital reserves                         --              --
                                                        ---------       ---------
Distributable cash from operations (b)                  $ 686,958       $ 709,514
                                                        =========       =========

Allocation to General Partner                               6,870       $   7,095
Allocation to Investors                                   680,088         702,419
Allocation to John Hancock Limited Partner                   --              --
                                                        ---------       ---------
                                                        $ 686,958       $ 709,514
                                                        =========       =========
</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 1998, the Partnership will make a distribution in
the aggregate amount of $2,372,764. Of this amount, $686,958 was generated from
Distributable Cash from Operations for the quarter ended March 31, 1998 and
$1,685,806 was generated from Distributable Cash from Sales during the same
quarter in 1998. These amounts will be allocated as follows:

                                      From Distributable      From Distributable
<TABLE>
<CAPTION>
                                           Cash From               Cash From
                                          Operations                 Sales
                                      ------------------      ------------------
<S>                                        <C>                    <C>       

Investors                                  $680,088               $1,560,931
John Hancock Limited Partner                     --                  124,875
General Partner                               6,870                       --
                                           --------               ----------
         Total                             $686,958               $1,685,806
                                           ========               ==========
</TABLE>


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 1998 will be comparable to that generated during the first quarter of 1998.




                                       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 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 RIF and the
        Partnership as defendants. The defendants filed demurrer motions, asking
        that the complaint be dismissed at law. These motions were under
        consideration during the first quarter of 1998.

        Although the court dismissed the complaint against the Partnership
        during the second quarter of 1998, the plaintiff subsequently amended
        its complaint, again naming the Partnership as defendant. The defendants
        continue to contest the action.  

        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.

ITEM 2. CHANGES IN SECURITIES

        There were no changes in securities during the first quarter of 1998.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        There were no defaults upon senior securities during the first quarter
        of 1998.

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 1998.

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 1998.




                                       19
<PAGE>   20


             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 15th day of May, 1998.


                                        John Hancock Realty Income Fund-II
                                        Limited Partnership


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



                                        By: /s/ William M. Fitzgerald   5/15/98
                                            ----------------------------------- 
                                            William M. Fitzgerald, President



                                        By: /s/ Richard E. Frank        5/15/98
                                            ----------------------------------- 
                                            Richard E. Frank, Treasurer
                                            (Chief Accounting Officer)