<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 SEPTEMBER 30, 2000
                               ------------------------------------------------

                                       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[ ]



                                       1

<PAGE>   2

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



                                      INDEX



                                                                            PAGE
PART I:  FINANCIAL INFORMATION

         Item 1 - Financial Statements:

                  Balance Sheets at September 30, 2000 and
                  December 31, 1999                                           3

                  Statements of Operations for the Three and Nine
                  Months Ended September 30, 2000 and 1999                    4

                  Statements of Partners' Equity for the
                  Nine Months Ended September 30, 2000 and
                  Year Ended December 31, 1999                                5

                  Statements of Cash Flows for the Nine
                  Months Ended September 30, 2000 and 1999                    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

                                                  SEPTEMBER 30,    DECEMBER 31,
                                                      2000             1999
                                                  -------------    ------------

Cash and cash equivalents                         $ 15,384,750    $  2,951,442
Restricted cash                                         15,513         119,891
Other assets                                             1,735           7,921

Deferred expenses, net of accumulated
     amortization of $1,108,354 in 2000 and
     $1,224,279 in 1999                                247,623         391,668

Investment in joint venture                            130,000       6,695,633

Investment in property:
     Land                                                   --       2,410,000
     Buildings and improvements                             --      10,476,229
                                                  ------------    ------------
                                                            --      12,886,229
     Less: accumulated depreciation                         --       3,997,381
                                                  ------------    ------------
                                                            --       8,888,848
                                                  ------------    ------------

         Total assets                             $ 15,779,621    $ 19,055,403
                                                  ============    ============


LIABILITIES AND PARTNERS' EQUITY

Accounts payable and accrued expenses             $     59,943    $     81,873
Accounts payable to affiliates                         117,330         156,512
                                                  ------------    ------------
         Total liabilities                             177,273         238,385

Partners' equity/(deficit):
     General Partners' deficit                        (168,975)       (145,091)
     Limited Partners' equity                       15,771,323      18,962,109
                                                  ------------    ------------

         Total partners' equity                     15,602,348      18,817,018
                                                  ------------    ------------

         Total liabilities and partners' equity   $ 15,779,621    $ 19,055,403
                                                  ============    ============






                        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            NINE MONTHS ENDED
                                                   SEPTEMBER 30,                 SEPTEMBER 30,
                                               2000            1999           2000          1999
                                               ----            ----           ----          ----
<S>                                    <C>             <C>           <C>            <C>

Income:

     Rental income                         $   206,978    $   387,299    $   734,359    $ 1,538,088
     Income/(loss) from joint venture          (37,063)       212,302        446,124        637,905
     Interest income                            77,278        120,872        155,101        194,755
     Gain/(loss) on sale of property          (569,970)     5,286,379       (569,970)     5,286,379
                                           -----------    -----------    -----------    -----------

         Total income                         (322,777)     6,006,852        765,614      7,657,127

Expenses:

     Depreciation                                   --         87,306         87,302        293,090
     Property operating expenses                25,425        145,213         82,259        370,242
     General and administrative expenses        79,239         84,833        202,954        243,345
     Property write-downs                           --             --      2,017,976             --
     Amortization of deferred expenses          31,527         36,562        100,002        130,405
                                           -----------    -----------    -----------    -----------

         Total expenses                        136,191        353,914      2,490,493      1,037,082
                                           -----------    -----------    -----------    -----------

         Net income                        $  (458,968)   $ 5,652,938    $(1,724,879)   $ 6,620,045
                                           ===========    ===========    ===========    ===========

Allocation of net income:

     General Partner                       $    (4,319)   $    56,529    $   (16,978)   $    66,200
     John Hancock Limited Partner             (187,799)       387,668       (187,799)       387,668
     Investors                                (266,850)     5,208,741     (1,520,102)     6,166,177
                                           -----------    -----------    -----------    -----------
                                           $  (458,968)   $ 5,652,938    $(1,724,879)   $ 6,620,045
                                           ===========    ===========    ===========    ===========

Net income per Unit                        $     (0.10)   $      2.00    $     (0.58)   $      2.37
                                           ===========    ===========    ===========    ===========


</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)

                    NINE MONTHS ENDED SEPTEMBER 30, 2000 AND
                          YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>


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


Partners' equity/(deficit) at January 1, 1999
  (2,601,552 Units outstanding)                    $(185,981)   $25,382,287   $25,196,306

Less: Cash distributions                             (23,567)   (13,278,322)  (13,301,889)

Add: Net income                                       64,457      6,858,144     6,922,601
                                                   ---------    -----------   -----------
Partner's equity/(deficit) at December 31, 1999     (145,091)    18,962,109    18,817,018
  (2,601,552 Units outstanding)

Less: Cash distributions                              (6,906)    (1,482,885)   (1,489,791)

Add: Net loss                                        (16,978)    (1,707,901)   (1,724,879)
                                                   ---------     ----------    ----------
Partners' equity/(deficit) at September 30, 2000
   (2,601,552 Units outstanding)                   $(168,975)   $15,771,323   $15,602,348
                                                   =========    ===========   ===========

</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>


                                                                                NINE MONTHS ENDED
                                                                                   SEPTEMBER 30,
                                                                              2000             1999
                                                                              ----             ----
<S>                                                                   <C>              <C>


Operating activities:
     Net income/(loss)                                                    $ (1,724,879)   $  6,620,045

     Adjustments to reconcile net income/(loss) to net cash provided by
     operating activities:

         Depreciation                                                           87,302         293,090
         Amortization of deferred expenses                                     100,002         130,405
         Property write-downs                                                2,017,976            --
         Cash distributions over equity in
           income from joint venture                                           253,957          12,510
         Gain/(loss) on sale of property interests                             569,970      (5,286,379)
                                                                          ------------    ------------
                                                                             1,304,328       1,769,671

     Changes in operating assets and liabilities:
         Decrease in restricted cash                                           104,378             513
         Decrease/(increase) in other assets                                     6,186          (1,152)
         Increase/(decrease) in accounts payable
           and accrued expenses                                                (21,930)        132,381
         Increase/(decrease) in accounts payable to
           affiliates                                                          (39,182)         71,878
                                                                          ------------    ------------
              Net cash provided by operating activities                      1,353,780       1,973,291

Investing activities:
     Increase in deferred expenses                                             (25,226)        (67,594)
     Proceeds from sale of property interests                               12,594,545      10,694,903
                                                                          ------------    ------------
              Net cash provided by investing activities                     12,569,319      10,627,309

Financing activities:
     Cash distributed to Partners                                           (1,489,791)     (1,963,604)
                                                                          ------------    ------------

              Net cash used in financing activities                         (1,489,791)     (1,963,604)
                                                                          ------------    ------------

              Net increase in cash and cash
                equivalents                                                 12,433,308      10,636,996

              Cash and cash equivalents at beginning
                of year                                                      2,951,442       3,261,458
                                                                          ------------    ------------

              Cash and cash equivalents at end
                of period                                                 $ 15,384,750    $ 13,898,454
                                                                          ============    ============
</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 September 30, 2000, the partners in the Partnership
     consisted of John Hancock Realty Equities, Inc. (the "General Partner"), a
     wholly-owned, indirect subsidiary of John Hancock 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 4,012 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.

     As initially stated in its Prospectus, it was expected that the Partnership
     would be dissolved upon the sale of its last remaining property, which at
     that time was expected to be within seven to ten years following the date
     such property was acquired by the Partnership. As of September 30, 2000,
     the Partnership has sold the two remaining properties in its portfolio, one
     of which is held through a joint venture. The sale of these last two
     properties results in the termination of the operations of the Partnership.
     The Partnership will be dissolved in accordance with the terms of the
     Partnership Agreement, as soon as reasonably practicable.

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 nine-month period ended September 30, 2000 are not necessarily
     indicative of the results that may be expected for the year ending December
     31, 2000. 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, 1999.

     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.

     Property held for sale is recorded at the lower of its carrying amount, at
     the time the property is listed for sale, or its fair value, less cost to
     sell. Carrying amount includes the property's costs, as described below,
     less accumulated depreciation thereon and less any property write-downs for
     impairment in value and plus any related unamortized deferred expenses.

     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.

     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.



                                       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)

     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 nine months ended
     September 30, 2000 and 1999 and to which the General Partner or its
     affiliates are entitled to reimbursement from the Partnership were $71,325
     and $81,555, 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 9. Accordingly, included in the
     Statements of Operations for the nine months ended September 30, 2000 and
     1999 are $0 and $23,744, respectively, representing the Partnership's share
     of costs incurred by the General Partner and its Affiliates relating to the
     class action complaint. Through September 30, 2000, the Partnership has
     accrued a total of $210,098 as its share of the costs incurred by the
     General Partner and its Affiliates resulting from this matter.

     The General Partner also believes that the indemnification applies to the
     complaint filed in the Superior Court of the State of California for the
     County of Los Angeles described in Note 9. 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.



                                       10
<PAGE>   11



                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)

5. INVESTMENT IN PROPERTY

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

                                         September 30,             December 31,
                                             2000                      1999
                                         -------------             ------------

     Park Square Shopping Center           $     --                $12,886,229
       Accumulated Depreciation                  --                 (3,997,381)
                                           --------                -----------
                                           $     --                $ 8,888,848
                                           ========                ===========

     During March 2000, the Park Square Shopping Center was listed for sale.
     Accordingly, this property has been classified as "Property held for sale"
     on the Balance Sheet since March 31, 2000 at its carrying value. During the
     second quarter of 2000, as a result of changes in the status of the
     supermarket anchor at the property and, in general, the continued weakness
     in local real estate market conditions, the General Partner wrote-down the
     carrying amount of Park Square Shopping center by $2,017,976 to an amount
     equal to the net proceeds projected to be received as a result of the sales
     price that had been negotiated with the then prospective buyer. On August
     30, 2000, the Partnership sold the Park Square Shopping Center for a net
     sales price of $6,309,923, after deductions for commissions and selling
     expenses incurred in connection with the sale of the property. This
     transaction resulted in a non-recurring loss of $542,917, representing the
     difference between the net sales price and the property's carrying value of
     $6,852,840.

     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.

6. 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 September 30, 2000, 97.55% has
     been contributed by the Affiliated Joint Venture. The Affiliated Joint
     Venture continues to hold a 75% interest in QOCC-1 Associates.



                                       11
<PAGE>   12

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



                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

6. INVESTMENT IN JOINT VENTURE (CONTINUED)

     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 1999, 1998, 1997 and 1996, the partners
     received returns on invested capital of approximately 12%.

     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.

     On September 29, 2000, QOCC-1 Associates sold the Quince Orchard Corporate
     Center to a non-affiliated buyer for a total net sales price of $12,569,246
     after deductions for commissions and selling expenses incurred in
     connection with the sale of the property. $6,284,623, representing fifty
     percent of the net proceeds of the sale, was distributed to the Partnership
     and fifty percent was distributed to Income Fund-III. This transaction
     resulted in a non-recurring loss of $27,053 to the Partnership,
     representing the difference between the net sales price and the carrying
     value of the investment of $6,311,676.


7. DEFERRED EXPENSES

   Deferred expenses consist of the following:

<TABLE>
<CAPTION>

                                                                UNAMORTIZED           UNAMORTIZED
                                                                 BALANCE AT           BALANCE AT
           DESCRIPTION                                        SEPTEMBER 30, 2000   DECEMBER 31, 1999
           -----------                                        ------------------   -----------------
<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.                       $ 96,056             $ 99,695

   $1,203,097 acquisition fees paid to the
   General Partner. Prior to September 30, 1993, this
   amount was amortized over a period of 30 years.
   Subsequent to September 30, 1993, the unamortized
   balance is amortized over a period of 8.5 years.                 151,567              242,508

   Tenant improvements were amortized over the terms
   of the leases to which they relate. During March,
   2000 the General Partner listed its last investment
   property for sale. Accordingly, the unamortized
   balance is included in carrying cost of "Property
   held for sale."                                                       --                5,224

   Lease commissions were amortized over the terms of
   the leases to which they relate. During March, 2000,
   the General Partner listed its last investment property
   for sale. Accordingly, the unamortized balance is
   included in carrying cost of "Property held for sale."                --               44,241
                                                                   --------             --------
                                                                   $247,623             $391,668
                                                                   ========             ========

</TABLE>



                                       12

<PAGE>   13

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



                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)


8. 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:

                                                 Nine Months Ended September 30,
                                                      2000              1999
                                                      ----              ----


     Net income per Statements of Operations      $(1,724,879)      $6,620,045

     Add/(deduct): Excess of book gain over tax
                    gain on disposition of assets    (667,318)        (154,926)
                   Excess of book depreciation
                    over tax depreciation            (105,312)          19,452
                   Excess of book amortization
                    over tax amortization               9,173           62,495
                                                  -----------       ----------
     Net income for federal income tax purposes   $(2,488,336)      $6,547,066
                                                  ===========       ==========

9. 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.

     A settlement agreement was approved by the Court on December 22, 1999.
     Under terms of the settlement, the defendants have guaranteed certain
     returns to class members on their investments and paid fees and expenses to
     class counsel in an amount determined by the court to be $1.5 million.
     These terms of the settlement will have no financial impact on 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 $532,173 in legal expenses in
     connection with the class action lawsuit (see Part II, Item 1 of this
     Report). Of this amount, approximately $322,075 relates to the
     Partnership's own defense and approximately $210,098 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.




                                       13

<PAGE>   14

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


                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

9. CONTINGENCIES (CONTINUED)

     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.

     A settlement agreement was reached on February 18, 2000 terminating all
     litigation between the parties. The settlement will not have a material
     adverse impact on the Partnership's financial position.

     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.







                                       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

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.

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, actions that would be taken in the event of lack of
liquidity, unanticipated leasing costs, repair and maintenance expenses,
litigation and indemnification claims, 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.

LIQUIDITY AND CAPITAL RESOURCES

As initially stated in its Prospectus, it was expected that the Partnership
would be dissolved upon the sale of its last remaining property, which at that
time was expected to be within seven to ten years following the date such
property was acquired by the Partnership. The Partnership sold Park Square
Shopping Center on August 30, 2000 and QOCC-1 sold the Quince Orchard Corporate
Center on September 29, 2000. The sale of the Partnership's last remaining
investments resulted in the termination of the operations of the Partnership,
and the Partnership will be dissolved, in accordance with the terms of the
Partnership Agreement, as soon as reasonably practicable. At such time as all
liabilities with respect to the Partnership are resolved, the General Partner
will make a final distribution of net assets to the Limited Partners, as soon as
practicable. No assurances can be given as to whether any distribution can be
made after all liabilities of the Partnership are resolved. Such final
distribution, if any, will result in the liquidation and termination of the
Partnership. At such time of such final distribution, the outstanding Units will
be cancelled, and, in accordance with federal securities laws, they will be
de-registered with the Securities and Exchange Commission, after which time the
Partnership will no longer be required to file periodic reports with the
Commission.

At September 30, 2000 the Partnership had $15,384,750 in cash and cash
equivalents, $15,513 in restricted cash.




                                       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 Partnership has a working capital reserve with a current balance of
approximately $2.7 million. The General Partner anticipates that such amount
should be sufficient to satisfy the Partnership's general liquidity requirements
as the Partnership's business is wound down. Liquidity would, however, be
materially adversely affected if there were significant unanticipated operating
and liquidation costs (including but not limited to litigation expenses). 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, or short-term loans
from the General Partner or its Affiliates.

The Partnership incurred $25,226 of leasing costs at the Park Square Shopping
Center during the nine months ended September 30, 2000. The current balance in
the working capital reserve was sufficient to pay such costs.

The Partnership has incurred approximately $532,173 in legal expenses in
connection with the class action lawsuit (see Part II, Item 1 of this Report).
Of this amount, approximately $322,075 relates to the Partnership's own defense
and approximately $210,098 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.

Cash in the amount of $1,489,791 generated from the Partnership's operations,
was distributed to the Partners during the nine months ended September 30, 2000.
This amount was distributed in accordance with the Partnership Agreement. The
amount distributed to the Investors from Distributable Cash from Operations
during the nine months ended September 30, 2000 represented an annualized return
of 6% on remaining Investors' Invested Capital. The General Partner anticipates
that the Partnership's Distributable Cash from Operations during the fourth
quarter of 2000 will be reduced as an effect of the sales of the Park Square
Shopping Center and the Quince Orchard Corporate Center during the third quarter
of 2000.

The General Partner evaluated the carrying value of each of the Partnership's
properties and its joint venture investment as of December 31, 1999 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
an impairment in values existed. Based upon such evaluations, the General
Partner determined that no impairment in values existed and, therefore, no
write-downs were recorded.

As a result of changes in the status of the supermarket anchor tenant at Park
Square Shopping Center and, in general, the continued weakness in the local real
estate market conditions for properties similar to Park Square, during the
second quarter the General Partner wrote down the carrying amount of Park Square
by $2,017,976 to an amount equal to the net proceeds projected to be received as
a result of the sales price that was being negotiated with a prospective buyer.

On August 30, 2000, the Partnership sold the Park Square Shopping Center for a
gross sales price of $6,500,000 to an unaffiliated buyer. After deductions for
commissions and selling expenses, the sale generated net proceeds of $6,309,923
resulting in a non-recurring net loss of $542,917, representing the difference
between the net sales price and the property's carrying value of $6,852,840.

During the second quarter of 2000, the General Partner received unsolicited
offers to purchase the Quince Orchard Corporate Center. On September 29, 2000,
QOCC-1 Associates sold the Quince Orchard Corporate Center to a non-affiliated
buyer for a total net sales price of $12,569,246 after deductions for
commissions and selling expenses incurred in connection with the sale of the
property. $6,284,623, representing fifty percent of the net proceeds of the
sale, was distributed to the Partnership and fifty percent was distributed to
Income Fund-III. This transaction resulted in a non-recurring loss of $27,053 to
the Partnership, representing the difference between the net sales price and the
carrying value of the investment of $6,311,676.



                                       16
<PAGE>   17



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

RESULTS OF OPERATIONS

The Partnership generated a net loss the nine months ended September 30, 2000 of
$1,724,879 , as compared to net income of $6,620,045 for the same period in
1999. The prior period results include a non-recurring gain of $5,286,379 from
the sale of the Miami International Distribution Center on August 9, 1999. The
current period results include a $2,107,976 write-down of the value of Park
Square Shopping Center, a non-recurring loss of $542,917 on the sale of Park
Square Shopping Center and a non-recurring loss of $27,053 as a result of
QOCC-1's sale of Quince Orchard Corporate Center. Excluding these results, net
income for the nine months ended September 30, 2000 decreased by $470,599, or
35%, as compared to the prior year. This decrease is primarily due to a decrease
in rental income and income from joint venture and was somewhat offset by
decreases in depreciation and property operating expenses.

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

                                                 Nine Months Ended September 30,
                                                   2000                   1999
                                                   ----                   ----

Park Square Shopping Center                         88%                    88%
Quince Orchard Corporate Center
 (Affiliated Joint Venture)                         67%                   100%

Rental income for the nine months ended September 30, 2000 decreased by
$803,729, or 52%, as compared to the same period during 1999 primarily due to
the sale of the Miami International Distribution Center on August 9, 1999 and
the sale of the Park Square Shopping Center on August 30, 2000.

Depreciation expense for the nine months ended September 30, 2000 decreased by
$205,788 or 70%, as compared to the same period in 1999. This decrease is due to
the sale of the Miami International Distribution Center and to the
reclassification of the Park Square Shopping Center as "Property Held for Sale"
during the first quarter of 2000. Accordingly, no depreciation expense has been
recorded since these properties were listed for sale.

Property operating expenses for the nine months ended September 30, 2000
decreased by $287,983, or 78%, as compared to the same period in 1999 primarily
due to the sale of the Miami International Distribution Center on August 9,
1999.

General and administrative expenses for the nine months ended September 30, 2000
decreased by $40,391, or 17%, as compared to the same period in 1999. This
decrease was primarily due to lower legal fees incurred by the Partnership in
connection with the legal proceedings described in Item 1 of Part II of this
Report and to a decrease in time required by the General Partner in managing the
activities of the Partnership resulting from the sale of the Miami International
Distribution Center in 1999.

Amortization of deferred expenses for the nine months ended September 30, 2000
decreased by $30,403, or 23%, as compared to the same period in 1999 due to the
sale of the Miami International Distribution Center and to the reclassifying of
deferred expenses for Park Square Shopping Center to "Property Held for Sale"
and, accordingly, no longer amortizing such amounts for this property.

The General Partner believes that inflation has had no significant impact on the
Partnership's operations during the nine months ended September 30, 2000, and
the General Partner anticipates that inflation will not have a significant
impact during the remainder of 2000.


                                       17
<PAGE>   18



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:

                                                          NINE MONTHS ENDED
                                                             SEPTEMBER 30,
                                                         2000           1999
                                                         ----           ----

Net cash provided by operating activities (a)        $ 1,353,780    $ 1,973,291
Net change in operating assets and liabilities (a)       (49,452)      (203,620)
                                                     -----------    -----------
Net cash provided by operations (a)                    1,304,328      1,769,671
Increase in working capital reserves                    (358,309)            --
                                                     -----------    -----------
Cash from operations (b)                                 946,019      1,769,671
Decrease in working capital reserves                          --        199,190
                                                     -----------    -----------
Distributable cash from operations (b)               $   946,019    $ 1,968,861
                                                     ===========    ===========

Allocation to General Partner                        $     9,460    $    17,697
Allocation to Investors                                  936,559      1,951,164
Allocation to John Hancock Limited Partner                    --             --
                                                     -----------    -----------
                                                     $   946,019    $ 1,968,861
                                                     ===========    ===========

(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 fourth quarter of 2000, the Partnership will make a cash distribution
in the amount of $12,017,089 to the General Partner and Limited Partners
generated from Distributable Cash from Sales or Financings as a result of the
sale of the Park Square Shopping Center and QOCC-1's sale of the Quince Orchard
Corporate Center. This amount is allocated as follows:

                                                            DIST. CASH FROM
                                                          SALES OR FINANCINGS
                                                          -------------------
Investors                                                      $11,550,891
John Hancock Limited Partner                                       466,198
General Partner                                                         --
                                                               -----------
   Total                                                       $12,017,089
                                                               ===========

The amount of future cash distributions will be dependent upon the need to draw
down working capital reserves. As of the date of this report, all of the
property interests of the Partnership have been sold. In order to adequately
provide for all future contingencies, the General Partner has determined (as
permitted by the Partnership Agreement) to retain rather than distribute to the
Limited Partners, net cash provided by the Partnership's normal operations in
order to fund cash reserves for contingencies. Accordingly, no cash
distributions with respect to Distributable Cash from Operations will be made to
Limited Partners at least for the last quarter of 2000. At such time as all
liabilities with respect to the Partnership are resolved, the General Partner
will make a final distribution of net assets to the Limited Partners, in
accordance with the terms of the Partnership Agreement. No assurances can be
given as to whether any distribution can be made after all liabilities of the
Partnership are resolved. Such final distribution, if any, will result in the
liquidation and termination of the Partnership.


<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.

          A settlement agreement was approved by the Court on December 22, 1999.
          Under terms of the settlement, the defendants have guaranteed certain
          returns to class members on their investments and paid fees and
          expenses to class counsel in an amount determined by the court to be
          $1.5 million. These terms of the settlement will have no financial
          impact on 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.

          A settlement agreement was reached on February 18, 2000 terminating
          all litigation between the parties. The settlement will not have a
          material adverse impact on the Partnership's financial position.

          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 third quarter of 2000.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          There were no defaults upon senior securities during the third quarter
          of 2000.

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

          No matters were submitted to a vote of security holders of the
          Partnership during the third quarter of 2000.

ITEM 5.   OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a) There are no exhibits to this report
          (b) A Report on Form 8-K was filed during the third quarter of 2000.



                                       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 14th day of November, 2000.


                                        John Hancock Realty Income Fund-II
                                        Limited Partnership


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



                                        By: /s/ John M. Garrison
                                           ---------------------------------
                                           John M. Garrison, President



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




                                       20