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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

     (Mark One)
               [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

                   For the fiscal year ended December 31, 1996

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

         For the transition period from...............to...............

                         Commission file number 0-17595

                        ENEX 88-89 INCOME AND RETIREMENT
                              FUND - Series 3, L.P.
                 (Name of small business issuer in its charter)

                New Jersey                         76-0251417
      (State or other jurisdiction of           (I.R.S. Employer
      incorporation or organization)           Identification No.)

            800 Rockmead Drive
           Three Kingwood Place
              Kingwood, Texas                         77339
 (Address of principal executive offices)          (Zip Code)

         Issuer's telephone number, including area code: (713) 358-8401

       Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:

                          Limited Partnership Interest

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained,  to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[x]

        State issuer's revenues for its most recent fiscal year. $ 40,352

State the  aggregate  market  value of the voting  stock held by  non-affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and asked  prices of such stock as of a  specified  date  within the past 60
days (See definition of affiliate in Rule 12b-2 of the Exchange Act):

                                 Not Applicable

                      Documents Incorporated By Reference:

                                      None
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<PAGE>
                                TABLE OF CONTENTS

                            FORM 10-KSB ANNUAL REPORT
                      FOR THE YEAR ENDED DECEMBER 31, 1996
             ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 3, L.P.


Item No.                             Part I                     Page
---------                           --------                   ------



       1       Description of Business                         I-1

       2       Description of Property                         I-3

       3       Legal Proceedings                               I-4

       4       Submission of Matters to a Vote
               of Security Holders                             I-4


                                     Part II
                                     ---------


       5       Market for Common Equity and
               Related Security Holder Matters                II-1

       6       Management's Discussion and Analysis
               or Plan of Operation                           II-2

       7       Financial Statements and Supplementary
               Data                                           II-4

       8       Changes In and Disagreements With Accountants
               on Accounting and Financial Disclosure         II-14


                                    Part III
                                   -----------


       9       Directors, Executive Officers, Promoters and
               Control Persons; Compliance with Section 16(a)
               of the Exchange Act                            III-1

      10       Executive Compensation                         III-3

      11       Security Ownership of Certain
               Beneficial Owners and Management               III-4

      12       Certain Relationships and Related
               Transactions                                   III-4

      13       Exhibits and Reports on Form 8-K               III-4


               Signatures                                      S-1


<PAGE>



                                     PART I


Item 1.      Description of Business

General

             Enex  88-89  Income  and  Retirement  Fund - Series  3,  L.P.  (the
"Company")  was formed  under the New Jersey  Uniform  Limited  Partnership  Act
(1976) on November 27, 1987 and  commenced  operations on December 28, 1988 with
aggregate subscriptions of $1,706,928, $1,689,860 of which was received from 240
limited  partners,   including   investors  whose   distributions  from  earlier
partnerships   sponsored  by  the  Company's  general  partner,  Enex  Resources
Corporation ("Enex"), were automatically invested in the Company.

             The  Company  is engaged in the oil and gas  business  through  the
ownership of  non-operating  interests in producing  oil and gas  properties  as
noted in Item 2, below. A non-operating  interest  typically entitles the holder
to receive a specified share of such production,  without  obligation to develop
or operate such  property,  or bear any  development  or  operating  costs (such
obligations being assumed by the owner of the working interest in the property).

             The Company's  non-operating interests are net profits royalties or
other royalty  interests  which entitle the Company to a share of gross revenues
from producing oil and gas properties measured by a specified  percentage of the
net profits realized by the owners of the underlying  working  interests in such
properties,  after deducting operating costs,  geological and engineering costs,
property,  severance and other taxes, and certain other specified  expenses.  If
such taxes,  operating  costs or other  expenses  exceed  gross  revenues in any
specified  measuring period, a net profits royalty holder will not be liable for
payment of any portion of such excess,  but a percentage of such excess equal to
the specified percentage of net profits (together with interest thereon) will be
carried over to subsequent  periods and will reduce future  amounts  accruing to
the  holder.  The  Company's  net  profits  royalties  and  other  non-operating
interests are generally derived from working interests in oil and gas properties
owned by other affiliates of Enex.

             The  Company  owns   royalty   interest  on  certain  oil  and  gas
properties.  A "royalty  interest" is the interest retained by the lessor in the
lease and payable out of 100% of proceeds before deducting any other interests.

             The  Company  does not own  working  interests  nor does it  engage
directly in any drilling,  completing or operating  activities,  but may benefit
from such  activities  undertaken  by the  owners of the  working  interests  in
properties  burdened by the  Company's  non-operating  interests.  The Company's
operations are concentrated in a single industry segment.

             The  principal  executive  office of the Company is  maintained  at
Suite 200, Three Kingwood Place, Kingwood,  Texas 77339. The telephone number at
this office is (713) 358-8401. The Company has no regional offices.

     The Company has no employees.  On March 1, 1997, Enex and its  subsidiaries
employed 23 persons.

                                       I-1

<PAGE>



Marketing

             The marketing of oil and gas produced by the Company is affected by
a number of factors which are beyond the Company's control,  the exact nature of
which cannot be accurately  predicted.  These  factors  include the quantity and
price of crude oil imports,  fluctuating  supply and demand,  pipeline and other
transportation facilities, the marketing of competitive fuels, state and federal
regulation  of oil  and  gas  production  and  distribution  and  other  matters
affecting the availability of a ready market. All of these factors are extremely
volatile.

             Global Natural Resources  Corporation purchased 58%, Omimex Company
accounted for 22% and Coalinga  Company  purchased  20% of the  Company's  total
sales in 1996.  Global Natural  Resources  Corporation  purchased 59%,  Coalinga
Company  accounted  for 26% and Omimex  Company  purchased  15% of the Company's
total sales in 1995. No other purchaser individually accounted for more than 10%
of such sales.  Although the Company marketed a significant portion of its sales
to the above noted companies,  such a concentration  does not pose a significant
risk due to the commodity nature of the Company's products.

             The  Company's  operators  of the  properties  are  noted in Item 2
below.  Although a significant portion of the Company's properties were operated
by a limited number of operators, this concentration does not pose a significant
risk since the Company's rights are secured by joint operating agreements.

Environmental and Conservation Regulation

             State  regulatory  authorities  in the states in which the  Company
owns net profits  interests in producing  properties  are  empowered to make and
enforce  regulations to prevent waste of oil and gas and to protect  correlative
rights  and  opportunities  to  produce  oil  and  gas for  owners  of a  common
reservoir.  Each of such regulatory authorities also regulates the amount of oil
and gas  produced  by  assigning  allowable  rates of  production,  which may be
increased  or  decreased  in  accordance  with supply and  demand.  Requirements
regarding the  prevention  and clean-up of pollution  and similar  environmental
matters are also generally  applicable.  The costs, if any, that may be incurred
in this regard cannot be predicted.

             The  existence  of such  regulations  has had no  material  adverse
effects on the Company's  operations to date, and the cost of compliance has not
yet been material.  There are no material administrative or judicial proceedings
arising under such laws or regulations pending against the Company.  The Company
is unable to assess or predict the impact that compliance with environmental and
pollution  control  laws  and  regulations  may have on its  future  operations,
capital expenditures, earnings or competitive position.

Tax Laws

             The  operations  of the Company are affected by the federal  income
tax laws  contained  in the  Internal  Revenue  Code of 1986,  as  amended  (the
"Code").  In general,  the limited  partners of the Company will generate income
from the receipt of royalties and net profits  interests and will be entitled to
a depletion  deduction.  Net income,  if any, will generally be characterized as
portfolio  income  under  the Code and  will be  taxed  in the  same  manner  as
dividends and interest.


                                       I-2

<PAGE>



             Partnerships with interests that are "publicly traded" are taxed as
corporations unless at least 90% of their income is "qualifying income." Because
the  Company's  income will be qualifying  income for this purpose,  the Company
will not be taxed as a corporation under this rule.

Item 2.      Description of Property

             Presented   below  is  a   summary   of  the   Company's   property
acquisitions.

             BYRUM acquisition. An overriding royalty interest in the Byrum 1-28
well  located in Onondago  Field,  Ingham  County,  Michigan was  purchased  for
$31,997  from  Pasadena  Oil & Gas  Corp.  effective  March 1,  1989.  The Byrum
acquisition  is operated by Global  Natural  Resources,  Inc. The Company owns a
 .99%  royalty  interest in the wells in the Byrum  acquisition  at December  31,
1996.

             BAGLEY  acquisition.  Net profits royalty  interests in 7 oil wells
located in Bagley Field, Otsego County, Michigan were acquired for $204,132. The
Bagley  acquisition  is  operated by Terra  Energy,  Ltd.  The Company  owns net
profits  royalty  interests  ranging  from  1.265% to 1.275% in the wells in the
Bagley acquisition at December 31, 1996.

             LAKE  DECADE  acquisition.  Effective  July 1,  1989,  net  profits
royalty  interests  in 2 gas  wells in Lake  Decade  Field,  Terrebonne  Parish,
Louisiana,  were purchased for $834,793. The Lake Decade acquisition is operated
by  Southwestern  Energy  Production.  The  Company  owns  net  profits  royalty
interests  ranging  from  0.971%  to  1.369%  in the  wells in the  Lake  Decade
acquisition at December 31, 1996.

             EL MAC  acquisition.  Net profits  royalty  interests in 3 wells in
Otsego County,  Michigan were purchased for $342,787 from Wolverine Exploration,
Ltd.,  Tenexco,  Inc., and Terra Energy,  Ltd.,  effective  November 1, 1989 and
March 1, 1990. The El Mac acquisition is operated by Don Yohe Enterprises,  Inc.
The Company  owns a 2.998% net profits  royalty  interest in the wells in the El
Mac acquisition at December 31, 1996.

             BAYWOOD  acquisition.  Royalty  interests in 4 wells  located in E.
Baton Rouge and St. Helena Parishes,  Louisiana, were purchased for $90,900 from
Steamboat  Petroleum  Corporation et al., effective January 1, 1990. The Baywood
acquisition is operated by Coalinga Company.  The Company owns royalty interests
ranging from .34% to .45% in the wells in the Baywood acquisition as of December
31, 1996.

             Purchase  price as used above is  defined  as the  actual  contract
price plus finders' fees, if  applicable.  Miscellaneous  acquisition  expenses,
subsequent capital additions, etc. are not included.

Oil and Gas Reserves

             For  quantitative  information  regarding the Company's oil and gas
reserves,  please see  Supplementary  Oil and Gas Information and related tables
which follow the Notes to  Financial  Statements  in Item 7 of this report.  The
Company has not filed any current oil and gas reserve  estimates or included any
such  estimates in reports to any federal or foreign  governmental  authority or
agency, including the Securities and Exchange Commission.


                                       I-3

<PAGE>



             Proved  oil  and  gas  reserves   reported   herein  are  based  on
engineering reports prepared by the petroleum engineering  consulting firm of H.
J. Gruy and Associates,  Inc. The reserves included in this report are estimates
only and should not be  construed as exact  quantities.  Future  conditions  may
affect  recovery of  estimated  reserves  and  revenue,  and all reserves may be
subject to  revision  as more  performance  data  become  available.  The proved
reserves used in this report conform to the applicable  definitions  promulgated
by the Securities and Exchange Commission. No major discovery or other favorable
or adverse  event that is believed to have  caused a  significant  change in the
estimated proved reserves has occurred since December 31, 1996.

Net Oil and Gas Production

             The following table shows for the years ended December 31, 1996 and
1995,  the  approximate  production  attributable  to the  Company's oil and gas
interests. The figures in the table represent "net production"; i.e., production
owned by the Company and produced to its interest  after  deducting  royalty and
other similar interests. All production occurred in the United States.

                                                         1996        1995
                                                         ----        ----

Crude oil and condensate (Bbls).....................    1,886       1,719
Natural gas (Mcf)...................................    8,963       8,720

                  The  following  table sets forth the  Company's  average sales
price per barrel of oil,  per Mcf of gas, and average  production  cost per unit
produced for the years ended  December 31, 1996 and 1995. The average prices are
lower than the average  market prices for oil and gas as they are computed using
the net revenues  received  from the Company's  ownership of net profit  royalty
interests.

                                                       1996         1995
                                                       ----         ----


Average sales price per barrel of oil............. $   15.84     $   15.15
Average sales price per Mcf of gas................      1.17          1.08
Average production taxes per equivalent
  barrel of production............................      0.11          0.15



Item 3.  Legal Proceedings

                  There are no material  pending legal  proceedings to which the
Company is a party.


Item 4.  Submission of Matters to a Vote of Security Holders

                  No matter was submitted to a vote of security  holders  during
the fourth quarter of the fiscal year covered by this report.

                                       I-4

<PAGE>



                                     PART II


Item 5.      Market for Common Equity and Related Security Holder Matters



Market Information

             There is no  established  public  trading  market for the Company's
outstanding units of limited partnership interest.



Number of Equity Security Holders

                                             Number of Record Holders
               Title of Class                  (as of March 1, 1997)
             -----------------               --------------------------


          General Partner's Interests                    1

          Limited Partnership Interests                 217



Dividends

          The  Company  made  cash  distributions  to  partners  of $1 per  $500
investment in 1995. The Company discontinued the payment of distributions in the
second quarter of 1995.  Future  distributions  are dependent upon,  among other
things,  an increase in the prices  received  for oil and gas.  The Company will
continue to recover its  reserves  and reduce  obligations  in 1997.  Based upon
current  projected  cash flows from its  property,  it does not appear  that the
Company  will  have   sufficient  net  cash  flow  after  debt  service  to  pay
distributions in the near future.


                                      II-1

<PAGE>



Item 6.     Management's Discussion and Analysis or Plan of Operation

Results of Operations

            This  discussion  should be read in  conjunction  with the financial
statements of the Company and the notes thereto included in this Form 10-KSB.

            Oil and gas sales increased to $40,352 in 1996 from $35,495 in 1995.
This  represents an increase of $4,857 or 14%. Oil sales  increased by $3,827 or
15%. A 10% increase in oil production  caused revenues to increase by $2,530.  A
5% increase in the average oil net sales price  increased sales by an additional
$1,297.  Gas sales  increased by $1,030 or 11%. A 3% increase in gas  production
increased  sales by $262.  An 8%  increase  in the  average  gas net sales price
increased  sales by an additional  $768. The increases in oil and gas production
were primarily due to the  successful  completion of workovers on the Bagley and
El Mac  acquisitions  in 1996.  The slight  increases in average net oil and gas
sales prices were  primarily the result of higher  prices in the overall  market
for the sale of oil and gas,  partially  offset by workover  charges incurred on
the  Bagley  and El Mac  acquisitions  in  which  the  Company  has net  profits
interests.

            Depletion expense decreased to $13,217 in 1996 from $23,157 in 1995.
This  represents  a decrease of $9,940 or 43%. A 46%  decrease in the  depletion
rate reduced depletion expense by $11,451. This decrease was partially offset by
the changes in production,  noted above.  The decrease in the depletion rate was
due to the lower property basis  resulting from the recognition of an impairment
for $258,758 in the first quarter of 1996, as noted below, partially offset by a
downward revision of the oil and gas reserves during December 1996.

            The Financial  Accounting  Standards  Board has issued  Statement of
Financial  Accounting Standard ("SFAS") No. 121,  "Accounting for the Impairment
of  Long-Lived  Assets  and for  Long-Lived  Assets to be  Disposed  Of,"  which
requires  certain  assets  to be  reviewed  for  impairment  whenever  events or
circumstances indicate the carrying amount may not be recoverable. Prior to this
pronouncement,  the Company  assessed  properties  on an aggregate  basis.  Upon
adoption of SFAS 121, the Company  began  assessing  properties on an individual
basis, wherein total capitalized costs may not exceed the property's fair market
value.  The fair market value of each property was  determined by H. J. Gruy and
Associates,  ("Gruy").  To determine the fair market value,  Gruy estimated each
property's oil and gas reserves, applied certain assumptions regarding price and
cost  escalations,  applied a 10% discount factor for time and certain  discount
factors for risk,  location,  type of ownership interest,  category of reserves,
operational  characteristics,  and other factors.  In the first quarter of 1996,
the Company recognized a non-cash  impairment  provision of $258,758 for certain
oil and gas properties due to market  indications that the carrying amounts were
not fully recoverable.

            General and  administrative  expenses  increased  to $13,541 in 1996
from  $11,769 in 1995.  This  increase of $1,772 or 15% was  primarily  due to a
$1,395 increase in direct costs incurred by the Company in 1996. The increase in
direct  expenses was due to higher audit and tax  preparation  fees  incurred in
1996.

Capital Resources and Liquidity

            The  Company's  cash flow from  operations  is direct  result of the
amount of the net  proceeds  realized  from the sale of oil and gas  production.
Accordingly,  the  changes  in cash flow from 1995 to 1996 are due to changes in
oil and gas sales  described  above.  It is the general  partner's  intention to
distribute  substantially  all of the  Company's  available net cash flow to the
Company's partners.


                                      II-2

<PAGE>



            The Company will continue to recover its reserves and  distribute to
the partners the net proceeds  realized from the sale of oil and gas  production
after payment of debt obligations. The Company plans to repay the amount owed to
the general  partner  over a seven year  period.  The general  partner  does not
intend to accelerate  the repayment of the debt beyond the cash flow provided by
operating activities. Distributions decreased from 1995 to 1996 due primarily to
the decrease in the oil and gas sales as noted above.  The Company  discontinued
the payment of distributions in the second quarter of 1995. Future distributions
are dependent  upon among other things,  an increase in the prices  received for
oil and gas.  The Company  will  continue to recover its reserves and reduce its
obligations in 1997. Based upon current  projected cash flows from its property,
it does not appear that the  Company  will have  sufficient  net cash flow after
debt service to pay distributions in the near future.

                                      II-3

<PAGE>



Item 7.      Financial Statements and Supplementary Data



INDEPENDENT AUDITORS' REPORT


The Partners
Enex 88-89 Income and Retirement Fund Series 3, L.P.:


We have  audited  the  accompanying  balance  sheet  of Enex  88-89  Income  and
Retirement  Fund - Series 3,  L.P.  (a New  Jersey  limited  partnership)  as of
December 31, 1996 and the related statements of operations, changes in partners'
capital (deficit),  and cash flows for each of the two years in the period ended
December 31, 1996.  These  financial  statements are the  responsibility  of the
general  partner of Enex 88-89 Income and  Retirement  Fund - Series 3, L.P. Our
responsibility is to express an opinion on the financial statements based on our
audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the  financial  position of Enex 88-89 Income and  Retirement  Fund -
Series 3, L.P. at December  31, 1996 and the results of its  operations  and its
cash flows for each of the two years in the period  ended  December  31, 1996 in
conformity with generally accepted accounting principles.


DELOITTE & TOUCHE  LLP




Houston, Texas
March 18, 1997

                                      II-4

<PAGE>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 3, L.P.

BALANCE SHEET, DECEMBER 31, 1996
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>

ASSETS                                                           1996
                                                        ---------------------

CURRENT ASSETS:
<S>                                                     <C>                 
  Cash                                                  $              6,174
  Accounts receivable - oil & gas sales                               13,121
                                                        ---------------------

Total current assets                                                  19,295
                                                        ---------------------

OIL & GAS PROPERTIES
  (Successful efforts accounting method) - Proved
   mineral interests                                               1,510,573
  Less  accumulated depletion                                      1,473,107
                                                        ---------------------

Property, net                                                         37,466
                                                        ---------------------

TOTAL                                                   $             56,761
                                                        =====================

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

CURRENT LIABILITIES:
   Accounts payable                                     $              1,731
   Payable to general partner                                         95,435
                                                        ---------------------

Total current liabilities                                             97,166
                                                        ---------------------

PARTNERS' CAPITAL (DEFICIT):
   Limited partners                                                  (45,881)
   General partner                                                     5,476
                                                        ---------------------

Total partners' capital (deficit)                                    (40,405)
                                                        ---------------------

TOTAL                                                   $             56,761
                                                        =====================
</TABLE>

Number of $500 Limited Partner units outstanding                       3,413




See accompanying notes to financial statements.
-----------------------------------------------------------------------------

                                      II-5

<PAGE>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 3, L.P.

STATEMENTS OF OPERATIONS
FOR THE TWO YEARS ENDED DECEMBER 31, 1996
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                    1996                  1995
                                            -------------------    -------------------

REVENUES:
<S>                                         <C>                     <C>                
  Oil and gas sales                         $           40,352      $          35,495  
                                            -------------------    -------------------

EXPENSES:
  Depletion                                             13,217                 23,157
  Impairment of property                               258,758                      -
  Production taxes                                         367                    473
  General and administrative:
    Allocated from general partner                      11,370                 10,993
    Direct expense                                       2,171                    776
                                            -------------------    -------------------

Total expenses                                         285,883                 35,399
                                            -------------------    -------------------

NET INCOME (LOSS)                           $         (245,531)      $             96  
                                            ===================    ===================
</TABLE>




See accompanying notes to financial statements.
------------------------------------------------------------------------
                                      II-6

<PAGE>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 3, L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
FOR THE TWO YEARS ENDED DECEMBER 31, 1996
--------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                              PER $500
                                                                                              LIMITED
                                                                                              PARTNER
                                                    GENERAL              LIMITED             UNIT OUT-
                                TOTAL               PARTNER              PARTNERS             STANDING
                            ---------------    -----------------    -----------------    -----------------

<S>                            <C>               <C>                <C>                  <C>                
BALANCE, JANUARY 1, 1995       $   210,060       $        1,014     $        209,046     $             61   

CASH DISTRIBUTIONS                  (5,030)                (505)              (4,525)                  (1)

NET INCOME (LOSS)                       96                2,326               (2,230)                  (1)
                            ---------------    -----------------    -----------------    -----------------

BALANCE, DECEMBER 31, 1995         205,126                2,835              202,291                   59

NET INCOME (LOSS)                 (245,531)               2,641             (248,172)                 (73)
                            ---------------    -----------------    -----------------    -----------------

BALANCE, DECEMBER 31, 1996   $     (40,405)      $        5,476     $        (45,881)(1) $            (14)  
                            ===============    =================    =================    =================
</TABLE>



(1)  Includes 226 units purchased by the general partner as a limited partner.



See accompanying notes to financial statements.
---------------------------------------------------------------------------
                                      II-7


<PAGE>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 3, L.P.

STATEMENTS OF CASH FLOWS
FOR THE TWO YEARS ENDED DECEMBER 31, 1996
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                  1996                    1995
                                                           -------------------      -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                        <C>                         <C>              
Net income (loss)                                          $         (245,531)         $            96  
                                                           -------------------      -------------------

Adjustments to reconcile net income (loss) to net cash
   provided by operating activities
  Depletion                                                            13,217                   23,157
   Impairment of property                                             258,758                        -
(Increase) decrease in:
  Accounts receivable - oil & gas sales                                (5,363)                   5,565
Increase (decrease) in:
   Accounts payable                                                       136                   (1,267)
   Payable to general partner                                         (15,819)                 (29,285)
                                                           -------------------      -------------------

Total adjustments                                                     250,929                   (1,830)
                                                           -------------------      -------------------

Net cash provided (used) by operating activities                        5,398                   (1,734)
                                                           -------------------      -------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Cash distributions                                                      -                   (5,030)
                                                           -------------------      -------------------

NET INCREASE (DECREASE) IN CASH                                         5,398                   (6,764)

CASH AT BEGINNING OF YEAR                                                 776                    7,540
                                                           -------------------      -------------------

CASH AT END OF YEAR                                        $            6,174         $            776  
                                                           ===================      ===================

</TABLE>

See accompanying notes to financial statements.
----------------------------------------------------------------------------

                                      II-8

<PAGE>

ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 3, L.P.



NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1996

----------------------------------------------------------------------------


1.        PARTNERSHIP ORGANIZATION

          Enex 88-89 Income and Retirement Fund Series 3, L.P. (the  "Company"),
          a New Jersey limited partnership, commenced operations on December 28,
          1988 for the purpose of acquiring non-operating interests in producing
          oil and gas  properties.  Total  limited  partner  contributions  were
          $1,706,928,  of  which  $17,068  was  contributed  by  Enex  Resources
          Corporation ("Enex"), the general partner.

          In  accordance  with  the  partnership  agreement,  the  Company  paid
          syndication fees and due diligence  expenses of $175,879 for solicited
          subscriptions  to Enex Securities  Corporation,  a subsidiary of Enex,
          and  reimbursed  Enex  for  organization   expenses  of  approximately
          $51,000.

          The Company owns only non-operating interests in producing oil and gas
          properties.  Such interests  typically  entitle the Company to receive
          its pro rata share of net profits and  royalties  from the  underlying
          properties  without  obligating  the Company to develop or operate the
          properties  or directly  bear any share of  development  or  operating
          costs.

          Information  relating to the allocation of costs and revenues  between
          Enex, as general partner, and the limited partners is as follows:
                                                            Limited
                                                      Enex  Partners

             Commissions and selling expenses                 100%
             Company reimbursement of organization
               expense                                        100%
             Company property acquisition                     100%
             General and administrative costs          10%     90%
             Revenues from temporary investment
               of partnership capital                         100%
             Revenues from producing properties        10%     90%

          At the  point  in time  when  the cash  distributions  to the  limited
          partners equal their subscriptions ("payout"), revenues from producing
          properties and general and administrative  costs will be allocated 15%
          to the general partner and 85% to the limited partners.


2.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Oil and Gas  Properties  - The  Company  uses the  successful  efforts
          method of accounting for its oil and gas operations. Capitalized costs
          are amortized on the units-of-production method based on

                                      II-9

<PAGE>



          estimated total proved reserves.  The acquisition costs of proved oil
          and gas properties are capitalized and periodically assessed for
          impairments.

          The  Financial  Accounting  Standards  Board has issued  Statement  of
          Financial  Accounting  Standard ("SFAS") No. 121,  "Accounting for the
          Impairment  of  Long-Lived  Assets  and for  Long-Lived  Assets  to be
          Disposed  Of,"  which  requires  certain  assets  to be  reviewed  for
          impairment  whenever  events or  circumstances  indicate  the carrying
          amount  may  not be  recoverable.  Prior  to this  pronouncement,  the
          Company assessed  properties on an aggregate  basis.  Upon adoption of
          SFAS 121, the Company  began  assessing  properties  on an  individual
          basis,  wherein total  capitalized costs may not exceed the property's
          fair  market  value.  The  fair  market  value  of each  property  was
          determined by H. J. Gruy and  Associates,  ("Gruy").  To determine the
          fair  market  value,  Gruy  estimated  each  property's  oil  and  gas
          reserves,   applied  certain  assumptions  regarding  price  and  cost
          escalations,  applied  a 10%  discount  factor  for time  and  certain
          discount  factors  for risk,  location,  type of  ownership  interest,
          category of reserves, operational characteristics,  and other factors.
          In the first  quarter  of 1996,  the  Company  recognized  a  non-cash
          impairment  provision of $258,758  for certain oil and gas  properties
          due to market  indications  that the  carrying  amounts were not fully
          recoverable.

          Cash  Flows - The  Company  has  presented  its cash  flows  using the
          indirect  method and considers all highly liquid  investments  with an
          original maturity of three months or less to be cash equivalents.

          General  and  Administrative  Expenses - The  Company  reimburses  the
          General Partner for direct costs and administrative  costs incurred on
          its behalf. Administrative costs allocated to the Company are computed
          on a cost basis in  accordance  with  standard  industry  practices by
          allocating the time spent by the General Partner's personnel among all
          projects and by allocating rent and other overhead on the basis of the
          relative direct time charges.

          Uses of Estimates - The  preparation  of the  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 periods.
          Actual results could differ from these estimates.

3.        FEDERAL INCOME TAXES

          General - The Company is not a taxable  entity for federal  income tax
          purposes.  Such taxes are  liabilities of the individual  partners and
          the amounts thereof will vary depending on the individual situation of
          each partner.  Accordingly,  there is no provision for income taxes in
          the accompanying financial statements.


                                      II-10
<PAGE>
Set forth below is a  reconciliation  of net income  (loss) as  reflected in the
accompanying financial state- ments and net income (loss) for federal income tax
purposes for the year ended December 31, 1996:
<TABLE>
<CAPTION>


                                                                                     Allocable to                  Per $500
                                                                      ---------------------------------
                                                                                                                    Limited
                                                                          General          Limited               Partner Unit
                                                        TOTAL             Partner          Partners               Outstanding
                                                   ---------------    --------------  -----------------      ---------------------
Net income (loss) as reflected in the
<S>                                                <C>                <C>             <C>                           <C>            
 accompanying financial statements                 $     (245,531)    $       2,641   $       (248,172)             $         (73) 
Reconciling item:
  Difference in depletion computed
     for federal income tax purposes
     and the amount computed for
     financial reporting purposes                         236,937                 -            236,937                         69
                                                   ---------------    --------------  -----------------      ---------------------

Net income (loss) for federal
   income tax purposes                             $       (8,594)    $       2,641   $        (11,235)             $          (4) 
                                                   ===============    ==============  =================      =====================
</TABLE>


Net income  (loss) for federal  income tax  purposes is a summation  of ordinary
income (loss),  portfolio income (loss),  cost depletion and intangible drilling
costs as presented in the Company's federal income tax return.

Set forth below is a  reconciliation  between  partners'  capital  (deficit)  as
reflected in the  accompanying  financial  statements and partners'  capital for
federal income tax purposes as of December 31, 1996:
<TABLE>
<CAPTION>


                                                                                     Allocable to                  Per $500
                                                                      ---------------------------------
                                                                                                                    Limited
                                                                          General          Limited               Partner Unit
                                                        TOTAL             Partner          Partners               Outstanding
                                                   ---------------    --------------  -----------------      ---------------------
Partner's capital (deficit) as reflected in
<S>                                                 <C>               <C>             <C>                        <C>              
 the accompanying financial statements              $     (40,405)    $       5,476   $        (45,881)          $            (14)
Reconciling items:
  Difference in accumulated
     depletion and amortization
     for financial reporting and
     federal income tax purposes                          567,812                 -            567,812                        166
  Commissions and syndication
     fees capitalized for federal
     income tax purposes                                  175,879                 -            175,879                         52
                                                   ---------------    --------------  -----------------      ---------------------

Partners' capital for federal
     income tax purposes                            $     703,286     $       5,476   $        697,810          $             204 
                                                   ===============    ==============  =================      =====================

</TABLE>
                                      II-11

<PAGE>



4.       PAYABLE TO GENERAL PARTNER

         The  payable to  general  partner  primarily  consists  of general  and
         administrative  expenses  allocated  to the  Company by Enex during the
         Company's  start-up phase and for its ongoing  operations.  The Company
         plans to repay the amounts owed to the general partner over a period of
         seven years.

5.       REPURCHASE OF LIMITED PARTNER INTERESTS

         In accordance  with the partnership  agreement,  the general partner is
         required to purchase  limited  partner  interests (at the option of the
         limited  partners) at annual intervals  beginning after the second year
         following  the  formation  of  the  Company.  The  purchase  price,  as
         specified in the partnership  agreement,  is based primarily on reserve
         reports  prepared by  independent  petroleum  engineers as reduced by a
         specified risk factor.

6.       SIGNIFICANT PURCHASERS

         Global Natural  Resources  Corporation  purchased  58%,  Omimex Company
         accounted for 22% and Coalinga  Company  purchased 20% of the Company's
         total sales in 1996.  Global Natural  Resources  Corporation  purchased
         59%,  Coalinga Company  accounted for 26% and Omimex Company  purchased
         15%  of  the  Company's   total  sales  in  1995.  No  other  purchaser
         individually accounted for more than 10% of such sales.



                                      II-12

<PAGE>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 3, L.P.

SUPPLEMENTARY OIL AND GAS INFORMATION
FOR THE TWO YEARS ENDED DECEMBER 31, 1996
------------------------------------------------------------------------------

Proved Oil and Gas Reserve Quantities (Unaudited)

The following  presents an estimate of the Company's  proved oil and gas reserve
quantities  and changes  therein  for each of the two years in the period  ended
December 31, 1996.  Oil reserves are stated in barrels  ("BBLS") and natural gas
in thousand cubic feet ("MCF"). The amounts per $500 limited partner unit do not
include a potential 5% reduction after payout. All of the Company's reserves are
located within the United States.
<TABLE>
<CAPTION>

                                                                            Per $500                                  Per $500
                                                                            Limited              Natural              Limited
                                                         Oil              Partner Unit             Gas              Partner Unit
                                                        (BBLS)            Outstanding             (MCF)             Outstanding
                                                   -----------------    -----------------    -----------------    -----------------

PROVED DEVELOPED AND
    UNDEVELOPED RESERVES:

<S>                                                           <C>                      <C>            <C>                       <C>
January 1, 1995                                               8,254                    2              173,824                   46

    Revisions of previous estimates                           1,085                    -              (16,557)                  (5)
    Production                                               (1,719)                   -               (8,720)                  (2)
                                                   -----------------    -----------------    -----------------    -----------------

December 31, 1995                                             7,620                    2              148,547                   39

    Revisions of previous estimates                            (858)                   -             (120,098)                 (32)
    Production                                               (1,886)                  (1)              (8,963)                  (2)
                                                   -----------------    -----------------    -----------------    -----------------

December 31, 1996                                             4,876                    1               19,486                    5
                                                   =================    =================    =================    =================


PROVED DEVELOPED RESERVES:

January 1, 1995                                               5,472                    1               39,390                   10
                                                   =================    =================    =================    =================

December 31, 1995                                             4,838                    1               14,113                    4
                                                   =================    =================    =================    =================

December 31, 1996                                             4,876                    1               19,486                    5
                                                   =================    =================    =================    =================
</TABLE>



                                      II-13




<PAGE>

Item 8.  Changes In and Disagreements With Accountants on Accounting and 
          Financial Disclosure


                  Not Applicable


                                      II-14

<PAGE>



                                    PART III

-------------------------------------------------------------------------
Item 9.       Directors, Executive Officers, Promoters and Control Persons;
              Compliance with Section 16(a) of the Exchange Act

              The Company's sole General Partner is Enex Resources  Corporation,
a Delaware corporation.  The Company has no Directors or executive officers. The
Directors and executive officers of Enex are:

              Gerald B. Eckley.  Mr.  Eckley,  age 70, has served as a Director,
President and Chief Executive Officer of the General Partner since its formation
in 1979.  He was  employed by Shell Oil Company  from 1951 to 1967 and served in
managerial  capacities  from 1959 to 1967. From 1967 to 1969, he was Director of
Fund  Raising at the  University  of  Oklahoma  and from 1969 to 1971,  was Vice
President of Land and Operations for Imperial American  Management  Company.  In
1971, Mr. Eckley was a petroleum consultant and in 1972-1973 was General Counsel
and Executive  Director of the Oil Investment  Institute.  From 1973 to 1974, he
was Manager of Oil  Properties,  Inc. and from 1974 to 1976, was Vice President,
Land and Joint Ventures for Petro-Lewis  Corporation.  From 1977 to August 1979,
Mr. Eckley was President of Eckley Energy, Inc., a company engaged in purchasing
and selling oil and gas properties.  Mr. Eckley  received an L.L.B.  degree from
the University of Oklahoma in 1951 and a Juris Doctor degree from the University
of Oklahoma in 1970.

              William C. Hooper,  Jr. Mr. Hooper, age 59, has been a Director of
the General  Partner  since its formation in 1979 and is a member of the General
Partner's Audit and Compensation and Options Committees.  In 1960 he was a staff
engineer in the Natural Gas Department of the Railroad Commission of Texas, with
principal  duties  involving  reservoir units and gas proration.  In 1961 he was
employed by the California  Company as a Drilling  Engineer and  Supervisor.  In
1963 he was employed as a Staff Engineer by California Research  Corporation and
in 1964 rejoined the  California  Company as a project  manager  having  various
duties involving  drilling and reservoir  evaluations.  In 1966 he was Executive
Vice  President  for Moran Bros.  Inc.,  coordinating  and  managing all company
activities,  drilling operations,  bidding and engineering.  From 1970 until the
present, he has been self-employed as a consulting  petroleum engineer providing
services to industry and  government  and engaged in business as an  independent
oil and gas operator and investor.  From 1975 to 1987 he was also a Director and
President of Verna Corporation,  a drilling contractor and service organization.
He received a B.S.  degree in Petroleum  Engineering in 1960 from the University
of Texas and an M.S. degree in Petroleum  Engineering  from that same University
in 1961.

              Stuart  Strasner.  Mr.  Strasner,  age 67, was a  Director  of the
General  Partner from its formation until October of 1986. He was reappointed to
the  Board on April  19,  1990 to fill a  vacancy.  He is a member  of the Audit
Committee. He is a professor of business law at Oklahoma City University and was
Dean of the law school at  Oklahoma  City  University  from July 1984 until June
1991.  Prior to July 1984, Mr. Strasner was an attorney in private practice with
McCollister,  McCleary, Fazio and Holliday in Oklahoma City, Oklahoma. From 1959
to 1974,  he was  employed  by various  banks,  bank  holding  companies  and an
insurance  company  in  executive  capacities.  From  1974  to  1978,  he  was a
consultant to various  corporations  such as insurance  companies,  bank holding
companies and small business investment companies. From 1978 until late 1981, he
was Executive  Director of the Oklahoma Bar  Association,  and from 1981 to 1983
was  a  Director  and  President  of  PRST  Enterprises,  Inc.,  a  real  estate
development  company.  Mr.  Strasner  holds an A.B.  degree from  Panhandle  A&M
College,  Oklahoma,  and a J.D. degree from the University of Oklahoma.  He is a
member  of the  Fellows  of the  American  Bar  Association  and a member of the
Oklahoma  Bar  Association.  Mr.  Strasner is also a director of Health  Images,
Inc., a public  company which  provides  fixed site magnetic  resonance  imaging
("MRI") services.


                                      III-1

<PAGE>



     Martin J. Freedman.  Mr. Freedman, age 72, was one of the General Partner's
founders  and a member of its Board of  Directors  as well as a board  member of
Enex Securities  Corporation until June of 1986. He was reappointed to the Board
on April 19,  1990 to fill a  vacancy.  He is a member of the  Compensation  and
Options  Committee.  He is  currently  President  of Freedman Oil & Gas Company,
engaged primarily in the management of its exploration and producing properties,
and the managing  partner  Martin J. Freedman & Company which has an interest in
approximately  one hundred  producing  oil and/or gas wells.  Mr.  Freedman is a
lifetime member of the Denver  Petroleum Club as well as being a lifetime member
of the Denver Association of Petroleum  Landmen.  He was an officer and Director
and/or  founder of several  former private and public  companies.  Mr.  Freedman
entered the oil and gas business in 1954 when he joined Mr.  Marvin Davis of the
Davis Oil Company.  In 1956, he became President of Central Oil  Corporation,  a
company engaged in oil and gas exploration.  From 1958 on, Mr. Freedman operated
as Martin J. Freedman Oil Properties and was President of Oil Properties,  Inc.,
a private corporation. Mr. Freedman attended Long Island University and New York
University.  He received a bachelor's degree in Psychology and also attended New
York University's graduate school.

              James Thomas Shorney.  Mr. Shorney, age 71, has been a Director of
the General Partner since April of 1990 and is a member of the  Compensation and
Options Committee. He has been a petroleum consultant and Secretary/Treasurer of
the Shorney Company, a privately held oil and gas exploration company, from 1970
to date. From 1970 to 1976, he also served as a petroleum consultant in Land and
Lease Research Analysis Studies for the GHK Company. He was an oil and gas lease
broker  from  1962 to 1970  and  employed  by  Shell  Oil  Company  in the  Land
Department  from 1954 to 1962.  Before  joining Shell Oil Company,  he served as
Public  Information  Officer  in the  U.S.  Army  Air  Force  from  1950 to 1953
including attending  Georgetown  University Graduate School in 1952. Mr. Shorney
graduated  from the  University of Oklahoma with a B.A.  degree in Journalism in
1950.  From 1943 to 1945,  he  served in the U.S.  Army Air Force as an air crew
member  on a  B-24  Bomber.  Mr.  Shorney  is a  member  of  the  Oklahoma  City
Association  of  Petroleum  Landmen  on  which he has  served  as  Director  and
Secretary/Treasurer.  He is an active  member  of the  American  Association  of
Petroleum Landmen. In 1975, Mr. Shorney was first listed in the London Financial
Times' Who's Who in World Oil and Gas.

     Robert D. Carl,  III.  Mr.  Carl,  age 43, was  appointed a Director of the
General Partner on July 30, 1991 and is a member of the Audit  Committee.  He is
President,  Chief Executive  Officer and Chairman of the Board of Health Images,
Inc., a public company whose securities are traded on NYSE, which provides fixed
site magnetic  resonance imaging ("MRI")  services.  From 1978 to 1981, Mr. Carl
also  served as  President  of Carl  Investment  Associates,  Inc. a  registered
investment  advisor.  In 1981,  Mr. Carl joined  Cardio-Tech,  Inc.,  as general
counsel  and as an officer and  Director.  Upon the sale and  reorganization  of
Cardio-Tech,  Inc.  into  Cardiopul  Technologies  in  1982,  he  served  as its
Executive  Vice  President  and as a  Director.  In March,  1985 he was  elected
President,  Chief Executive Officer and Chairman of Cardiopul Technologies which
spun off its  non-imaging  medical  services  business  and  changed its name to
Health  Images,  Inc.  Mr. Carl  received a B.A. in History  from  Franklin  and
Marshall  College,  Lancaster,  Pennsylvania  in  1975  and a  J.D.  from  Emory
University  School of Law,  Atlanta,  Georgia in 1978.  Mr. Carl is a trustee of
Franklin & Marshall College and is a member of the State Bar of Georgia.

              On January 4, 1996, the SEC filed a complaint in the United States
District  Court for the District of Columbia  against Mr. Carl alleging that Mr.
Carl violated  Section 16(a) of the Securities  Exchange Act of 1934  ("Exchange
Act"), and Rule 16a-2 and 16a-3 (and former Rule 16a-1)  thereunder,  by failing
to timely file reports concerning  thirty-eight  securities  transactions in his
mother's brokerage  accounts involving shares of Health Images,  Inc. stock. The
SEC took the position that because Mr. Carl (1) provided substantial

                                      III-2

<PAGE>



financial  support to his mother,  (2) commingled  his mother's  assets with his
own, (3) provided a substantial portion of the funds used to purchase the shares
in question, and (4) received from his mother a substantial portion of the sales
proceeds, he, therefore, had a pecuniary interest in, and was a beneficial owner
of, the shares in question.

              In response to the SEC's  action,  Mr.  Carl  disgorged  to Health
Images,  Inc.  approximately  $92,400 in short-swing profits from the trading in
his mother's account,  plus interest thereon of approximately  $52,600.  The SEC
further  requested the court to impose a $10,000 civil penalty  against Mr. Carl
pursuant to Section 21(d)(3) of the Exchange Act.  Without  admitting or denying
the  allegations  in the  complaint,  Mr. Carl consented to the entry of a final
judgement  imposing the $10,000  penalty.  On January 12, 1996, a federal  judge
entered the final judgement in this matter, and Mr. Carl has since filed amended
reports on Forms 4 and 5 reflecting these transactions in his mother's accounts.

              In   relation  to  the  same   matter,   the  SEC  has  issued  an
administrative  Order  pursuant to Section 21C of the  Exchange  Act against Mr.
Carl,  finding  that he  violated  Section  16(a) and the rules  thereunder  and
requiring  him to cease and desist from  committing  or causing any violation or
future violation of those provisions.  Without admitting or denying  allegations
in the SEC's Order, Mr. Carl consented to the entry of the Order.

     Robert E. Densford.  Mr. Densford,  age 39, was appointed a Director of the
General  Partner  on  September  11,  1991.  He joined  the  General  Partner as
Controller  on May 1, 1985 and became Vice  President-  Finance,  Secretary  and
Treasurer  on March 1, 1989.  From  January  1983 to April  1985,  he was Senior
Accountant for Deloitte Haskins & Sells in Houston, Texas, auditing both closely
held and publicly owned oil and gas  companies.  From September 1981 to December
1982, he was a staff  accountant for Coopers & Lybrand in Houston.  Mr. Densford
is a C.P.A.  and holds a B.B.A.  degree in Accounting and an M.S.  degree in Oil
and Gas  Accounting  from Texas Tech  University and is a member of the American
Institute of Certified  Public  Accountants  and the Texas  Society of Certified
Public Accountants.

     James A. Klein. Mr. Klein, age 33, joined the General Partner as Controller
in February 1991. In June 1993, he was appointed President and Principal of Enex
Securities  Corporation.  From June 1988 to February  1991,  he was  employed by
Positron Corporation in Houston.  From July 1987 to May 1988, he was employed by
Transworld  Oil Company in Houston and from  September  1985 until July 1987, he
was an accountant with Deloitte Haskins & Sells in Houston,  Texas, auditing oil
and gas and oil service  companies.  Mr. Klein is a Certified Public  Accountant
and holds a B.A. in  Accounting  (1985)  from the  University  of Iowa.  He is a
member of the American  Institute of Certified  Public  Accountants and the Iowa
Society of Certified Public Accountants.

Item 10.      Executive Compensation

              The Company has no Directors or executive officers.

              The  Company  does not pay a  proportional  or fixed  share of the
compensation paid to the officers of the General Partner.

              The Company  reimburses  the General  Partner for direct costs and
administrative  costs incurred on its behalf.  Administrative costs allocated to
the Company are computed on a cost basis in accordance  with  standard  industry
practices by allocating the time spent by the General Partner's  personnel among
all  projects  and by  allocating  rent and other  overhead  on the basis of the
relative direct time charges. The Company

                                      III-3

<PAGE>



incurred $11,370 and $10,993 of such administrative costs payable to the General
Partner in 1996 and 1995, respectively.

Item 11.      Security Ownership of Certain Beneficial Owners and Management


                                         $500 Limited
                         Name of         Partner Units             Percent
 Title of Class     Beneficial Owner    Owned Directly            of Class
---------------    -----------------    ---------------           ----------


 Limited Partner     Enex Resources               226              6.630%



Item 12.      Certain Relationships and Related Transactions


              See  the  Statements  of  Operations  included  in  the  Financial
Statements  in Item 7 of this  report for  information  concerning  general  and
administrative  costs incurred by Enex and allocated to the Company,  and Note 1
to  such  Financial  Statements  for  information  concerning  payments  to Enex
Securities  Corporation,  a  wholly  owned  subsidiary  of Enex  and to Enex for
certain offering and organization expenses incurred by the Company.



Item 13.     Exhibits and Reports on Form 8-K

                                                                      Sequential
                                                                        Page No.

                                                                  --------------


         (a) Exhibits

             (3)       (a)  Certificate  of  Limited  Partnership,  as  amended.
                       Incorporated   by   reference  to  Exhibit  3(a)  to  the
                       Company's  Annual  Report on Form 10-K for the year ended
                       December 31, 1988.

                  (b)  Amended Agreement of Limited Partnership.  Incorporated
                       by reference to Exhibit 3(a) to Post-Effective Amendment
                       No. 1 to the Registration Statement on Form S-1
                       (No. 33-18776) of Enex 88-89 Income and Retirement Fund 
                       filed with the Securities and Exchange Commission on
                       October 12, 1988.

             (4)  Not Applicable

            (10)  Not Applicable

            (11)  Not Applicable

            (12)  Not Applicable

                                      III-4

<PAGE>



            (13)  Not Applicable

            (18)  Not Applicable

            (19)  Not Applicable

            (22)  Not Applicable

            (23)  Not Applicable

            (24)  Not Applicable

            (25)  Not Applicable

            (28)  Not Applicable

         (b)    Reports on Form 8-K

                No reports on Form 8-K were filed during the last quarter of the
                period covered by this report.


                                      III-5

<PAGE>


                                   SIGNATURES


         In  accordance  with  Section  13 or 15 (d) of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                        ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 3, L.P.

                       By:      ENEX RESOURCES CORPORATION
                                the General Partner



March 18, 1997         By:      /s/    G. B. Eckley
                               -------------------------------
                                       G. B. Eckley, President


         In accordance  with the Exchange Act, this report has been signed below
on March 18, 1997, by the following persons in the capacities indicated.


ENEX RESOURCES CORPORATION                        General Partner



By:      /s/ G. B. Eckley
        ----------------------------
             G. B. Eckley, President              President, Chief Executive
                                                  Officer and Director


         /s/ G. B. Eckley
        ------------------
             G. B. Eckley


         /s/ R. E. Densford
         ------------------
             R. E. Densford                       Vice President, Secretary,
                                                  Treasurer, Chief
                                                  Financial Officer and Director

         /s/ James A. Klein
         ------------------
             James A. Klein                       Controller and Chief
                                                  Accounting Officer




                                       S-1

<PAGE>


                                   /s/ Robert D. Carl, III

                                   --------------------------

                                       Robert D. Carl, III       Director



                                   /s/ Martin J. Freedman

                                   --------------------------

                                       Martin J. Freedman        Director


                                   /s/ William C. Hooper, Jr.

                                   --------------------------

                                       William C. Hooper, Jr.    Director


                                   /s/ Tom Shorney

                                   --------------------------

                                       Tom Shorney               Director


                                   /s/ Stuart Strasner

                                   --------------------------

                                       Stuart Strasner           Director



                                       S-2
<PAGE>