<PAGE> PAGE 1
000 B000000 09/30/98
000 C000000 0000731266
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0
000 J000000 U
001 A000000 COMBINED PENNY STOCK FUND, INC.
001 B000000 811-03888
001 C000000 7195932111
002 A000000 6180 LEHMAN DRIVE, SUITE 103
002 B000000 COLORADO SPRINGS
002 C000000 CO
002 D010000 80918
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
007 B000000 0
007 C010100 1
007 C010200 2
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
013 A000001 STOCKMAN KAST RYAN & COMPANY, PC
013 B010001 COLORADO SPRINGS
013 B020001 CO
013 B030001 80903
020 A000001 M.H. MEYERSON
020 B000001 13-1924455
020 C000001 1
020 A000002 D.E. FREY
020 B000002 84-1098795
020 C000002 1
020 C000003 0
020 C000004 0
020 C000005 0
020 C000006 0
020 C000007 0
020 C000008 0
020 C000009 0
020 C000010 0
021 000000 2
<PAGE> PAGE 2
022 A000001 M.H. MEYERSON
022 B000001 13-1924455
022 C000001 387
022 D000001 502
022 A000002 HERZOG, HEINE & GEDULD
022 B000002 13-1955436
022 C000002 20
022 D000002 82
022 A000003 TROSTER SINGER CORP.
022 B000003 13-5515160
022 C000003 59
022 D000003 111
022 A000004 CHARLES SCHWAB & COMPANY, INC.
022 B000004 13-2598328
022 C000004 102
022 D000004 89
022 A000005 D.A. DAVIDSON
022 B000005 81-0139474
022 C000005 181
022 D000005 9
022 A000006 WILSON DAVIS & COMPANY
022 B000006 87-0278784
022 C000006 11
022 D000006 0
022 A000007 H.J. MEYERS
022 B000007 95-2979381
022 C000007 28
022 D000007 0
022 C000008 0
022 D000008 0
022 C000009 0
022 D000009 0
022 C000010 0
022 D000010 0
023 C000000 824
023 D000000 823
062 A000000 N
062 B000000 0.0
062 C000000 0.0
062 D000000 0.0
062 E000000 0.0
062 F000000 0.0
062 G000000 0.0
062 H000000 0.0
062 I000000 0.0
062 J000000 0.0
062 K000000 0.0
062 L000000 0.0
062 M000000 0.0
062 N000000 0.0
062 O000000 0.0
<PAGE> PAGE 3
062 P000000 0.0
062 Q000000 0.0
062 R000000 0.0
066 A000000 Y
066 D000000 Y
071 A000000 943
071 B000000 1004
071 C000000 1404
071 D000000 67
072 A000000 12
072 B000000 33
072 C000000 0
072 D000000 0
072 E000000 0
072 F000000 0
072 G000000 0
072 H000000 43
072 I000000 7
072 J000000 5
072 K000000 4
072 L000000 2
072 M000000 3
072 N000000 0
072 O000000 1
072 P000000 0
072 Q000000 42
072 R000000 10
072 S000000 0
072 T000000 0
072 U000000 0
072 V000000 0
072 W000000 8
072 X000000 125
072 Y000000 0
072 Z000000 -93
072AA000000 108
072BB000000 0
072CC010000 0
072CC020000 786
072DD010000 0
072DD020000 0
072EE000000 0
073 A010000 0.0000
073 A020000 0.0000
073 B000000 0.0000
073 C000000 0.0000
074 A000000 23
074 B000000 0
074 C000000 0
074 D000000 0
074 E000000 0
<PAGE> PAGE 4
074 F000000 1094
074 G000000 0
074 H000000 0
074 I000000 0
074 J000000 2
074 K000000 0
074 L000000 0
074 M000000 0
074 N000000 1117
074 O000000 1
074 P000000 0
074 Q000000 0
074 R010000 0
074 R020000 0
074 R030000 0
074 R040000 0
074 S000000 0
074 T000000 1116
074 U010000 54561000
074 U020000 0
074 V010000 0.02
074 V020000 0.00
074 W000000 0.0000
074 X000000 6279
074 Y000000 0
075 A000000 0
075 B000000 1404
076 000000 0.02
077 A000000 Y
077 B000000 Y
080 A000000 BROWN/RAYNOR CORPORATION
080 C000000 425
081 A000000 Y
081 B000000 1
082 A000000 Y
082 B000000 10
083 A000000 N
083 B000000 0
084 A000000 N
084 B000000 0
085 A000000 N
SIGNATURE STAN PITTMAN
TITLE CHIEF FINANCIAL OFF.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000731266
<NAME> COMBINED PENNY STOCK FUND, INC.
<SERIES>
<NUMBER> 01
<NAME> COMBINED PENNY STOCK FUND, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1969425
<INVESTMENTS-AT-VALUE> 1094395
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 23095
<TOTAL-ASSETS> 1117490
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 855
<TOTAL-LIABILITIES> 855
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6070189
<SHARES-COMMON-STOCK> 54561000
<SHARES-COMMON-PRIOR> 57361000
<ACCUMULATED-NII-CURRENT> (2935955)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1142569)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (875030)
<NET-ASSETS> 1116635
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 32621
<OTHER-INCOME> 0
<EXPENSES-NET> 125383
<NET-INVESTMENT-INCOME> (92762)
<REALIZED-GAINS-CURRENT> 107951
<APPREC-INCREASE-CURRENT> (785587)
<NET-CHANGE-FROM-OPS> (770398)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (770398)
<ACCUMULATED-NII-PRIOR> (58350)
<ACCUMULATED-GAINS-PRIOR> 208042
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 125383
<AVERAGE-NET-ASSETS> 1524148
<PER-SHARE-NAV-BEGIN> .034
<PER-SHARE-NII> (.001)
<PER-SHARE-GAIN-APPREC> (.013)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> .020
<EXPENSE-RATIO> 8.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
AUDITOR'S REPORT ON INTERNAL CONTROL EX-99.C1
To the Board of Directors and Shareholders,
Combined Penny Stock Fund, Inc.
In planning and performing our audit of the financial statements of Combined
Penny Stock Fund, Inc. (the Fund) for the year ended September 30, 1998 (on
which we have issued our report dated October 21, 1998), we considered its
internal control structure, including procedures for safeguarding securities, in
order to determine our auditing procedures for the purpose of expressing our
opinion on the financial statements and to comply with requirements of Form
N-SAR, not to provide assurance on the internal control structure.
The management of the Fund is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgements by management are required to assess the expected benefits and
related costs of internal control structure policies and procedures. Two of the
objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any evaluation
of the structure to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
September 30, 1998.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
/s/Stockman Kast Ryan & Company, P.C.
Stockman Kast Ryan & Company, P.C.
Colorado Springs, Colorado
October 21, 1998