diff --git a/lib/comp.c b/lib/comp.c
index e0f8976..16bbc42 100644
--- a/lib/comp.c
+++ b/lib/comp.c
@@ -3618,11 +3618,13 @@ static HCL_INLINE int emit_lambda (hcl_t* hcl)
 	hcl_cframe_t* cf;
 	hcl_oow_t block_code_size, lfsize;
 	hcl_ooi_t jip;
+	hcl_fnblk_info_t* fbi;
 
 	cf = GET_TOP_CFRAME(hcl);
 	HCL_ASSERT (hcl, cf->opcode == COP_EMIT_LAMBDA);
 	HCL_ASSERT (hcl, cf->operand != HCL_NULL);
 
+	fbi = &hcl->c->fnblk.info[hcl->c->fnblk.depth];
 	jip = cf->u.lambda.jump_inst_pos;
 
 	if (hcl->option.trait & HCL_TRAIT_INTERACTIVE) 
@@ -3631,16 +3633,30 @@ static HCL_INLINE int emit_lambda (hcl_t* hcl)
 	/* HCL_CODE_LONG_PARAM_SIZE + 1 => size of the long JUMP_FORWARD instruction */
 	block_code_size = hcl->code.bc.len - jip - (HCL_CODE_LONG_PARAM_SIZE + 1);
 
-	if (block_code_size == 0)
- 	{
-		/* no body in lambda - (lambda (a b c)) */
-/* TODO: is this correct??? */
-		if (emit_byte_instruction(hcl, HCL_CODE_PUSH_NIL, HCL_CNODE_GET_LOC(cf->operand)) <= -1) return -1;
+	if (fbi->tmpr_nrvars > 0)
+	{
+		/* this function block defines one or more return variables */
+		if (block_code_size > 0)
+		{
+			if (emit_byte_instruction(hcl, HCL_CODE_POP_STACKTOP, HCL_CNODE_GET_LOC(cf->operand)) <= -1) return -1;
+			block_code_size++;
+		}
+		if (emit_byte_instruction(hcl, HCL_CODE_PUSH_RETURN_R, HCL_CNODE_GET_LOC(cf->operand)) <= -1) return -1;
 		block_code_size++;
 	}
+	else
+	{
+		if (block_code_size == 0)
+		{
+			/* no body in lambda - (lambda (a b c)) */
+	/* TODO: is this correct??? */
+			if (emit_byte_instruction(hcl, HCL_CODE_PUSH_NIL, HCL_CNODE_GET_LOC(cf->operand)) <= -1) return -1;
+			block_code_size++;
+		}
 
-	if (emit_byte_instruction(hcl, HCL_CODE_RETURN_FROM_BLOCK, HCL_CNODE_GET_LOC(cf->operand)) <= -1) return -1;
-	block_code_size++;
+		if (emit_byte_instruction(hcl, HCL_CODE_RETURN_FROM_BLOCK, HCL_CNODE_GET_LOC(cf->operand)) <= -1) return -1;
+		block_code_size++;
+	}
 
 	if (block_code_size > MAX_CODE_JUMP * 2)
 	{
diff --git a/lib/decode.c b/lib/decode.c
index ea3e850..c47fca4 100644
--- a/lib/decode.c
+++ b/lib/decode.c
@@ -335,6 +335,10 @@ int hcl_decode (hcl_t* hcl, hcl_oow_t start, hcl_oow_t end)
 				break;
 
 			/* -------------------------------------------------------- */
+			case HCL_CODE_PUSH_RETURN_R:
+				LOG_INST_0 (hcl, "push_return_r");
+				break;
+
 			case HCL_CODE_CALL_R:
 				FETCH_PARAM_CODE_TO (hcl, b1); /* nargs */
 				FETCH_PARAM_CODE_TO (hcl, b2); /* nrvars */
diff --git a/lib/exec.c b/lib/exec.c
index 0fb6819..7f7540e 100644
--- a/lib/exec.c
+++ b/lib/exec.c
@@ -363,7 +363,6 @@ static HCL_INLINE void fill_function_data (hcl_t* hcl, hcl_oop_function_t func,
 
 	/* initialize other fields */
 	func->home = homectx;
-	func->flags = HCL_SMOOI_TO_OOP(0);
 	func->tmpr_mask = HCL_SMOOI_TO_OOP(tmpr_mask);
 }
 
@@ -380,7 +379,6 @@ static HCL_INLINE void fill_block_data (hcl_t* hcl, hcl_oop_block_t blk, hcl_ooi
 
 	blk->home = homectx;
 	blk->ip = HCL_SMOOI_TO_OOP(ip);
-	blk->flags = HCL_SMOOI_TO_OOP(0);
 	blk->tmpr_mask = HCL_SMOOI_TO_OOP(tmpr_mask);
 }
 
@@ -1819,7 +1817,6 @@ static int prepare_new_context (hcl_t* hcl, hcl_oop_block_t rcv_blk, hcl_ooi_t n
 	/* the receiver must be a block context */
 	HCL_ASSERT (hcl, HCL_IS_BLOCK(hcl, rcv_blk));
 
-	flags = HCL_OOP_TO_SMOOI(rcv_blk->flags);
 	tmpr_mask = HCL_OOP_TO_SMOOI(rcv_blk->tmpr_mask);
 
 	fblk_nrvars = GET_BLKTMPR_MASK_NRVARS(tmpr_mask);	
@@ -1837,12 +1834,12 @@ static int prepare_new_context (hcl_t* hcl, hcl_oop_block_t rcv_blk, hcl_ooi_t n
 		return -1;
 	}
 
-	if (fblk_nrvars != req_nrvars)
+	if (req_nrvars > fblk_nrvars)
 	{
 		HCL_LOG3 (hcl, HCL_LOG_IC | HCL_LOG_ERROR, 
-			"Error - wrong number of returns specified of a block %O - expected %zd, requested %zd\n",
+			"Error - wrong number of returns specified of a block %O - max expected %zd, requested %zd\n",
 			rcv_blk, fblk_nrvars, req_nrvars);
-		hcl_seterrbfmt (hcl, HCL_ECALLRET, "wrong number of returns requested of function block - %zd expected, %zd requested", fblk_nrvars, req_nrvars);
+		hcl_seterrbfmt (hcl, HCL_ECALLRET, "wrong number of returns requested of function block - %zd expected at most, %zd requested", fblk_nrvars, req_nrvars);
 		return -1;
 	}
 
@@ -1860,7 +1857,7 @@ static int prepare_new_context (hcl_t* hcl, hcl_oop_block_t rcv_blk, hcl_ooi_t n
 	}
 #else
 	blkctx->ip = rcv_blk->ip;
-	blkctx->flags = rcv_blk->flags;
+	blkctx->req_nrets = HCL_SMOOI_TO_OOP(req_nrvars);
 	blkctx->tmpr_mask = rcv_blk->tmpr_mask;
 	blkctx->receiver_or_base = (hcl_oop_t)rcv_blk;
 	blkctx->home = rcv_blk->home;
@@ -1965,7 +1962,7 @@ static int __activate_function (hcl_t* hcl, hcl_oop_function_t rcv_func, hcl_ooi
 	if (HCL_UNLIKELY(!functx)) return -1;
 
 	functx->ip = HCL_SMOOI_TO_OOP(0);
-	functx->flags = rcv_func->flags;
+	functx->req_nrets = HCL_SMOOI_TO_OOP(1);
 	functx->tmpr_mask = rcv_func->tmpr_mask;
 	functx->receiver_or_base = (hcl_oop_t)rcv_func;
 	functx->home = rcv_func->home;
@@ -2290,7 +2287,7 @@ static int start_initial_process_and_context (hcl_t* hcl, hcl_ooi_t initial_ip,
 	hcl->sp = -1;
 
 	ctx->ip = HCL_SMOOI_TO_OOP(initial_ip);
-	ctx->flags = HCL_SMOOI_TO_OOP(0);
+	ctx->req_nrets = HCL_SMOOI_TO_OOP(1);
 	ctx->tmpr_mask = HCL_SMOOI_TO_OOP(tmpr_mask);
 	ctx->origin = ctx; /* the origin of the initial context is itself as this is created over the initial function */
 	ctx->home = hcl->initial_function->home; /* this should be nil */
@@ -3117,6 +3114,37 @@ static int execute (hcl_t* hcl)
 
 			/* -------------------------------------------------------- */
 
+			case HCL_CODE_PUSH_RETURN_R:
+			{
+				hcl_oop_context_t ctx;
+				hcl_oow_t i;
+				hcl_ooi_t tmpr_mask, fixed_nargs;
+
+				LOG_INST_0 (hcl, "push_return_r");
+
+				HCL_ASSERT(hcl, HCL_IS_CONTEXT(hcl, hcl->active_context));
+
+				ctx = hcl->active_context;
+				tmpr_mask = HCL_OOP_TO_SMOOI(ctx->tmpr_mask);
+				fixed_nargs = GET_BLKTMPR_MASK_NARGS(tmpr_mask);
+
+				i = HCL_OOP_TO_SMOOI(ctx->req_nrets); 
+
+				/* return variables are placed after the fixed arguments */
+				while (i > 0)
+				{
+					--i;
+					HCL_STACK_PUSH (hcl, ctx->slot[fixed_nargs + i]);
+				}
+
+				/* same as HCL_CODE_RETURN_FROM_BLOCK */
+				
+				hcl->last_retv = HCL_STACK_GETTOP(hcl); /* get the stack top */
+				do_return_from_block (hcl);
+
+				break;
+			}
+
 			case HCL_CODE_CALL_R:
 			{
 				hcl_oop_t rcv;
@@ -3165,7 +3193,7 @@ static int execute (hcl_t* hcl)
 							break;
 
 						case HCL_BRAND_BLOCK:
-							if (activate_block(hcl, b1, 0) <= -1) goto call_failed;
+							if (activate_block(hcl, b1, 1) <= -1) goto call_failed;
 							break;
 
 						case HCL_BRAND_PRIM:
diff --git a/lib/hcl-prv.h b/lib/hcl-prv.h
index a57334d..8b29505 100644
--- a/lib/hcl-prv.h
+++ b/lib/hcl-prv.h
@@ -831,13 +831,14 @@ enum hcl_bcode_t
 
 	HCL_CODE_CALL_X                   = 0xD4, /* 212 ## */
 	HCL_CODE_CALL_R                   = 0xD5, /* 213 ## ##*/
-	HCL_CODE_TRY_ENTER                = 0xD6, /* 214 ## */ 
-	HCL_CODE_TRY_ENTER2               = 0xD7, /* 215 ## */ 
+	HCL_CODE_PUSH_RETURN_R            = 0xD6, /* 214 */ 
+	HCL_CODE_TRY_ENTER                = 0xD7, /* 215 ## */ 
+	
 
 	HCL_CODE_STORE_INTO_CTXTEMPVAR_X  = 0xD8, /* 216 ## */
-	HCL_CODE_TRY_EXIT                 = 0xD9, /* 217 */
-	HCL_CODE_THROW                    = 0xDA, /* 218 */
-	/* UNUSED - 0xDB - 0xDB */
+	HCL_CODE_TRY_ENTER2               = 0xD9, /* 217 ## */ 
+	HCL_CODE_TRY_EXIT                 = 0xDA, /* 218 */
+	HCL_CODE_THROW                    = 0xDB, /* 219 */
 
 	HCL_CODE_POP_INTO_CTXTEMPVAR_X    = 0xDC, /* 220 ## */
 	/* UNUSED - 0xDD - 0xDF */
diff --git a/lib/hcl.h b/lib/hcl.h
index ce91621..d76e137 100644
--- a/lib/hcl.h
+++ b/lib/hcl.h
@@ -549,11 +549,11 @@ struct hcl_fpdec_t
 #define HCL_FUNCTION_GET_CODE_BYTE(m) HCL_OBJ_GET_TRAILER_BYTE(m)
 #define HCL_FUNCTION_GET_CODE_SIZE(m) HCL_OBJ_GET_TRAILER_SIZE(m)
 
-#define HCL_FUNCTION_NAMED_INSTVARS 4   /* this excludes literal frames and byte codes */
+#define HCL_FUNCTION_NAMED_INSTVARS 3   /* this excludes literal frames and byte codes */
 typedef struct hcl_function_t hcl_function_t;
 typedef struct hcl_function_t* hcl_oop_function_t;
 
-#define HCL_BLOCK_NAMED_INSTVARS 4
+#define HCL_BLOCK_NAMED_INSTVARS 3
 typedef struct hcl_block_t hcl_block_t;
 typedef struct hcl_block_t* hcl_oop_block_t;
 
@@ -567,7 +567,6 @@ struct hcl_function_t
 {
 	HCL_OBJ_HEADER;
 
-	hcl_oop_t         flags;
 	hcl_oop_t         tmpr_mask; /* smooi */
 	hcl_oop_context_t home; /* home context. nil for the initial function */
 
@@ -587,7 +586,6 @@ struct hcl_block_t
 {
 	HCL_OBJ_HEADER;
 
-	hcl_oop_t         flags;
 	hcl_oop_t         tmpr_mask; /* smooi */
 	hcl_oop_context_t home; /* home context */
 	hcl_oop_t         ip; /* smooi. instruction pointer where the byte code begins in home->origin */
@@ -597,8 +595,8 @@ struct hcl_context_t
 {
 	HCL_OBJ_HEADER;
 
-	/* SmallInteger, context flags */
-	hcl_oop_t         flags;
+	/* SmallInteger */
+	hcl_oop_t          req_nrets;
 
 	/* SmallInteger. */
 	hcl_oop_t          tmpr_mask;