diff --git a/lib/comp.c b/lib/comp.c
index e91dff8..9421a04 100644
--- a/lib/comp.c
+++ b/lib/comp.c
@@ -2756,7 +2756,7 @@ static int compile_set_r (hcl_t* hcl, hcl_cnode_t* src)
 {
 	hcl_cframe_t* cf;
 	hcl_cnode_t* cmd, * obj, * var, * val, * var_start;
-	hcl_oow_t index, nvars, i;
+	hcl_oow_t nvars, i;
 	hcl_var_info_t vi;
 
 	HCL_ASSERT (hcl, HCL_CNODE_IS_CONS(src));
@@ -2822,7 +2822,7 @@ static int compile_set_r (hcl_t* hcl, hcl_cnode_t* src)
 
 	SWITCH_TOP_CFRAME (hcl, COP_COMPILE_OBJECT_R, val); /* special for set_r */
 	cf = GET_TOP_CFRAME(hcl);
-	cf->u.obj_r.nrets = nvars;
+	cf->u.obj_r.nrets = nvars; /* number of return variables to get assigned */
 
 	for (i  = 0, obj = var_start; i < nvars; i++, obj = HCL_CNODE_CONS_CDR(obj))
 	{
@@ -2841,13 +2841,30 @@ static int compile_set_r (hcl_t* hcl, hcl_cnode_t* src)
 		}
 		else
 		{
-			/* the check in compile_lambda() must ensure this condition */
-			HCL_ASSERT (hcl, index <= HCL_SMOOI_MAX);
 			PUSH_SUBCFRAME (hcl, COP_EMIT_SET, cmd); 
 			cf = GET_SUBCFRAME(hcl);
 			cf->u.set.vi = vi;
 		}
-		cf->u.set.mode = (i > 0)? VAR_ACCESS_STORE: VAR_ACCESS_POP; /* STORE_INTO or POP_INTO  */
+
+		/* 
+		 * (defun f(x y ::: aa bb cc) ....) 
+		 * (set_r a b c (f 1 2))
+		 *
+		 *    the call to f 
+		 *       call 2 3  ; 2 arguments, 3 return variables (CALL_R)
+		 *                 ; 3 to be emitted from cf->u.obj_r.nrets
+		 *                 ; this gets remembered in req_nrvars of the created context.
+		 *   
+		 *    the return from f must push 3 values.
+		 *        push_return_r  ; as remembered in the ctx->req_nrvars
+		 * 
+		 *    emit store_into_xxx instruction for the first return variable assignment.
+		 *    emit pop_into_xxx instructions for the rest.
+		 *        pop_into c
+		 *        pop_into b
+		 *        store_into a
+		 */
+		cf->u.set.mode = (i <= 0)? VAR_ACCESS_STORE: VAR_ACCESS_POP; /* STORE_INTO or POP_INTO  */
 	}
 
 	return 0;
diff --git a/lib/exec.c b/lib/exec.c
index 9888a78..1ecf743 100644
--- a/lib/exec.c
+++ b/lib/exec.c
@@ -3430,6 +3430,7 @@ static int execute (hcl_t* hcl)
 				/* return variables are placed after the fixed arguments */
 				for (i = 0; i < req_nrets; i++)
 				{
+HCL_DEBUG1 (hcl, "PUSHING %O\n", ctx->slot[fixed_nargs + i]);
 					HCL_STACK_PUSH (hcl, ctx->slot[fixed_nargs + i]);
 				}
 
@@ -3940,7 +3941,7 @@ if (do_throw(hcl, hcl->_nil, fetched_instruction_pointer) <= -1)
 				hcl_oop_t t;
 				FETCH_PARAM_CODE_TO (hcl, b1);
 				LOG_INST_1 (hcl, "push_cvar_m %zu", b1);
-				t = hcl->active_context->owner;
+				t = hcl->active_context->home->owner;
 				if (HCL_UNLIKELY(!HCL_IS_CLASS(hcl, t)))
 				{
 					/* this is an internal error or the bytecodes are compromised */
@@ -3956,7 +3957,7 @@ if (do_throw(hcl, hcl->_nil, fetched_instruction_pointer) <= -1)
 				hcl_oop_t t;
 				FETCH_PARAM_CODE_TO (hcl, b1);
 				LOG_INST_1 (hcl, "store_into_cvar_m %zu", b1);
-				t = hcl->active_context->owner;
+				t = hcl->active_context->home->owner;
 				if (HCL_UNLIKELY(!HCL_IS_CLASS(hcl, t)))
 				{
 					/* this is an internal error or the bytecodes are compromised */
@@ -3972,7 +3973,7 @@ if (do_throw(hcl, hcl->_nil, fetched_instruction_pointer) <= -1)
 				hcl_oop_t t;
 				FETCH_PARAM_CODE_TO (hcl, b1);
 				LOG_INST_1 (hcl, "pop_into_cvar_m %zu", b1);
-				t = hcl->active_context->owner;
+				t = hcl->active_context->home->owner;
 				if (HCL_UNLIKELY(!HCL_IS_CLASS(hcl, t)))
 				{
 					/* this is an internal error or the bytecodes are compromised */
diff --git a/t/retvar-01.hcl b/t/retvar-01.hcl
new file mode 100644
index 0000000..888fc9f
--- /dev/null
+++ b/t/retvar-01.hcl
@@ -0,0 +1,26 @@
+((lambda ()
+	; test return variables
+
+	| v1 v2 v3 i |
+
+	(set i 100)
+
+	(defun ff(a b ::: x y z)
+		(set x (+ a b i))
+		(set y (+ x x))
+		(set z (+ 999 i))
+		(set i (* i 10))
+	)
+
+	(set-r v1 v2 v3 (ff 10 20))
+	(if (/= v1 130) (printf "ERROR: v1 must be 130\n"))
+	(if (/= v2 260) (printf "ERROR: v2 must be 260\n"))
+	(if (/= v3 1099) (printf "ERROR: v3 must be 1099\n"))
+	(printf "OK v1=%d v2=%d v3=%d\n" v1 v2 v3)
+
+	(set-r v1 v2 (ff 1 2)) ; using 2 return variables only. not assigning to v3
+	(if (/= v1 1003) (printf "ERROR: v1 must be 1003\n"))
+	(if (/= v2 2006) (printf "ERROR: v2 must be 2006\n"))
+	(if (/= v3 1099) (printf "ERROR: v3 must be 1099\n"))
+	(printf "OK v1=%d v2=%d v3=%d\n" v1 v2 v3)
+))