diff --git a/src/lib/annotations/annotations.html b/src/lib/annotations/annotations.html
index 81357e6c35..1128570dc9 100644
--- a/src/lib/annotations/annotations.html
+++ b/src/lib/annotations/annotations.html
@@ -154,9 +154,12 @@
     _parseTextNodeAnnotation: function(node, list) {
       var parts = this._parseBindings(node.textContent);
       if (parts) {
-        // NOTE: use a space here so the textNode remains; some browsers
-        // (IE) evacipate an empty textNode.
-        node.textContent = ' ';
+        // Initialize the textContent with any literal parts
+        // NOTE: default to a space here so the textNode remains; some browsers
+        // (IE) evacipate an empty textNode following cloneNode/importNode.
+        node.textContent = parts.map(function(part) {
+          return part.literal;
+        }).join('') || ' ';
         var annote = {
           bindings: [{
             kind: 'text',
@@ -291,6 +294,13 @@
           name = name.slice(0, -1);
           kind = 'attribute';
         }
+        // Initialize attribute bindings with any literal parts
+        var literal = parts.map(function(part) {
+          return part.literal;
+        }).join('');
+        if (kind == 'attribute') {
+          node.setAttribute(name, literal);
+        }
         // Clear attribute before removing, since IE won't allow removing
         // `value` attribute if it previously had a value (can't
         // unconditionally set '' before removing since attributes with `$`
@@ -311,6 +321,7 @@
           kind: kind,
           name: name,
           parts: parts,
+          literal: literal,
           isCompound: parts.length !== 1
         };
       }
diff --git a/src/lib/bind/effects.html b/src/lib/bind/effects.html
index af15b803db..2643164e67 100644
--- a/src/lib/bind/effects.html
+++ b/src/lib/bind/effects.html
@@ -21,10 +21,6 @@
              !effect.parts[0].negate;
     },
 
-    _compoundInitializationEffect: function(source, value, effect) {
-      this._applyEffectValue(effect);
-    },
-
     _annotationEffect: function(source, value, effect) {
       if (source != effect.value) {
         value = this._get(effect.value);
diff --git a/src/standard/annotations.html b/src/standard/annotations.html
index 8e969de4c8..50be217fd3 100644
--- a/src/standard/annotations.html
+++ b/src/standard/annotations.html
@@ -219,42 +219,51 @@
     },
 
     // push configuration references at configure time
-    _configureAnnotationReferences: function() {
-      this._configureTemplateContent();
-      this._configureCompoundBindings();
-    },
-
-    // nested template contents have been stored prototypically to avoid
-    // unnecessary duplication, here we put references to the
-    // indirected contents onto the nested template instances
-    _configureTemplateContent: function() {
-      this._notes.forEach(function(note, i) {
+    _configureAnnotationReferences: function(config) {
+      var notes = this._notes;
+      var nodes = this._nodes;
+      for (var i=0; i<notes.length; i++) {
+        var note = notes[i];
+        var node = nodes[i];
+        // nested template contents have been stored prototypically to avoid
+        // unnecessary duplication, here we put references to the
+        // indirected contents onto the nested template instances
         if (note.templateContent) {
           // note: we can rely on _nodes being set here and having the same
           // index as _notes
           this._nodes[i]._content = note.templateContent;
         }
-      }, this);
-    },
-
-    // Compound bindings utilize private storage on the node to store
-    // the current state of each value that will be concatenated to generate
-    // the final property/attribute/text value
-    // Here we initialize the private storage array on the node with any
-    // literal parts that won't change (could get fancy and use WeakMap)
-    _configureCompoundBindings: function() {
-      this._notes.forEach(function(note, i) {
-        var node = this._nodes[i];
-        note.bindings.forEach(function(binding) {
+        // Compound bindings utilize private storage on the node to store
+        // the current state of each value that will be concatenated to generate
+        // the final property/attribute/text value
+        // Here we initialize the private storage array on the node with any
+        // literal parts that won't change (could get fancy and use WeakMap),
+        // and configure property bindings to children with the literal parts
+        // (textContent and annotations were already initialized in the template)
+        var bindings = note.bindings;
+        for (var j=0; j<bindings.length; j++) {
+          var binding = bindings[j];
           if (binding.isCompound) {
             var storage = node.__compoundStorage__ ||
               (node.__compoundStorage__ = {});
-            storage[binding.name] = binding.parts.map(function(part) {
-              return part.literal;
-            });
+            var parts = binding.parts;
+            var literals = new Array(binding.parts);
+            for (var k=0; k<parts.length; k++) {
+              literals[k] = parts[k].literal;
+            }
+            var name = binding.name;
+            storage[name] = literals;
+            if (binding.kind == 'property') {
+              var literal = literals.join('');
+              if (node._configValue) {
+                node._configValue(name, literal);
+              } else {
+                node[name] = literal;
+              }
+            }
           }
-        });
-      }, this);
+        }
+      }
     },
 
     // construct `$` map (from id annotations)
diff --git a/src/standard/effectBuilder.html b/src/standard/effectBuilder.html
index cd35fd9803..e64495a3f6 100644
--- a/src/standard/effectBuilder.html
+++ b/src/standard/effectBuilder.html
@@ -150,14 +150,6 @@
           });
         }
       }
-      // We need to ensure compound bindings with literals push the literals
-      // through regardless of whether annotation dependencies initialized
-      // this is done with a special compoundInitialization effect which simply
-      // kicks _applyEffectValue to push the literals through
-      if (note.isCompound) {
-        note.index = index;
-        this._addPropertyEffect('__static__', 'compoundInitialization', note);
-      }
     },
 
     _addAnnotatedComputationEffect: function(note, part, index) {
diff --git a/test/unit/bind-elements.html b/test/unit/bind-elements.html
index 129997a7f6..1c5b36c4c5 100644
--- a/test/unit/bind-elements.html
+++ b/test/unit/bind-elements.html
@@ -24,13 +24,15 @@
       computed-from-tricky-literals2='{{computeFromTrickyLiterals(3,"tricky\,&#39;zot&#39;" )}}'
       computed-from-no-args="{{computeFromNoArgs( )}}"
       no-computed="{{foobared(noInlineComputed)}}"
-      compound1="{{cpnd1}}{{ cpnd2 }}{{cpnd3.prop}}{{ computeCompound(cpnd4, cpnd5, 'literal')}}"
-      compound2="literal1 {{cpnd1}} literal2 {{cpnd2}}{{cpnd3.prop}} literal3 {{computeCompound(cpnd4, cpnd5, 'literal')}} literal4"
       compoundAttr1$="{{cpnd1}}{{ cpnd2 }}{{cpnd3.prop}}{{ computeCompound(cpnd4, cpnd5, 'literal')}}"
       compoundAttr2$="literal1 {{cpnd1}} literal2 {{cpnd2}}{{cpnd3.prop}} literal3 {{computeCompound(cpnd4, cpnd5, 'literal')}} literal4"
       >
       Test
       </div>
+      <x-prop id="boundProps"
+        prop1="{{cpnd1}}{{ cpnd2 }}{{cpnd3.prop}}{{ computeCompound(cpnd4, cpnd5, 'literal')}}"
+        prop2="literal1 {{cpnd1}} literal2 {{cpnd2}}{{cpnd3.prop}} literal3 {{computeCompound(cpnd4, cpnd5, 'literal')}} literal4"
+      ></x-prop>
       <span id="boundText">{{text}}</span>
       <span idtest id="{{boundId}}"></span>
       <s id="computedContent">{{computeFromTrickyLiterals(3, 'tricky\,\'zot\'')}}</s>
@@ -364,6 +366,26 @@
   });
 </script>
 
+<script>
+  Polymer({
+    is: 'x-prop',
+    properties: {
+      prop1: {
+        value: 'default',
+        observer: 'prop1Changed'
+      },
+      prop2: {
+        value: 'default',
+        observer: 'prop2Changed'
+      }
+    },
+    created: function() {
+      this.prop1Changed = sinon.spy();
+      this.prop2Changed = sinon.spy();
+    }
+  });
+</script>
+
 <script>
   Polymer({
     is: 'x-notifies1',
diff --git a/test/unit/bind.html b/test/unit/bind.html
index 261643605b..6aed2aab1a 100644
--- a/test/unit/bind.html
+++ b/test/unit/bind.html
@@ -703,36 +703,38 @@
 
   test('compound adjacent property bindings', function() {
     var el = document.createElement('x-basic');
-    assert.equal(el.$.boundChild.compound1, '');
+    assert.equal(el.$.boundProps.prop1, '');
+    assert.isTrue(el.$.boundProps.prop1Changed.calledOnce);
     el.cpnd2 = 'cpnd2';
-    assert.equal(el.$.boundChild.compound1, 'cpnd2');
+    assert.equal(el.$.boundProps.prop1, 'cpnd2');
     el.cpnd1 = 'cpnd1';
     el.cpnd3 = {prop: 'cpnd3'};
-    assert.equal(el.$.boundChild.compound1, 'cpnd1cpnd2cpnd3');
+    assert.equal(el.$.boundProps.prop1, 'cpnd1cpnd2cpnd3');
     el.cpnd4 = 'cpnd4';
-    assert.equal(el.$.boundChild.compound1, 'cpnd1cpnd2cpnd3');
+    assert.equal(el.$.boundProps.prop1, 'cpnd1cpnd2cpnd3');
     el.cpnd5 = 'cpnd5';
-    assert.equal(el.$.boundChild.compound1, 'cpnd1cpnd2cpnd3literalcpnd5cpnd4');
+    assert.equal(el.$.boundProps.prop1, 'cpnd1cpnd2cpnd3literalcpnd5cpnd4');
   });
 
   test('compound property bindings with literals', function() {
     var el = document.createElement('x-basic');
-    assert.equal(el.$.boundChild.compound2, 'literal1  literal2  literal3  literal4');
+    assert.equal(el.$.boundProps.prop2, 'literal1  literal2  literal3  literal4');
+    assert.isTrue(el.$.boundProps.prop2Changed.calledOnce);
     el.cpnd1 = 'cpnd1';
     el.cpnd2 = 'cpnd2';
     el.cpnd3 = {prop: 'cpnd3'};
     el.cpnd4 = 'cpnd4';
     el.cpnd5 = 'cpnd5';
-    assert.equal(el.$.boundChild.compound2, 'literal1 cpnd1 literal2 cpnd2cpnd3 literal3 literalcpnd5cpnd4 literal4');
+    assert.equal(el.$.boundProps.prop2, 'literal1 cpnd1 literal2 cpnd2cpnd3 literal3 literalcpnd5cpnd4 literal4');
     el.cpnd1 = null;
     el.cpnd2 = undefined;
     el.cpnd3 = {};
     el.cpnd4 = '';
     el.cpnd5 = '';
-    assert.equal(el.$.boundChild.compound2, 'literal1  literal2  literal3 literal literal4');
+    assert.equal(el.$.boundProps.prop2, 'literal1  literal2  literal3 literal literal4');
   });
 
-  test('compound adjacent property bindings', function() {
+  test('compound adjacent attribute bindings', function() {
     var el = document.createElement('x-basic');
     assert.equal(el.$.boundChild.getAttribute('compoundAttr1'), '');
     el.cpnd2 = 'cpnd2';
@@ -746,7 +748,7 @@
     assert.equal(el.$.boundChild.getAttribute('compoundAttr1'), 'cpnd1cpnd2cpnd3literalcpnd5cpnd4');
   });
 
-  test('compound property bindings with literals', function() {
+  test('compound property attribute with literals', function() {
     var el = document.createElement('x-basic');
     assert.equal(el.$.boundChild.getAttribute('compoundAttr2'), 'literal1  literal2  literal3  literal4');
     el.cpnd1 = 'cpnd1';
@@ -765,7 +767,10 @@
 
   test('compound adjacent textNode bindings', function() {
     var el = document.createElement('x-basic');
-    assert.equal(el.$.compound1.textContent, '');
+    // The single space is due to the gambit to prevent empty text nodes
+    // from being evacipated on IE during importNode from the template; it will
+    // only be there the when in the virgin state after cloning the template
+    assert.equal(el.$.compound1.textContent, ' ');
     el.cpnd2 = 'cpnd2';
     assert.equal(el.$.compound1.textContent, 'cpnd2');
     el.cpnd1 = 'cpnd1';
@@ -775,6 +780,14 @@
     assert.equal(el.$.compound1.textContent, 'cpnd1cpnd2cpnd3');
     el.cpnd5 = 'cpnd5';
     assert.equal(el.$.compound1.textContent, 'cpnd1cpnd2cpnd3literalcpnd5cpnd4');
+    // Once the binding evaluates back to '', it will in fact be ''
+    el.computeCompound = function() { return ''; };
+    el.cpnd1 = null;
+    el.cpnd2 = '';
+    el.cpnd3 = {prop: null};
+    el.cpnd4 = null;
+    el.cpnd5 = '';
+    assert.equal(el.$.compound1.textContent, '');
   });
 
   test('compound textNode bindings with literals', function() {