Transcriptional enhancers integrate positional and temporal information to regulate the complex expression of developmentally controlled genes. Current models suggest that enhancers act as computational devices, receiving multiple inputs from activators and repressors and resolving them into a single positive or a negative signal that is transmitted to the basal transcriptional machinery. We show that a simple, compact enhancer is capable of representing both repressed and activated states at the same time and in the same nucleus. This finding suggests that closely apposed factor binding sites, situated within compact cis-elements, can be independently interpreted by the transcriptional machinery, possibly through successive enhancer-promoter interactions. These results provide clear evidence that the computational functions usually ascribed to the enhancer itself are actually shared with the basal machinery. In contrast to the autonomous computer model of enhancer function, an information-display or 'billboard' model of enhancer activity may better describe many developmentally regulated transcriptional enhancers.