(FORTUNE Magazine) – SERVICE 500/COVER STORIES 54 STARS OF THE SERVICE 500 Strict attention to costs and a passion for satisfying customers are the secrets of nine standout performers. Measured over a decade, these companies have averaged more than a 20% return on shareholders' equity. Their techniques and philosophies for achieving success hold lessons for business. by Carol J. Loomis

56 BILL MARRIOTT PROPHESIED PROFIT AND PROSPERED

64 AMERICA STILL REIGNS IN SERVICES Japanese banks, British builders, and many other foreign companies are challenging their Yankee counterparts -- often on U.S. turf. But don't count the Americans out: In brainpower-driven businesses they sell lots more to the world than the U.S. buys. And with a work force that outproduces the Japanese in transportation, communications, and retailing, the U.S. sets the standard for efficiency in serving customers. by Sylvia Nasar

INVESTING 73 THE RICHEST LITTLE CLUB IN THE WORLD AEA Investors is no ordinary outfit. Its shareholders -- many present or former CEOs -- make a return of 45% a year. by Christopher Knowlton

COMPENSATION 88 SEEKING THE SENSE IN CEO PAY Sometimes there isn't much. A compensation expert shows what does and doesn't influence the take at the top. by Graef S. Crystal

109 CEO POLL: SO WHAT IS THE BEST WAY TO PAY?

ENERGY 116 GET READY FOR POWER BROWNOUTS You may be shocked by electricity shortages this summer. Demand is up and utilities aren't building enough capacity. by Peter Nulty

125 FUSION'S FUTURE: IT AIN'T DEAD YET Despite problems, the dream of cheap power could someday come true. by Gene Bylinsky

SELLING 131 CONFESSIONS OF AN ADVERTISING MAN Martin Sorrell is after Ogilvy on the way to becoming ''the major multinational marketing services company.'' by Richard I. Kirkland Jr.

137 DIET CENTERS ARE REALLY IN FAT CITY Baby-boomers are plunking down $500 to $900 to get others to help them do what they haven't been able to do themselves. by Brian O'Reilly

CORPORATE PERFORMANCE 145 WOOLWORTH TO RULE THE MALLS A retail relic has evolved into a hot specialty merchant, with 40 different brands of stores. Expect five or ten of them to show up in your local shopping center soon. by Bill Saporito

161 THE OTHER DISNEY IN THE SPOTLIGHT At the studio he was the ''idiot nephew.'' On Wall Street he's now ''Roy the Raider.'' He doesn't like either handle. by Faye Rice

173 COMPANIES TO WATCH

SPECIAL REPORT THE SERVICE 500 Stories and indexes start on page 351

352 -- AT LAST, PROFITS WORTH SAVORING A rebound by banks sparked a stunning performance by America's biggest service companies -- the FORTUNE Service 500. by Alan Deutschman and Karen Nickel

358 -- THE 500 LARGEST SERVICE CORPORATIONS

388 -- DEFINITIONS AND EXPLANATIONS

388 -- INDUSTRY MEDIANS

389 -- ARRIVALS, DEPARTURES, AND MONEY LOSERS

390 -- ALPHABETICAL INDEX

MONEY & MARKETS 181 DOES DEREGULATION MAKE SENSE? Freeing banks, brokers, and thrifts to compete was supposed to help consumers. What followed was the S&L debacle. Has anybody gained -- and what's next? by John J. Curran

CAREERS 199 THE UNCOMMITTED CLASS OF 1989 What this year's college grads want isn't permanence. Loyalty to their employers is neither offered nor expected. by Terence P. Pare

COMPETITION 245 CAN CONSORTIUMS DEFEAT JAPAN? High-tech cooperation can work -- with the right leadership, well-defined goals, and money. Sematech looks good, HDTV doesn't. by Lee Smith

257 EUROPE GOES WILD FOR YANKEE PCs Getting ready for 1992, business is on a computer-buying binge. One supplier had to charter cargo jets to keep up. by Richard I. Kirkland Jr.

TRADE 263 PERILS OF GETTING TOUGH ON KOREA With Washington threatening retaliation, the Koreans are talking up what they've already done to open markets. by Ford S. Worthy

THE SOCIETY 271 CAN YOUR KID BECOME PRESIDENT? Arguments that America is growing more elitist don't wash. The country welcomes ability more than ever. by Myron Magnet

DEPARTMENTS 6 EDITOR'S DESK

9 INDEX

16 NEWS/TRENDS Wall Street likes the steel contract, the latest gold scams, games on the job, a bridge match, a steal in Colorado real estate, and more.

37 FORTUNE FORECAST Service companies supply the steam as business spending rises. by Maureen F. Allyn

41 PERSONAL INVESTING Stocks of some service companies may keep outpacing the industrials. by Andrew Evan Serwer

Also: A homebuilder with a backlog, some equity funds reopen, and Portfolio Talk with William E. Donoghue of the Donoghue Organization.

319 FORTUNE PEOPLE Saul Steinberg's son talks empire, the President's son talks baseball, and more. by Mark Alpert

320 ON THE RISE

323 OTHER VOICES Lester Thurow defends China's economic moves and calls student riots a sign of success.

329 BOOKS & IDEAS Two economists argue that you should feel good about the federal deficit. by Todd May Jr.

The truth about trade. by David R. Henderson

333 LETTERS TO FORTUNE The oil spill, the MBA myth, feminism, cold-call cowboys, a voice from GE's past, and more.

339 KEEPING UP Bimboism and the High Court, Russians and welfare, and much more. by Daniel Seligman

Riding a service boom: Ovak Arslanian photographed this Atlanta rail yard.

COVER: Katherine Lambert caught Marriott at the Camelback Inn in Scottsdale.