The changes that artistic director John Neville-Andrews began to effect in the Folger Theatre Group toward the end of last season continue apace with "The Merchant of Venice," the company's first show of the new season. More importantly, they appear to be bearing fruit.

This is a thoughtful, provocative production -- albeit a bit static -- of a work that seethes with unresolved questions. What is encouraging, however, is Neville-Andrews' willingness to break away from the familiar faces and the predictable formulas that had mired the Folger in a kind of depressing mediocrity.

For the first time in the theater's history, he has assembled the nucleus of a resident company, and while it's too early to say if the actors who form its core will have the staying power that will carry them from show to show, they do bring a welcome freshness of attack to the Folger stage. In a further bid to brush away the cobwebs, he has borrowed Richard Bauer from Arena Stage to play the critical role of Shylock.

On its own terms, the guest performance is wonderfully ambivalent--a blend of the sinner and the sinned against. Justified in some of his suspicions and demands, perfectly reckless in others, devious on occasion, although not always without sound motivation for deviousness, Bauer eludes easy categorization. A Shylock who is little more than a sniveling cur can close down the play early on. Bauer's sharp intelligence, his darting eyes and his quick humor keep the issues alive and force the other characters to remain on their toes.

As a result, a theater that was all too inbred not that long ago now is giving the impression that it has flung open the doors to outside inspiration. Visually, in fact, the production takes its distinctly abstract look from Yugoslavian artist Mersad Berber, whose paintings Neville-Andrews encountered in a local art gallery. Luminescent panels, rich blocks of layered colors accented with silver and gold leaf, form the various backdrops for Venice and Belmont. And the costumes are a bold juxtaposition of thick, stiff fabrics. There's a feeling of antique wealth to the show, but also the measured formality of a remote culture.

Unlike his production of "A Comedy of Errors," which updated that romp to include the madness just prior to World War I, Neville-Andrews has emphasized the faraway exoticism of "Merchant" and the rigor of a society that could permit, among its ironclad contracts, the exchange of 3,000 ducats for a pound of flesh. Although the cast doesn't exactly overlook the opportunities for spirited romance and fanciful disguise that constitute a large portion of the action, this is not a playful staging.

True, Portia (the gracious Mikel Lambert) is besieged by strutting buffoons, trying to crack the mystery of the three caskets and win her hand. And when it appears that Antonio, the titular merchant, is about to go under Shylock's knife, it's she who dons a lawyer's robe and pleads his case in court. Shylock's servant, Launcelot Gobbo (Floyd King), juggles puns and nonsense, while his father (John Reese) is a half-blind old fool, who can't see whom he's talking to and usually winds up talking to thin air.

However, it is indicative of this production that servant and doddering father reminded me more of the poor tramps in "Waiting for Godot." For all the sprightliness of their minds, Portia and her lady-in-waiting, Nerissa, are garbed in elongated farthingales that impede their movements and flatten their appearance, thereby suggesting that they, too, are prisoners of a kind. Jim Beard's Antonio is dourly self-sacrificial, a lamb primed for slaughter, while the magnificoes who preside over his trial wear blood red.

We are never allowed to stray too far from Shylock's shadow or forget that death, not just a lover's moon, hangs over the proceedings. It is debatable whether Shylock posed such a dilemma to Elizabethan audiences. Evidence suggests he was once viewed in far more comic terms. But time and the aberrations of history have added a dark patina to the play. What Shylock does is no more cruel than what is done to him, perhaps, but cruelty still prevails. The Folger addresses both sides of the nettlesome question and leaves it unresolved. Indeed, the final image is that of a standoff -- Shylock and Antonio facing one another, impassive profiles on rare coins, as the lights fade.

Not all the performances are first-rate, perhaps, but there's more good acting on the stage than the Folger has seen for some time. Of the leads, only John Wojda and Mario Arrambide struck me as disappointments -- the former a flavorless Bassanio, the latter an unaccountably vindictive Gratiano. But Thomas Schall, David Digiannantonio and Paul Norwood give good account of themselves in smaller roles and, all in all, the signs seem to indicate that the Folger has the makings of the resident company it has sorely needed. How it matures is bound to be one of the more interesting developments of the months to come.

THE MERCHANT OF VENICE. By William Shakespeare. Directed by John Neville-Andrews. Sets, Russell Metheny; costumes, Bary Allen Odom; lighting, Richard Winkler. With Richard Bauer, Mikel Lambert, John Reese, Jim Beard, Chip Bolcik, Kerry Waters, Mario Arrambide, Floyd King, Chris Casady, John Wojda. At the Folger through Nov. 21.