Capitalizing on its recent acquisition of Columbia Management Co., Fleet Financial Group Inc. will infuse its variable annuity this quarter with mutual funds managed by the Portland, Ore., company.

Columbia's real estate investment trust and high-yield bond mutual funds will join two added Galaxy equity funds in the augmented Galaxy Variable Annuity 3, which should be available in February or March.

Before acquiring Columbia last month in a $600 million deal, Boston- based Fleet only offered four of its proprietary Galaxy mutual funds in variable annuities: money market, high-quality bond, blended equity, and asset allocation. Columbia brought $20 billion of mutual fund assets to Fleet.

Fleet is looking to another acquisition-its pending $1.6 billion deal for brokerage Quick & Reilly Group-to help sell the annuity. About 210 of Quick & Reilly's 500 brokers will offer the annuity nationwide, Fleet executives said. Fleet's purchase of Quick & Reilly is expected to close this month.

Initially, Fleet will market the expanded annuity through its 275 investment associates in bank branches and through its private-client group. Fleet manages more than $95 billion of assets.

"This is the first product, in terms of the investment management side, where we're leveraging all of the synergies of Columbia, Quick & Reilly, and Galaxy," said Robert L. Ash, managing director of Fleet Investment Management.

Besides the Columbia funds, Fleet plans to add undisclosed nonproprietary mutual funds to the annuity. Mr. Ash added that the variable annuity was a "natural" vehicle for introducing Columbia Funds to Fleet clients because it was easier to place the portfolios in a product already undergoing a makeover.

Fleet, which began selling proprietary variable annuities underwritten by American Skandia Life Assurance Corp. in 1992, had $135.8 million of assets under management in the products at Nov. 30, the most recent data available from Lipper Analytical Services, Summit, N.J.

Though Fleet was the first banking company to have a proprietary variable annuity, others have surpassed it in sales. For instance, Banc One Corp., Columbus, Ohio, introduced proprietary variable annuities in 1994 and has more than $203 million of assets under management in them.

And Dreyfus Corp., which became a unit of Pittsburgh-based Mellon Bank Corp. in 1994, has more than $4.2 billion of assets under management in variable annuities, which it began selling in 1989.

Mr. Ash, who declined to state sales goals for the beefed up annuity, said its more aggressive investment stance targets a new generation of prospects: middle-aged investors seeking higher returns.

Galaxy 3 will likely fare better with Quick & Reilly's discount brokerage customers than with bank customers, who tend to be more conservative investors, according to Eli Neusner, a senior consultant at San Francisco-based Spectrem Group.

"They're adding a little sizzle to the variable annuity, which is usually somewhat more of a conservative product," Mr. Neusner said. "Even though those invest through several disciplines, you usually don't see a REIT or a junk bond fund in there."

Fleet also hopes competitive pricing will attract attention to the revamped annuity. Its annual insurance expense ratio is 1%, compared with an industry average tracked by Morningstar Inc., Chicago, of 1.12%.

"These funds might be appealing to more sophisticated investors, and there is more sensitivity toward price among sophisticated investors," said David G. Kaytes, managing vice president of First Manhattan Consulting Group.

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