THRU SORTING AND MERGING IT WILL BE POSSIBLE
IF IT ALREADY SORTED MEANS DO THE MERGING OF TWO FILES, 
HERE I AM GIVING THE PROGRAM HOW TO STORE ALL THOSE IN ONE 
PROGRAM

IDENTIFICATION DIVISION.
PROGRAM-ID. MERGEFILES.
ENVIRONMENT DIVISION.
INPUT-OUTPUT SECTION.
FILE-CONTROL.
  SELECT STUDENTFILE ASSIGN TO "STUDENTS.DAT"
         ORGANIZATION IS LINE SEQUENTIAL.
  SELECT DEPARTMENTFILE ASSIGN TO "TRANSINS.DAT"
          ORGANIZATION IS LINE SEQUENTIAL.
  SELECT NEWSTUDENTFILE ASSIGN TO "STUDENTS.NEW"
         ORGANIZATION IS LINE SEQUENTIAL.
  SELECT WORKFILE ASSIGN TO "WORK.TMP".
         ORGANIZATION IS LINE SEQUENTIAL.
DATA DIVISION.
FILE SECTION.

FD STUDENTFILE.
01 STUDENTREC PIC X(30). // THIS IS THE STUDENT REC AS FILE1

FD DEPARTMENTFILE.
01 DEPARTMENTREC PIC X(30).// THIS IS THE DEPT. REC AS FILE2

FD NEWSTUDENTFILE.
01 NEWSTUDENTREC PIC X(30).//THIS IS THE FILE3 IN WHICH YOU 
ARE GOING TO STORE THE TWO FILE DETAILS 

SD WORKFILE.
01 WORKREC.
   02 STUDENTIDWF PIC 9(7).
   02 FILLEER     PIC X(23).

PROCEDURE DIVISION.
/*HERE I AM MERGING THE TWO FILES AND STORING IN 
NEWSTUDENTFILE.*/
BEGIN.
  MERGE WORKFILE
      ON ASCENDING KEY STUDENTIDWF
        USING INSERTIONSFILE, STUDENTFILE 
           GIVING NEWSTUDENTFILE.
STOP RUN.


---IF I AM WRONG INFORM ME. THANKS

Hi Asmara i think u didnt get my question asking 
for.Actually my requirement is to not only merge all 5 
fields but they shud come in 1 row(2 flds from file 1 and 3 
flds from file 2) into file3(output file)


file1 is having 2 fields
 
field1    field2
123       234


file2 is having 3 fields
field1    field2    field3

456       678       789

output file3
Fld1 fld2 fld1 fld2 fld3
123  234  456  678  789

Quikjob is best for your case. (if your company has this 
mainframe tool. It is a JCL tool similar to a SORT).

FD FILE1
01 FILE1-REC
	05 FIELD1 PIC X(3)
	05 FIELD2 PIC X(3)

FD FILE2
01 FILE2-REC
	05 FIELD1 PIC X(3)	
	05 FIELD2 PIC X(3)
	05 FIELD3 PIC X(3)

FD FILE3
01 FILE3-REC
	05 FELD1 PIC X(3)
	05 FELD2 PIC X(3)
	05 FELD1 PIC X(3)
	05 FELD2 PIC X(3)
	05 FELD3 PIC X(3)

PROCEDURE DIVISION
oPEN INPUT FILE1
	   FILE2
     OUTPUT FILE3
	
READ FILE1
READ FILE2

WRITE FILE3-REC FROM FILE1-REC,FILE2-REC.

STOP RUN.

i think the last ans will give som error due the same 
varable name is declare in the same level in fd file3.

Have an output file with 5 fields
Output file layout
field1field2filed3field4field5
MOVE FIELD1 OF FILE1 TO FIELD1 OF OUTPUT
MOVE FIELD2 OF FILE1 TO FIELD2 OF OUTPUT
MOVE FIELD3 OF FILE1 TO FIELD3 OF OUTPUT
MOVE FIELD1 OF FILE1 TO FIELD4 OF OUTPUT
MOVE FIELD2 OF FILE1 TO FIELD5 OF OUTPUT
WRITE OUPUT FILE

By using move reference modification it is very simple.
first open 2 input files and 1 output file.read 2 input 
files.write the logic as following.
move filerec1 to filerec3(1:10).
move filerec2 to filerec3(11:10).
write filerec3.