Dispersed reference interferometry (DRI) is a potentially useful technique for applications such as absolute displacement, surface topography and film thickness measurement. A bulk optic implementation of a short coherence dispersed reference interferometer is described with the chromatic dispersion applied using two matched transmission gratings in one arm. Such an interferometer can provide absolute knowledge of position by tracking a symmetrical fringe pattern produced by a spectrometer. An operating principle is presented and validation provided through empirical data from optical apparatus. We present experimental results for the resolution, linearity and repeatability of the investigated interferometer apparatus.