From what I understand, internal refers to the dispesion of the composite by itself and the external is referncing the index AND the composite - both are mandatroy:
Internal dispersion: ex. 20 accounts ranging from 10.5%-13.2% or STD must be disclosed … (not required if less than 6 portfolios for the year)
External dispersion: 3 years:last 36 monthly returns of composite and benchmark - annualized STD