It means that if we are looking at the performance of an external benchmark (such as the FTSE100), we look at it gross return and do not include the cost of raising funds to invest in it. So for example, if the FTSE went from 1000 to 1100, we DONT say the benchmark return was (1100-1000 -(cost of capital, say 5%) / 1000 = 5% !! We simply say that the return is (1100-1000)/1000 = 10%. This is a gross return and is consistent with the gross return calculated on the company's operations. the reference to "interest free equity" means that it is equivalent to saying that the gross return is the return assuming that you get your financing from equity capital for free.
