The second quartile (or 50th percentile) is calculated using the formula for the position of a percentile in an array sorted in ascending order: $L_y = (n + 1) \times \frac{y}{100}$, where $y$ is the percentile. For seven entries, the location of the second quartile is $L_y = (7 + 1) \times \frac{50}{100} = 4$. When the returns are sorted in ascending order (3%, 3%, 4%, 5%, 7%, 8%, 12%), the return of the 4th fund is 5%. Alternatively, the second quartile is the median, which for an odd-numbered sample is the value at the $\frac{n + 1}{2}$ position, confirming the median return as 5%.