There is a port somewhere on the underside (the side that is closest to the receiver of the SMG) for the bullets to be fed trough. If it isn't present, then you may chalk that one up to laziness on Bungie's (or your team's) part. You can't have a completely closed magazine and expect the bullets to be loaded.

Unless you can justify your logic, I think the "realistic" reloading of the M7 needs to be fixed.