Whether relying on Section 3(c)(1) or Section 3(c)(7), fund managers should note that “knowledgeable employees” (as defined in Rule 3c-5 under the Investment Company Act) may own securities of a fund that relies on Section 3(c)(1) or Section 3(c)(7), even if doing so would result in more than 100 persons beneficially owning the fund’s securities and even though such employees are not qualified purchasers. This is possible, even in the face of the basic requirements of Sections 3(c)(1) and 3(c)(7), because the SEC has adopted a rule clarifying that “knowledgeable employees” are not counted for purposes of satisfying such exclusions. The term “knowledgeable employee” covers natural persons.