DAILY INCOME FUND
                               Municipal Portfolio

                                 Class T Shares


                 Distribution and Service Plan Pursuant to Rule
                 12b-1 Under the Investment Company Act of 1940


                  The Distribution and Service Plan (the "Plan") is adopted by
Daily Income Fund (the "Fund") on behalf of the Class T shares, in accordance
with the provisions of Rule 12b-1 under the Investment Company Act of 1940 (the
"Act").

                                    The Plan

        1.              The Fund and Reich & Tang Distributors, Inc. (the
"Distributor"), have entered into a Distribution Agreement, in a form
satisfactory to the Fund's Board of Directors, under which the Distributor will
act as distributor of the Fund's Class T Shares. Pursuant to the Distribution
Agreement with respect to the Class T Shares, the Distributor, as agent of the
Fund, will solicit orders for the purchase of the Fund's shares, provided that
any subscriptions and orders for the purchase of the Fund's shares will not be
binding on the Fund until accepted by the Fund as principal.

        2.              The Fund and the Distributor have entered into a
Shareholder Servicing Agreement with respect to the Class T Shares of the Fund,
in a form satisfactory to the Fund's Board of Directors, which provides that the
Distributor will be paid a service fee for providing or for arranging for others
to provide all personal shareholder servicing and related maintenance of
shareholder account functions not performed by us or our transfer agent.

        3.              The Manager may make payments from time to time from its
own resources, which may include the management fees and administrative services
fees received by the Manager from the Fund and from other companies, and past
profits for the following purposes:

                (i)     to pay the costs of, and to compensate others, including
organizations whose customers or clients are Class T Shareholders
("Participating Organizations"), for performing personal shareholder servicing
and related maintenance of shareholder account functions on behalf of the Fund;

                (ii )   to compensate Participating Organizations for providing
assistance in distributing the Fund's Class T Shares; and

                (iii)   to pay the cost of the preparation and printing of
brochures and other promotional materials, mailings to prospective shareholders,
advertising, and other promotional activities, including salaries and/or
commissions of sales personnel of the Distributor and other persons, in
connection with the distribution of the Fund's Class T Shares. The Distributor
may also make payments from time to time from its own resources, which may
include the service fee and past profits for the purpose enumerated in (i)
above. Further, the Distributor may determine the amount of such payments made
pursuant to the Plan, provided that such payments will not increase the amount
which the Fund is required to pay to (1) the Manager for any fiscal year under
the Investment Management Contract or the Administrative Services Agreement in
effect for that year or otherwise or (2) to the Distributor under the
Shareholder Servicing Agreement in effect for that year or otherwise. The
Investment Management Contract will also require the Manager to reimburse the
Fund for any amounts by which the Fund's annual operating expenses, including
distribution expenses, exceed in the aggregate in any fiscal year the limits
prescribed by any state in which the Fund's shares are qualified for sale.

        4.              The Fund will pay for (i) telecommunications expenses,
including the cost of dedicated lines and CRT terminals, incurred by the
Distributor and Participating Organizations in carrying out their obligations
under the Shareholder Servicing Agreement with respect to the Class T Shares of
the Fund or the Participating Organization agreement, as the case may be, and
(ii) preparing, printing and delivering the Fund's prospectus to existing
shareholders of the Fund and preparing and printing subscription application
forms for shareholder accounts.

        5.              Payments by the Distributor or Manager to Participating
Organizations as set forth herein are subject to compliance by them with the
terms of written agreements in a form satisfactory to the Fund's Board of
Directors to be entered into between the Distributor and the Participating
Organizations.

        6.              The Fund and the Distributor will prepare and furnish to
the Fund's Board of Directors, at least quarterly, written reports setting forth
all amounts expended for servicing and distribution purposes by the Fund, the
Distributor and the Manager, pursuant to the Plan and identifying the servicing
and distribution activities for which such expenditures were made.

        7.              The Plan became effective upon approval by a majority of
the Board of Directors of the Fund, including a majority of the Directors who
are not interested persons (as defined in the Act) of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreement entered into in connection with the Plan, pursuant to a vote cast in
person at a meeting called for the purpose of voting on the approval of the
Plan.

        8.              The Plan will remain in effect until [July 20, 2007],
unless earlier terminated in accordance with its terms, and thereafter may
continue in effect for successive annual periods if approved each year in the
manner described in paragraph 7 hereof.

        9.              The Plan may be amended at any time with the approval of
the Board of Directors of the Fund, provided that (i) any material amendments of
the terms of the Plan will be effective only upon approval as provided in
paragraph 7 hereof, and (ii) any amendment which increases materially the amount
which may be spent by the Fund pursuant to the Plan will be effective only upon
the additional approval of a majority of the outstanding voting securities of
the Class T Shares (as defined in the Act).

        10.             The Plan may be terminated without penalty at any time
(i) by a vote of a majority of the Directors of the Fund who are not interested
persons (as defined in the Act) of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan, or (ii) by a vote of a majority of the outstanding voting securities
of the Class T Shares of the Fund (as defined in the Act).


Dated: July 20, 2006