Dave purchases 10,000 units of a no-load US-dollar denominated mutual fund for US$15 per unit...

Dave invested in a U.S.-dollar denominated mutual fund. Even though the unit price increased (US$15 → US$16), he lost money when converted back to Canadian dollars. This loss was caused by fluctuations in the exchange rate between the Canadian dollar and the U.S. dollar, not the fund’s performance itself.

This is a clear example of exchange rate (currency) risk.