Many (most) DACs internally upsample prior to conversion to analog. Most CD players do. There are benefits to this such as the ability to use digital filters rather than analog reconstruction filters. There are various trade-offs - as with all things - depending on the design of the filters, etc..
Upsampling does not compromise the sound. It is simply mathematical transcoding to a different format which neither creates nor destroys information.
The DacMagic transcodes all files to 24/96. Benchmark DACs transcode to 110 kHz, IIRC.
If you would like to know more, Benchmark's website has some great articles.