My daughter has had grades on her report cards since Grade One. Some parents around here seem to lose their minds when report cards come home and they say things like, "Gee, I didn't know little Bobby was good at math, but he got an A and so he must be doing okay." That shows parents who are just not engaged with their children's lives.
We don't make a big deal about marks, but they are part of school. They are not all bad, either, because they help a child learn about external standards and whether or not they are interested in what other people think about their work. The marks should be supported by some kind of comment on the child's work that term in that particular subject area. Learning to live with other people's opinions (positive and negative) is an important lesson in life, and though it doesn't have to be learned through report card marks, it can be.
The thing that I have observed with my daughter is that we talk about "learning goals" a lot. On the report cards my daughter brings home(these are three page documents that the teachers assure me are hell to produce, but I love them because there is so much good information in them for people who look beyond the letter grade), there is a section for the child to express her learning goals and a place for one of the adults in the family to write how they will help the child achieve those goals. If your daughter's report card doesn't include things like that, sit down together and write it out for yourselves. It isn't as flexible as unschooling, but it doesn't have to be driven by someone else's agenda, either.