Lucky she didn't ask me?! I guess living on a farm life and death is viewed a little differently at our place.
I just tell the truth. The girls have both been fishing and seen a fish caught, killed and then eaten for dinner. Maybe the excitement helped but killing the fish wasn't a big issue.

I think a lot of her reaction to the answer is a direct response from your emotions. If you find it upsetting and its a big deal to you then she will pick up on that. If the answer comes back as more a fact of life and not a big deal then she might not be as upset. Works with my girl anyway. If I think she's going to be upset and go in ready to pick up the pieces she generally does get upset. if I tall about something in a factual way and try not up slant it with my emotions her response is generally better.