The "OR" at the end will slow things down considerably - the AVM does better if you split it up into two sets of AND statements and OR the result, like so:
WHERE (Report.EXTRACTDATE < Today
AND Report.ReportType = 'Customer Report'
AND Report.STATUS = 'Pending'
AND Report.MailingType = "LETTER")
OR
(Report.EXTRACTDATE < Today
AND Report.ReportType = 'Customer Report'
AND Report.STATUS = 'Pending'
AND Report.MailingType = "Mail")