Hi
Doesn't exist differences between fetch-XML and sql report.. you can create report in both of them, but you can create a complex report with sql but no with fetch-xml.
Fetch has a limitation and, this limitation is based for the fetch itself. You have to follow fetch language. I let you a link where you can read more about it.
http://gonzaloruizcrm.blogspot.com.es/2011/07/sql-vs-fetchxml-reports-in-crm-2011.html
Salu2 Atilin | http://www.dexrm.com