Bad performance caused by DISTINCT?

[Heist TheAlmighty]

This is the query:
SELECT DAY(date_time) "day", COUNT( DISTINCT session_id ) "count"
FROM application_requests
WHERE (retailer_id = '111111-1111-11111')
AND(year_for_reports = 2006)
AND(month_for_reports = 9)
GROUP BY DAY( date_time );

EXPLAIN returns this:
"1" | "SIMPLE" | "application_requests" | "ref" | "index_for_reports" | "index_for_reports" | "53" | "const,const,const" | "998840" | "Using where; Using filesort"

index_for_reports is (retailer_id, year_for_reports, month_for_reports)

Table structure goes as follow:
id(int)
retailer_id(varchar[40])
date_time(datetime)
session_id(varchar[255])
controller(varchar[255])
action(varchar[255])
parameters(text)
product_line_id(int)
merchandise_id(int)
month_for_reports(int)
year_for_reports(int)

Any idea how I could make this faster? Right now I'm clocking at 555703 ms, which is intolerable.