Halliday & Matthiessen (2004: 480-1):
Fred thinks something; this is a mental event. To represent it, I use a ‘mental’ clause Fred thought, plus a report of his mental act (that) it had stopped. The two have unequal status (hypotactic), because one is a wording while the other is a meaning. That is to say, my locution Fred thought is a lexicogrammatical phenomenon, but Fred’s idea ‘that it had stopped’ is a semantic one.