Declarative memory is divided into episodic and sematic memory. Episodic memory represents our memory of experiences , autobiographical events involving times, places and associated emotions that can be explicitly stated. As you have rightly observed, semantic memory is derived from episodic memory simply because we learn facts from experiences. This gradual transition from episodic memory to semantic memory is natural since episodic memories generally lose their sensitivity to events we have experienced, and as a result, nuggets of autobiographical, episodic information are generalized as semantic memory. As such, semantic memory is the memory of structured facts, meanings and knowledge about the external world and deals with those contexts and their associated features that constitute our declarative knowledge. For instance, our knowledge about where Washington D.C is forms an instance of semantic memory, whereas the way a person feels when a beloved one passes away is a case of episodic memory. For further information, I will refer you The Essentials of Human Memory by Baddely and also two scholars of the field named Daniel Schacter and John O'Keefe.
You did not answer to my question "How does the man distinguish his fantasy and the real episodic memory?" I belongs to the point of view which is quite skeptical about the existence of vivid clear imageries (visual or acoustic). Prof. Baddely in his popular book on memory agreed with me :). Prof. E. Loftus also make her research solely on the critics about our GOOD memory (see youtube). She says that the memory is partly what we IMAGINE, e.g. the real memory is mixed with our fantasy!!:)