Source: Warhammer Fantasy: 4th Edition

Which Models Fight
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A model can fight if its base is touching the base of an enemy model. Even models attacked in the side or rear may fight, and may be turned in the ranks to indicate they are doing so. If a model is touching more than one enemy it can choose which to attack. For example, if faced with an enemy hero and an ordinary enemy trooper you may decide to attack the trooper because you stand more chance of harming him, or could take the outside chance of fighting the hero.

which-models-fight
You may decide which model to attack.

In the case of cavalry mounts which have their own attacks, these are worked out in exactly the same way as normal. This means that some cavalry have two lots of attacks, the rider attacks and his mount attacks as well. For example, Warhorses and Giant Wolves have their own attack which they strike in the normal way.