In a greased shallow 3-qt. baking dish, combine the potatoes and fennel; set aside.
In a small saucepan, melt butter. Stir in flour until smooth; gradually add broth, cream, salt, pepper and nutmeg. Bring to a boil; cook and stir for 2 minutes or until thickened. Layered a casserole dish with 1/2 potatoes slices and 1/3 cup of cheddar cheese and repeat.
Pour over mixture; gently toss to coat potatoes. Cover and bake at 350 degrees F for 1 hour or until potatoes are tender. Uncover; sprinkle with remaining cheese. Bake 15 minutes longer or until cheese is melted.
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