The core of a CANDU (CANada Deuterium Uranium) pressurized heavy water reactor includes several hundred horizontal fuel channels that pass through a calandria vessel containing the heavy water moderator. In each fuel channel, annulus spacers are used to maintain the gap between the cold calandria tube and the hot pressure tube, a pressurized vessel containing the nuclear fuel in contact with heavy water coolant. In order to carry the loads between the pressure tube and calandria tube, the annulus spacers are required to possess adequate structural strength throughout the operating life of the reactor. The Inconel X-750 spacers used in some reactor units are susceptible to irradiation induced degradation. As irradiation fluence increases with operating time, material embrittlement has been observed due to helium bubble formation in the X-750 spacer material. An engineering approach for assessing the structural strength of CANDU annulus spacers has been recently developed. When the ductility of the material is relatively low, the region susceptible to fracture under applied tensile stress may be adequately idealized as a strip-yield process zone surrounded by elastic material and associated with restraining stress. The engineering approach is based on applying the strip-yield process zone methodology to fracture at a nominally smooth surface. Finite element modeling was undertaken to simulate the strip-yield based fracture process zone. The finite element analyses and results are presented in this paper. The finite element results verify the engineering equations developed to assess the structural strength of annulus spacers.