In a Pressure-Tube Heavy Water Reactor (PT-HWR) with conventional fuel bundles (49.53-cm bundle length,48-cm fuel pellet stack length), axial peaking in the neutron flux and power density at the ends of the fuel bundles occurs due to the axial gap (1.53 cm) in fuel pellets between adjacent fuel bundles. This axial gap is occupied by coolant, end plates, end plugs and a gas gap. Power peaking has the potential to cause fuel damage and failure, if the local linear element rating exceeds 57 kW/m, and may be of concern for advanced, higher-burnup fuels. Earlier studies using 3-D MCNP models of a 37-element PT-HWR fuel bundle made with 1.2 wt% U-235/U in the form of UO2 in the outer 36 elements, and ThO2 in the central element indicated that ThO2 could be used to dilute and axially grade the fissile content in the end fuel pellets to reduce power peaking in fresh fuel. This study extends the previous work by performing 3D neutronics and burnup calculations using SERPENT, to evaluate how power peaking changes with burnup. In addition, alternative dilution materials (such as DUO2, ZrO2 and MgO) were also evaluated. It was found that axial power peaking can be significantly reduced by using the ThO2 dilution material for fresh fuel, while ZrO2 or MgO are even more effective at higher burnup levels. Dilution materials have little impact on the exit burnup of the fuel.