masking in illustrator

I'm a regular photoshop user, Illustrator is a program I don't use often but I need to create a logo and I'm running into a snag.

I have an oval, shaded in color. In that oval I have 3 letters. I sized the letters to fit in the oval but overlap on the ends.

I need to "mask out" or erase the edges of the letters though.
This screen shot should make sense:

link to screen shot

I've tried the erase path tool and it jacks up the letters.

Any other suggestions?

Select all the letters you want to mask out, group them. next, make a layer above those letters. In that layer, make the oval shape you want to use as your mask, make the fill solid white, and set the stroke to null, or colorless, if you will.

Now select the white oval mask and the grouped letters (making sure the mask it above the grouped letters) then make sure your transparency window is open (window>Transparency) (or Shift+Ctrl+F10).

On that transparency window, there's a little triangle in the top right part of that window (just under the 'close window' button)

Click that and in there you'll see "Make Opacity Mask", click that, and you're done!