 Solution

DBU removes the proton $\alpha$ to sulfonium, generating the propargyl-substituted sulfur ylide $\mathrm{M}{\mathrm{e}}_2{\mathrm{S}}^{+}-\mathrm{C}{\mathrm{H}}^{-}\mathrm{C}\equiv \mathrm{CMe}$. Its carbon attacks the enone $\beta$ carbon bearing indolyl, shifting the conjugated electrons into an enolate. The new intermediate has the carbon sequence ${\mathrm{O}}^{-}-\mathrm{C}(\mathrm{Ph})=\mathrm{C}(\mathrm{CN})-\mathrm{CH}(\mathrm{indolyl})-\mathrm{CH}(\mathrm{SM}{\mathrm{e}}_2^{+})(\mathrm{C}\equiv \mathrm{CMe})$.

Intramolecular attack by the enolate oxygen on the sulfonium-bearing carbon displaces dimethyl sulfide and closes a five-membered ring. This conjugate addition–O-alkylation sequence gives the dihydrofuran, retaining the C≡CMe substituent and placing the original carbonyl oxygen in the ring. Enolate carbon alkylation would instead give a cyclopropane; the observed oxygen-containing ring identifies the alternative closure. An approach and betaine conformation minimizing crowding between indolyl and alkynyl substituents, followed by stereoinverting displacement at the sulfonium carbon, rationalizes the depicted trans product. The result is racemic in the absence of an external chiral influence.