= Solution
DBU removes the proton $\alpha$ to sulfonium, generating the propargyl-substituted <sulfur ylide> $\mathrm{Me_2S^+-CH^-C\equiv CMe}$. Its carbon attacks the enone $\beta$ carbon bearing indolyl, shifting the conjugated electrons into an <enolate>. The new intermediate has the carbon sequence $\mathrm{O^-{-}C(Ph)=C(CN)-CH(indolyl)-CH(SMe_2^+)(C\equiv CMe)}$.
Intramolecular attack by the <enolate> oxygen on the sulfonium-bearing carbon displaces <dimethyl sulfide> and closes a five-membered ring. \b[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.
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