We introduce a fold operation that realises a tree-to-graph transduction by merging selected nodes in the input tree to form a possibly cyclic output graph. The work is motivated by the increasing use of graph-based representations in semantic parsing. We show that a suitable class of graphs languages can be generated by applying the fold operation to regular unranked tree languages. We investigate two versions of the fold operation, one that preserves a depth-first ordering between the edges, and one that does not. Finally, we demonstrate that the time complexity for the associated non-uniform membership problem is solvable in polynomial time for the order-preserving version, and NP-complete for the order-cancelling one.