Is there a bug in "tf add /recursive"?

Question

I'm trying to add the following folder tree to TFS:

C:\TFS\folder1
C:\TFS\folder1\folder2
C:\TFS\folder1\folder2\folder3
C:\TFS\folder1\folder2\folder3\test.txt

In the above example the folder "C:\TFS" is a mapped TFS working folder. I issue the following commands from the console:

cd C:\TFS
tf add folder1 /recursive

After this command has finished my repository contains the following tree (as pending changes):

$/folder1
$/folder1/folder2

As you can see "folder3" and the text file "test.txt" below are completely missing! Why?

Update: I've submitted this as a bug to Microsoft:

http://connect.microsoft.com/VisualStudio/feedback/ViewFeedback.aspx?FeedbackID=423279