div.index-term:first-letter{text-transform:uppercase;}
Does Prince 8.1 not support the first-letter pseudo element?
div.index-term:first-letter{text-transform:uppercase;}
div.index-term::first-letter{font-variant:small-caps; font-size:1.25em;}
<html>
<head>
<style>
p::first-letter { text-transform: uppercase }
</style>
</head>
<body>
<p>hello</p>
</body>
</html>